Hi, I'm an international student. In a frenzy to build up my credit, I had applied to numerous places, resulting in around 5-6 hard pulls on my credit file. I had requested help on this forum a few months back. Moving on, I have now had a CapitalOne card (limit $500) for 5 months. I have paid each bill on time -- my only intention in using a card is to build history, not leverage credit. Recently, I am interning at Cisco, who has a relationship with BofA. I applied for their cashback rewards card, thinking that with my 5 month on-time history and Cisco creds, it will be an easy approval. Surprisingly, they rejected me (and offered a secured card). I have contacted them again, and am waiting to hear back. If this wasn't enough, I also applied for a Chase Freedom cashback rewards card, thinking that if either of them goes through, I'm a happy camper. They have told that they will get back to me in 10 days, but I am almost sure of getting a reject because of so many hard pulls. I am definitely not desperate for credit, but I don't know how to convey this to them. Meanwhile, my CreditKarma score has been dropping. My average utilisation is being shown as 45%, and my score which was at a 719, is currently at 690. I am expecting it to go further drop, since the above two hard pulls have not registered yet. I am scared that this will screw up my file for a pretty long time. Is there anything I can do to fix this? I know I can't get rid of the hard pulls. CapitalOne had promised to increase my limit to $750 after 5 months of on-time payments, but that will take up to three more months. Should I request them to do it sooner? Should I pay off my balances sooner, so that by the time the statement is generated, my utilisation is very low? What else can I do to improve my miserable score? Sorry for the long ramble, but I was unsure how to squeeze it in a few words Thanks!
Your credit utilization is really hurting your score a lot more than the hard pulls. The hard pulls should only drop your scores 5 points or so for a few months before it bounces right back. Pay your balances off completely before your statement close date, and that should really help improve things. Try to get a credit limit increase as soon as possible too. With a $500 credit limit, you should really only be spending about $50 per month because you want your CU ratio at 10% or less.
Thank you, Joshua. Then I have been reading really wrong advice. I read at places that you should keep your utilisation in the 30-50% range. I have no problem with paying the balance in full before statement -- but doesn't 0% utilisation also hurt? Should I keep it around 10% like you said? I have resolved not to apply for any more cards, even if I get rejected for this Chase cashback card. How long would it take for my score to improve?
You've definitely been reading wrong advice. Anyone that would tell you to use 30-50% of your available credit has absolutely no clue what they're talking about. 0% utilization won't hurt you though. Pay your balance down and you should see an immediate improvement in your credit scores within the next 30-60 days. Your CU ratio accounts for about 30% of your FICO scores, so next to payment history, it's the most important part of your credit score.
Thank you, Joshua -- I will plan to keep my utilisation at or near 5-10% from now on. My payment history is perfect, I usually pay on the very same day my statement is generated. I was wondering, how does it reflect on my history if I overpay Example, if I just pay $450 at the start of every month? Does it cause a problem? Also, with around 7 hard pulls on my report, is there anything at all I can do to mitigate that (apart from paying on time and keeping the utilisation down)?
Overpaying won't help improve your credit scores. You'll just have a credit on your account until you use it up. I wouldn't worry too much about the hard pulls at this point. Their effect will quickly lessen over time, and your FICO scores will be most improved by keeping your CU ratio low and paying on-time every month.
Ok, sounds good. I will not overpay, and pay the chunk of my bill before the statement is generated. Thank you Joshua, especially for helping me on the long weekend. Have a nice one
