Building Credit/increasing credit score

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lc1125
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Building Credit/increasing credit score

Postby lc1125 » Fri Sep 26, 2014 9:47 am

Hi! This is my first post but I am hoping one of y'all can help me. My current credit score is 714, and I am looking to raise that to at least 800 but I don't really know what my best course of action is to do so. To summarize, these are my current accounts:

Currently open:
Citi AAdvantage MC - $5.4k limit
Kohl's card - $900 limit
1 car loan - $6k left to pay off, loan is for one more year (3 year total loan)
2nd car loan (husband's car) - ~$18k left, loan for 4 more years
Some sort of credit account from our credit union, I think we can use up to $500, we haven't used any of it.

Closed accounts:
Chase Visa, closed by default years ago when I didn't know if you didn't use a card they would close it
US bank auto loan - switched the loan to our credit union for a much lower interest rate

My oldest account is the Citi card, at 7.5 years. AAOA is 3 years, 2 months, due to the 2nd car loan and credit union line of credit.

I am considering (highly) paying off the first car loan in full very soon, as even the full 3 years will pull my AAOA down. Thoughts?

What else can I do to raise my score? I pay my credit card in full monthly, and on the first auto loan I have been paying extra every month as well. If I pay off my first auto loan (much higher monthly payment than the second) I am planning to put all the money I would pay on that one, onto my second auto loan to pay that one off early as well.

I also just yesterday applied for a Discover It card, not sure what the CL will be, but I am hoping for a few thousand at least.

Any thoughts would be much appreciated!
Citi AAdvantage Bronze MC | 2007 | $5,300
Discover It | 09/2014 | $6,500 | 5% categories, shopdiscover purchases
Amex BCP | 10/2014 | $10,300 | groceries and gas
CapitalOne Quicksilver | 10/2014 | $10,000 | every day card
Kohl's | 2012 | $1,000
Victoria's Secret | 10/2014 | $750

Credit Karma | 713 (10/13/2014) | TU (Discover) | 758 (10/5/2014)


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Vattené
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Postby Vattené » Fri Sep 26, 2014 11:51 am

Closed accounts still stay on your report for 10 years. Closing an account won't impact your AAoA.

Is the loan for your husband's car in your name? Definitely pay off on the car loans as much as you can. This will help bring down the proportion of your loan balances to loan amounts. I would request CLIs on your credit cards only if it will not require a HP. This wilp help with your utilization, but requiring a hard pull will have a negative impact on your credit. I would talk with a CSR and make sure they won't to a HP. Finally, I would make sure one credit card is reporting a low balance, aiming for around 10% utilization, and none of the others are. You can still use them, but pay them off before a balance reports.

You are on the right track, but getting to 800 won't be easy. Even if you do everything perfectly, all of the factors need to be just in the right place (for example, my credit profile is only about 3 years old, so I simply don't have enough history to get there at this point). You can do it, but realize it will take time and the "perfect storm" of conditions being met.

Good luck!
-Vattené
FICO-8:
EX - 809 (11/16) | TU - 803 (11/16)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now

lc1125
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Postby lc1125 » Fri Sep 26, 2014 12:08 pm

Vattené wrote:Closed accounts still stay on your report for 10 years. Closing an account won't impact your AAoA.

Is the loan for your husband's car in your name? Definitely pay off on the car loans as much as you can. This will help bring down the proportion of your loan balances to loan amounts. I would request CLIs on your credit cards only if it will not require a HP. This wilp help with your utilization, but requiring a hard pull will have a negative impact on your credit. I would talk with a CSR and make sure they won't to a HP. Finally, I would make sure one credit card is reporting a low balance, aiming for around 10% utilization, and none of the others are. You can still use them, but pay them off before a balance reports.

You are on the right track, but getting to 800 won't be easy. Even if you do everything perfectly, all of the factors need to be just in the right place (for example, my credit profile is only about 3 years old, so I simply don't have enough history to get there at this point). You can do it, but realize it will take time and the "perfect storm" of conditions being met.

