How do I improve my credit score?

Question

Hi everyone,
          
          Sometime over the next 6 to 12 months, I plan to acquire my first investment property. My current FICO scores range from 726-738. