topic Re: This Noob needs your help! - any insight or advice you can offer :) in Understanding FICO® Scoring

This Noob needs your help! - any insight or advice you can offer :)

Cardman2 — Mon, 18 May 2020 14:38:18 GMT

I'm a complete newbie to MyFico, but I've been reading the forums for the past few days trying to learn as much as possible. Thought I'd share what I can, and see if anybody has any thoughts, suggestions, or advice. I haven't always taken credit seriously, but now I'm determined to get things right. It's time for me to close my mouth and listen to you guys

Payment History: 94% (ouch!), 125 out of 132 payments on time.

Last late payment: Jan. 2017 (60 days)

3 open revolving accounts (AZEO w/1% util., 3 bankcards)

All CLs on revolvers are low, approximately $1,000. 2 with a "predatory" company (CreditOne), 1 with USAA.

1 installment account (personal loan): $7,605 (100% on time, still owe approx. 90%)

Age of oldest revolver: 4yrs, 8 mo.

Youngest Revolver is 4 yr 1 mo.

Age of Installment: 9 months.

1 Hard inquiry (Dec. 2018).

9 Total Accounts (including past closed accounts).

No derogatory marks, nothing in collections.

Current Fico Score 8s: 687 (Eq). 709(Trans), 708 (Ex)

Fico Score 9s ( probably irrelevant): 756 ,760, 754

I'm looking for ANY insight, suggestions, or advice to raise my scores and get in better financial shape. Although my credit score isn't good, I'm in decent "financial" shape now with $1,000+/month of disposable income. I don't anticipate applying for any new bankscards, autoloans or mortages (unless advised). In 2012 I had a vehice repossession and my finances were a mess; I foolishly closed a couple of credit cards, quite a few things were in collections, and I made some classic foolish mistakes.

From what I've learned the past few days, it seems that I need to significantly reduce the balance on the installment loan without paying it off and possibly stay in the garden to increase my credit age and history. I'm quite surprised my scores haven't taken more of a hit with my late payments and credit history. I'm slowly learning...

Anything else I'm missing?

Thoughts or advice?

Also, I'd eventually like to apply for a CC with a much higher credit limit, but it's definitely not a necessity for now. I don't think the pros of having it help keep my util. at 1% outweighs the hit from a new TL at the moment.

Re: This Noob needs your help! - any insight or advice you can offer :)

Shooting-For-800 — Mon, 18 May 2020 16:07:10 GMT

More and more banks and CUs are using fico9s.

My fico9s are 50 points lower than my fico8s.

GL!

Re: This Noob needs your help! - any insight or advice you can offer :)

Cardman2 — Mon, 18 May 2020 17:20:01 GMT

I didn't realize that. Good to know. Thanks!

Anybody else have any advice?

Re: This Noob needs your help! - any insight or advice you can offer :)

SouthJamaica — Mon, 18 May 2020 17:35:25 GMT

@Cardman2 wrote:
I'm a complete newbie to MyFico, but I've been reading the forums for the past few days trying to learn as much as possible. Thought I'd share what I can, and see if anybody has any thoughts, suggestions, or advice. I haven't always taken credit seriously, but now I'm determined to get things right. It's time for me to close my mouth and listen to you guys

Payment History: 94% (ouch!), 125 out of 132 payments on time.
Last late payment: Jan. 2017 (60 days)
3 open revolving accounts (AZEO w/1% util., 3 bankcards)
All CLs on revolvers are low, approximately $1,000. 2 with a "predatory" company (CreditOne), 1 with USAA.

1 installment account (personal loan): $7,605 (100% on time, still owe approx. 90%)
Age of oldest revolver: 4yrs, 8 mo.
Youngest Revolver is 4 yr 1 mo.
Age of Installment: 9 months.
1 Hard inquiry (Dec. 2018).
9 Total Accounts (including past closed accounts).

No derogatory marks, nothing in collections.

