topic Re: More credit for credit score increase? in Understanding FICO® Scoring

More credit for credit score increase?

Anonymous — Wed, 10 Oct 2018 18:06:58 GMT

So I never had or used credit cards until just recently. I paid cash for my first house and most of my vehicles over the years...I only had student loans...which the first many years were neglected. It's been 7-8yrs since then and they are up to date. Im wanting to buy a larger home and will need to finance some of it, so am working on my credit. It was at 680, so I applied for some cards literally all at once in July. I basically picked the best credit cards off a list that I thought I could get. I went with Amex gold, Chase Sapphire reserve, Capital 1 venture, Discover it, Amazon prime, Capital 1 savor, Barclay Uber, and then a couple Dept. Store cards (Mayor's and Macy's). I ended up with a little over 90k in credit limits across all the cards. My score since then has slowly moved up to 720, 738, and 758 depending where I look. I'd like to ideally get to 800 or at least to a solid super prime score across all three bureaus. Is there a point where more credit won't help? I haven't received a rejection yet and don't want one. Is there any other quick way to get all 3 scores above at least 760?

Re: More credit for credit score increase?

Anonymous — Wed, 10 Oct 2018 18:14:56 GMT

Also forgot to mention I co-signed on a $60k car loan about 4yrs ago for my girlfriend (now wife) . There's about 7k left on it and 11 months to go.

Re: More credit for credit score increase?

Anonymous — Wed, 10 Oct 2018 18:26:03 GMT

Bigger credit limits do not help your score, in and of themselves. Example:

Bob has four cards, each with a limit of 1k a balance of $80. He asks for a credit limit increase and his CC issuers raise it to 25k each. His score will not go up by even one point. The reason is that his utilization was very low before he had the big limits and it is still very low.

Low utilization helps your score a lot, but a person can have a low util and still spend a lot on his cards. We can walk you through how that could be possible pretty easily, if you want to know.

A person with five cards can have a higher score than a person with one (other things being equal) but there's no scoring advantage to having more than five cards.

Re: More credit for credit score increase?

SouthJamaica — Wed, 10 Oct 2018 18:39:07 GMT

@Anonymous wrote:
So I never had or used credit cards until just recently. I paid cash for my first house and most of my vehicles over the years...I only had student loans...which the first many years were neglected. It's been 7-8yrs since then and they are up to date. Im wanting to buy a larger home and will need to finance some of it, so am working on my credit. It was at 680, so I applied for some cards literally all at once in July. I basically picked the best credit cards off a list that I thought I could get. I went with Amex gold, Chase Sapphire reserve, Capital 1 venture, Discover it, Amazon prime, Capital 1 savor, Barclay Uber, and then a couple Dept. Store cards (Mayor's and Macy's). I ended up with a little over 90k in credit limits across all the cards. My score since then has slowly moved up to 720, 738, and 758 depending where I look. I'd like to ideally get to 800 or at least to a solid super prime score across all three bureaus. Is there a point where more credit won't help? I haven't received a rejection yet and don't want one. Is there any other quick way to get all 3 scores above at least 760?

Yes you are at that point.

At this point your path to higher scores is:

1. having low or zero balances report on your credit cards

2. paying your loans down but not to zero if you can avoid it

3. the passage of time

4. no credit applications or other hard inquiries

If you need to maximize your scores, have all but one of the credit cards report a zero balance, while the other card reports a sub-9% balance.

Re: More credit for credit score increase?

Anonymous — Wed, 10 Oct 2018 18:43:02 GMT

My balances are paid each month on time, but each credit bureau still show balances for some of them for each month. Should I let them sit at zero for a while for the reports to catch up? I thought your supposed to use them each month

Re: More credit for credit score increase?

Medic981 — Wed, 10 Oct 2018 19:03:45 GMT

Welcome to the myFICO forums!

Ultimately, what a person needs to improve their FICO scores and build credit are three open credit cards (secured or unsecured) in good standing and one open installment loan in good standing such as a car, home, student, personal, share secured, or credit building loan. This combination is what the myFICO score theorists here have determined is what you need for optimal credit building and FICO score. You can have more CCs and more installment loans, however, this will not increase your FICO scores.

Next, is paying in full all of the credit card balances each month, before the posting date, except one. This is called the All Zero Except One (AZEO) method. The one credit card you allow to post a balance needs to be less than 8.9% of the credit limit of the card. So using one card each month to buy lunch, letting it report and then paying in full will maximize FICO scoring.

