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Advice on how to further improve my credit score

Caviart
Member

Advice on how to further improve my credit score

So I am 25, about a year out from graduating with my undergrad. My wife has just finished her first year of dental school. As you can probably imagine, being 25 and not having graduated, I have changed my course of study a couple times. That fact compounded with my wife being in an expensive graduate program (60k/yr) means we have so much debt in the form of student loans it is not even funny. By the time my wife graduates we are likely looking at around 300-350K in total student loan debt. I know that having deferred student loans with growing balances is certainly negatively affecting my credit score. We also do not have auto or mortgage loans, only credit cards, so the diversity of credit lines is likely also affecting our credit. As for the credit cards I have, I have an Apple credit card that began w/ a $3k limit that was increased to a $5k limit without my requesting it, a Discover It card with a $1K limit, a Citi Double Cash Card with a $7K limit, a Costco Citi Visa card with a $7.2k limit, and I am an authorized user on my wife's AMEX Blue Cash Preferred card with a $6K limit. We have never missed a payment, and I am currently carrying ~$2000 balance on my apple card with 0% apr (financing apple product purchases). I also recently applied to a Chase Freedom Flex and upon checking the status of my application I received the 2-week message (from what I've read online, a likely sign that I have been approved). I believe I have had my apple card for about a year and a half, my Costco card for a little over 6 months, and my Discover and Citi Double Cash card for around 3 months. I was added as an authorized user on my wife's Amex less than a month ago. Currently my FICO score sits around a 735, while my TU and EF sit around a 700. My question is, aside from paying down my student loans upon graduation and diversifying the lines of credit we have (obtaining an auto loan/mortgage), what should we be doing to raise our credit scores? I plan on having my apple card paid off by the end of this summer, and I have no doubt that the # of inquires also adversely affects my credit to some degree. Thank you in advance for any advice you can provide!

6 REPLIES 6
AllZero
Mega Contributor

Re: Advice on how to further improve my credit score

@Caviart   Revolving utilization % is key. If you want to increase scores in the event you are seeking credit or score improvement, optimize your credit reports by reporting low revolving utilization.

 

Not knowing your exact details, below are benchmarks for FICO 8.

Remember these aggregate utilization thresholds: 9%, 29%, 49%, 69%, 89%
Remember these individual utilization thresholds: 29%, 49%, 69%, 89%

Look into AZEO Technique. All Zero Except One card reporting a small balance e.g. $10 but not exceed $100. Use a bank card. Do not use a store card.

Get your CC aggregate utility at or below 9% for full FICO points optimization. Under 4.5% for some profiles.

 

I would recommend reading the below from ABCD2199
The Truth about Credit Card Utilization
My 11 Rules to Credit Rebuilding
FICO Score: What to pay down first?

From Birdman7
General Scoring Primer and Version 8 Master Thread, pub.5.17.20

Message 2 of 7
Caviart
Member

Re: Advice on how to further improve my credit score

Thank you so much for your reply,

 

I read "The Truth about Credit Card Utilization" and plan on reading the other threads you suggested. I just wanted to clarify to make sure I am understanding what is being stated; that is that aggregate credit utilization is somewhat relevant, but also the individual utilization of each individual card affects your score? So if I have 5 credit cards all with a $5K limit, and I'm utilizing $2,000/$25,000, it would be better to carry $2000 between the five cards rather than to carry it on just one card, because the unique utilization of that card would then be 40% despite my overall utilization being just 8%?

Message 3 of 7
AllZero
Mega Contributor

Re: Advice on how to further improve my credit score


@Caviart wrote:

Thank you so much for your reply,

 

I read "The Truth about Credit Card Utilization" and plan on reading the other threads you suggested. I just wanted to clarify to make sure I am understanding what is being stated; that is that aggregate credit utilization is somewhat relevant, but also the individual utilization of each individual card affects your score? So if I have 5 credit cards all with a $5K limit, and I'm utilizing $2,000/$25,000, it would be better to carry $2000 between the five cards rather than to carry it on just one card, because the unique utilization of that card would then be 40% despite my overall utilization being just 8%?


It depends on which scoring model is important to you; e.g. FICO 8/9 or mortgage scores, EX2, TU4, EQ5.

 

At or under 29% individual and at or under 9% aggregate utilization is optimal.

 

Aggregate over individual utilization. However, if aggregate is optimal, once you cross 29% individual utilization, you may see a score penalty.

 

You'll read this a lot, finances over FICO. Since you are on a 0% promo, take full advantage of it with planned pay down and not worry about the FICO scores unless you a credit seeking.

Message 4 of 7
Caviart
Member

Re: Advice on how to further improve my credit score

@AllZero Thank you! I greatly appreciate you taking the time to explain. Smiley Happy

Message 5 of 7
AllZero
Mega Contributor

Re: Advice on how to further improve my credit score


@Caviart wrote:

@AllZero Thank you! I greatly appreciate you taking the time to explain. Smiley Happy


It is my pleasure. Read as much as you can. There is a treasure trove of knowledge here, waiting to be discovered by you. Smiley Happy

Message 6 of 7
SouthJamaica
Super Contributor

Re: Advice on how to further improve my credit score


@Caviart wrote:

So I am 25, about a year out from graduating with my undergrad. My wife has just finished her first year of dental school. As you can probably imagine, being 25 and not having graduated, I have changed my course of study a couple times. That fact compounded with my wife being in an expensive graduate program (60k/yr) means we have so much debt in the form of student loans it is not even funny. By the time my wife graduates we are likely looking at around 300-350K in total student loan debt. I know that having deferred student loans with growing balances is certainly negatively affecting my credit score. We also do not have auto or mortgage loans, only credit cards, so the diversity of credit lines is likely also affecting our credit. As for the credit cards I have, I have an Apple credit card that began w/ a $3k limit that was increased to a $5k limit without my requesting it, a Discover It card with a $1K limit, a Citi Double Cash Card with a $7K limit, a Costco Citi Visa card with a $7.2k limit, and I am an authorized user on my wife's AMEX Blue Cash Preferred card with a $6K limit. We have never missed a payment, and I am currently carrying ~$2000 balance on my apple card with 0% apr (financing apple product purchases). I also recently applied to a Chase Freedom Flex and upon checking the status of my application I received the 2-week message (from what I've read online, a likely sign that I have been approved). I believe I have had my apple card for about a year and a half, my Costco card for a little over 6 months, and my Discover and Citi Double Cash card for around 3 months. I was added as an authorized user on my wife's Amex less than a month ago. Currently my FICO score sits around a 735, while my TU and EF sit around a 700. My question is, aside from paying down my student loans upon graduation and diversifying the lines of credit we have (obtaining an auto loan/mortgage), what should we be doing to raise our credit scores? I plan on having my apple card paid off by the end of this summer, and I have no doubt that the # of inquires also adversely affects my credit to some degree. Thank you in advance for any advice you can provide!


The best thing you can do in the short run for your mortgage scores is get as many zero balances as possible, except for letting a small balance report on one revolver before you pay it off, and to not apply for any new credit whatsoever.

 

The best thing you can do in the short run for your FICO 8's and 9's is to get the utilization down as low as possible, and to not apply for any new credit whatsoever.

 

The best thing you can do in the long run for all of your credit scores is to stop applying for new credit.


Total revolving limits 677500 (584500 reporting) FICO 8: EQ 758 TU 777 EX 749

Message 7 of 7
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