Credit Raising

[Anonymous]

Hey everyone!

So at this point in the game, I am currently at 720-725 range for my scores. I am wanting to get that as high as possible but for a realistic goal, I want to aim for 780 for a mortage.

I had a few questions in regards to this though, obviously the WHAT DO I DO NOW?!


I've been reading through these forums and a lot of the information is mostly in regards to how to rebuild your credit, not what to do if you have a clean (almost null) credit history with no derogatory remarks and want to increase it.

What I have:

~ CC with my CU for $500. Thinking of getting a CLI or a rewards card.
~HAD a Luxury credit account with Harry Ritchies (WAS $1,400)
~8 Inquiries. One dropped off today (was at 9). All but 3 drop of no later than 7/8/13
~Longest line of credit: 1 yr 5 months.


What should I do that could help increase my credit score, make me look more appealing to lenders, and keep me within a good self-control area so that I don't become a risk to myself let alone the lenders? I am looking at getting a newer car soon as well as getting a house within the next year or two. I'd be looking at anywhere from a $5,000-$14,000 range for the car with a $2,000-$4,000 DP. The house would be around $80,000-$125,000 with a $10,000-$20,000 DP.

[llecs]

While it's best to aim for the highest possible score come mortgage-time, a 780 certainly isn't necessary. It is good to have cushion there though. If you are using a program like USDA, FHA, VA, or the like you can get approved at 100 less. Even if you went conventional you don't need higher scores like that, though higher the better. 

Realistically, I don't see a 780 with a length of credit history at 1.5 yrs. You probably would need to add more time to that.

Check the source of your scores. You mentioned that an inquiry is dropping. They drop at 2 yrs and if you are pulling a score from the same source that is providing a report showing a 2-yr inquiry, then that score is not a FICO score. FICO reports only show up to 12-month inquiries because FICO ignores them after a year.

Getting a CLI wouldn't help your FICO provided the balances are being paid off. You might benefit from one more CC though. If applying for a car or mortgage within a year, then I personally wouldn't. If you can wait more than a year, then I'd say go for it.

Get the house before the car. Like with any credit item, a car loan can ding your FICO and cut into your DTI. If you have the means to pay off the car before the mortgage, then go for it, but don't apply for anything a year prior to the mortgage.

[Anonymous]

Thanks for your input, llecs. I wasn't necessarily refering to having a 780 within my current time frame, I was merely stating that that was a goal that I am trying to achieve next. 

As for credit card vs. car vs. mortage, I have to get a new car (not necessarily brand new but new to me) because my current one has over 310,000 miles on it, 1 of the 3 pistons has low compression and the engine could go at any time. It has also been a major cash sink. I will definitely be getting a new car, but I was contemplating if I should try to get a CLI on my current $500 or if I should try to get a rewards card instead, or neither, at the same time (or within 60 days). 

I am also looking for ways to improve my score, if anyone has advice. I am not talking about short term or long term specifically, I am looking at the big picture.

[RobertEG]

If the CC is your only revolving line of credit, I would get another CC, as FICO likes to see multiple revolving.

Now is the time, with a relatively low AAoA, to take the hit on age of accounts, and let it start maturing.

If you need the car, then that is not an option.  If you currently have no installment, the hit on AAoA might be somewhat offset by improvement in credit mix.

If the mortage app is more than a year into the future, then you really are kinda in a building mode, as you have a year to get the multiple revolving and improved credit mix that will bear fruits as they mature.  After a year, the inquiries associated with that new credit will be gone from scoring.

With a current AAoA of under two years, a FICO of 720 is excellent.

As an aside, do you qualify for membership with any credit unions?  If so, you might open an account with them, and look into their auto and credit card options after a few months.

They often are easier to secure new credit at more favorable rates.

[Anonymous]

Robert - That is actually the exact reason I have a $500 unsecured CC. My CU was the only lender willing to work with me for a credit card. So what exactly should I be doing in this building phase? I am looking to buy a home within anytime but would prefer 1-5 years. I understand that that is a short time but it's just a goal and goals are meant to be changed

[credit_wise]

First off, I think you are in a great position, a position that many would envy in today's environment. If I am not mistaken, nearly 33% of the individuals are facing credit issues (according to some news sources). That said, I agree with what some individuals said in response to your post. The process of rebuilding credit does take time. One thing that has worked for me in the past is to lower my "balance outstanding". I think one of the many variables in the credit score equation is how much you owe credit card companies in comparison to your total available credit limit.

You will have to work with many variables to get to a 780 score. Have you spoken to your credit card companies about increasing your credit line? I think that would boost your total available credit as well.

Here's an article that shares some additional tips:

Tips To Improve Credit Score

Hope that helps.

Do let us know how it goes and good luck!

[Anonymous]

I'm sorry I don't know if I was very clear in my message.

I am not rebuilding credit. I am starting from nothing. Thank you for the link, but that all has information that I already know about, for the most part. I was wondering if there were other things that I should be doing as well. I've already always made payments on time. I don't PIF but that's because I prefer the extra bit of FICO points it gives me (and it costs me very little). 

The reason I am asking is because I've seen a lot of people that are in a rush to get a large CLI (which I understand that for Utilz it is better to have a larger cli but that still falls under utilz) does that even help your FICO score, or does that just look appealing to lenders because they will see that you have a $25,000 credit card, $18,000 credit card and a $6,000 card as well and they will see that other people have trusted you with very large sums of money as well?

[credit_wise]

I don't know for sure if that point alone raises the score. From what I understand, a lot of variables go into play and you have to perfect each one of them to get a boost. It is a slow process but you are aiming only for sixty points so I think it should be doable. I think some time back I had read an article about the variables that go into the making of a FICO score. I will look for it and if I can find I will paste it here.

But seriously, just maintain your score in good shape. It is such a blessing when you need it.

[credit_wise]

Reverting to your point about CLI and fewer balances ... since the total amount owed to total CLI is one of the variables, it should ideally impact your score. How much ... well that depends on how much weight the credit score algorithm gives to that ratio. Like I said, there are so many variables (around 30, I guess).