How much room for increase over 2 years?

[Anonymous]

First, I want to say I have learned a lot here the last two months. I thank you all for the education.

My goal remains obtaining a loan with a 760+ mid-score in about 2 years time. I would like to know what gains I can realistically expect over that time. I am done applying for credit. I just want to know what I can expect with expert credit gardening

3/25/08  TU 742  EQ 710  EX 739

4/26/08  TU 725  EQ 733  EX 743

10k BOA/FIA CC (6%) 4/2004

5k Citi CC (4%) 4/2008

500 Macy’s store card  (14%) 4/2004

14.5k Auto Loan (10.1 remaining)  5/2007

Analyzing my scores and financial situation:

Negatives:

Acount Age (4 years oldest)

Account Age (average 1 year)

Account Balances (all 4 with balances, auto loan with 70% util)

New Credit (3 accounts opened in last year)

Positives:

No baddies/perfect payment history

Low overall revolving util (9%) – for info purposes, a past report had 23% and this was still positive so it tells you something about my current bucket

Recent Use of Credit Cards

Unlisted Positive:

Mix – I currently have bank revolving, a store card, and an auto loan (install)

My questions:

At what point does low average age of your oldest TL come off being listed as a negative for someone with a short credit history?

….Would my history become a more neutral factor at 6 years of age? If I am in the 2-5 year bucket now….I expect to take a hit around year 5 when I am rebucketed but by year 6 would I be in much better shape?

At that point I expect my average age to be 3 years (which I anticipate to be a negative but not a large negative)

Near Maxed out Areas:

Mix

Payment History

Overall Util

Areas I can gain in:

1)      Having balances on revolving cards at 50% or less. With 3 revolving accounts I will simply use only 1 before applying for a mortgage in a few years

2)      Paying down my installment loan. According to my loan amortization table calculations my balance will be down to 930 ( approx 6%) in 2 years, when I am looking for a mortgage

3)      No New Credit obtained (youngest account will be 2 years)/ No Inquiries (small improvement because I have 1,2,1 inquiries currently)

Sorry for the long post and thanks to any experienced posters who can give and educated guess as to what I can realistically expect.

[smallfry]

I think you have a good shot at plus 760's across the board. Key is no new accounts and % of utilization. You are doing really well. Before you know it you should be in the over 830 club.

[RobertEG]

Debtisgood, I wish I had your "problems!!!!"   LOL!

You are on the absolute right track for FICO improvement, and in two years, I think you have a great shot at 760. 

The only "neg" I see in your history is both low oldest account, and avg age.  But length of credit is only 15% of your FICO, and you can no nothing about that other than to get older, and thus add another two years of age.  But 15% of 850 is 128 pts that you are there for future harvesting.  Improvements in length of credit history, from published FICO graphs, usually do not much impact until you get over 5-7 years, so any significant harvest here probably wont come in the next two years.  You gotta just get real old, dude!

I offer only the obvious observations.  Of course, NO LATES, AT ALL!!!  Second, NO new accounts, since that will only hurt your avg age in your achilles category of length of credit history.  Third, do NOT close any of your current accounts, for obvious loss of CL and credit mix implications.

As for your installment loan, %util of an installment loan is much less in significance that revolv. %util. Being at 70% on an install loan has far, far less significance than being even at 50% of revolv util.  And if you paid it off early, you would lose scoring in your credit mix category.  Two years from now, you will still have it in credit mix, and its %util will be much lower.  I would NOT pay it off early. That may hurt more than help.

My advice is to keep doing what you are doing, and only worry about your specfic FICO score in about a year and a half.  %util on revolv util has no memory, so if you get your %util on your revolv acccounts down to all under 10% within a few months before your future application for your new loan, that is when you want to start paying monthly attention to FICO score.  Until then, I would not even bother to buy a FICO score!  It will be meaningless....

I wish I had your credit saavy when I was first building my credit history!

Here is my crystal ball, two years from now:

70% loss under length credit:  -80

3% loss under %util:   -10

Score:  850 - 90 = 760

Message Edited by RobertEG on 05-01-2008 11:37 PM

Message Edited by RobertEG on 05-01-2008 11:51 PM

[Anonymous]

Thanks for the reply Robert. Your mention of your own approximate FICO model in the threads I have read through in searches has always intrigued me and I thank you for your estimate. Your recommendations are pretty much my plan