Hello Everyone, A little over a year ago i had had roughly a 715 score before applying to and getting an auto loan approved. I had just one Wells Fargo student credit card for just a year and a half prior to that so it was difficult to land a auto loan due to lack of credit history despite my good score, but somehow managed to get a reasonable interest rate as well considering my limited credit history. I had heard loans of any sort to have a much more serious impact on credit score than credit cards, and was expecting a good credit boost after maintaining on time installment payments over a 12 month period, as well as making early payments on my credit cards every month so i did not pay any interest or have any balance carrying over on my credit card. I had applied for a credit line through my bank after the 12 month mark of maintaining my auto loan and much to my dismay was rejected and even more to my dismay got my hard pull results at 705, a slight dip after expecting a big jump from the auto loan! This is the point where I decided I need to get educated and get cracking on building my credit to make up for this wasted year. The only thing that i was able to pin my credit score drop was on was using a higher than ideal credit-debt ratio on my credit card (usually 50%-80% and rarely under 30%). Ive read that debt-credit ratio makes up 30% of your credit score, but would that be enough to effect my credit like it did? or do you suspect there may be other causes of my outcome? Another issue i have had is over the past two years my credit limit on my credit card has not increased much (This happens for me when i get the credit limit bump letter from wells fargo in the mail after every 6 months, and im pretty sure i had requested a credit increase once and it been denied) It has only gone from $500 to $1600 in 2 years and i would like to know if credit limit requests cause hard checks and how i should go about requesting raising the limit on this credit card and any other credit cards i get in the future as fast as possible... I have a friend that had horrible credit and now is already in the low 600s within 6 months from starting with two secured credit cards and now up to 6 or 7 regular credit cards (subprime, high AP and high interest though). It seems like this is a great strategy for someone coming out of a delinquent or bad credit situation, but would this be advisable for someone like me who is trying to build up from 700 and have a squeaky clean credit history? The perks look to be making payments on/managing a larger revolving credit amount and a lowered debt-credit ratio both of which should help my credit building goals. But my concern here is having too many hard credit inquiries for credit cards within a short amount of time and that either hurting my credit score or getting my applications rejected which no one wants. I just applied for an AMEX Gold yesterday and got approved, but im itching to start filling out the credit card applications that flood my mailbox coming from citibank and capital one and start going to town on building my credit after my last year of credit building effort being a complete flop. Is there a general rule of thumb for time lapse between applications? And finally, what kinds of cards should i be shooting for at my stage of credit building? Should I be shooting for tougher and more serious cards (I have my eye on a chase sapphire next) or just use my friend's approach and take anything that comes in the mail from capital one or credit one to stat building as much credit as possible and just cancel them after a year when they have served their purpose? (i do not care about how high interest rates are because i never carry balances and dont care about any annual fees because im willing to spend money to build my credit) Your help, suggestions, opinions, and comments are all much appreciated.
Absolutely. If you have the ability, pay it down to under 10% (or even lower) and pull a fresh score (you can subscribe to monitoring services) the following month. Usually not. Should be a soft pull. Sadly, if the CC company is not making ANY interest off you, that may be part of the reason. You are too responsible. (ridiculous, I know) Also, when applying for a CLI did they request salary information by chance? I wouldn't suggest going the secured route unless you've run out of options. Yes, they help people to rebuild credit in order to get prime, but you're already there. Just watch your inquiries, they stick around for 2 years and if you're looking to make a big purchase in the next year or so, like a house, you don't want a load of them on your report(s). Canceling them after a year won't do you much good. Age of accounts and history count as well towards your score and cutting account after account off won't help the longevity of them. Keep what you have, the longer the history the better you look to new creditors.
Yes. If your credit is as limited as you describe, a hiccup like this will have a pretty big impact on your score. You read correctly that 30 percent of your score is made up up for debt-to-credit ratio - prioritize paying down this debt, and better yet, the next time you apply for a card, consider a 0 interest balance transfer card, move that debt over and pay it down interest-free to expedite the process and save some cash. There's a good chance the amount of debt you're carrying is what's keeping you from automatic credit line increases. Again, prioritize paying down your debt to show lenders that you're not interested in carrying a high balance. Odds are they'll react by extending your credit line. Don't scratch that itch! Every time you apply for a card, you're temporarily docking your score (which you know and have addressed). Several inquiries at once could amount to a significant drop in your score, and odds are you might get denied for one or two of those offers if your score regresses enough. There's no set rule, but I would wait at least 6 months before applying for a new card. Here's what I think you should do. Start using that AmEx card sparingly, paying it off in full each month. You just improved your total available credit, which is great. Keep the balance on that card at ZERO to maximize the benefits of that new credit extension. Meanwhile, keep paying that other card down; you should see a marginal boost once you get your total credit-utilization-ratio under 30 percent and the shock of that hard credit pull wears off. Get your debt under 10 percent and it should improve that much more. Your credit score is good enough that you can be choose-y with the kinds of cards you apply for. Honestly, I shred every credit card offer that I receive in the mail because quite frankly, they're not directed at me - they're directed at EVERYONE. When you're ready to apply for a new card, shop around with online comparison tools and narrow down your search to the exact categories you're most interested in (cash back, miles, etc.) I also rarely recommend closing a credit card account because doing so eliminates a chunk of your available credit. Keep your cards open, use them sparingly and keep your debt low. (I'm confused - you mentioned using a high percentage of your available credit, but you also don't carry a balance? Once you clarify I might have another option for you to consider.) And in regards to annual fees, you really don't need to spend money to build credit if you don't want to. If you carry 5 cards with annual fees, that's going to add up over time. There are plenty of solid no annual fee credit card options available; I don't knock annual fees the way others do, but carrying multiple annual fee cards is ultimately going to put a dent in your wallet. Honestly, the best things you can do to get that score up are to keep your old cards open, keep the number of cards you apply for under 2 per year, make on-time payments and don't carry a high balance. That said, it doesn't sound like you urgently need to build credit (you're just out of college, correct?) and a 700+ score is already a good starting point. Don't go overboard with a crazy overnight push to improve your score because it's simply not necessary at this point in your life. Hope this helps!
