Unique credit background, looking for some advice

Anonymous · ‎10-27-2014

I just recently joined the forums, although I've looked here for the past few years for advice on various things including student loans and recommended student credit cards. The reason I'm posting is because I have a unique credit background and I'm looking for any advice to keep my score moving up. Currently TransUnion reports my score at 709 and Vantage has me at 722. I hear this is pretty good for a 21 year old, and I'm proud to have a score over 700. However, I'd like to keep this upward trend going and hopefully break 750 in the next couple months.

After 750, does it get exponentially more difficult to go up in score? My current utilization is 25% and previously was 39%. I believe this is the reason my score recently jumped up 34 points (TU). Should I continue to pay this down to ~10%? This is the highest my score has ever been, it's usually around ~670.

My age of credit history is pretty bad, only about 11 months. I've had two bank account open for 5 years, however a family member is also on the account and I believe that is why it does not show up on my credit report. Other than that most of my cards and accounts are between 0 and 2 years old. My oldest reported account is 2 years 2 months, should I allow my accounts to age and leave them be? Or should I consider closing my 14 month old discover card account that I just recently paid off due to the APR going up from 0%. After doing some research I feel that it'd make my credit age go down, not up. I have a 1 month old account that has about $350 on it that I'll be paying off with 0 interest in 4 months, would it be wise to pay a 3% balance transfer fee and transfer it to my new 0% APR card in order to remove the 1 month old account?

Another factor I'd like to add is that I'm a full time student and have 6 out of my total 11 accounts being from FEDLOAN (my loan servicer). Is there anything I can do with my loans to help increase my score?

I realize that this has gotten to be a bit long, but I'd like to cover everything and have a healthy score for the future!

CreditDunce · ‎10-27-2014

1) Deposit accounts are not part of your credit report. You might find them listed on your ChexSystems report, but that is not part of your normal credit report

2) Closing new credit card accounts will not help your credit score. It does not matter if you do not activate the card, the TL will show up on your credit report for 7-10 years after the account is closed.

3) You are correct, most of the gains you have made recently is due to lower utilization. If you want to maximize your current score, only let one credit card report 1-9% balance each month. All of the others should report a $0 balance. You can use the other credit cards (and you should use all of them to keep them active), but you will need to pay off the card before the statement cuts. Note, this will not help increase your long term credit score. But it will maximize your current credit score.

4) Are you student loans in deferment? If so, I am not sure if they are currently helping your credit mix (between revolving and installment). Plus if you aren't making payments, the loans can't show positive installment payment history. It might improve your score in 6 months if you were to open a shared secured installment loan. Search the forums for more information on this. If you have or will get an auto loan in the next couple of months, don't worry about this.

5) If you don't have an Amex CC, then consider app'g for one by this December. I am not sure if you will be approved, so do some research on how likely you are to be approved and for what cards first. Your score will take hit by getting another CC. However, the Amex backdating can work wonders for your score when you are older.

6) Any additional trade lines (credit cards, auto loans, student loans, etc) will ding your score. Don't worry about that too much, but only app when there is a tangible benefit. Letting your TL's age is the one fo the best thing you can do for your score.

7) Lastly, always pay your bills on time. One late payment can hurt your scores for years.

Good luck

Anonymous · ‎10-27-2014

Very solid advice! Thanks a lot for your reponse, all of your tips will be taken into my knowledge and utilized. Pertaining to my college loans, I do not believe that they are shared secured installment. The cost of my loans well exceeds the amount of money in my savings account (I come from a low-middle class family) and the amount of my loans well exceeds my savings. The school I go to is a renowned aviation university and due to this it is very expensive. The loans are in fact deferred, and according to my credit report the servicer is making "payments" for me. I believe that this is essentially whatever payments I would have due, they're being covered due to the deferment. I don't plan on getting an auto loan for the next 2 years at least, which might not help my score but it's fine by me considering I'm already at 700+. With that being said I'll use the other advice you gave me to try to raise my score in another route.

All of my payments are made on time 100%. I've only been maybe 2 days late on a payment before, but I called them, made a significant payment, and they forgave the late fee and didn't report it. We all make mistakes and I learned from that one!

The most valuable thing that you mentioned would be the Amex CC backdating. I did some research and the fact that they have your account considered from the date of your first CC is extremely valuable. This also raises some concerns, though. Amex generally has a yearly fee to use their card, which I would like to avoid. Is it possible to avoid this fee? If not, what are the major benefits that possibly outweight the yearly fee? Another problem is that a lot of places don't accept Amex due to them having a higher processing fee, this could be mitigated by using a different credit card, but I'd like to keep it all on one if possible. My final concern is the possiblity have not having a 0% apr? I like to carry over a small balance from month to month, which is why I recently got rid of my discover card and got a chase freedom card for the 15 months of 0% apr.

takeshi74 · ‎10-28-2014

Nothing really unique here. All the usual credit factors apply.

