How Do I Improve my Credit Score?

[Senatorii]

Hi all, 

I am hoping someone can tell me how to improve my credit score.  Experian says my Vantage score (whatever that is) is 749 on a scale of 501 - 990.  It also says that my Risk Grade is C and that "Factors in your credit file indicate that you may be viewed as a medium-low credit risk by lenders. Lenders may want to review certain areas of your credit history in more depth and may require additional documentation before approving a loan. Offers, such as auto loans, may have higher interest rates and may require a higher initial down payment."  I am disappointed - I thought my score would be higher and I have never heard of a "risk grade" before.

It also shows:

- four mtge accounts (three closed and one active): (1) our original mtge, (2) a refi, (3) a new purchase (therefore a new mtge and (4) a new refi 

- two closed credit card accounts (one where I was an authorized user), one in my own name

- one active credit card account (where I am an authorized user)

- for inquiries shared with others, it just shows the two inquiries for the settlement company for the last two mtges

- for inquiries shared only with me, it shows a bunch of crap (??) dealing with a bunch of companies I guess wanting to offer me credit?

- it shows nothing else (I've never had any other credit)

Is there any way that I can improve my credit score?

Regards,
Senatorii

[Lel]

Hi Senatorii, and welcome to the FICO forums.

The first thing that I'd recommend is that you pull at least one FICO score from here.  The Vantage Score, which is a different credit scoring system, isn't widely used and the score that you get may not correlate well with an actual FICO score.

Your credit file is otherwise fairly thin - currently only one open credit card account on which you are an authorized user.  It will probably be advantageous for you to open a credit card account with you as the account owner, but I'd take a look at your FICO score first before making any moves.

The inquiries shared with others - referred to as "hard inquiries" here - typically have a small negative effect on your score.  Though hard inquiries remain on your credit report for two years, they are factored into scoring for only one year.

If your current mortgage and subsequent refinance took place within the last year, then these may still be scored as new credit accounts, which also exert negative pressure on your FICO score.

The other inquiries (shared only with you) are "soft inquiries" and have absolutely no effect on your credit score.  You're correct, these are often promotional pulls by prospective creditors who hope to gain your business.  I'm guessing that a lot of those soft pulls are from mortgage companies hoping that you'll refinance with them.

If you do decide to purchase one of your FICO scores, you'll also get some information that will help you understand your score - details such as average age of accounts, length of credit history, utilization of available credit, etc.

Much more information about FICO scoring can be had here: Credit Scoring 101

[Senatorii]

Hi Lel,

Thanks for the welcome.

I just pulled my TU and EQ through myFICO. TU = 779, EQ = 755. Quite the difference, or is that normal?

I guess it looks like I need to open a credit card account in my own name? Or, should I open more than one? Either way, is there a "better" credit card to open?

And, if so, for how long will my score take a hit for the new account?

The reports also said something about my "Best Action" - Pay Down 90%-100% of Your Credit Card Balances - Over the Next 24 Months." I am a little perplexed by that, b/c the last balance on our credit card was only $1,495 and the limit on the accounts is $11,700. And, in my reports it says my credit utilization is only 12%. Am I missing something here? Am I trying to compare apples to oranges or something?

Should I also open some sort of loan (even though I don't need one) just to build my score?

Regards,

Senarotii

[MarineVietVet]

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@Senatorii wrote:
Hi Lel,

Thanks for the welcome.

I just pulled my TU and EQ through myFICO. TU = 779, EQ = 755. Quite the difference, or is that normal?

I guess it looks like I need to open a credit card account in my own name? Or, should I open more than one? Either way, is there a "better" credit card to open?

And, if so, for how long will my score take a hit for the new account?

The reports also said something about my "Best Action" - Pay Down 90%-100% of Your Credit Card Balances - Over the Next 24 Months." I am a little perplexed by that, b/c the last balance on our credit card was only $1,495 and the limit on the accounts is $11,700. And, in my reports it says my credit utilization is only 12%. Am I missing something here? Am I trying to compare apples to oranges or something?

Should I also open some sort of loan (even though I don't need one) just to build my score?

Regards,

Senarotii

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I also welcome you here.