reychan, It sounds like you are on the right track with improving your credit score. Josh and midcrime have some great advice for you. There is another way to increase your credit score. Adding authorized user accounts to your credit. Just ask a trusted friend or family member to add you as an authorized user to one of there existing credit cards accounts. Make sure the account has perfect payment history and they can maintain a low balance (10% or less of the credit limit). The higher the credit limit and the longer the payment history established the bigger the boost in your credit will be. Thanks! Heather with BoostMyScore.NET
The CARD Act has provided clear and significant benefitsto consumers especially with regard to the limitations on the ability to raise interestrates on existing balances, which eliminated unexpected increasesin interestrates. In addition, fewer account holders are paying over‐the‐limit and late payment fees.
Wow, unbelievable amount of activity on this forum, more response that I was expecting.... I always do pay it down to 0% by paying the full balance at the last day of the month for the purpose of avoiding interest(I just use about 50%-80% during the course of the month). I however have been led to believe that even just using a high amount of your credit limit is bad, just as much so as carrying a balance over that is over 30% your credit limit... I feel like i may not be doing what im trying to achieve properly and possibly have been mistakenly carrying over a balance when I think i am not...here is a question to everyone, what would the ideal day of the month for me to pay off my full balance to achieve BOTH avoiding interest and carrying a $0.00 balance from statement to statement on this particular card. My statement closes on the 6th of the month and my minimum payment of $25 is due on the 1st of the following month. The wells fargo credit department has given me different answers on this every time i call in...(thank god AMEX is so much simpler) Good to know that is a soft pull, but i have heard both that the interest avoiding early payment making isn't a problem at all and that it can be like you are saying...im not sure what to think of this (logically Wells Fargo should not want to give me a bigger credit limit if theyre not making a cent off of me, but by that logic how is AMEX making money off of anyone when they require full payment every month and therefore don't charge interest when paid on time?) And no, wells fargo has never asked for salary information for CLI requests or when i signed up (im thinking because this is a student credit card) This is traditionally what I have learned, and definitely I would believe to be true. I have heard from credit building advice information that using crappy cards to build your credit and canceling them within a year isn't a problem though, or at least as much as canceling credit lines you have been holding for several years... Well I am glad to now know why my score didn't go up after this past year, part of the learning process of trial and error...Im not sure if I explained my payment habits well in my post but I dont carry over any balance my credit limit is only $1600 and i charge up about 50%-80% then pay it off in full at the end of the month so its never a problem to pay off every month, I think my problem is just i need to keep my spending down. Which now brings up the question with my new AMEX Gold Premier Rewards (I applied and got approved for gold but they sent me a gold premier rewards...it seems like the snuck that in just to make extra $50 bucks in annual fees off me, i bet theyll be sending me mail for platinum next month) how do i calculate my debt-to-credit ratio with a $1600 Wells Fargo Student and a NPSL AMEX?? Are you saying keep my balance at zero as far as what balance amount im carrying over month to month? or as in pay off charges as i accumulate them to keep my balance as low as possible at all times throughout the month. And from the sound of it you're saying keeping my balances as low as possible across both of my cards is going to help my score that much more? That is what i was thinking, especially if you don't reccommend me applying sooner than 6 months in between cards then I definitely just want better cards that start me off with higher limits and have better terms if I have the score to qualify. The cards i get in the mail have such bad terms, they're just tempting because of these "pre-screened" and "pre-approved" labeling they put on the paperwork. Thanks for the advice, I think i have a much better grip of what to do and what not to do after hearing your guys' input. I probably should have mentioned what my credit building goals are, I have two businesses and obviously a lot of business functions and startup costs rely on bank funding (your business credit when it is started is based on your personal credit from what i have read) so I would say being able to pull out high dollar loans for businesses and investments down the road are why I am looking to build my credit aggressively and hopefully to a high score. This is something that I have been familiar with but have never considered, I a glad you brought this to my attention because my dad had stellar credit and i should have him add me to one or more of his credit lines so i will have some extra credit building support. One of my friends had his parents put some credit cards in his name from when he was born or very young and I remember him being in his late teens and already having awesome credit before he got his first credit card.
I have also heard of parents adding there kids as an authorized user to one of their credit cards and then freezing their credit until they are 18 to protect their social security numbers from identity theft. That is not actually a bad idea. Thanks! Heather with BoostMyScore.NET