@Anonymous wrote:
After 750, does it get exponentially more difficult to go up in score?

No idea but best terms are generally offered ~760 so anything above that is really just gravy.

@Anonymous wrote:
My current utilization is 25% and previously was 39%. I believe this is the reason my score recently jumped up 34 points (TU). Should I continue to pay this down to ~10%? This is the highest my score has ever been, it's usually around ~670.

Your call to make. 30% is the generally recommended max. Ideal is typically 10% or less. Utilization (Amounts Owed in the link below) is the second biggest factor so, yes, decreasing utilization can have a significant impact.

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

@Anonymous wrote:

My age of credit history is pretty bad, only about 11 months. I've had two bank account open for 5 years, however a family member is also on the account and I believe that is why it does not show up on my credit report.

Bank accounts such as checking, savings, etc are not credit accounts and therefore will not appear on your credit report even if a hard pull was required to open them. They will not factor in your AAoA either.

@Anonymous wrote:
Or should I consider closing my 14 month old discover card account that I just recently paid off due to the APR going up from 0%. After doing some research I feel that it'd make my credit age go down, not up.

Should is for you to determine. Closing does not impact AAoA either way. Opening an account reduces your AAoA. To build AAoA just takes time. The only exception is if you open a sufficiently backdated American Express card. You might want to look into establishing your membership now so you can leverage backdating in the future.

Don't overlook the stickies. This thread is linked in the Helpful Threads sticky in the Credit Cards subforum and addresses the impacts of closing a credit card (and also mentions that AAoA is not immediately affected):

http://ficoforums.myfico.com/t5/Credit-Cards/Closing-Credit-Cards/m-p/347190?jump=true

@Anonymous wrote:
Another factor I'd like to add is that I'm a full time student and have 6 out of my total 11 accounts being from FEDLOAN (my loan servicer). Is there anything I can do with my loans to help increase my score?

Just pay them on time. Avoid derogs as they will kill your Payment History (the biggest slice in the link I provided above).

@Anonymous wrote:
This also raises some concerns, though. Amex generally has a yearly fee to use their card, which I would like to avoid.

Don't rely on generalizations. AmEx offers many more than just one card and they have varying features, benefits etc. Look at their card offerings. There are no AF cards if that's a priority for you. However, I highly recommend considering total cost/benefit versus just avoiding AF's no matter what cards you're looking at.

@Anonymous wrote:
Is it possible to avoid this fee? If not, what are the major benefits that possibly outweight the yearly fee? Another problem is that a lot of places don't accept Amex due to them having a higher processing fee, this could be mitigated by using a different credit card, but I'd like to keep it all on one if possible. My final concern is the possiblity have not having a 0% apr? I like to carry over a small balance from month to month, which is why I recently got rid of my discover card and got a chase freedom card for the 15 months of 0% apr.

The only way to avoid the fee on a card is by not applying for the card. It's really up to you to determine what would make any card worth it for you. Look over the benefits of the cards. Look at the rewards and compare to your major spend categories and volume in each category. Crunch the numbers to see if you'd stand to gain. For Membership Rewards the best point values are typically achieved by transferring to travel partners. Look at the MR transfer partners and see if you could make use of MR points. Again, consider your spend volumes and compare to the redemption rates to see if you'd earn MR rewards in what you'd consider a reasonable timeframe.

As for 0% offers, again, it's up to you to determine your priorities. If you want to reduce utilization you probably want to avoid carrying balances. Such offers are always temporary as well. I personally wouldn't use them as a deciding factor but, again, your call.

CreditDunce · ‎10-28-2014

Yes, you can get 0% interest deals by opening new credit cards. But it means you will have to keep opening new CC's every year or so. It is better to simply pay in full each month. If you PIF it doesn't matter what the interest rate is.

For Amex, you just need to establish your MSD. You could get an Amex charge card. Then close it in 11 months before the AF kicks in (assuming the AF is waived the first year).

RobertEG · ‎10-28-2014

You dont ""remove an account" by transferring its balance to another account. You reduce its balance to $0, and even if closed, it still continues to count in calculation of your average age of accounts.

The low age accounts will only be removed from your AAoA calculation if the creditor chooses to delete the account. You have no control over whether they will delete after closure. If its age is less than your current AAoA, it continues to hurt.