Tips for improving credit score with Amex as highest limit card

[slvrhwk]

Hi all,

I've learnt from this forum that a good way to improve credit scores is to pay off all your cards, except one, in full. And keep that one card with <10% utilization. I've been following that advice by keeping one of my cards at 5% and I've had some success with that strategy.

This question is regarding my girlfriend's credit. She started off with a BofA student credit card (Visa), with a $1000 limit, which she has stopped using for quite some time now. She then got an Amex BCE with a $1000 credit limit, which over the course of 2 years, has increased to $2500, then $6000 and currently at $10,600. This is the card she uses for most transactions. The third card she has is a Banana Republic store credit card (Visa) with around $2500 credit limit. She uses this card for shopping at Banana Republic, Gap and making some occasional random purchases. Additionally, she also has an auto loan, which will be paid off in 4-5 months.

She has a healthy credit score (760+). I want her to reach 800. She keeps the BR card at 0% utilization and Amex at ~20%. My question is, what's the best way to go about managing credit when Amex is your highest limit card? I'm not sure how Amex reports to the CRAs and how does it impact the credit scores. She's done an excellent job of managing her credit, but I want the score to improve even more since we're planning to buy a house after 6 months or so. And higher the credit score, better will be the mortgage rate. I'd appreciate any inputs. Thanks.

[Vegas247]

Open up a installment loan like a car loan or a personal loan from a bank if she doesn't  have an installment loan. But becareful if you plan to buy a house in the near future. Having different types of loans help. It will hurt her AAoA,but that's the only way to get to 800 Fico's.......But if you are going to get a home loan, that will diversify her credit portfolio.......so maybe no need for a personal or car loan.

[newhis]

One thing she can do is open another Amex, the new card will be reported as open in her MSD year, so if her can wait to open it in January that will be the most backdate she can do. I guess her MSD is 2012, so if she open a card today it will be reported as 11/12 if she get the card in January it will report as 01/12, giving her an AAoA boost.

[Anonymous]

Great answer newhis.

[Simply827]

A 760 score generally qualifies for the best rates. If you are buying them home together, then you need to get your scores up to 760 otherwise the rate will be based on your lower scores. 

[Anonymous]

One thing she can do is open another Amex, the new card will be reported as open in her MSD year, so if her can wait to open it in January that will be the most backdate she can do. I guess her MSD is 2012, so if she open a card today it will be reported as 11/12 if she get the card in January it will report as 01/12, giving her an AAoA boost.

Crap I didn't realize this with the Amex I just got.  I should have waited till Jan

[Fizzled]

I have a FICO08 Transunion of 833 (pulled this month) and FIC08 Experian of 807 (from Sept). File's about 7 years old.

I've only ever had revolving accounts to get there. I did recently open an unsecured loan, but it hasn't reported yet. My guess is the loan won't make too much of a difference for my score.

Also, I have the AmEx BCP, it reports like a normal credit card where your limit and balance are reported monthly. However, AmEx doesn't appear to report "actual payment amount" or "Scheduled payment amount" like CapOne or my local CU.

[OnTheRebound]

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@Vegas247 wrote:

Open up a installment loan like a car loan or a personal loan from a bank if she doesn't  have an installment loan. But becareful if you plan to buy a house in the near future. Having different types of loans help. It will hurt her AAoA,but that's the only way to get to 800 Fico's.......But if you are going to get a home loan, that will diversify her credit portfolio.......so maybe no need for a personal or car loan.

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That ain't necessarily true. I haven't had a mortgage or installment loan in many, many years. Only credit cards on my reports.

Edit: Granted, you may get there quicker if you have a installment loan reporting but I don't believe it's chiseled in stone that it is required.

[slvrhwk]

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@Fizzled wrote:

I have a FICO08 Transunion of 833 (pulled this month) and FIC08 Experian of 807 (from Sept). File's about 7 years old.

I've only ever had revolving accounts to get there. I did recently open an unsecured loan, but it hasn't reported yet. My guess is the loan won't make too much of a difference for my score.

Also, I have the AmEx BCP, it reports like a normal credit card where your limit and balance are reported monthly. However, AmEx doesn't appear to report "actual payment amount" or "Scheduled payment amount" like CapOne or my local CU.

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Excellent! I was wondering if getting a car or any other type of loan is that significant. Great to know you can improve your scores even without it. Would you say that keeping a ~5% balance on AmEx BCE every month is the right way to approach it? Do you have any suggestions?

Congrats on the score! I hope to get there one day.

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@OnTheRebound wrote:

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@Vegas247 wrote:

Open up a installment loan like a car loan or a personal loan from a bank if she doesn't  have an installment loan. But becareful if you plan to buy a house in the near future. Having different types of loans help. It will hurt her AAoA,but that's the only way to get to 800 Fico's.......But if you are going to get a home loan, that will diversify her credit portfolio.......so maybe no need for a personal or car loan.

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That ain't necessarily true. I haven't had a mortgage or installment loan in many, many years. Only credit cards on my reports.

Edit: Granted, you may get there quicker if you have a installment loan reporting but I don't believe it's chiseled in stone that it is required.

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Thanks. That part got me a little scared. But I'm happy that's not necessarily the case, since I only have 2 credit cards at the moment and no type of loans.

[Fizzled]

^

At the time the scores were pulled I only had 3 revolving accounts. The other 2 reported 0 balance, BCP had 1% when the 833, the 807 was about 8%.

I don't think there's anything you can do to 'turbo' your score up. It all takes time. However, I will say I wish I had opened maybe 2 more accounts earlier on so that as time progressed my AAoA was more resilient to new accounts. I recently opened up 3 new accounts (unsecured loan, Discover IT and Barclaycard arrival+) so my AAoA is about to tank. But, I've also increased my diversity and not all the inquiries are concentrated onto one bureau, so it might all cancel out in my benefit.

Otherwise, your utilization doesn't really make a difference unless you're applying for new accounts, at least as it pertains to your score. If you spent 12 months maxed out then paid it all off, your score would be the same as if you kept the low balance the entire time. However, a lender might look at that as bad behavior. So, your score will forgive balances past (as long as nothing goes delinquent). Creditors might not be so inclined.

On my reports, my "High Credit" is 2k dollars out of 11k limit. Your score won't take that metric into account, but it could be a reason why nobody told me no from my recent apps.

You can see my thread here about my history below.

http://ficoforums.myfico.com/t5/Credit-Card-Approvals/3-in-a-Row-Approvals-first-instant/m-p/3630693