How would you boost my score? Complete analysis if you can :)

[sfoboy85]

Hello FicoFighters,

I have done an extreme amount of research online and studied this whole credit thing for a while. I am at a point where I feel that I am stuck and would like to ask you kindly if you could help me out with some advice I might have not thought about or accidentally overlooked.

What triggered this whole thing is that 2 days ago I got a message on my Equifax alert: Dormant card activity (there was an activity detected on a previously inactive card)and caused a minor drop in my Fico score from 737 to 734. I have read a lot about it because I failed to find an answer from both AMEX and Equifax customer service. Since all my cards are perfectly active and reported as active ones turns out that I figured I get smart and pay off the balance on my AMEX before they report it to the credit bureaus therefore it results in a $0 balance. I guess I was wrong since the next month I did not pay it off before it was reported (and still before it was due) and on my AMEX Platinum I paid after they reported the ~ $620 balance which triggered this alert.  So I guess from now on before I PIF I should pay off most of my balance before it gets reported to the bureaus (leaving $10 on it or something).

Here is my complete profile, please advise (I would need some specifics regarding to my balances: should I pay off most of it before they report or just leave a $0 balance which might cause another dormant card activity which is obviously not good or what?

I understand that my score is only not better because of my "relatively limited credit history - being "relatively" new to this country). Your advise is much appreciated !!!

Accounts:

Mortgage account: N/A

Installment account:

Open Accounts

 Date of last reported update. Condition of account when last updated by creditor or otherwise. Credit Limit

Account Name	Account Number	Date Opened	Balance	Date Reported	Past Due	Status
REDWOOD CREDIT UNION (secured loan)	XXX	08/2011	$10	06/2012		PAYS AS AGREED	$500

Closed Accounts

 Date of last reported update. Condition of account when last updated by creditor or otherwise. Credit Limit

Account Name	Account Number	Date Opened	Balance	Date Reported	Past Due	Status
REDWOOD CREDIT UNION (secured loan)	XXX	06/2009	$0	06/2011		PAYS AS AGREED
REDWOOD CREDIT UNION (secured loan)	XXX	05/2008	$0	07/2009		PAYS AS AGREED
WELLS FARGO DLR SVC (car loan)	XXX	03/2009	$0	03/2011		PAYS AS AGREED

Revolving accounts:

Open Accounts

 Date of last reported update. Condition of account when last updated by creditor or otherwise. Credit Limit

Account Name	Account Number	Date Opened	Balance	Date Reported	Past Due	Status
REDWOOD CREDIT UNION - Visa Platinum	XXX	04/2012	$5	06/2012		PAYS AS AGREED	$5,000

Other accounts:

Open Accounts

 Date of last reported update. Condition of account when last updated by creditor or otherwise. Credit Limit

Account Name	Account Number	Date Opened	Balance	Date Reported	Past Due	Status
AMERICAN EXPRESS	XXX	11/2010	$620	07/2012		PAYS AS AGREED

Inquiries that may impact your credit rating

These inquires are made by companies with whom you have applied for a loan or credit.

Name of Company	Date of Inquiry
DEFENDER SECURITY	01/07/11
REDWOOD CREDIT UNION	04/23/12, 07/21/11

Negative accounts: N/A

Collections: N/A

Public records: N/A

Snapshot:

FICO:

SOOO... what would you do in terms of balances? I know exactly what date each CCC report to the bureaus but I have no clue what (if any) balances I should leave to build credit effectively?!

Thanks!

[jamie123]

You might want to consider getting 1 or 2 more credit cards. Most people on these forums think the minimum number of cards to maximize your scores are 3.

You want to only have 1 card report a small balance every month. All other cards reporting zero. You want to switch which card reports the small balance every few months so all your accounts appear active. You nicked your score by having 100% of your credit cards reporting balances.

I think, but am not sure, the reason you lost a few points is because $620 is just over 12% of the $5000 credit limit shown for your cards and both cards reported balances. The AMEX doesn't show a CL. You went from $5 reporting to $625 reporting.

The amount you want to have reporting on ONE card each month is less than 9% of available credit. So $5000 X .09 = $450 That means you want less than $450 reporting each month.

