@Anonymous wrote:Hello community,
I've came to seek some help understanding credit scores and factors better after I've read so many mixed opinions etc. My wife and I are working on getting our credit up after a bit of a hard time and we are trying to understand what we need to do to achieve our goal of a great credit score so we can sooner then later apply for a mortgage and get our own home.
The situation is as follows. I personally had a bad student loan on my credit report years ago (it fell off by now) which meant that I was first able to get a credit card (BoA world traveller) in 2012. As a stupid boy in his 20's I messed it up by late payments etc. finally settled the debt and the card was closed, which meant no hope for my own card. My best friend was kind enough to put me on as an additional user on his Amex Platinum card which I still have. In 2015 my wife built up her credit enough were she was able to get a bunch of cards herself which she added me on as a signer, the cards are as follows:
Chase Saphire Preferred 9k
Discover $1890
Citi Thank You premier 5k
Capital One Venture 7k
Also about 4 months ago, I was finally able to open my very own Capital One Quick Silver with a $500 limit. (Maybe I should go for an increase request about now? I've only used on average about 20% and paid it off 100% every month for those 4 months.)
We had a bit of a hardship job wise and had to max out the cards for about 6-7 months. We finally paid them off 100% Last November. There were unfortunately already two late payments made one for 30 days and one 60 days so My wife's score dropped significantly as well as mine. After we paid off the FULL balances, we had a "nice" boost again in score and are now sitting at Experian 680 Transunion 605 and Equifax 615 for me and for my wife Transunion 569 and Equifax 572.
Question what is the strategy now to quickly and steadily improve our scores. How much a month can we spend per card (some say you can use it all as long as it is paid off the end of the month) and should we always pay it off 100% because some people told me to keep a small balance so the card reports properly. Another thing I've heard is making 2 payments per cycle.
Anyways, looking forward to your suggestions to get us back on track. Your help is greatly appreciated!
Sirius
1. To optimize her credit card utilization factor, your wife should let all but one of the cards report a zero balance when the statement cuts, and the other card report a small balance (under 10%).
2. Since you have only 1 card, it's not clear whether you'll get more points for zero balance on your statement, or a small balance. So experiment for 2 months, and see which does better.
3. I gather there are no open installment loans on either report. You can each pick up some points by opening a share secured loan at a credit union which reports like Alliant Credit Union does. Here's how it's done: Join Alliant Credit Union, take out a $500+ savings account, take out a $500 share secured loan secured by the savings account with a 48 or 60 month term, decline or cancel autopay, transfer $455 from the savings account towards the loan balance bringing the balance down to $45. Pay that off slowly over the balance of the term. Once the $45 balance reports the positive effects will be felt. On the downside, you will be getting a new account, which has a slightly negative effect on your scores.
@Anonymous wrote:what about the spneding habits. how much of our available credit on each card can we use (considering we will pay all but one off 100% each month)
From a scoring standpoint it doesn't matter how much you spend during the month, so long as the statement balance is zero on 3 of the cards, and sub-10% on the 4th.