increasing FICO score

[Anonymous]

Hi,

The only credit debt I now have is home mortgage and Home Equity loan.

Does my credit FICO score increase as I pay these down?

Thanks

[haulingthescoreup]

Unless the home equity loan is relatively small (under $40,000 or so), it is being counted as installment, like your mortgage. Paying down installment debt does help some, but the score impact is minimal.

Did you decide to get out of credit cards for some reason? It's true that they can be time bombs if not handled right, but because of that very reason, having revolving credit with very low usage helps your scores a lot. (Higher risk = higher reward.)

I have 5 CC's with over $50K in credit limit, but I rarely have more than $100-200 on my cards at any one time, and I pay them off before I ever have to pay interest. This has definitely helped my scores. EQ has increased 100+ points in 8 months from how I use my CC's.

[RobertEG]

I think Hauling hit it right on the head, as usual.  Do not forget that FICO also scores you on Credit Mix, which is 10% of total FICO.  With no credit cards, you have no mix.  Also, concurrenty, total % util is 30%, of which a major portion of that is %util of revolving, and not installment, debt.  By noit having credit cards, you are taking a hit both in the credit mix and use of revolving credti categories, which are far more important than installment loan util.  in your FICO score. 

[Anonymous]

I keep on hearing that keeping the UTL below 10% is optimal.  How much of a hit is 10%-20% and 20% to 30%?

[Anonymous]

Hi.I don't know if I'm on the right post,but here's my question: I would like to boost my credit score.I have credit cards that I no longer use-for instance Avenue store credit card,Filene's store credit card and maybe one or two others.I'm afraid to close these down because I don't want to adversley affect my score,but I also don't want to just leave them open with all the fraud going around.I have other cards that I do use on a regular basis and I always pay them off.Can anyone advise if I can safely shut down those cards that I don't use without doing damage to my score.Thank You.

[Anonymous]

In my bucket-

12 to 15 points per 10% of utl

Both overall and on an individual card-

20 points for having more than 1/2 of TL's with a balance-  

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Boscoe wrote:

I keep on hearing that keeping the UTL below 10% is optimal.  How much of a hit is 10%-20% and 20% to 30%?

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[Anonymous]

Timothy:  When you say "20% for having more than 50% of TL's with a balance", I assume you mean open revolving TL's, right?  closed and installment TL's don't count?

[Anonymous]

No -

20 points for having more than 50% of OPEN tl's (including installment) with a balance-

in my bucket at least.

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Boscoe wrote:

Timothy:  When you say "20% for having more than 50% of TL's with a balance", I assume you mean open revolving TL's, right?  closed and installment TL's don't count?

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[RobertEG]

Timothy has hit on a good point that many often ignore.  Total %util, or even %util of each individual TL, is important in the FICO model, but is not the only factor in the FICO algorithm.  They also score on the number of total TLs with balances.  Not just my opinion. FICO pubs have confirmed this. So tweaking FICO to the max requires keeping the percentage of total revolving TLs with balances at a minimum.  Clearly, less than half.  PIF can, at least on a majority of TLs, be better than maintaining a balance based on some obscure and undocumented speculation that keeping 1-9% is better than 0%.
I must dispute the long and often preached mantra on this forum that keeping all accounts at 1-9% is the best strategy.  I have NEVER seen anything from FairIsaac, or any other reputable source, that confirms this speculation. And my experience does not confim this.  Accounts with balances, even if under 10%, are not always viewed favorably by the FICO algorithm.  Sure, showing recent use of credit is iimportant, but I submit that keeping balances on all cards will hurt, and not help.

Sorry to dispute the current wisdom, but my experience shows otherwise.

Message Edited by RobertEG on 01-25-2008 01:35 AM

[Anonymous]

dolly - yes, your scores will gradually increase as you pay down your mortgage and home equity loan. You can help your score rise by adding some different kind of credit. Consider a credit card, or two, or three as well as a store card.