You are in wonderful shape in my opinion. Do you know how many people dream about the scores you have?   A FICO High Achiever is someone who has a score of 760+.

I wouldn't change a thing. Keep doing whatever you've been doing and you'll be fine.

Just my 2 cents.

From a BK years ago to:
7/09 TU-742 EQ- 779
8/09 TU-765 EQ- 783
9/09 EX pulled by lender 802

You can do the same thing with hard work.

[bigman023]

LOL...With FICO scores like those, that must be one heck of an AU account you're sharing..... Congrats!

[Jazzzy]

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@Senatorii wrote:
Hi Lel,

Thanks for the welcome.

I just pulled my TU and EQ through myFICO. TU = 779, EQ = 755. Quite the difference, or is that normal? Yes, your FICOs can vary between the 3 agencies. Older, thicker credit files (as long as they contain the same basic information) will have scores that are closer together.

I guess it looks like I need to open a credit card account in my own name? Or, should I open more than one? Either way, is there a "better" credit card to open? Yes, it would be a good idea for you to have a credit card in your own name. The choice of cards is wide. Do some reading in the credit card forum. There are lots of likes and dislikes. It depends upon whether you want a card to get rewards, for example.

And, if so, for how long will my score take a hit for the new account? There may be a minor ding for an inquiry, and you will have a new account for a year. Also, it will lower your average age of accounts (AAoA). The hit is minimal...and in building credit, you have to take a step back in order to go forward.

The reports also said something about my "Best Action" - Pay Down 90%-100% of Your Credit Card Balances - Over the Next 24 Months." I am a little perplexed by that, b/c the last balance on our credit card was only $1,495 and the limit on the accounts is $11,700. And, in my reports it says my credit utilization is only 12%. Am I missing something here? Am I trying to compare apples to oranges or something? You got that advice because your utilization is 12%. The long-time experienced posters here advise that FICO likes to see utilization under 9%. Many don't carry any utilization and pay their cards before the statement even posts. Your FICOs are good, and you likely don't have a lot of reasons to tweak your score by doing that.

Should I also open some sort of loan (even though I don't need one) just to build my score? No...no need to do this.

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[Lel]

I agree that getting a card in your name would be a good move.  Your scores are great, any hit from the new account should not be severe, and with time your score will recover.  The good thing about having your own CC is that your credit score won't be so dependent on (and at the mercy of) the account owner.  A missed payment or a high balance on that account will affect your score.  Of course, as an AU you're free to have yourself removed at any time, and any negative information will disappear off your credit report.

As for opening up other types of credit accounts, don't do it unless you need to.  And be careful of those financing deals at furniture or mattress stores; those are sometimes classified as consumer finance accounts and can negatively affect your score.

The only other comment I'll make is that your situation demonstrates quite clearly how poor of a surrogate the Vantage Score can be for actual FICO scores.  A Vantage Score of 749 puts you smack in the middle of its range.  If you were in the middle of the FICO score range, your score would have been in the low 600s.

[MarineVietVet]

I missed the part about being an authorized user. That shows the danger of reading too many posts late at night.

I have to agree about getting a card on your own. The impact will be minimal and temporary.

[Senatorii]

Thanks to all who have replied.  It looks like I have a little reading to do and then decide which CC to open.

For credit cards, is there any way that I can pick a crdit card that shows the credit limit?  I have heard that there are some credit cards that don't report the limit and that therefore the high balance each month (although I would pay it off immediately) gets reported as the limit and therefore there is 100% credit utilization? Also, how do you know when to pay your balance so that it doesn't show at all?

Regards,
Senatorii

[MarineVietVet]

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@Senatorii wrote:

Thanks to all who have replied.  It looks like I have a little reading to do and then decide which CC to open.

For credit cards, is there any way that I can pick a crdit card that shows the credit limit?  I have heard that there are some credit cards that don't report the limit and that therefore the high balance each month (although I would pay it off immediately) gets reported as the limit and therefore there is 100% credit utilization? Also, how do you know when to pay your balance so that it doesn't show at all?

Regards,
Senatorii

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All mine show the CL; Discover, Cap 1, Citi, BoA, CareCredit, Best Buy.

If you don't want any balance to report all you have to do is pay the balance before the statement posts because that amount is what is reported to the CRA's.