Current Fico Score 8s: 687 (Eq). 709(Trans), 708 (Ex)
Fico Score 9s ( probably irrelevant): 756 ,760, 754

I'm looking for ANY insight, suggestions, or advice to raise my scores and get in better financial shape. Although my credit score isn't good, I'm in decent "financial" shape now with $1,000+/month of disposable income. I don't anticipate applying for any new bankscards, autoloans or mortages (unless advised). In 2012 I had a vehice repossession and my finances were a mess; I foolishly closed a couple of credit cards, quite a few things were in collections, and I made some classic foolish mistakes.

From what I've learned the past few days, it seems that I need to significantly reduce the balance on the installment loan without paying it off and possibly stay in the garden to increase my credit age and history. I'm quite surprised my scores haven't taken more of a hit with my late payments and credit history. I'm slowly learning...

Anything else I'm missing?
Thoughts or advice?
Also, I'd eventually like to apply for a CC with a much higher credit limit, but it's definitely not a necessity for now. I don't think the pros of having it help keep my util. at 1% outweighs the hit from a new TL at the moment.

Give yourself some credit, please (no pun intended). You're doing an excellent job.

1. Great that you have your revolving accounts totally in order now.

2. Great that you haven't applied for any revolvers in 4 years.

3. Your plan not to apply for anything new is the right plan. Do not apply for anything new.

4. Since your revolvers are in order, your plan of paying down your installment loan is fine. Once you get it down to 9% your FICO 8's will get a nice boost. Once that happens, don't be in a hurry to pay it down to zero, as the area between 1% and 9% is the sweet spot.

Right now, if you just keep up with this, your scores are going up, up, up. There's no limit to how high you can go as your lates age, and eventually age off.

The longer you wait to apply for a high quality new card, the higher your starting limit will be.

Re: This Noob needs your help! - any insight or advice you can offer :)

Cardman2 — Tue, 19 May 2020 10:42:47 GMT

Thanks so much for the response, SouthJamaica! It's quite reassuring to know I'm on the right path. Your posts elsewhere on the forum have also been TREMENDOUSLY helpful for me. I'll definitely follow your advice and not apply for anything new (and focus on the installment).

Using the AZEO method, are there any risks associated with switching the card I report a balance on as long as it's a bank card? I recently decided to report a balance on my USAA CC instead of CreditOne's predatory card...

Re: This Noob needs your help! - any insight or advice you can offer :)

SouthJamaica — Tue, 19 May 2020 12:41:47 GMT

@Cardman2 wrote:
Thanks so much for the response, SouthJamaica! It's quite reassuring to know I'm on the right path. Your posts elsewhere on the forum have also been TREMENDOUSLY helpful for me. I'll definitely follow your advice and not apply for anything new (and focus on the installment).

Using the AZEO method, are there any risks associated with switching the card I report a balance on as long as it's a bank card? I recently decided to report a balance on my USAA CC instead of CreditOne's predatory card...

No, there's no risk in switching cards as long as you've got the timing right. But if you went to all zero for a week, it wouldn't kill you

Re: This Noob needs your help! - any insight or advice you can offer :)

Anonymous — Wed, 20 May 2020 00:17:57 GMT

A lot depends on your goals. The advice given by @SouthJamaica is great based on the only goal you stated to get a high CL premium cc in the future.

You stated you have a 60 day late, but then you said you had no derogatories. Once that 60 day late drops off, you’ll be looking pretty. Meanwhile you could try the Goodwill saturation technique.

If you were to get a credit card now, there would be no new account penalty, only the hard pull and aging affect. And your clock on AAOA would begin rising again now with them rather than later when it will cause it to drop more. However, if you wait till that late drops off, you’ll get a better SL, APR, and terms.

Eventually you’d like to get to a point where you have 5 bank cards and 1 installment loan, IF you want to be able to fully optimize your mortgage scores as well, IMHO. Whenever you do get those cards, you will then need to wait optimally probably 18 months to 24 months after that with no more inquiries or new accounts to reach your highest mortgage scores.