Good luck!


Thanks for the response! The first car loan is my name only. The second loan is in both of our names, I believe. My husband has no other credit other than that loan, so I had to cosign. Due to my score we were able to get a low interest rate.

I will admit I have a high utilization on my Citi card - about 40%. I use it for EVERYTHING and then pay it off in full each month. But I pay what's on the statement - do I need to start paying it off before the statement? That card had an auto CLI just a few months ago - I tried requesting one yesterday via their website (soft pull) and was denied. Do I need to wait a certain amount of months between requests?

Should I be only having 10% utilization across all cards? Should I stick with the cards I have for now or open any more? I clearly am clueless - I got to the score I have just by paying everything in full and on time.

I have absolutely no bad marks of any kind on my report, but it has actually dropped 50 points over this last year. I make all payments on time, and in full. I am ahead on my first car loan by overpaying each month. Is there something I am overlooking? I know my lack of history is hurting me but according to CK the number of accounts is also low?
Citi AAdvantage Bronze MC | 2007 | $5,300
Discover It | 09/2014 | $6,500 | 5% categories, shopdiscover purchases
Amex BCP | 10/2014 | $10,300 | groceries and gas
CapitalOne Quicksilver | 10/2014 | $10,000 | every day card
Kohl's | 2012 | $1,000
Victoria's Secret | 10/2014 | $750

Credit Karma | 713 (10/13/2014) | TU (Discover) | 758 (10/5/2014)

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PlyrStar93
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Postby PlyrStar93 » Fri Sep 26, 2014 12:41 pm

lc1125 wrote:I will admit I have a high utilization on my Citi card - about 40%. I use it for EVERYTHING and then pay it off in full each month. But I pay what's on the statement - do I need to start paying it off before the statement?

Surely you can. Paying before statement helps reduce the amount owe shown on statement, so it reduces utilization. After statement still PIF. Just remember to keep 1 revolving account a statement balance so it's not to be penalized for no revolving balance. For the other revolving accounts you can make statement to be zero-if you have several credit cards and all of them have balances you may get penalized for too many accounts with balances.

lc1125 wrote:That card had an auto CLI just a few months ago - I tried requesting one yesterday via their website (soft pull) and was denied. Do I need to wait a certain amount of months between requests?

Citi's policy is that you can request CLI with no hard pull every six months (counting from previous CL increase).

lc1125 wrote:Should I be only having 10% utilization across all cards?

Basically, the lower overall util (provided >0), the better; the fewer accounts having balances, the better.

lc1125 wrote:Should I be only having 10% utilization across all cards? Should I stick with the cards I have for now or open any more?

With the current score, if FICO, it's not bad, though still can improve by reducing utilization. If you figure out you need another good card then you can try. Otherwise, it's fine to stay like this for some months before getting the next.

lc1125 wrote:I know my lack of history is hurting me but according to CK the number of accounts is also low?

CreditKarma's score is FAKO and has differences with FICO model. It's for educational only, and FICO may either be lower or higher than that. Also CK says if you only have 5 accounts it's fail. However, you don't have to focus on that part. Sometimes it's just not practical to listen to CK to open a lot of accounts, and you are not supposed to do that.
Citi Forward Visa $5000 10/2012 | American Express Blue Cash Everyday $8000 2/2014 | Discover it $7000 5/2014
Chase Freedom Visa Signature $7000 6/2014 | Citi ThankYou Premier Visa Signature $5000 1/2015
All EMV.

lc1125
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Postby lc1125 » Fri Sep 26, 2014 12:51 pm

PlyrStar93 wrote:Surely you can. Paying before statement helps reduce the amount owe shown on statement, so it reduces utilization. After statement still PIF. Just remember to keep 1 revolving account a statement balance so it's not to be penalized for no revolving balance. For the other revolving accounts you can make statement to be zero-if you have several credit cards and all of them have balances you may get penalized for too many accounts with balances.


