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More credit for credit score increase?

Member

More credit for credit score increase?

So I never had or used credit cards until just recently. I paid cash for my first house and most of my vehicles over the years...I only had student loans...which the first many years were neglected. It's been 7-8yrs since then and they are up to date. Im wanting to buy a larger home and will need to finance some of it, so am working on my credit. It was at 680, so I applied for some cards literally all at once in July. I basically picked the best credit cards off a list that I thought I could get. I went with Amex gold, Chase Sapphire reserve, Capital 1 venture, Discover it, Amazon prime, Capital 1 savor, Barclay Uber, and then a couple Dept. Store cards (Mayor's and Macy's). I ended up with a little over 90k in credit limits across all the cards. My score since then has slowly moved up to 720, 738, and 758 depending where I look. I'd like to ideally get to 800 or at least to a solid super prime score across all three bureaus. Is there a point where more credit won't help? I haven't received a rejection yet and don't want one. Is there any other quick way to get all 3 scores above at least 760?
21 REPLIES
Member

Re: More credit for credit score increase?

Also forgot to mention I co-signed on a $60k car loan about 4yrs ago for my girlfriend (now wife) . There's about 7k left on it and 11 months to go.
Message 2 of 22
Community Leader
Super Contributor

Re: More credit for credit score increase?

Bigger credit limits do not help your score, in and of themselves. Example:

 

Bob has four cards, each with a limit of 1k a balance of $80.  He asks for a credit limit increase and his CC issuers raise it to 25k each.  His score will not go up by even one point.  The reason is that his utilization was very low before he had the big limits and it is still very low.

 

Low utilization helps your score a lot, but a person can have a low util and still spend a lot on his cards.  We can walk you through how that could be possible pretty easily, if you want to know.

 

A person with five cards can have a higher score than a person with one (other things being equal) but there's no scoring advantage to having more than five cards.

 

Message 3 of 22
Super Contributor

Re: More credit for credit score increase?


@Goinfor800 wrote:
So I never had or used credit cards until just recently. I paid cash for my first house and most of my vehicles over the years...I only had student loans...which the first many years were neglected. It's been 7-8yrs since then and they are up to date. Im wanting to buy a larger home and will need to finance some of it, so am working on my credit. It was at 680, so I applied for some cards literally all at once in July. I basically picked the best credit cards off a list that I thought I could get. I went with Amex gold, Chase Sapphire reserve, Capital 1 venture, Discover it, Amazon prime, Capital 1 savor, Barclay Uber, and then a couple Dept. Store cards (Mayor's and Macy's). I ended up with a little over 90k in credit limits across all the cards. My score since then has slowly moved up to 720, 738, and 758 depending where I look. I'd like to ideally get to 800 or at least to a solid super prime score across all three bureaus. Is there a point where more credit won't help? I haven't received a rejection yet and don't want one. Is there any other quick way to get all 3 scores above at least 760?

Yes you are at that point.

 

At this point your path to higher scores is:

1. having low or zero balances report on your credit cards

2. paying your loans down but not to zero if you can avoid it

3. the passage of time

4. no credit applications or other hard inquiries

 

If you need to maximize your scores, have all but one of the credit cards report a zero balance, while the other card reports a sub-9% balance.


FICO8 EQ 755 TU 777 EX 752 Total revolving limits 643900 (533900 reporting)
Message 4 of 22
Member

Re: More credit for credit score increase?

My balances are paid each month on time, but each credit bureau still show balances for some of them for each month. Should I let them sit at zero for a while for the reports to catch up? I thought your supposed to use them each month
Message 5 of 22
Valued Contributor

Re: More credit for credit score increase?

Welcome to the myFICO forums!

 

Ultimately, what a person needs to improve their FICO scores and build credit are three open credit cards (secured or unsecured) in good standing and one open installment loan in good standing such as a car, home, student, personal, share secured, or credit building loan. This combination is what the myFICO score theorists here have determined is what you need for optimal credit building and FICO score. You can have more CCs and more installment loans, however, this will not increase your FICO scores.

Next, is paying in full all of the credit card balances each month, before the posting date, except one. This is called the All Zero Except One (AZEO) method. The one credit card you allow to post a balance needs to be less than 8.9% of the credit limit of the card. So using one card each month to buy lunch, letting it report and then paying in full will maximize FICO scoring.

The installment loan will have its greatest impact on your FICO score when the amount owed is at its smallest such as a few months before the loan is paid in full. 

Most folks only employ the AZEO method when they are trying to maximize their FICO scores in anticipation of purchasing a home or auto. Or they are obsessed with their FICO scores and want to milk every last point out of there FICO scores every month.











Credit isn’t just a score, it’s a skill.
Message 6 of 22
Member

Re: More credit for credit score increase?

Thanks! That can all be accomplished in a month for me. So pay the car loan to almost nothing, leave a small balance on one card, and pay the rest ahead of the due date...how long does it take for the credit scores to catch up?
Message 7 of 22
Valued Contributor

Re: More credit for credit score increase?


@Goinfor800 wrote:
Thanks! That can all be accomplished in a month for me. So pay the car loan to almost nothing, leave a small balance on one card, and pay the rest ahead of the due date...how long does it take for the credit scores to catch up?

Payment on your cards needs to before the posting date when CCC reports the balances to the CRAs. Not before the due date as that balance has already been reported to the CRAs.

 

Pay the car loan down to below 8.9% of the original loan and pay on it for as long as you can. AZEO maximizes utilization which accounts for 30% of your FICO score and utilization has no memory. This means that you can have 50% utilization one month with a FICO score drop and pay it down to below 8.9% the next month and see your FICO score return as long as nothing else has changed on your credit reports.

 

 











Credit isn’t just a score, it’s a skill.
Message 8 of 22
Community Leader
Super Contributor

Re: More credit for credit score increase?


@Goinfor800 wrote:
... Im wanting to buy a larger home and will need to finance some of it, so am working on my credit.... My score since then has slowly moved up to 720, 738, and 758 depending where I look. I'd like to ideally get to 800 or at least to a solid super prime score across all three bureaus.

I have cut much of the original post so that we can hone in on the fact that what is driving our guy is a home purchase.

 

GoinFor800... are the scores you describe above FICO 8 scores?  Or are they FICO mortgage scores?  It's the latter that should be moving everything for you.    What tools are you using to get your scores currently?

 

My recomendation is that you implement AZEO as soon as possible, wait until all the new CC balances are reporting and then (after that) purchase your mortgage scores.  We can walk you through that.

 

I would not pay the auto loan down yet.  There's many reasons not to right away.  First off only one of the three mortgage scores seems to be helped by loan paydowns.  Another is that paying the loan down to "almost nothing" could cause the loan to pay off prematurely, depending on the lender, which might be a problem.  Finally if the loan does pay off prematurely you can't reverse that, whereas CC balances are easy to fiddle with.

 

PS.  When do you envision buying the house?  (Best guess.)  Three months from now?  Six?  Twelve?

Message 9 of 22
Super Contributor

Re: More credit for credit score increase?


@Goinfor800 wrote:
My balances are paid each month on time, but each credit bureau still show balances for some of them for each month. Should I let them sit at zero for a while for the reports to catch up? I thought your supposed to use them each month

Most cards report the statement balance to the credit bureau. For optimal scoring it's best to let only one card report a balance, while the others report a zero balance.

 

 


FICO8 EQ 755 TU 777 EX 752 Total revolving limits 643900 (533900 reporting)
Message 10 of 22