The installment loan will have its greatest impact on your FICO score when the amount owed is at its smallest such as a few months before the loan is paid in full.

Most folks only employ the AZEO method when they are trying to maximize their FICO scores in anticipation of purchasing a home or auto. Or they are obsessed with their FICO scores and want to milk every last point out of there FICO scores every month.

Re: More credit for credit score increase?

Anonymous — Wed, 10 Oct 2018 19:03:45 GMT

Thanks! That can all be accomplished in a month for me. So pay the car loan to almost nothing, leave a small balance on one card, and pay the rest ahead of the due date...how long does it take for the credit scores to catch up?

Re: More credit for credit score increase?

Medic981 — Wed, 10 Oct 2018 19:13:51 GMT

@Anonymous wrote:
Thanks! That can all be accomplished in a month for me. So pay the car loan to almost nothing, leave a small balance on one card, and pay the rest ahead of the due date...how long does it take for the credit scores to catch up?

Payment on your cards needs to before the posting date when CCC reports the balances to the CRAs. Not before the due date as that balance has already been reported to the CRAs.

Pay the car loan down to below 8.9% of the original loan and pay on it for as long as you can. AZEO maximizes utilization which accounts for 30% of your FICO score and utilization has no memory. This means that you can have 50% utilization one month with a FICO score drop and pay it down to below 8.9% the next month and see your FICO score return as long as nothing else has changed on your credit reports.

Re: More credit for credit score increase?

Anonymous — Wed, 10 Oct 2018 21:41:37 GMT

@Anonymous wrote:
... Im wanting to buy a larger home and will need to finance some of it, so am working on my credit.... My score since then has slowly moved up to 720, 738, and 758 depending where I look. I'd like to ideally get to 800 or at least to a solid super prime score across all three bureaus.

I have cut much of the original post so that we can hone in on the fact that what is driving our guy is a home purchase.

GoinFor800... are the scores you describe above FICO 8 scores? Or are they FICO mortgage scores? It's the latter that should be moving everything for you. What tools are you using to get your scores currently?

My recomendation is that you implement AZEO as soon as possible, wait until all the new CC balances are reporting and then (after that) purchase your mortgage scores. We can walk you through that.

I would not pay the auto loan down yet. There's many reasons not to right away. First off only one of the three mortgage scores seems to be helped by loan paydowns. Another is that paying the loan down to "almost nothing" could cause the loan to pay off prematurely, depending on the lender, which might be a problem. Finally if the loan does pay off prematurely you can't reverse that, whereas CC balances are easy to fiddle with.

PS. When do you envision buying the house? (Best guess.) Three months from now? Six? Twelve?

Re: More credit for credit score increase?

SouthJamaica — Wed, 10 Oct 2018 23:27:06 GMT

@Anonymous wrote:
My balances are paid each month on time, but each credit bureau still show balances for some of them for each month. Should I let them sit at zero for a while for the reports to catch up? I thought your supposed to use them each month

Most cards report the statement balance to the credit bureau. For optimal scoring it's best to let only one card report a balance, while the others report a zero balance.

Re: More credit for credit score increase?

Anonymous — Thu, 11 Oct 2018 00:11:16 GMT

OP, what is the source of your credit scores?

Also, you said you started with a 680 score. That seems a bit low for a profile that has no negative items and no high utilization. Perhaps because there was no revolvers present... but I'm not sure. What is the age of your oldest account and the average age of your accounts? Based on your original post, I got the impression that your file wasn't young nor was it extremely thin (student loans, auto loan). That being said, I would think your FICO scores are capable of being in the mid-upper 700's generally speaking based on the limited information you've provided us thus far.

Re: More credit for credit score increase?

Anonymous — Thu, 11 Oct 2018 00:29:13 GMT

Im going off credit scores from different credit cards fico monitoring services. I did have a little over 200k in student loans. Now it's 35k. Also, the 3 credit bureaus have different length of credit history. One says oldest acct 38yrs ( I'm only 34) my dad used to have me as an authorized user in highschool. I'm assuming that's why. The other gives an avg. credit age of 5yrs.

Re: More credit for credit score increase?

Anonymous — Thu, 11 Oct 2018 01:15:27 GMT

Hi GoinForIt. Did you see my response earlier? I include it below again in case you missed it.