Citi's policy is that you can request CLI with no hard pull every six months (counting from previous CL increase).


Basically, the lower overall util (provided >0), the better; the fewer accounts having balances, the better.


With the current score, if FICO, it's not bad, though still can improve by reducing utilization. If you figure out you need another good card then you can try. Otherwise, it's fine to stay like this for some months before getting the next.


CreditKarma's score is FAKO and has differences with FICO model. It's for educational only, and FICO may either be lower or higher than that. Also CK says if you only have 5 accounts it's fail. However, you don't have to focus on that part. Sometimes it's just not practical to listen to CK to open a lot of accounts, and you are not supposed to do that.


Thank you for all the help! Also, do you know if there's any way Citi would convert my AAdvantage card to a Double Cash card? I am not really using the miles anymore so I am not sure this card is worth it for me, but, I don't want to close the account since it is my oldest open account.
Citi AAdvantage Bronze MC | 2007 | $5,300
Discover It | 09/2014 | $6,500 | 5% categories, shopdiscover purchases
Amex BCP | 10/2014 | $10,300 | groceries and gas
CapitalOne Quicksilver | 10/2014 | $10,000 | every day card
Kohl's | 2012 | $1,000
Victoria's Secret | 10/2014 | $750

Credit Karma | 713 (10/13/2014) | TU (Discover) | 758 (10/5/2014)

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Vattené
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Postby Vattené » Fri Sep 26, 2014 2:27 pm

I see, I was just curious. My wife and I recently purchased a car, and applying for credit in my name only got us the lowest rate they offered (she has some baddies).

Don't want to repeat PlyrStar93 too much, but yes. Both utilization overall and for each individual card are considered. General advise is it's best FICO-wise to let only 1 card report a balance, and for that balance to be a low 1-10%. Use your cards as you need them, but strategize payments so this is what is reported.

Assuming the statement balance is what's reported (I can't say for sure), yes this is what you should do. A few days before the statement cuts look online at your current balance. Let's say it is $2,000. Pay $1,460 immediately and let your statement cut with a balance of $540.

You have multiple cards now, including a new Discover you'll probably want to use. I say if there is something out there that can benefit you, go for it; otherwise, I would keep what you have now and just focus on those. No need getting a card you don't really care about for score purposes when no one can say for sure whether it will help or hurt you.

As far as your 50 point drop, my best guess is it's from your most recent car loan. Your loan balance relative to your loan amount is high, which is unavoidable after recent installment loans. Someone more experienced may need to tell you when you will recover from this, but it may well help you in the long run. Personally, my car loan made me dip a little for just a few months, I suspect because it was my first debt of any type and helped diversify my thin credit profile. As long as you manage everything responsibly and PIF you will come out of it.

And to repeat (again), CK is just useful enough to have. Monitor your credit and observe trends. If it says something objective about your credit report that is incorrect it's a red flag, but take any recommendations with a grain of salt.
-Vattené
FICO-8:
EX - 809 (11/16) | TU - 803 (11/16)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now

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sicasun
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Postby sicasun » Fri Sep 26, 2014 2:35 pm

My parents both have over 800 FICO scores (well last they told me anyway), and my dad told me that it just takes dedication and a long time of consistent care of your accounts. He was a bit vague, but getting to 800 and above is not an easy thing and probably does take a considerable amount of time.

[strike]I would consider opening another credit card if you can.[/strike] Just kidding, didn't see that you applied for the Discover :) While I (and probably everyone else in the forums) wouldn't recommend following CreditKarma for credit advice, I do know that my parents have an insane amount of credit cards. Like 10 or so? They probably use about 5 of those cards regularly, and let the other 5 see some use a few times a year. Obviously, don't open a crazy number of cards right now, but kind of slowly build your way up to a few more cards.