It looks like with your good credit you could easily be approved for another card or two from one of these PRIME banks:

Citi Bank

Chase

Bank of America

AMEX

Discover

Barclays

Wells Fargo

You might actually consider applying for 2 more cards right now. 1 each from 2 different banks to help diversify your portfolio.

DO NOT apply for anything if you are planning on applying for a mortgage within the next 6 months.

Good luck!

[jamie123]

Also.....

Don't obsess about it! Scores are only important when you plan on applying for NEW credit. The reporting balances are only important the month you are applying for NEW credit. Just make sure you always PAY ON TIME!

You don't have to worry about how your balance reports every month, but now you know how to groom your score to be the best BEFORE a lender pulls your score.

[sfoboy85]

Hi and thank you for your answer.

The $5 reported balance was on my $5,000 limit Visa card.

The $620 reported balance was on my NPSL AMEX Platinum card in case you misunderstood

I know it is only important if I apply for new credit but that's my hobby and I want to bring the most out of my credit score...

According to FICO simulator it would not do any good if I open any new accounts but I do consider opening a new account a year later I really like Chase's Mileage plus explorer Visa card since I travel a great deal on United.

I did what you told me and my score dropped by 3 points (1 month AMEX reporting $0) next month reporting $620 and I got a "Dormant card activity" even though it only reported $0 for 1 month!!! So what am I suppose to do then?!

I definitely will not need mortgage or car loan in the next 2 years so I am not worried about that, just trying to maximize my score I am actually considering adding myself as an AU on someone's AMEX card which I know for sure would help since my biggest problem is the length of credit history.

Thanks!

[jamie123]

---

@sfoboy85 wrote:

Hi and thank you for your answer.

The $5 reported balance was on my $5,000 limit Visa card.

The $620 reported balance was on my NPSL AMEX Platinum card in case you misunderstood

I know it is only important if I apply for new credit but that's my hobby and I want to bring the most out of my credit score...

According to FICO simulator it would not do any good if I open any new accounts but I do consider opening a new account a year later I really like Chase's Mileage plus explorer Visa card since I travel a great deal on United.

I did what you told me and my score dropped by 3 points (1 month AMEX reporting $0) next month reporting $620 and I got a "Dormant card activity" even though it only reported $0 for 1 month!!! So what am I suppose to do then?!

I definitely will not need mortgage or car loan in the next 2 years so I am not worried about that, just trying to maximize my score I am actually considering adding myself as an AU on someone's AMEX card which I know for sure would help since my biggest problem is the length of credit history.

Thanks!

---

Okay...A few clarifications are in order.

The "Dormant card activity" warning HAS ABSOLUTELY NOTHING TO DO WITH YOUR FICO SCORE! Your credit monitoring service was just doing its job. They were warning you that a card that previously reported zero is now reporting a balance. What if you had that card in your sock drawer and received that notice? You would know somebody has stolen your credit card numbers to charge something. It is just a warning. I received a warning the other day after I purchased something from Australia online. My warning said "This credit card has been used in Australia and the charge was approved." They were just giving me a warning as they should. That's part of what I pay them for.

Okay...Follow this closely.

Your reported balance needs to be less than 9% of ALL AVAILABLE CREDIT.

You need to add up ALL of your credit card credit limits. In your case that would be $5000 plus your AMEX NPSL. That is your TOTAL AVAILABLE CREDIT. Now, I am sure there is a formula to use for the NPSL amount but I don't know what it is. I don't ever recall seeing anyone on these boards having a definitive answer for what that represents in dollar amount. To be on the safe side I would use zero for that amount like I did in the previous example. After you do the math you will find out that you should never have more than $450 reporting each month. Now I am sure the AMEX with the NPSL is worth something but I don't know what that number is.

There are 2 things that could have nicked your score to drop it the few points you are talking about. They are:

1. 100% of your cards are reporting balances. There is some leeway with the percent of cards reporting balances but 100% will for sure trigger a negative drag on your score. Perhaps because the 1 card was only reporting $5 your score didn't drop by much. I would think that this is where you lost your points but am not sure.

