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New Line of Credit to improve FICO?

Established Member

New Line of Credit to improve FICO?

Hello All,

 

     First of all, thank you for your time in reading my question.  I am looking to lease/buy a vehicle in Jan 2011.  In the meantime, I have paid off several of my negative debts and according to my TransUnion report there is an inquiry and 2 other very old negative items that will be falling off.  I know this will improve my FICO score, however, I was wondering if it would be wise to take out a secured/unsecured line of credit in the meantime, while waiting to get my car.  I know that initially this may hurt my score, but is it wise to think that maybe a few months of on-time payments and and increase in my debt to credit ratio may help?  Any suggestions would be greatly appreciated.  Thank you!

 

Wesley


Starting Score: EQ 563 TU 523 EX FAKO 573
Current Score: EQ 601 TU 633 EX FAKO 606
Goal Score: EQ 750 TU 750 EX FAKO 750


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Message 1 of 7
6 REPLIES
Community Leader
Epic Contributor

Re: New Line of Credit to improve FICO?

Is it an installment loan, or a revolving line of credit?

On the negative side, it will of course cost you a new inquiry, and reduce your average age of accounts.

On the postive side, IF it reported as revolving credit, it may improve your revolving CL, and thus reduce your overall % util.

 

Message 2 of 7
Established Member

Re: New Line of Credit to improve FICO?

It is a revolving line of credit with a local credit union.

Starting Score: EQ 563 TU 523 EX FAKO 573
Current Score: EQ 601 TU 633 EX FAKO 606
Goal Score: EQ 750 TU 750 EX FAKO 750


Take the FICO Fitness Challenge
Message 3 of 7
Community Leader
Epic Contributor

Re: New Line of Credit to improve FICO?

In very rough terms, I would expect a hit of around 5 pts from the new account and reduction in AAoA.

In my opinion, it would take an increase of close to 20% in your overall CL to offset this in the short term.

So, the factor for me, would be the amount of the additional CL this new LOC will report.

Message 4 of 7
Established Member

Re: New Line of Credit to improve FICO?

The line would be <1000

Starting Score: EQ 563 TU 523 EX FAKO 573
Current Score: EQ 601 TU 633 EX FAKO 606
Goal Score: EQ 750 TU 750 EX FAKO 750


Take the FICO Fitness Challenge
Message 5 of 7
Community Leader
Epic Contributor

Re: New Line of Credit to improve FICO?

If your current, total CL is now at least $5K, my vote would be not to open it.

Message 6 of 7
Established Member

Re: New Line of Credit to improve FICO?

I recently opened a CC  with my credit union; it has a $1500 credit limit.  My only other CC I have has a $300 limit.  I have 0% utilization; will opening this new account improve my score since my CL was so low before?


Starting Score: 4/10 585
Current Score: June 2013 EQ 744 TU 705 EX 750
Goal Score: 12/13 > 720


Take the FICO Fitness Challenge
Message 7 of 7