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how to improve credit score

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tparvaiz
Contributor

how to improve credit score

Hi,

 

I want to increase my fico from current 680sh

 

here is what my current situation is

 

- I have no mortage or any loans

- my history in US is about 4 years old

- single CC with very limited credit limit

 

I am planning to apply for car lease and mortgage. in order to secure better rates, I want to improve my credit score.

 

Please advise 

1)  can getting a car on lease or finance will impact my ability to secure a good mortgage rate

2) tips on improing FICO score

 

Thanks

 

 

 

Message 1 of 10
9 REPLIES 9
AllZero
Mega Contributor

Re: how to improve credit score

@tparvaiz  When do you plan to apply for a mortgage and car loan?

 

It is recommended not to apply for new accounts or incur Hard Pull inquiries 12 months leading up to a mortgage application.

 

It is also recommended to have 3 open cards and 1 open installment loan to optimize your FICO 8 scores. 5 open cards and 1 open installment loan to optimize AZEO All Zero Except One card reporting a small balance for the older scoring models EX2, TU4, EQ5.

 

You will want to get a baseline on where you stand score wise to see what steps you need to take.

 

Free mortgage scores


EX2 + 3 Bureau scores and reports for $1 at Experian or CreditCheckTotal (part of Experian). Cancel in 7 days or less to avoid the reoccurring charge.

TU4 WyHy quarterly score. Not sure on membership requirement. Maybe hard pull TU?

EQ5 Get a savings account with DCU. Soft pull EQ to be a member. Free monthly score.

 

You can also obtain your 3 bureau mortgage scores at FICO Advanced . Cancel plan after you obtain your scores and reports to avoid re-occurring monthly charge.

Message 2 of 10
tparvaiz
Contributor

Re: how to improve credit score

Thanks for the suggestions. So that I have it right.


1- suggestion is not to go for the car until we secure mortgage.

 

2-  suggestion is to have 3 open cards...question: I am assuming you are referring to credit cards (I already have one with low limit,  opened almost 4 years back). By opening 2 new ones, are they not going to decrease the age of my accounts and impact me negatively? Plus, aren't enquiries going to hit me negatively?

 

3- what's an open instalment Liam?

 

thanks again

 

Message 3 of 10
AllZero
Mega Contributor

Re: how to improve credit score


@tparvaiz wrote:

Thanks for the suggestions. So that I have it right.


1- suggestion is not to go for the car until we secure mortgage.

 

2-  suggestion is to have 3 open cards...question: I am assuming you are referring to credit cards (I already have one with low limit,  opened almost 4 years back). By opening 2 new ones, are they not going to decrease the age of my accounts and impact me negatively? Plus, aren't enquiries going to hit me negatively?

 

3- what's an open instalment Liam?

 

thanks again


@tparvaiz  When do you plan to apply for mortgage or car loan?

 

1. Mortgage should have priority over car loan.

 

2. Yes, 3 open revolving accounts, e.g. credit cards. Yes, opening more accounts will reduce your AoAA Average Age of Accounts, AoYA Age of Youngest Account. Opening new account may negatively impact you, thus lowering your AoAA. Incurring hard pull inquiries may lower your FICO score. However, IIRC there is a 3 card threshold, so to speak, where you aren't negatively impacted by new accounts if you are building your credit profile. If you are building your credit profile, your scores will rebound. The benefit is increased revolving accounts (thicker profile) and usable credit limits.

 

3. Installment loans. e.g student, auto, RV, personal, mortgage, motorcycle, watercraft, etc.

Message 4 of 10
tparvaiz
Contributor

Re: how to improve credit score

Re opening new cards, can I go the same bank that I already have a card with and open a new card.

 

re. Instalment loan. I Don't need anything immediately but I am willing to go for the loan to build my credit. Can u please advise who may give me this loan. May be the same bank that I am working with.

 

thanks again

Message 5 of 10
AllZero
Mega Contributor

Re: how to improve credit score


@tparvaiz wrote:

Re opening new cards, can I go the same bank that I already have a card with and open a new card.

 

re. Instalment loan. I Don't need anything immediately but I am willing to go for the loan to build my credit. Can u please advise who may give me this loan. May be the same bank that I am working with.

 

thanks again


As mentioned in the previous post, one should not open any new accounts if one is going to apply for mortgage. That is why I asked but have not received an answer for, when do you plan to apply for mortgage? Your time frame can be of importance with your credit decisions.

Message 6 of 10
tparvaiz
Contributor

Re: how to improve credit score

sorry, I missed that part

 

I am planning to apply for mortgage between 3 to 6 months

 

 

Thanks

Message 7 of 10
SouthJamaica
Mega Contributor

Re: how to improve credit score


@tparvaiz wrote:

Hi,

 

I want to increase my fico from current 680sh

 

here is what my current situation is

 

- I have no mortage or any loans

- my history in US is about 4 years old

- single CC with very limited credit limit

 

I am planning to apply for car lease and mortgage. in order to secure better rates, I want to improve my credit score.

 

Please advise 

1)  can getting a car on lease or finance will impact my ability to secure a good mortgage rate

2) tips on improing FICO score

 

Thanks

 

 

 


1. Don't apply for anything until after you get the mortgage.

 

2. Always have your credit card report a balance of 9% or less.

 

3. Pull your actual mortgage scores with MyFICO.

 

4. If you can ask your present lender for a credit limit increase WITHOUT A HARD PULL, do so. If it would entail a hard pull, don't. If you told us who the lender is, we might know if their credit limit increase requests are hard pull or soft pull.

 

5. If you have any late payments or other negatives, try to get rid of them.


Total revolving limits 657200 (536700 reporting) FICO 8: EQ 712 TU 710 EX 708

Message 8 of 10
dynamicvb
Valued Contributor

Re: how to improve credit score

OP, what is your limit on this one card and your reported balance? Really the only place you have for improvement is the utilization on the one card. It needs to report less than 8.9 % of the limit. Other than that and time you don't have anything to help you. Assuming there are no baddies on the report.

 

You may want to ask this over on the mortgage forum and get the input of one of the loan officers that hang out there. I'm not sure with such a thin file that you will be approved for a mortgage. If you did then I'm sure it will require a substantial down payment of a good bit more than 20%. You may be able to get into a FHA or similar government-backed, but I'm thinking conventional may be out of your reach to be approved right now. Have you gotten any preapprovals for a mortgage?

 

If this was me, then I would probably push the mortgage out a year or so and then add a self lender loan or another small loan, to satisfy your credit mix and a couple of more cards so you can practice AZEO leading up to the mortgage app. If there are no baddies, then these actions and a year will likely push you well over the 700's

Started Rebuild 4/2018: EX 616| TU 604| EQ 621

Current 5/28/20:


First Goal Score: 750+ Reached 3/2019

Next Goal all over 800
Message 9 of 10
tparvaiz
Contributor

Re: how to improve credit score

Thank you all for your assistance

Message 10 of 10
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