Will my credit score be ok in about 2 years?

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throwaway312
 
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Will my credit score be ok in about 2 years?

Postby throwaway312 » Wed Feb 24, 2016 4:03 am

Hello,
Current Credit Score on Credit Karma is 672, FICO on AMEX is 721
Current Cards
Chase SLATE ..................................................................4500/5000 limit---> balance transfer
Barclay Arrival ($89 annual fee) ................................ 0/4400 limit
Barclay Cash Rewards ..................................................0/4000 limit
AMEX Premier Rewards Gold ($195 annual fee)
AMEX Everyday ..............................................................0/5600 limit
Citi Premier($95 annual fee)........................................ 0/4300 limit
Discover Chrome ...........................................................0/2250 limit
US Bank Student ............................................................0/500 limit
Possibly a Citi Simplicity, and a Chase Freedom,

I also have 11500 of student loans I will repay in full sometime in the next 2 years. I am 20 years old and the reason the Chase SLATE has a balance is the balance transfer. I am currently traveling abroad so I have not been working. I will return to work and pay off before the promotional period is over.

I am wondering the long term affects of my credit score. I have put out about 25 inquiries in the last 12 months. I am just about done making inquires and those will disappear. I never make a late payment. I am just trying to build credit. If I transfer a PayPal credit Balance 4300$ to one of my cards and pay that off over 12 months to avoid the 19.99% interest rate, will that be damaging to my credit score? Should I close any of these accounts? What should I do to have the highest possible credit score 24 months from now? I will have all balances at 0 in 12 months, so I will go 12 months straight with 0 balances and 0 inquiries.
Please provide thoughts and insight... My oldest account is about 2 years old and my newest is about a month.


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Vattené
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Re: Will my credit score be ok in about 2 years?

Postby Vattené » Wed Feb 24, 2016 10:07 am

If you don't make any new inquiries, don't add any new accounts, get your Slate balance down, and most importantly avoid any derogs or late payments, your credit will be very strong in 2 years. Even if you make a few inquiries and add a couple of accounts (you never know - you may move to a new apartment and have no choice but to take a hard pull), I think you will be in good shape. 25 inquiries is a lot, but will completely fall off your profile after 2 years. The bottom line is if you manage your accounts responsibly and don't go crazy trying to get approved for new credit, your credit score by any model will be good.

When you say 0 balances do you mean you won't be using your cards at all? If you want the highest score possible, you should use your current cards. You don't have to use them all, and you don't have to use credit for everything you buy, but letting activity report on them will help your credit score (it will also keep them from getting closed on you for inactivity). Letting (low) balances report before paying them in full will show usage, and having payments report - regardless of what balances you let report - will add to your positive payment history.
-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

takeshi
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Re: Will my credit score be ok in about 2 years?

Postby takeshi » Wed Feb 24, 2016 10:45 am

throwaway312 wrote:the reason the Chase SLATE has a balance is the balance transfer.

We can understand that. However scoring models and creditors are only going to see the revolving utilization which is maxed at 90% for your Slate. If you look at your reports you'll see that there's no indication of 0% offers, BT's, etc. Get that down as quickly as possible.

throwaway312 wrote:If I transfer a PayPal credit Balance 4300$ to one of my cards and pay that off over 12 months to avoid the 19.99% interest rate, will that be damaging to my credit score?

What would the revolving utilization be on that card? How long would it take you to get to 50%? 30%?

Keep in mind that 30% is the generally suggested maximum. 30%, however, is not ideal. It is a suggested maximum as in "do not exceed". Short term high utilization generally isn't an issue but prolonged high utilization may lead to trouble. It's not just scoring impact that matters but risk assessment and potential for adverse action (credit limit decrease, balance chasing, account closure, etc) that matter as well. Your score really doesn't matter until you're applying and any impact from high revolving utilization will dissipate as you drop your revolving utilization. Based on what you've said it doesn't sound like you're in any shape to apply for new credit in the near future. Your oldest account is only 2 years. You have new accounts. You have a lot of inquiries for your credit profile.

Revolving utilization falls under Amounts Owed:
http://ficoforums.myfico.com/t5/Underst ... icoscoring

throwaway312 wrote:Should I close any of these accounts?

That's your call to make. You'd need to provide us with your specific needs, wants, preferences. priorities etc if you want feedback. What's useful to you? What's not? Consider that and other subjective matters as well as scoring impact. AAoA is not immediately impacted by account closure. However, revolving utilization is immediately impacted. You can do the math to determine impact to revolving utilization to help you decide.

throwaway312 wrote:What should I do to have the highest possible credit score 24 months from now?

Consider the factors and their typical weights in the link above. Payment History must be 100% with no derogs. Get revolving utilization as low as possible. Other factors generally just take time and responsible usage to build.

What are you looking to do in 24 months that you need a higher score for? What are you not able to qualify for with a 721 EX FICO 8? Have you checked your other FICO's based on the other 2 major CRA's?

throwaway312 wrote:I am wondering the long term affects of my credit score. I have put out about 25 inquiries in the last 12 months. I am just about done making inquires and those will disappear. I never make a late payment.

Revolving utilization doesn't have a long term affect unless you run into adverse action. It is determined based on the limits and balances as indicated on your reports. Historical revolving utilization is not considered.

Credit seeking activity does have an impact but it is generally short term. Your recent activity isn't helping you at this point but the effect should taper off over time.

Payment History and derogs definitely have long term effect as derogs can remain for quite some time and have a significant impact as long as they are on your reports. Payment History is also the biggest factor. That's why it must be 100% and your reports need to be free from derogs.

throwaway312 wrote:Current Credit Score on Credit Karma is 672, FICO on AMEX is 721

Always consider the specific scoring model and CRA and consider the relevance of a given model/CRA combo to a given creditor. CK provides 2 Vantagescores, one for TU and one for EQ. Those scores are only relevant to creditors that use a TU or EQ Vantagescore. AmEX provides an EX FICO 8. It is only relevant to creditors that use an EX FICO 8. There are many FICO models used by creditors. FICO 8 is the most common but it is not used by all creditors/products. For most models you'll have a score with each of the 3 major CRA's.

throwaway312 wrote:I am currently traveling abroad so I have not been working. I will return to work and pay off before the promotional period is over.

Definitely budget and stick to it.

Kevin86475391
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Re: Will my credit score be ok in about 2 years?

Postby Kevin86475391 » Wed Feb 24, 2016 11:16 am

There isn't much I can add to the informative posts Vattené & takeshi made above. However, I'll just add my own opinion that you're doing great and if everything goes according to plan you should be in a very strong position in two years. I'll also reiterate the importance of simply continuing to manage your accounts responsibly, never make late payments, and just sit tight and let those inquiries age off and your overall history age up.

Regarding whether you should close any of your accounts...that is indeed a very subjective and personal decision. Personally, I'd probably consider closing or PC-ing (product changing) those annual fee accounts unless your spending habits and lifestyle definitely make them worthwhile. Once you've paid off the balance on the Slate you'll likely have no reason to keep that account around and may want to consider PC-ing it into the Freedom (for rewards), or simply closing it altogether, but of course that's still at least a year away.

Anyway good luck and congrats on your success thus far!



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