Building your credit

[Brian Wilson]

Good Morning BP!

I'm at a bit of a cross road, and thought I would seek out some sage advice from the more seasoned individuals here on BP.


Goal: Trying to increase my credit score


Current stats: (score 709 according to Equifax via mint)

2 credit cards (avg 11% or less monthly usage on credit line)

-one account was opened in Jan 2016 the other in Jan 2017

5 total inquiries on my Equifax report

Average age of credit is 11 months

No debt

No additional loan history ( I've heard debt diversification helps boost your credit?)

I regularly check Mint and have been slowly increasing my score since getting my first credit card. However after just one inquiry for a home loan it brought my score down 13 points.


So my question is, since I only have 2 accounts open should I open more? How long do you normally wait between opening a new account?

Any additional advice and insight to helping me build my credit would be phenomenal, my short term goal is to leave the low 700's and go into the 740 range then ultimately beyond.


Thanks in advance!

[David Dachtera]

@Brian Wilson,

I'm sort of the voice of dissent here.

Try not to focus too much on the score alone. Your credit score is nothing more than a numerical representation of your likelihood of going 90 days late in the next two years. That's the "textbook" definition of a credit score. Your credit report content is FAR more meaningful.

There's a lot of misinformation out there on credit scores. Your short credit history is just a fact of your situation - it's only 15% of your score calculation for FICo, 13% of Vantage, but Vantage combines length of history and mix of credit into "Depth of Credit".

The impact of inquiries is not the number alone or type of inquiries but the number of inquiries over a given span of time. There is no point value for any specific inquiry. Also, there are "shopping windows" for certain types of inquiries: 15 days for auto loans and student loans, 30 days for home loans. All inquiries of the same type inside of the "window" count as only a single inquiry. Credit cards, etc., of course, have no "shopping window". Each inquiry counts as one.

If you pay your cards off every month, this actually LOWERS your score! Why? Lenders make money by charging interest. If you're not paying interest or if you're employing tactics to avoid paying interest, you're not attractive as a potential borrower. This is figured into the score calculations. See, when you pay off every month, your have NO PAYMENT HISTORY - you have a PAY-OFF history! Payment history is 35% of the FICo score calculations, 32% of Vantage. Lenders and creditors want to see how you handle carrying balances.

You only have the two "new" accounts now. So, opening more won't seriously impact your score. Get at least three to five revolving accounts (credit cards or unsecured credit lines).

According to FICo, this is an "ideal" mix of (consumer) credit (10% of FICo calculations):

•Home Loan (Mortgage)

•Two Auto Loans

•Three to five credit cards (revolving)

•Two to three installment loans (personal loan, etc.)

Hope this helps ...