What have I done wrong

[Anonymous]

Let's me start with a quick background.  I have a steady job that I have held for 3+ years.  I make over 50K a year.  I have savings of 30K plus additional funds in a 401k and and an IRA.  I have no student loans and am currently working on my MBA without taking out a loan.

18 months ago I applied for a mortgage and was unable to qualify with a FICO score of 550,  I had never had a credit card or any loans.  A medical bill I received after going to the hospital for food poising during college was sent to a college apartment that I no longer lived in and the hospital did not have my correct phone number.  I paid that off and contacted the hosipital and the credit agencies and this was removed.  Then I proceeded to open a credit card to start building my credit.  6 months later I opened another credit card again for the same reason.

I pay off my credit cards 100% twice a month.   6 months ago I applied for a mortgage again, interest rate had already risen and house prices had recovered slightly .  My FICO score was at 625 and was told I would have to pay a higher interest rate on a mortgage.  All of this has resulted in 6 credit inquires now on my FICO score, I also applied for a credit card in College and did not get approved.  I put my tuition payments on the credit cards to get points back and then pay them off right away.  My credit limit is $7,500 and unless there is a tuition payment I never have more than 10% on these cards.  My FICO score is provided on my Discover Card monthly statements and is currently 663.

What am I doing wrong? Also, what can I do to further raise my score without further inquires?

Thanks for you help!

[p-]

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@Anonymous wrote:

Let's me start with a quick background.  I have a steady job that I have held for 3+ years.  I make over 50K a year.  I have savings of 30K plus additional funds in a 401k and and an IRA.  I have no student loans and am currently working on my MBA without taking out a loan.

18 months ago I applied for a mortgage and was unable to qualify with a FICO score of 550,  I had never had a credit card or any loans.  A medical bill I received after going to the hospital for food poising during college was sent to a college apartment that I no longer lived in and the hospital did not have my correct phone number.  I paid that off and contacted the hosipital and the credit agencies and this was removed.  Then I proceeded to open a credit card to start building my credit.  6 months later I opened another credit card again for the same reason.

I pay off my credit cards 100% twice a month.   6 months ago I applied for a mortgage again, interest rate had already risen and house prices had recovered slightly .  My FICO score was at 625 and was told I would have to pay a higher interest rate on a mortgage.  All of this has resulted in 6 credit inquires now on my FICO score, I also applied for a credit card in College and did not get approved.  I put my tuition payments on the credit cards to get points back and then pay them off right away.  My credit limit is $7,500 and unless there is a tuition payment I never have more than 10% on these cards.  My FICO score is provided on my Discover Card monthly statements and is currently 663.

What am I doing wrong? Also, what can I do to further raise my score without further inquires?

Thanks for you help!

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Sounds like the only derogatory account is the old apartment.  Is that correct, or are there other items, such as lates, on your credit reports?

[Anonymous]

There are no late payments on any of my credit reports.  The apartment I had in undergrad and my 2 credit cards are on there and then there are 6 inquires. 

[Anonymous]

Hi and welcome.

Don't let all of your CC report 0 balances or all report a balance.  Either one, FICO will ding you for.

Let all but one report a 0 balance and the other at 9% or below.  After it reports the balance, pay it off before the due date to avoid interest charges.  CCs normally report on or within a few days of the statement being cut.

Inquires in conjunction with mortgage searching are only counted as 1 by FICO if done between 14 and 45 days, depending on the scoring model used.

[titanofold]

If the 6 inquiries are all from the mortgage applicaiton, they'll count as 1 if they were done relatively close together. So, don't worry too much about those.

I think what's holding you back is your mix of credit and/or lack of credit history. The only thing you can do about the history is wait for the future to become history. You could open a personal loan, auto loan, and/or student loan, but you'll have to weigh if the cost in interest is worth it to you to have that kind of a mix.

The mortgage also helps your mix and will help your score when you're approve. You could open the mortgage now, suffer with the higher interest for 5 years and then refinance once your scores are in the excellent range.

One final note: Lender's often use their own scoring formula and there are 49 different FICO algorithms. Scores are a snapshot in time. They are ever changing. If the scores you get from two different places are ever the same it's because of coincidence and not accuracy.

[SunriseEarth]

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@Anonymous wrote:

Let's me start with a quick background.  I have a steady job that I have held for 3+ years.  I make over 50K a year.  I have savings of 30K plus additional funds in a 401k and and an IRA.  I have no student loans and am currently working on my MBA without taking out a loan.

18 months ago I applied for a mortgage and was unable to qualify with a FICO score of 550,  I had never had a credit card or any loans.  A medical bill I received after going to the hospital for food poising during college was sent to a college apartment that I no longer lived in and the hospital did not have my correct phone number.  I paid that off and contacted the hosipital and the credit agencies and this was removed.  Then I proceeded to open a credit card to start building my credit.  6 months later I opened another credit card again for the same reason.

I pay off my credit cards 100% twice a month.   6 months ago I applied for a mortgage again, interest rate had already risen and house prices had recovered slightly .  My FICO score was at 625 and was told I would have to pay a higher interest rate on a mortgage.  All of this has resulted in 6 credit inquires now on my FICO score, I also applied for a credit card in College and did not get approved.  I put my tuition payments on the credit cards to get points back and then pay them off right away.  My credit limit is $7,500 and unless there is a tuition payment I never have more than 10% on these cards.  My FICO score is provided on my Discover Card monthly statements and is currently 663.

What am I doing wrong? Also, what can I do to further raise my score without further inquires?

Thanks for you help!

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If I'm reading correctly, you have two CCs reporting, one opened 18 months ago, one opened 1 year ago.  This puts your AAofA at 1 year, 3 months...or effectively one year.   There's not much you can do to age your credit history, other than wait.  The only way around that would be to have someone add you as an AU on an old TL, preferably one with low UTIL.

Overall UTIL should be between 1-10%.  If you let everything report as 0%, the FICO scoring model doesn't like that.   So let one card report a small balance (but less than 10% of the CL), then PIF to avoid interest.