Question on building a good fico score

[Anonymous]

Hello,

I am new to this forum, but I had a credit card since november (Capital One Secured Card), and I have had a store card for then. I was recently approved for a student card with capital one, and the over all line of credit is $1100 (Secure Card is $200, Walmart Card is $400, and Student Card is $500). I read, studied, and learn about what to do and not to do when it comes to credit, and I know its not good to have to many credit cards, or to apply for so many at one time. I do make my payments in full before when the statement is released, and I do stay below 30% (no greater than 50% of the line of credit). I already know that a FAKO score doesnt matter but my Transunion is 746, Experian is 726, and right now awaiting for exquifax to verify my documents so I can access my report with them. 

My question is, does the fico score includes the overall credit line (like I listed above) or does the score base on each card? I do plan on keeping my secure card so I can build credit. I also have plenty of savings accounts funded for different things, and the largest one is $10000, so I know for my age, I am keeping things up to date so I can have a backup to pay things off. I dont want to use no more than $330 in total of my cards (30%), but at the same time, I dont know how the fico score caculate, which comes back to my question I stated above.

Also, since im 18, can anyone provide any tips on building a good credit score, other than whats listed above by making payments on time, or use no more than 30% of your credit limit?

My next question is does having a mix credit like having auto-loans, installment loans, etc., help build a good history and score? At the time, I dont plan on applying for anything else, but in the future, I may want to get a car.

My last question is how do applying for any form of credit affects your fico score? When I applied for my student card with capital one, the fako score droped a few points, but rose up to the current score i listed above. I read in some places that someone score droped by 100 points just for applying for a credit card (I dont know if its true), and I dont want to take any form of risk of having my score droping that much. I only have 2 inquires on my experian report (they are being disputed because they suppose to be soft inquires), and on my transunion I have 3 (4 if I include the one inquire thats in dispute because capital one pulled my report 2 times when I applied for a secure credit card).

Thank you all!

[beb86]

All I can say is I wish I found this forum when I was 18.......FICO takes into total utilization as well as individual utilization and the general consensus on this forum is $0 on all but one and on that one leave a 1-5% balance....For inquiries you will take a small hit for the inquiry as well as if approved you will take a hit on your AAoA but it will recover with on time payments and keeping your utilization low. Hope this helps

[Guava]

- Beb86 is right, FICO score you on both the overal utilization of all your credit lines and the individual utilization of each credit line. The less number of card you have reporting balance the better. You should let 1 card report 1-9% of its credit limit, the rest report $0.

- Credit score is a way for lender to see how likely you'd pay back your debt, so there's no quick way to establish your score, you just have to make good payment history overtime to show that you're a good "borrower". Since you're starting with a clean plate, you can have a great score in 6 months to a year by just making timely payment and keep your utilization low.

- Credit mix is only 10% of your score. It would help, but not that much. I personally wouldn't go out of my way to take out a loan & pay interest just to gain a few points.

- When you apply and are approved for new credit, you have a new "hard" inquiry, and once the account shows up on your reports, it lowers your average age of accounts (AAoA); and both of these factor lower your scores. New inquiry decreases your scores by a few points (maybe 1 or 2) and you'll gain these score back after a year. Unfortunately there's no way to regain the score drop from AAoA loss, you just have to let your accounts age overtime and keep making great payment pattern.

that's my shot at it 

[RobertEG]

Throwing my two cents in....

FICO places heavy emphasis on the showing of effective use of discretionary, revolving credit.  All I have seen seems to show that at least two revolving are needed to appease the algorithm.  More than that becomes speculative.  Here are some of the factors that come to mind....

Getting a new revolving has many aspects.  Those new to credit usually start with low CL cards, which have the benefit of establishing revolving credit, but are a pain to effectively monitor.  Relatively small purchases can result in a high % util.  Thus, getting a CLI or a new card with higher CL gives you more spending flexibility without a drastic increase in % util.

Add to that the factor that FICO also scores the % of revolving reporting a balance.  With one card, you are always at either 0% or 100%.  As the number of cards increases, the denomintor increases, and thus you have more flexibility in maintainin the % cards reporting a balance from month to month.

While revolving is revolving when scored, a manual review of your type of revolving credit might peer at the types of revolving you have secured.  Major bank cards, in addition to giving you the ability to use them most anywhere, are also viewed more favorably than store cards.  So I would shoot for at least one major bank card (VISA, MC).

Credit mix also suggests having installment accts, but personally, I would not open an installment just to improve credit mix.  It is not a huge scoring factor.  A new installment will cost you $$ in interest, and will also lower your average age of accts, and take a new inq hit to establish.  I would personally reserve my quest for new installment to need for the loan rather than FICO score improvement.

The sooner you get the "necessary" trade lines, the better, as they begin to build account age at an earlier time.  But only app when you are relatively sure of approval, as each will cost you an inq. hit.