@Anonymous wrote:
Hi guys,
39/m here who never really thought about credit in the past. I was always able to get car loans and mortgages so I didn’t think it was a big deal. Within the past year, my father in law ran into a bit of trouble and we had to carry him financially for months. Mortgage, car payment, etc. I didn’t realize that my wife had put a lot of our personal bills on the back burner in the process, and mostly everything is in my name as I’m the only source of income. I went to get a mortgage for a piece of land last month and was told my score was too low and I had recent delinquencies and I was denied, and devastated. I’d only had 1 credit card my entire life and for the most part never used it as I pay cash for everything. When I looked at my credit report, it was hurting me not having more revolving credit. I opened another Capital One card with Cash Back and now have taken over the bills. About the end of October I was about a 515, and today I’m around a 630. My goal is to be around 750. I’ve been making purchases on the credit cards and paying them off the same day to carry no balance and pay no interest. I don’t know if that’s hurting or helping me instead of just paying it on the due date? I also don’t know how often scores update since I’m still seeing the same balances I did a month ago on 2 reports even though I have zero balance. Any other tips anyone can give to me would be great. My naivety has cost me a dream that I know I could have realized had it not been for this hiccup. Thanks in advance.
Todd
Welcome to the forums! It was a nice thing y'all did, helping your FIL, btw.
For maximum FICO scores, it's best to have three credit cards. (You actually get extra 'free' points for having the three credit card accounts.) For utilization, you only want ONE card to report (it reports when the statement cuts) to the CRAs at 8% or under. This is called the AZEO method - all report zero except one. If you use your one card a lot and it reports high utilization to the CRAs, this hurts your score, even if you pay the balance in full. Other creditors can't see your payment after the fact. Pick a card (NOT a Chase bank backed card though!) to report and pay the others before the statement cuts.
If you don't have a loan reporting, find the link to the Alliant SSL Loan technique, in the post by ABCD2199 on rebuilding credit, here in the forum. It's a secured loan you set up for maximum FICO points.
I'd also start on a goodwill campaign to try and get the lates removed. There's a good thread called the "saturation technique" here in the forum. I'm fairly sure it's also linked in ABCD2199s post, too. It takes persistence, and lots of stamps but can yield great results.
@Anonymous wrote:
When you say that I only want 1 card to report, what exactly does that mean?
Say you have you 3 cards. One with $100 limit, the second is $250 limit and the third is $500. You spend $50/$100, $200/250 and $30/$500. BEFORE THE STATEMENT CUTS on each card (before the billing cycle ends), you pay in full the $50 and $200 bills, so only the $30/$500 reports a balance to the CRAs. THAT is your ONE card reporting. (Note: this will NOT work on a Chase bank card because they'll report zero whenever the bill is down to zero.)
If I do get another card for this AZEO method (yes, you need three to really maximize your points) do I not use two of them at all (you don't have to but do keep the two you don't use alive & charge something a minimum of once every six months) and just keep my total monthly usage under the 8% (usuage doesn't matter as long as it's paid before the statement cuts. I regularly max out my $200 secured card but pay the balance BEFORE the statement cuts so it never looks maxed out & I get the most FICO points.) or do I just pay off the other 2 cards before they run a statement so it doesn’t effect me? (You can do whichever is easiest for you. Though if you eventually want a credit line increase, the issuer usually likes to see some usage on the card) Sorry about the questions, it’s all just so confusing. Thanks in adavance for the info. (N/p, if you still don't understand, let me know)
Cool! And remember that utilization is the EASIEST thing to fix in your FICO score. You mess up & something reports high? You can fix it next month. Do whatever work for you, everyone has their own system. Keep us posted on your progress! I suggest Discover for a third card, check their pre-qualification page.