This isn’t a necessity and just allows you to reach probably one lower breakpoint on one metric which depending on scorecard could be worth 5 to 15 points, I would guesstimate, so it’s definitely not essential.

But, like SJ said, once you pay that one installment loan down to 9% or lower, you’re going to get a nice boost anyway and that may be all you will ever need, your scores can definitely be super high with just the 3 cards.

Re: This Noob needs your help! - any insight or advice you can offer :)

Cardman2 — Wed, 20 May 2020 08:52:56 GMT

Thanks so much, Birdman7!

Super insightful...

Some more questions for you:

When I (later) decide to start optimizing my mortgage scores over an extended period of time, is it generally correct to assume that all of my scores will go up (in the long term) as my mortgage scores optimize?

(Sorry if that sounds like an idiotic question)

What's the likelihood of ever achieving an excellent (800+) F8 score with 3 revolvers and 1 installment?

(I know that sounds a bit superficial and contradictory to my following questions, but I think it'll help me better understand the big picture of the credit scoring system. Seeing the CLs and amount of CCs people have in their signatures here is a bit intimidating. I'm leaning towards gardening now for a better SL & APR, and taking a bigger hit on my scores later since I don't currently plan on getting a mortgage in the near future.)

I'm purchasing a $6k motorcycle at the beginning of August; I didn't plan on financing it. Would it make any sense to put that money towards getting my installment loan below 9% and opening a new installment to finance it? I'm guessing not...

(For what it's worth, I spend 8+ months a year traveling overseas and the motorcycle is the sensible primary transportation option for my stateside situation. I'm not a young man foolishly prioritizing a toy over long-term mortgage opportunities.)

If I decide to get my 4th and 5th bankcards in the future to solely optimize my mortgage scores, wouldn't it make sense to get them in the same month since I'd be gardening afterwards and my AAoA wouldn't take another hit in the future when applying for my 5th?

Once again, I can't thank you guys enough for the insightful responses! This is an education I wish I would've received from my parents or school MUCH earlier than now. You guys ROCK!

Re: This Noob needs your help! - any insight or advice you can offer :)

Anonymous — Wed, 20 May 2020 16:33:41 GMT

Yes what you do to optimize the mortgage scores will optimize the other scores as well.

Yes 800+ is possible with three credit cards.

Whether financing your bike makes sense depends on the interest-rate you’re currently paying on your installment loan and whether that it would be cheaper. Finances over ficos. You can always pay down an installment loan and get the score bump. You can do that when you need it, it doesn’t have to be done now. Do it if it makes financial sense.

Yes you’ve got the idea exactly right. You would want to get your fourth and fifth at the same time, preferably as soon as possible after the derogatory drops so that they can begin aging as soon as possible.

Re: This Noob needs your help! - any insight or advice you can offer :)

Cardman2 — Wed, 20 May 2020 17:35:55 GMT

Got it. Once again, thanks for all of your help. You've taught me a lot and I look forward to lurking around here to keep learning new things.

Thanks!

Re: This Noob needs your help! - any insight or advice you can offer :)

SouthJamaica — Wed, 20 May 2020 17:59:54 GMT

@Cardman2 wrote:
Thanks so much, Birdman7!
Super insightful...

Some more questions for you:

