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Tips and Tricks to improve credit?

Established Member

Tips and Tricks to improve credit?

Hello, 

After lurking this entire forum I still have yet to see a "tips and tricks" thread anywhere. 

 

I just want general tips to improve it, I'm not so caught up in going to 800's or high 700's.

 

Just wanna have great credit, so any tips?

Message 1 of 68
67 REPLIES
Valued Contributor

Re: Tips and Tricks to improve credit?

Welcome VCAlan to myFICO!

 

This entire board is all about tips and tricks. 

 

The basic tips:

 

1. Spend less than you earn (budget your money)

2. Pay your bills on time, ALWAYS

3. Have three major credit cards with only 1 card reporting <10% of the credit line as a balance

4. Have an additional loan product (if you can use it). The mix of credit is important to improve your score.

5. Have a goal for your credit. Look into the future 2-5 years and think about what is important. Work your credit to achieve those goals.

 

That is a start at least.

 

Not really tricks:

PenFed is good for multiple products with 1 Equifax pull if your credit is solid enough.

Want a chance at a 5 figure CL credit card? Capital One Venture or Synchrony Bank YMMV

Message 2 of 68
Community Leader
Senior Contributor

Re: Tips and Tricks to improve credit?


Appleman wrote:

Welcome VCAlan to myFICO!

 

This entire board is all about tips and tricks. 

 

The basic tips:

 

1. Spend less than you earn (budget your money)

2. Pay your bills on time, ALWAYS

3. Have three major credit cards with only 1 card reporting <10% of the credit line as a balance

4. Have an additional loan product (if you can use it). The mix of credit is important to improve your score.

5. Have a goal for your credit. Look into the future 2-5 years and think about what is important. Work your credit to achieve those goals.

 

That is a start at least.

 

Not really tricks:

PenFed is good for multiple products with 1 Equifax pull if your credit is solid enough.

Want a chance at a 5 figure CL credit card? Capital One Venture or Synchrony Bank YMMV


  well said


Message 3 of 68
Community Leader
Super Contributor

Re: Tips and Tricks to improve credit?

If you do not have any open installment loans at all (tip #4) let us know.  There is an easy cheap way to get an installment loan on your profile.  For people with no open loans, this can be a significant help.

Message 4 of 68
Established Member

Re: Tips and Tricks to improve credit?

Awesome replies guys!
Also wondering you said spend less than you make right?

Well what if I wanna make a big purchased? For example a new car or a ton of new furniture for a new house?

Do I just use cash for those? Or do a loan?

Credit Utilization vs Loans is still confusing to me.
Message 5 of 68
Moderator

Re: Tips and Tricks to improve credit?


VeryCoolAlan wrote:
Awesome replies guys!
Also wondering you said spend less than you make right?

Well what if I wanna make a big purchased? For example a new car or a ton of new furniture for a new house?

Do I just use cash for those? Or do a loan?

Credit Utilization vs Loans is still confusing to me.

Spending less than you make is the route to financial happiness.  No money = no bueno, eventually the bills come due; that said, when it comes to temporary big purchase expenditures, you finance them as cheaply as possible.

 

Finances > FICO always.  If you get a sweetheart 0% financing deal, or even call it <4% on a loan, it may not make much sense to pay it off immediately.  Conversely if you're stuck against 20% financing, throw your cash at it.  Credit is just another financial tool really... and if you need to make the big purchase, don't worry about the short-term utilization effects.  

 

To give a relevant personal example: I run every little bit of my financial life that I can through my credit report, and objectively I still only have $270 total debt reported outside of my mortgage.  That's going to change as I'm coming up against 2 years educational expenses at UCI, and that's non-trivial cash (~30K), and since I can't realistically pay 30K right now (or even ~5K every quarter) I'm going to have to finance part of it either on a student loan at ~5% or a HELOC at 3.25%. 

 

Hello HELOC!  It really isn't more complicated than that honestly, taking the cheapest money route.

 

Credit card (revolving) utilization is calculated completely seperately from loan (installment) utilization.  Revolving utilization is a bigger (and more complex) factor than installment utilization, but you want to maximize both ideally when we're talking optimizing one's report.

 




        
Message 6 of 68
Established Member

Re: Tips and Tricks to improve credit?

Holy crap. You just made all the sense. Thank you!
For weeks I've wanted to buy a computer but just wasn't sure if I should do financing (PayPal Credit or Apple Barclays Credit card) or just straight up cash.

Message 7 of 68
Community Leader
Super Contributor

Re: Tips and Tricks to improve credit?

There's a slight tweak that I would add personally.  A washing machine or big screen TV at Best Buy, a funiture set at Rooms To Go, a computer from Dell -- it is not uncommon to get an offer of "financing" for these.  You'll get that offer when you are talking to the sales person (or perhaps interacting with a virtual salesperson on a website) at Best Buy or RTG or Dell (etc.).

 

This is basically a loan.  But these kinds of loans (see the kind of thing I talked about above, those are just a few examples) are often tagged in your credit report as a "finance company" account.  These will actually harm your score -- in a way that buying the item through a major credit card would not.  (Your Amex or Chase Visa or Citi Mastercard are not tagged as FC accounts.)  I am not saying the FC account will do huge harm -- but they are considered negatively by FICO.

 

So before you decide to open this particular kind of loan, I suggest that you hop onto this forum, explain what you are trying to do and ask people if it might be considered an FC account.  People here will often know.  You can also use Google and other information gathering tools.

 

You may decide that you still want to use that specific financing offer, even if it is an FC account.  (You decide that the harm to you is less than the pleasure you will get from having a new TV, or whatever.)  But it's important to make informed decisions, rather than learning that it is an FC account after the fact.

 

PS.  Buying a car with an auto loan from a recognized lender, or buying a house with the help of a mortgage lender -- these are NOT exampless of FC accounts. 

Message 8 of 68
Established Member

Re: Tips and Tricks to improve credit?

Okay thank you.
So as I said in my example above

I am considering either buying a new TV from BestBuy or Conns ($1600) (BestBuy Credit or Conns Yes Money)

Or

A new iMac from Apple (PayPal Credit or BarClays)

Should I finance them? Or just buy it with cash? None of my credit cards have a big enough limit for the TV or iMac computer.


You guys rock!
Message 9 of 68
Valued Contributor

Re: Tips and Tricks to improve credit?

I can see a younger version of myself in your post. Want to buy a $1,600 TV and an Apple computer and need to finance them both.

 

This will come down to a want/need discussion for you and once again examining this against your long term goals. Are you going back to school, getting married or buying a house (or all three)? Every decision you make today will have a direct impact in your future self, be kind to your future self.

 

If your credit file is 'thin' (a file that has a short history and few trade lines) it may be difficult to make both purchases with good rates. You may want to consider doing one purchase at a time and ensure that the purchase payments fit your current budget. Remember keeping your credit card balance below 30% of the credit line will help your score from being pushed down. So a $1,600 TV would require a credit line of around $5,400 to finance the item without a big negative credit hit (Utilizing < 30% of available credit on the card)

.

It is always confusing that credit card companies give you credit but get spooked when you utilize said credit. 

 

If you feel comfortable, share some of your current 'ballpark' information (I certainly don't want you to compromise your identity here).

 

If we have some more information about credit score, AAoA (average age of accounts), number of credit accounts it can be helpful in pointing you in the right direction. 

 

Cars are tricky but something that I will likely always finance. This is one area where good credit can help greatly with getting the best loan rate.

 

 

 

Message 10 of 68