@Anonymous wrote:
@Anonymous wrote:
... Im wanting to buy a larger home and will need to finance some of it, so am working on my credit.... My score since then has slowly moved up to 720, 738, and 758 depending where I look. I'd like to ideally get to 800 or at least to a solid super prime score across all three bureaus.
I have cut much of the original post so that we can hone in on the fact that what is driving our guy is a home purchase.

GoinFor800... are the scores you describe above FICO 8 scores? Or are they FICO mortgage scores? It's the latter that should be moving everything for you. What tools are you using to get your scores currently?

My recomendation is that you implement AZEO as soon as possible, wait until all the new CC balances are reporting and then (after that) purchase your mortgage scores. We can walk you through that.

I would not pay the auto loan down yet. There's many reasons not to right away. First off only one of the three mortgage scores seems to be helped by loan paydowns. Another is that paying the loan down to "almost nothing" could cause the loan to pay off prematurely, depending on the lender, which might be a problem. Finally if the loan does pay off prematurely you can't reverse that, whereas CC balances are easy to fiddle with.

PS. When do you envision buying the house? (Best guess.) Three months from now? Six? Twelve?

Re: More credit for credit score increase?

Anonymous — Thu, 11 Oct 2018 01:58:48 GMT

6-12 mo. I'm not sure what kind of scores they are. Just what is shown on credit monitoring features of my credit cards.

Re: More credit for credit score increase?

Anonymous — Thu, 11 Oct 2018 02:18:30 GMT

The scores from your credit cards are definitely not the scores your mortgage lender will use.

I encourage you to implement AZEO as a few other folks have recommended. Then use a free tool like Credit Karma to track when the new AZEO balances have materialized on your reports. After that has happened, purchase a subscription to the myFICO Ultimate credit monitoring service. It will give you your mortgage scores. You may be in great shape at that point.

Definitely do not not do the loan paydown until you know what AZEO will accomplish for you. A loan paydown is often better used as a downpayment for mortgages.

Re: More credit for credit score increase?

HeavenOhio — Thu, 11 Oct 2018 02:33:54 GMT

Don't apply for any new credit until after your mortgage has closed. Mortgage lenders don't like new accounts. In your six to twelve month timeframe, you'll be fine, though. In the meantime, your scores will continue to rise simply due to aging factors.

Re: More credit for credit score increase?

Anonymous — Wed, 05 Dec 2018 18:45:47 GMT

Did AZEO...I'm at 780 now. Left a small amount on car loan. Just waiting on aging of accounts to happen

Re: More credit for credit score increase?

Anonymous — Wed, 05 Dec 2018 20:15:22 GMT

Have you pulled your mortgage scores via the myFICO Ultimate tool?

Re: More credit for credit score increase?

Anonymous — Thu, 06 Dec 2018 01:35:24 GMT

@Anonymous wrote:
Did AZEO...I'm at 780 now.

OP, just a suggestion, but any time you reference a score you should mention what type of score it is. I know back in October when you were asked about the type of scores you were referencing you said you weren't sure, just that they were coming from your CC accounts, CMS's, etc. A "780" in and of itself doesn't mean much. If it's a VS 3.0 score, it's meaningless. If it's a FICO 8 score, it's meaningful but not the best. If it's a TU FICO 4 score (a mortgage flavor) it's extremely meaningful and ideal for the sake of this discussion considering your home purchase goal.

If you aren't sure what type of score you're referencing, check out the page where you're seeing that score. Usually right below the score or perhaps if you scroll all the way down on the page in some fine print you'll find the scoring model/bureau referenced. If not, sometimes this is in the FAQ for whatever your source is. If you still aren't sure, if you post for us the source of the score more than likely someone will chime in with the exact scoring model provided by that source.

Re: More credit for credit score increase?

Anonymous — Thu, 06 Dec 2018 15:04:31 GMT

So a few things have changed. The timeline has moved up, as I don't see a reason to wait any longer. we decided to stay in a home we already own (One which I paid cash for about 10 years ago) and take a mortgage out on it to expand and remodel to the specifications we were looking at in other homes. It just made sense when we started looking around at what we could buy versus what we have already. I actually don't know what my exact scores are,but when my lender was reviewing everything, he said my average score was 780, which is what they use. I'm not sure if theyre ( SunTrust) using 1,2, or 3 bureaus scores. But the number that they are taking into consideration is 780. He also says he doesn't see any reason why it won't close. We're just waiting on an appraiser to come out, and then paperwork from there out. Much thanks to everybody. I didn't think credit score would react that quickly, or maybe it's just a different type of score they calculate. Either way I appreciate all the advice on AZEO