When I (later) decide to start optimizing my mortgage scores over an extended period of time, is it generally correct to assume that all of my scores will go up (in the long term) as my mortgage scores optimize?
(Sorry if that sounds like an idiotic question)
No there's no general rule except that if you optimize your mortgage scores you certainly won't hurt any other scores.
What's the likelihood of ever achieving an excellent (800+) F8 score with 3 revolvers and 1 installment?
(I know that sounds a bit superficial and contradictory to my following questions, but I think it'll help me better understand the big picture of the credit scoring system. Seeing the CLs and amount of CCs people have in their signatures here is a bit intimidating. I'm leaning towards gardening now for a better SL & APR, and taking a bigger hit on my scores later since I don't currently plan on getting a mortgage in the near future.)
Fine. You don't need more than that.
I'm purchasing a $6k motorcycle at the beginning of August; I didn't plan on financing it. Would it make any sense to put that money towards getting my installment loan below 9% and opening a new installment to finance it? I'm guessing not...
(For what it's worth, I spend 8+ months a year traveling overseas and the motorcycle is the sensible primary transportation option for my stateside situation. I'm not a young man foolishly prioritizing a toy over long-term mortgage opportunities.)
No.
If I decide to get my 4th and 5th bankcards in the future to solely optimize my mortgage scores, wouldn't it make sense to get them in the same month since I'd be gardening afterwards and my AAoA wouldn't take another hit in the future when applying for my 5th?
There's no need to get a 4th and 5th card. You can have 850 scores with what you presently have.
If you insist on getting 2 more cards, I wouldn't get 2 together.

Once again, I can't thank you guys enough for the insightful responses! This is an education I wish I would've received from my parents or school MUCH earlier than now. You guys ROCK!

Re: This Noob needs your help! - any insight or advice you can offer :)

Cardman2 — Wed, 20 May 2020 18:25:21 GMT

Thanks for taking the time to respond! As I've said before, I can't thank all of you enough for the responses and posts. I'm learning a TON and I'm thrilled to be a new lurker around here so I can keep learning more from everybody.

Re: This Noob needs your help! - any insight or advice you can offer :)

Anonymous — Wed, 20 May 2020 21:30:18 GMT

Unfortunately I haven’t seen one example of a person with three cards with an 850. I would love to be proven wrong. We even had a discussion about this and if I recall correctly I think TT said someone with 4 cards hit 850.

If you space out the fourth and fifth card it just makes the opening date of the fifth card later which reduces AAOA and either extends or renews your new account penalty, so it doesn’t make sense in my opinion to get them separately.

Re: This Noob needs your help! - any insight or advice you can offer :)

SouthJamaica — Sat, 23 May 2020 04:04:29 GMT

@Anonymous wrote:
Unfortunately I haven’t seen one example of a person with three cards with an 850. I would love to be proven wrong. We even had a discussion about this and if I recall correctly I think TT said someone with 4 cards hit 850.......

The MyFICO forums do not present a true cross section of our society. It is rare to meet someone here who has a lengthy credit history who is content to have a total of 3 revolving accounts. But in the real world there are lots of people like that.

Re: This Noob needs your help! - any insight or advice you can offer :)

Anonymous — Sat, 23 May 2020 08:54:43 GMT

I bet you @Anonymous will be here for a long time and will never have a whole bunch of credit cards! Lol.

They actually did threads looking to find somebody with only three cards that hit 850, iirc and they couldn’t. I would think somebody ruthless optimizing like that would probably be a MF’er. But we can agree to disagree, but we have lack any evidence that you can hit 850 with three cards.

Re: This Noob needs your help! - any insight or advice you can offer :)

SouthJamaica — Sat, 23 May 2020 13:22:26 GMT

@Anonymous wrote:
I bet you @Anonymous will be here for a long time and will never have a whole bunch of credit cards! Lol.

They actually did threads looking to find somebody with only three cards that hit 850, iirc and they couldn’t. I would think somebody ruthless optimizing like that would probably be a MF’er. But we can agree to disagree, but we have lack any evidence that you can hit 850 with three cards.

Yes but trying to find those people in the MyFICO forum, when you're looking for people who have not yet drunk the MyFICO kool aid, is sort of a fool's errand The folks I'm talking about wouldn't know a credit forum from a hole in the wall.

Re: This Noob needs your help! - any insight or advice you can offer :)

Anonymous — Sun, 24 May 2020 02:50:08 GMT

@SothJamaica But that's speculation. We have no evidence to support the assertion, even if true.