2. You went from $5 reporting to $625 reporting. That represents a considerable increase in reported balance from month to month. That could be worth a few points. I don't really know the answer for sure.

Okay...Now for your LONG term outlook.

Don't become an AU on anyone's card. Your scores are already MORE than good enough to stand on their own. When you apply for a mortgage and they do a manual review of your credit file it will become DETRIMENTAL to your score. They will then see that part of your score is derived from being an AU and discount your score. They will not be able to trust the score generated by FICO. They won't really know how much the AU contributed to your score.

You are doing REALLY great! Don't make a bad decision just to boost your score for the heck of it.

Your file is thin. You need to add 2 more cards sometime in the near future. Your score will take a slight hit for the first 6 months but will recover and climb even higher. If you were to have 2 new cards with $2000 CL each, your total available credit rises to $9000. Now you could let up to $810 report each month. You might then be in a position of just rotating your cards every month and not having to worry about paying them off early.

Oh yeah....One other thing....

The FICO simulator and ALL other simulators give BAD ADVICE quite often.

[sfoboy85]

Dear Jamie123,

First of all, thank you very much for your last post. It had some really interesting and important facts I did not consider previously (or did not see). You made valid points to what you said and I will pay more attention to this! Big thanks for those!

Now that I see that the Dormant card activity was just an alert it makes things a lot easier. I was confused previously but now I see a lot more clearly!

The only thing that is still shady:

My AMEX account.

My AMEX Platinum with NPSL balance amount should NEVER factor in the % of utilization. EVEN in the official statements that are out there are 2 versions:

1.) FICO does not factor in the utilization ratio since it is NPSL.

or

2.) FICO considers your highest reported balance as high limit (my case was $6,400) so that would give it ~ 9% ratio.

But the weirdest thing is that NONE of these are shown on my report (will call EQ tomorrow about that). As you can see from the screenshot they did count it into my utilization ratio HOWEVER no limit was shown... that's not how it suppose to be so that's quite strange to see something like this on my report!

Either way it factors into your total outstanding debt I know that.

I guess I will just have only 1 card report a balance from now on (a very tiny balance) and in about 9 month (when I have no inquiries in the past 12 months) I will apply for that Mileage plus explorer card by Chase and/or maybe a store card like Walmart... That should give me a healthy mix of cards then...

I would only put myself as an AU because the cardholder has a 20+ years of history with AMEX while - since I have only been to the USA for 5 years - I only have a history for a total of 4 years and 2 months.

I am pretty sure that I am not going to need to apply for a mortgage in the next 1-2 year(s) and I really only build credit score for fun / besides the fact that it is practical to have an excellent score cause:

- You never know when you're gonna need it

- Helps you get discounts/credit cards/rents easier or with no deposits...

[jamie123]

Your average age of accounts is fine.

With your scores you could probably get almost any credit card you want. You need to start establishing some history with PRIME banks.

If I were you this is what I would do:

1. Wait until your scores report properly next month.

2. Go on an app spree. Chase, CitiBank and Discover/Walmart. (In that order.)

I'm pretty sure you would be approved for all of them. Then sit back and garden for a year.

I 100% agree with you....Its practical to have good scores because...

But even better yet, its better to have credit in hand when you need it, because they surely won't lend it to you when you REALLY do need it!

Just sayin.....

You are doing great!

Good luck! You know what you're doing!

[sfoboy85]

Dear Jamie123,

Your help was invaluable! Thank you so much for taking the time to help me out on this!

I am still very cautious guy (that's just my personality) and I will wait until I have no inquiries/new accounts in the last 6 months at least /or more specifically when my CU Visa Platinum hits 6 months of Pays as agreed status/ then apply for an explorer by Chase and a Discover/Walmart... That should give me a healthy blend of cards and would not apply for anything for a few years afterwards ))

... And yes, you are absolutely right: They surely do not want to lend you when you NEED IT ! ) Good thing is that I really do not need it... I am just a FICO junkie

Good luck on your FICO fitness, I am sure with all the great advice you gave me, you will be able to exceed your expectations!!!

Best Regards!