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New Visitor
Posts: 4
Registered: ‎10-28-2012
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Improving credit score

Hi, I'll be applying for an auto loan within the next few months but I need to improve my credit score. I have a $3500 personal loan that I can pay off. Or, should I pay off $3500 in credit card debt instead so that my available credit increases? I wasn't sure which one would potentially help the most. Unfortunately I can't do both Smiley Sad Thank you, Kevin
Frequent Contributor
Posts: 385
Registered: ‎02-06-2009
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Re: Improving credit score

To maximize your credit score, I believe a low % utilization on revolving accounts is more important than a low % remaining balance on installment loans.

 

My recommendation would be to pay down all revolving accounts except one. For the one you allow to report a non-zero balance, be sure the utilization is <10%, ideally 1-2%.

 

If you have money left over, pay down the installment loan such that at least 35% of the original principal is paid off, ie for a $1000 loan, pay off at least $350, leaving $650 or less remaining balance.

 

Hope that helps.


11/02/2012 Peak - EQ 790 (ScoreWatch EQ FICO)
01/06/2015 Current - TU 831 (Walmart MasterCard TU FICO 08 Classic)
GOAL - 800! - App free since 05/18/2015
New Visitor
Posts: 4
Registered: ‎10-28-2012
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Re: Improving credit score

Thank you very much, that definitely helps Smiley Happy
Established Contributor
Posts: 760
Registered: ‎02-11-2012
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Re: Improving credit score

Definitely, pay off the credit cards first, starting with the highest interest acount. Then keep paying on the next card until it is paid. Then if you want, pay towards your installment loan or "bank" some of your saved payment money for a rainy day fund. Good luck.

Starting scores 01/02/2012 EQ 707(Fico) TU 733(Fico) EXP 735 (FAKO)
Updated scores 06/01/2014 EQ 797(Fico) TU 768(Fico) EXP 769 (Fico), EQ 849 (Next Gen 5/27/14 Penfed)


Remember the Three P's: Pay early in Full, Pay on Time, Patience
New Visitor
Posts: 4
Registered: ‎10-28-2012
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Re: Improving credit score

Thanks again for all the help! One last question. What is the preferred/recommended credit score/monitoring program out there? I've been trying to figure out which is the best between the Experian product and MyFico.com. Any recommendations would be great. Thank you, Kevin
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Moderator
Posts: 13,897
Registered: ‎04-15-2011
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Re: Improving credit score

That's a good question, albeit a very complicated one.  I will try to do my best to explain my take on this matter.  First off, the scores you get from myFICO are FICO scores.  They have one for EQ and for TU.  They don't have one for EX.  A couple of years ago EX stopped making their FICO scores available to the public, and yes, that even includes the scores they sell on their own website.  The EX score you get from any site will be a FAKO and could have no correlation to your actual FICO score.  The only way to get your EX score is through a lender pull or if you belong to a certain CU in Pennsylvania.  My suggestion to you, don't buy the product from their site.  You can get a free EX FAKO score from www.creditsesame.com.  Hope this clears it up for you!

Starting Score: 504
July 2013 score:
EQ FICO 819, TU08 778, EX "806 lender pull 07/26/2013
Goal Score: All Scores 760+, Newest goal 800+
Take the myFICO Fitness Challenge

Current scores after adding $81K in CLs and 2 new cars since July 2013
EQ:809 TU 777 EX 790 Now it's just garden time!
New Visitor
Posts: 4
Registered: ‎10-28-2012
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Re: Improving credit score

Thank you!! What if I'm going to be applying for a car loan through Ford Credit or another place. I want to get my FICO score and also do some analysis on how paying off certain credit cards will improve my score. I want to get the lowest rate possible but that will only happen if I pay a few of my credit cards off. Thank you, Kevin
Moderator
Posts: 13,897
Registered: ‎04-15-2011
0

Re: Improving credit score

Pay down the util on those credit cards, that will give you the most bang for your buck at this time.  Get your util to 9% or lower for the most bump.

Starting Score: 504
July 2013 score:
EQ FICO 819, TU08 778, EX "806 lender pull 07/26/2013
Goal Score: All Scores 760+, Newest goal 800+
Take the myFICO Fitness Challenge

Current scores after adding $81K in CLs and 2 new cars since July 2013
EQ:809 TU 777 EX 790 Now it's just garden time!
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