Opinions on Raising My Credit Score Above 750

[pessen]

Hey Everyone,

 

I'm new to CB but I like the advice and the amount of information I have seen on these boards in just a short time of looking at it.

 

I just recently pulled my credit score from Trans-Union and they gave me a score of 749. I know that this is a pretty good score, but my wife and I going to be looking into buying our first house early next year and we want to be able to get the best rates we possibly can. From what I understand the distinction between a good credit score and an excellent credit score is somewhere right around 750 (plus or minus a little depending on where the lending institution) sets their limits.

 

We don't carry any debt (No mortgage , car, or credit card balances - we pay off credit cards religiously every month) and will make at least a 20% down payment when we do buy a home so that should help some.

 

Here are some of the factors that contribute to our score:

- Carry two credit cards: one major card and one department store card (total limits ~$6000)

--We try to keep low usage balances (> 10%)

--Have had the major credit card for about 6-7 years

--Have had the department card for about 3 years

 

-Additionally, my parents put my name on one of their credit cards when I was in highschool so I could do grocery shopping..ect for them. Their card still shows up on my credit report even though they took me off a couple of years ago. They have had that card since the 80's so that adds a nice boost to my average card age.

 

Some of the things I am considering to try to raise my score are:

-Sign up for an american express card which would give better rewards and we could use it when we shop at costco.

This would increase our credit limit but our usage would stay the same. Would take slight hit for opening a new account and this would affect our average card age....but would give us another line of credit.

 

-We will soon need to buy another car. We always buy used. I am considering taking out a small loan to pay for part of the car (even though we could pay cash). This would give us an installment loan instead of simply the revolving credit we have now. Since we could pay cash I could pay it off early if I wanted.

 

So my main question is this: Do you think either of these options would help raise our score? I think our biggest hindrance right now it that we have never had a mortgage/car loan and we don't carry any credit card balances past the due date.....so in essence we are being punished for being responsible with our finances.

 

What would you recommend doing to push our score up a little to make sure we can get into the highest bracket for getting a mortgage loan in ~6 months?

 

Thanks in advance!

Edited August 25, 2010 by pessen

[Guest Froachie]

I think if you had an installment loan, it might help with the "mix of credit" scoring

[brainchasm]

if you get a car loan, or a loan tagged for that purpose, don't go crazy paying it off early.

 

Lenders typically want to see a car loan paid on time and for a long time, like at least two years.

 

Of course, most can't see (or don't care enough to look at) your actual payment history, so get the loan, pay it down to say $50, then just camp on it and pay the tiny bit of interest that it generates. Wait two years. End up with a beautiful installment loan history when you do pay it off, that any lender (especially car ones) will like to see.

[Jeremy09]

A lot of people are firm believers that new accounts within 9-18 months of applying for a mortgage is a big no-no. My parent's real estate agent recently told them that a lot of mortgages were being rejected or given a high rate due to new accounts. If you're going to add any new accounts, do it now so then in a year or so you would be better off for the mortgage.

[VK]

if you get a car loan, or a loan tagged for that purpose, don't go crazy paying it off early.

 

Lenders typically want to see a car loan paid on time and for a long time, like at least two years.

 

Of course, most can't see (or don't care enough to look at) your actual payment history, so get the loan, pay it down to say $50, then just camp on it and pay the tiny bit of interest that it generates. Wait two years. End up with a beautiful installment loan history when you do pay it off, that any lender (especially car ones) will like to see.

 

Yes, but also, consider doing the following - get the loan for say 5K, and then, in the month or two, prepay 3k of principal.....that way, your credit reports will show that you are only have 40% to pay on your installment loan, and that helps the score.

 

In general, it sounds like you are in good shape as far as buying a house in 6 months....I will highly suggest buying EQ score, and see what its like....for mortgage, any middle score over 740 will get you best pricing possible, so, 749 is just the same as 850.....Lastly, adding new inquiries from car shopping, plus adding new accounts, etc, will most likely DECREASE your score for the first 6 months.

 

Good luck,

 

VK

[pessen]

Oh, boy,

 

So my wife called me and told me we had a score of 749 when she go the mail. When I got home and looked at the score I realized that Trans Union has now switched over to the Vantage score which uses the following brackets and "grades":

 

901 - 990 equals A credit

801 - 900 equals B credit

701 - 800 equals C credit

601 - 700 equals D credit

501 - 600 equals F credit

 

So it turns out that my score of 749 is only good for a C grade, and is only better than 30% of the country according to Trans Union. And thats with never racking up Student loans, credit card debt, etc, and only 1 late payment ever which was a simple mistake. Ugh, like I said in my original post, I feel like we are being punished because we have been responsible with our money and have not gotten into debt.

 

So frustrating......

[pessen]

I know that getting a car loan right now might lower my score slightly in the short term......but it might also help it since I would then have an installment loan on my report instead of all revolving credit, and would at least start to build some payment history. Would this benefit be enough to offset the slight ding I would take from getting the loan, or would it have at least recovered to where it was at in 6 months or so?

[Jen23514]

A lot of people are firm believers that new accounts within 9-18 months of applying for a mortgage is a big no-no. My parent's real estate agent recently told them that a lot of mortgages were being rejected or given a high rate due to new accounts. If you're going to add any new accounts, do it now so then in a year or so you would be better off for the mortgage.

 

Normally yes, but in this case, his file is thin.

 

 

I know that getting a car loan right now might lower my score slightly in the short term......but it might also help it since I would then have an installment loan on my report instead of all revolving credit, and would at least start to build some payment history. Would this benefit be enough to offset the slight ding I would take from getting the loan, or would it have at least recovered to where it was at in 6 months or so?

