Increase my score

[Anonymous]

Hi all,

I'm a single mom of two and have finally established decent credit after a divorce. I'm also new to posting ot the forum, but have gotten pretty credit savvy by reading from this community, so thank you all for your sharing your stories! My score has been sitting...taunting me at a 690 and I just want to go over 700. Within the last 3 months, I have opened three new cards; specifically to take advantage of the perks. Southwest Rapid Rewards (Chase)$2,000 Carnvial World Cruise(Barclay) $3,000, and Home Depot(Synchronoy..if I'm not mistaken) $1,000. Southwest has a balance of $949. I'm using this for airline points since my kids and I will be traveling more. I just purchased a trip and have setup to pay the balance over 3 months to show good paymen history. HD higest balance was $119 and paid that within the first billing statement. and charged $825 for a cruise and has been paid off (within the billing statement as well). I definitely wil not be applying for any other cards,

I had an auto loan through Chase for 4 years at roughly $9k, and paid it off two years early, and my other cards have no balance. One card, I'm getting the email to push to use it since I haven't swiped it since May or June. Do you think time is what's needed to increase the score? I do plan on buying a home within the next 24 months, so my thought on getting all three cards was 1., establish payment history with the revolving debit quicker, having access to higher CLs and not getting another card for a very long time. With home ownership, I didn't think the HD card would hurt if something like a hot water tank was needed and can use special financing. Any help is greatly appreciated.

Thanks!

Karen

Carvnial MC: $3,000

Southwest RR: $2,000

Home Depot: $1,000

Walmart: $1,700

TJX Rewards: $1,700

Capital One Platinum: $1,500

Barclay Rewards: $1,150 (recently got to take advantange of 3.9% APR

NYCO: $500

GMC BuyPower: $300

[Anonymous]

It sounds like you do not have any open installment loans.  No car loans, student loans, mortgage, personal loans?

If you do not, you will benefit a lot from adding a $500 share secure loan, paying off most of the capital early on, and then keeping the loan open for the full term of the loan (see if you can get one for at least 4 years, 5 is better).  Alliant is a lender that seems very receptive to this approach.  You will end up paying very little interest and it will help your score substantially,

Your idea of using your cards each month to create payment histories seems to me very sound.  Just understand that you don't need to carry a balance to do that.  The amount could be small, it just needs to cause your monthly statement to report a balance to the credit bureaus, and then you can pay it in full.  As a matter of fact, down the road, prospective lenders will like it better if you created a history of always paying your CCs in full rather than carrying balances.

After you have been using your cards and paying them off for maybe the next six months, you should pay all of the cards down to $0 except one with your total CC utilization in the range of 1-5%.  If you do that, and if by then you have your $500 share secure loan in place, you will likely see a significant score jump.

[NRB525]

Congratulations on getting started, and sticking with a good plan.

How long have you had the Capital One Platinum card? Call to see if you can product change the Platinum into a Quicksilver with no AF. This will increase your rewards earning to 1.5%.

Have you checked on the Capital One website, to ask for a credit limit increase on the Platinum card? This is a SP review, and it may result in a CLI. It may not result in a CLI, it all depends on the way Capital One views your file.

[NRB525]

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@Anonymous wrote:

If you do not, you will benefit a lot from adding a $500 share secure loan, paying off most of the capital early on, and then keeping the loan open for the full term of the loan (see if you can get one for at least 4 years, 5 is better).  Alliant is a lender that seems very receptive to this approach.  You will end up paying very little interest and it will help your score substantially,

.

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I agree completely in opening the $500 share secured loan, I have one myself with a local CU. I wonder how many specific points paying most of it off results in, vs paying it down initally to $450 (90%) and letting it pay down normally? If one pays it down to 30%, then one does not get the long term benefit of the loan aging, and has the same issue with the loan disappearing off the file in a year or slightly more time.

[Anonymous]

Hi there! I got the CO card over a year ago now. My limit went from $1000 to $1500 in July. I'll definitely take a look into the loan. When LaSalle bank was around back in 2008, I was approved for $800 for a dream loan, so I'm somewhat familiar on how it works. I never thought about product changing, great idea!


My student loans are in deferral because I'm in school for my MBA. No mortgage yet, I'm renting, and no auto loan (I paid it off in September and interest was 7.8%. Chase dropped it to 7.5% within the duration of the loan). Thank you all so much!!

[Anonymous]

Hi NRB525.  I have myself never taken out a share secure loan, but based on the reports of others, you just need to choose the right lender and you can do both.  I.e. you can pay almost all of the capital off a few months into the life of the loan, and then you can also keep it open for the loan's full life (e.g. 5 years). 

