long credit history but low FICO

[Anonymous]

I have had credit for years with no negative info. I have worked hard to pay off credit cards and consolidate debt. Now I have only mtg. and 1 credit card and my FICO is lower. My homeowner's insurance was raised because of my lower FICO! Seems crazy with everyone spouting that we should get out of consumer debt, yet when we do we are penalized. What should I do now to raise my FICO back up? Will the old "closed" acct's stay on my credit report and be "negative" since they're paid off?

[haulingthescoreup]

Hi, bjm, welcome to the forums! One of the first things that you should do is read Credit Scoring 101, which is stickied at the top of the page.

Do you still use the one credit card that you have? I'm guessing that your problem is that you have closed down so much of your credit in an attempt to clean things up that it's now difficult to predict how you would handle credit if you got it again. FICO seems to like knowing that you can "flirt" with credit --you use it every now and then and have a little fun with it, but you don't go overboard, carrying a lot of debt, and so forth.

Another possible problem, if you still use your current card, is that it reports a relatively high percentage of your credit limit ("util"), even if you pay it off. The figure that is reported to the CRA's (credit bureaus) is generally the amount that is on your monthly statement. Naturally, most people wait until that statement posts, and then they pay their bills. Unfortunately, that makes it look like you're carrying a lot of debt. You can get around that by paying most of what you owe several days before the statement is due to post, let that low figure report, and then pay off the rest. Weird, but true.

Your closed accounts aren't hurting you at all; in fact, they're helping by providing length of credit history. They should report for 10 years after they're closed, but unfortunately some creditors stop early. This shortens your average age of credit history, and if the account was opened the longest ago, it shortens your overall age as well.

If you want to help your scores get back where they should be, try allowing about 5% of the credit limit on your card report to the credit agencies before you pay it off in full. That should help some, at any rate. And you might want to consider having one or two more cards, even if you only put a tank of gas on each card every other month, just to help show that you can handle credit, and that it doesn't handle you. Hope that helps!