 

I believe so, yes. But, I wouldn't get a car loan just to get one. Maybe a $2k personal loan? or something small and relatively little interest cost.....?

 

Also, are those the only 2 open cards reporting? If so, I'd go ahead and get the AmEx CostCo card (only cause I reallllllly want that one, and you mgiht enjoy the points! ) and maybe one other through CU if you belong to one. Yes, your score might drop initially, but I think with your obvious good money mgmt habits, the effect will be minimal. YMMV.

[Jaymes]

First, you need to order your real scores from www.myfico.com. There is a discount thread pinned at the top of these boards. Go to the last few pages to get the current discount codes, and purchase both your TU and EQ scores. Once you get your reports from myfico, you can review them. They will tell you the best single action you can take to improve your scores.

 

You need to add one major CC... one isn't enough for optimum scoring purposes. the Costco AMEX is a good option.

 

I agree with the previous poster that you should get an auto loan and, once it hits your reports, pay down a chunk of money. If the auto loan gets in the way of your mortgage approval, you can pay it off a month before formally applying for the mortgage. A local CU would be a good place to get a loan.

 

Until you get your mortgage, never charge more than about 9% of your total revolving limits, and never let a balance report on more than 50% of your cards (in this case, one).

[pessen]

First, you need to order your real scores from www.myfico.com. There is a discount thread pinned at the top of these boards. Go to the last few pages to get the current discount codes, and purchase both your TU and EQ scores. Once you get your reports from myfico, you can review them. They will tell you the best single action you can take to improve your scores.

 

You need to add one major CC... one isn't enough for optimum scoring purposes. the Costco AMEX is a good option.

 

I agree with the previous poster that you should get an auto loan and, once it hits your reports, pay down a chunk of money. If the auto loan gets in the way of your mortgage approval, you can pay it off a month before formally applying for the mortgage. A local CU would be a good place to get a loan.

 

Until you get your mortgage, never charge more than about 9% of your total revolving limits, and never let a balance report on more than 50% of your cards (in this case, one).

 

Thanks everyone! I'll take a look at myfico.com to try to get a better overall gauge of where my scores are at. I do belong to a CU (that is where my current credit card is from) and will definitely look into getting a loan from there if I decide to go that route.

[pessen]

So, I went ahead and pulled my scores from myfico.com and got the following:

 

Trans Union : 768

Equifax : 737

 

I am not sure where the free vantage score of 749 that Trans Union gave my came from. Seeing my fico scores in the mid 700's was relieving to see.

 

I had one late payment about 9 months ago from a Kohl's card where my wife missed the email statement from them and we got reported for being 30 days late. I am not hopeful of getting Kohls to remove it. The only thing they indicated on my reports as a negative was the missed payment, everything else received good marks.

 

myfico.com also has a credit score simulator that I used to see what kind of effect taking out a small personal/car loan, or applying for an additional credit card would have. In both cases they showed my scores going down by up to (but maybe less) than ~30 points. Since we are going to be looking into buying a house in the next 6 months or so, I think I will just hold off on applying for any more credit, as I don't know that my scores would recover the lost points by the time we applied for a mortgage. As the late payment we had ages it should count against us less and so my scores should increase some in the next 6 months.....just not sure how much. I am hoping that hitting one year of on time payments since that one late payment will give a small jump to my scores.....but I'm not sure if it works that way or not. Anyway, my scores are close enough to where I need them to be to get the best mortgage rates, that I don't think I want to risk messing with them and having them drop.

[Repairerer]

Probably wise. Congrats on your scores!

 

I don't know if the lates give bumps as they hit milestones of age, so much as it's just gradual over time. In 6 more months of everything on time you should gain a few.

[Ulan]

So, I went ahead and pulled my scores from myfico.com and got the following:

 

Trans Union : 768

Equifax : 737

 

I am not sure where the free vantage score of 749 that Trans Union gave my came from. Seeing my fico scores in the mid 700's was relieving to see.

A vantage score penalizes quite a bit for not having a mortgage. For this reason, it's irrelevant for getting a mortgage .

[KDS]

Screw the vantage score- it means nothing so long as a creditor doesn't pull it. I have 755 fico and 730ish vantage, so I am in the C category for vantage and the very good category for Fico.

 

See if you can boost your Fico score by paying your cards down to ~1% utilization. Remember that even if you pay it off every month, the amount on your statement is the amount used to calculate utilization ratios. I boosted mine by living off my debit card for a month and paying my cc balance to $2 a week before it reported.

 

Since you average age of accounts (AAOA) is >3 years, see if very low utilization is enough to boost your EQ Fico score above 750. Once you have AAOA >3 years and EQ Fico above 750, join penfed and apply for a credit card with them over the phone.

 

I say over the phone because if you apply over the phone they do not ask for a requested CL, they just give you the max available. I went from my only card being an $800 secured card to a 14.5K CL with Penfed Promise by spending about 6 weeks boosting my EQ Fico and making sure not to apply for anything else first. I was able to go from 731 to 755 in a month doing this. PenFed likes low utilization, >3 year AAOA, no recent inquiries, >750 EQ Fico and no new accounts. You may want to dispute your 1 baddie to have a clean slate before applying.

 

Apparently once you are in the PenFed club, you are in the club with offers for pre-approval on installment loans and other credit products (Mortgages, etc). It's very valuable because you know where you stand before you apply.

 

Good luck!