Alliant appears to be friendly to this approach, according to reports of people here.  You pay off $451 of the capital very early, so that you owe only $49.  Then Alliant allows you to make a nominal payment every 4-5 months (like $1) to keep the loan active.  Again, just basing that off of what I have heard from Revelate and others.

If the share secure loan is the only open installment loan one has, my guess is that you get a substantial benefit from paying most of it off  early on.  The scoring factor implicated belongs to FICO's "Amounts Owed" category, which is the ratio of installment debt owed to the amount of the original loan.  (Something analogus to credit card utilization.)  Amounts Owed is 30% of your score.  Even if only 1/4 of the category considers installment debt that's still about 7% of one's score. 

[Anonymous]

Hi KC2.  Note that the Share Secure loan idea is good for people who have no open installment loans of any kind.  You do.  They are in deferal, but you have them.  Probably a lot of debt (in terms of the original amount) and you owe 100% of it still.    When you pull your credit reports, my guess is that your student loans all appear on the report -- is that right?

The Share Secure loan idea is really a gimmick, a way of gaming the FICO model.  You create an installment account and you then pay off almost all of it.  This creates the illusion of installment debt that you have been gradually paying on for a while, which FICO likes.  But it only has a real impact if the loan causes your total installment debt to look as though it has been almost all paid off.  In your case, all your student loan debt will still be sitting there untouched.  So the Share Secure "trick" may very well have no impact (except to lower your AAoA).

[NRB525]

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@Anonymous wrote:

Hi NRB525.  I have myself never taken out a share secure loan, but based on the reports of others, you just need to choose the right lender and you can do both.  I.e. you can pay almost all of the capital off a few months into the life of the loan, and then you can also keep it open for the loan's full life (e.g. 5 years). 

Alliant appears to be friendly to this approach, according to reports of people here.  You pay off $451 of the capital very early, so that you owe only $49.  Then Alliant allows you to make a nominal payment every 4-5 months (like $1) to keep the loan active.  Again, just basing that off of what I have heard from Revelate and others.

If the share secure loan is the only open installment loan one has, my guess is that you get a substantial benefit from paying most of it off  early on.  The scoring factor implicated belongs to FICO's "Amounts Owed" category, which is the ratio of installment debt owed to the amount of the original loan.  (Something analogus to credit card utilization.)  Amounts Owed is 30% of your score.  Even if only 1/4 of the category considers installment debt that's still about 7% of one's score. 

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Ok, then it depends on where the SSL is obtained. At my CU, the signup was easy for the $500, but the payment is a fixed amount on a schedule, thus the reporting as an installment loan. I opened a LOC with this same CU a year ago, with the intention of seeing an installment loan, was told it would report as such, but only came up as a revolver. Alliant may report as an installment, but without a fixed payment each month, I'd wonder at others also truly reporting as installment, or running the balance to zero faster.

and if it were me, even with Alliant, i'd only pay it down to 50% in month 1. I've started mine at 90% and got 3 points on EQ when it first reported as my only installment line, October 9.

[Anonymous]

The only significant drawback to Alliant is that, if you are going by the "pay most of it off early on" plan, then the little payments you make later to keep it active (e.g. $3 every 5 months) all have to be made manually.  You can't program them up via your checking account's billpay or via some autodraft mechanism at Alliant's end.  I mean you can use autodraft but then Alliant requires that you do the normal thing of making the standard monthly payment and (as you pointed out) you'd end up paying the thing off in 3-4 months.

Again, I have no direct experience doing any of this, I am basing this off of what I have heard people convery here.

The Alliant approach seems especially good for someone who has no open installment debt and who needs to create (immediately) the illusion that he's gradually paid almost all of his installment debt off over time -- in preparation for substantial credit needs he anticipates during the next three years.  A good example would be the thing we seem to hear about endlessly on the Forum: I want to buy a house in six months and need a fast way to raise my score. 

But the thing we have to qualify it with is, if you already have an open installment loan, the SSL trick will probably not help you.  (Because it is not causing your aggregate installment debt to appear to be mostly paid off.) 

[Anonymous]

Hello all,

It definitely doesn't sound like the Alliant route would be for me due to the SLs. I'm paying on them, but just recently started and the payments haven't scratched the surface of what I owe. Thankfully I'm not adding to the debt with my MBA since I work for a university. Thank you all for being so helpful!! I'll definitely be checking back in if there's been a score change!!