Understanding FICO® Scoring

[TheOtis]

So I'm 19, I'm a college student and I work fulltime. I started building credit in July of 2006. I started when I was 18, because I'd like to be able to have the highest credit score possible before I finance a car and move out. And I figured I had a steady job, I'm still at home, and why not build credit early?

So far, I've had 3 seperate bills each month, and have made every payment on time and 85% of the time been they've more then the minimum payment.

Currently, my FICO score is 675. Is this a good credit score for my age? Right now my total balances from the different creditors adds up to be around $800, so it will all be paid off by June.

Also, by the time they're paid off, is their a chance my credit score can surpase the 700 mark? I'd really like to be around 725 or so when I do finance a car, but I'm not sure if that can happen that soon.

Is their a FICO score I can expect once I do have that paid off? Thanks!

[TheNewWorldMan]

FICO is an unpredictable beast, but really I don't think you have anything to worry about. Your best strategy for keeping FICO well-fed and happy is:

1) Have credit cards, but keep just enough of a balance to get a bill each month. If you're using more than 25% of your available credit on any one card, make paying that down a priority.

2) NEVER pay late. Automate payments if you can. I have Bank of America, and I can set up automatic payments for the minimum payment due a week before the due date, every month, forever.

3) Save money to buy that car. Finance part of it in a simple-interest loan. Pay the loan off ahead of schedule (put an extra $100 a month or so toward the principal). A paid car note looks good on FICO.

4) Periodically apply for a new credit card, and credit line increases (not that you'll USE the extra credit, it just looks good).

Do these things, and your FICO will rise. You're just fine for your age.

[TheOtis]

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TheNewWorldMan wrote:
FICO is an unpredictable beast, but really I don't think you have anything to worry about. Your best strategy for keeping FICO well-fed and happy is:

1) Have credit cards, but keep just enough of a balance to get a bill each month. If you're using more than 25% of your available credit on any one card, make paying that down a priority.

2) NEVER pay late. Automate payments if you can. I have Bank of America, and I can set up automatic payments for the minimum payment due a week before the due date, every month, forever.

3) Save money to buy that car. Finance part of it in a simple-interest loan. Pay the loan off ahead of schedule (put an extra $100 a month or so toward the principal). A paid car note looks good on FICO.

4) Periodically apply for a new credit card, and credit line increases (not that you'll USE the extra credit, it just looks good).

Do these things, and your FICO will rise. You're just fine for your age.

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Thanks a lot for your response! It's helped out a lot.

I have a $300 limit on one of my cards that's a tad higher then half way. But that'll be paid off next paycheck. My Circuit City card is the one that is the highest, but that one will get paid off in the next month as well.

I was thinking about the autopayments thing, but haven't looked much into it. I've been fine so far. Even if I've already paid that month, the second I get home on pay day I pay my bills online ( I get paid twice a month).

I am savings money for the car, I plan on financing around 8k-9k. Whatever can give me around a $200 a month car payment. That way I can pay $100 or so above that every month, just like you stated.

The only part that I don't quite understand is point #4. I currently have 3 credit lines. Wouldn't it do just as good to keep the total balance under 25% and keep paying it off monthly on the same cards, as opposed to opening up new credit lines? I do plan on increasing my line of credit on the $300 limit, once I get my balance paid off.

And again, thanks for your response!