I also have read that having a variety of debt actually helps increase your credit score, provided that you pay on time and are in good standing. My friend's dad actually bought a new car with an auto loan in recent years because his credit score was dropping from not enough activity or something. Of course, if you don't need another car or a house, then no reason to do this.

Wait for your accounts to age, and become an expert at managing multiple revolving accounts (credit cards). Other than that, you just got to keep doing what you're doing. Always pay on time and stay in good standing and keep low utilization rate (not to zero though).

Chase Sapphire Preferred | 09/2014 | $10,300
Chase Sapphire | 05/2010 | $5,000
Chase Freedom | 01/2013 | $5,500
CapitalOne Quicksilver | 01/2013 | $2,500
American Express TrueEarnings | 08/2014 | $5,500
Victoria's Secret Angel Card | 04/2011 | $600

FICO | 09/2014 | Experian 738 | Equifax 706 | TransUnion 701

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Vattené
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Postby Vattené » Fri Sep 26, 2014 2:40 pm

Any idea how long it took them to break 800?
-Vattené
FICO-8:
EX - 809 (11/16) | TU - 803 (11/16)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now

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sicasun
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Postby sicasun » Fri Sep 26, 2014 3:21 pm

Vattené wrote:Any idea how long it took them to break 800?

My parents? I'm not sure when they first broke 800, since they've only been in the USA as long as I've been alive (23 years).

But I'd imagine they had 800 (or at least high 700s) for half the time possibly cause my dad always talked about his 0.99% interest rate on his car loans. They're both ridiculously financially responsible and retired from full time careers by the time I was 13-14 years old (so they were about 45).

I think maybe having oldest account at 10 years with all your records clean is a good guess on making it to 800.

Chase Sapphire Preferred | 09/2014 | $10,300
Chase Sapphire | 05/2010 | $5,000
Chase Freedom | 01/2013 | $5,500
CapitalOne Quicksilver | 01/2013 | $2,500
American Express TrueEarnings | 08/2014 | $5,500
Victoria's Secret Angel Card | 04/2011 | $600

FICO | 09/2014 | Experian 738 | Equifax 706 | TransUnion 701

takeshi
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Postby takeshi » Sat Sep 27, 2014 12:44 am

lc1125 wrote:My current credit score is 714, and I am looking to raise that to at least 800 but I don't really know what my best course of action is to do so.

Why are you fixated on 800?

lc1125 wrote:I am considering (highly) paying off the first car loan in full very soon, as even the full 3 years will pull my AAOA down. Thoughts?

While reducing the balance on the $18K auto loan can help, paying off an installment won't give you the most gain in your scores and you may actually see a drop.

Closing an account doesn't increase your AAoA either.

lc1125 wrote:AAOA is 3 years, 2 months, due to the 2nd car loan and credit union line of credit.

Did you calculate this or are you relying on what CK told you? If the latter, keep in mind that CK provides AAoOA, not AAoA. AAoA is what matters.

lc1125 wrote:I will admit I have a high utilization on my Citi card - about 40%.

Definitely get that down. Payment History has the biggest impact on your score but utilization is the second biggest factor. Do not exceed 30% and for ideal scoring purposes keep it at 10% or less.

lc1125 wrote:That card had an auto CLI just a few months ago - I tried requesting one yesterday via their website (soft pull) and was denied. Do I need to wait a certain amount of months between requests?

You need to look at the reason(s) for denial and address what you can versus just relying on time.

lc1125 wrote:Should I be only having 10% utilization across all cards?

Ideally 10% and only one balance reporting. That said I have balances reporting on nearly all my cards and I've been over 800 until recently (now at 797).

sicasun wrote:I also have read that having a variety of debt actually helps increase your credit score, provided that you pay on time and are in good standing. My friend's dad actually bought a new car with an auto loan in recent years because his credit score was dropping from not enough activity or something. Of course, if you don't need another car or a house, then no reason to do this.

OP has several cards and 2 auto loans.



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