@Anonymous wrote:Hey everyone! First post here, although I’ve been lurking for a couple months.
My question relates to achieving an optimal credit score (i.e. as close to 850 as possible). I’ve been fairly lucky in life so far, which has allowed me to make north of 150k a year by age 28 (Fiancé also makes north of 100K). As a result, I currently have 4 credit cards, which have a combined 89K in credit limits.
So, my question is, which would be better for my long-term credit score (3-5 years down the line): A) Keep the 4 cards I have, get some CLI’s here and there, and focus on AAoA or B) Continue to try and get ~25 - 30K credit lines to bolster my total credit portfolio, which would keep my utilization lower, as well as increase my total # of accounts, but would lower my AAoA.
I’m not looking at making any large credit purchases in the next few years (read: house or car), which is why I want to look 3-5 years down the road. Given hard inquiries roll off after 2 years, getting a number of hard inquiries now also doesn’t matter much to me.
I already put <10% utilization on the cards (although every now and then I will go over), and have credit scores in the 740-770 range, depending on the report. Let me know if you need any further information.
Thanks everyone!
Update 7/6/17 12:20 PM. Correction! Very sorry for my mistake. I meant Plan A. Letting your 4 accounts grow and letting everything age.
@Anonymous wrote:Do you have any open installment loans? If not, the Share Secure Loan Technique should be your next step for sure. You only need to read the first couple posts in this thread to find out all you need to know:
Like SouthJ, I'd lean toward adding more tradelines if the goal is long term. But just to clarify a possible misunderstanding, you don't need bigger credit limits to have an ultralow utilization. You can spend a lot on your cards, have a total credit limit of 2k, and still have a 1-3% utilization. You just have to pay down the balance before it reports. But having a bigger CL is more convenient it could be argued.
Two other things to bear in mind. (1) Your current style of having a fairly low utilization but not feeling like it it has to always be really low is perfect. An ulttralow util is only needed in the 40 days before an important application for credit, which won't be happening to you for years. (2) When you do need to squeeze out every additional scoring point (just before an important credit pull), you want to be lower than the 10% you mentioned. The actual line in the sand is 8.99%.
I carelessly made a mistake... I meant he should go with Plan A -- letting his 4 accounts grow and letting everything age.
@Anonymous wrote:
@Anonymous wrote:Do you have any open installment loans? If not, the Share Secure Loan Technique should be your next step for sure. You only need to read the first couple posts in this thread to find out all you need to know:
Like SouthJ, I'd lean toward adding more tradelines if the goal is long term. But just to clarify a possible misunderstanding, you don't need bigger credit limits to have an ultralow utilization. You can spend a lot on your cards, have a total credit limit of 2k, and still have a 1-3% utilization. You just have to pay down the balance before it reports. But having a bigger CL is more convenient it could be argued.
Two other things to bear in mind. (1) Your current style of having a fairly low utilization but not feeling like it it has to always be really low is perfect. An ulttralow util is only needed in the 40 days before an important application for credit, which won't be happening to you for years. (2) When you do need to squeeze out every additional scoring point (just before an important credit pull), you want to be lower than the 10% you mentioned. The actual line in the sand is 8.99%.
I actually have 2 open installment loans for ~85K, as I just completed my MBA earlier this year.
Question on installment loans - if I were to pay off both of these loans, do they drop from my credit mix immediately, or do they stay on for a fixed period of time?
Also, thanks for the tip for credit utilization, was not aware that is how it worked!
1. I misspoke before. I apologize for my carelessness. I meant that I would recommend Plan A... keeping and growing the cards you've got, and letting everything age. With 4 cards you could wind up getting a perfect FICO score.
2. If possible, you should pay the installment loans down to 9% or less but not to zero. When your overall installment loan utilization percentage is 1 to 9% you're in the sweetspot for that factor.
3. With 4 credit cards, optimal is to let 1 report a small balance, and 3 report a zero balance.
@Anonymous wrote:
I disagree with the above post. The OP does not need to add any other cards. He already has 4 which is more than is needed for optimal scoring. Unless he sees value in additional cards such as increased reward benefits, I see no reason to app now. The argument about AAoA is basically irrelevant. 5 years from now if the OP goes to apply for a mortgage, his AAoA may be 8 years, for example. If he apps a few times now, maybe it will be 7 years at that time. Not a significant difference. Conversely, if he doesn't app now but does a spree in 5 years, he's still going to drop his AAoA from say 8 to 7. The end result will barely be any different... And at that time he'll already have secured his mortgage in theory so the few points difference between an AAoA a year or so different when you're in the 6+ AAoA club isn't going to matter.
Agreed. I misspoke before when I said Plan B, I meant to say Plan A.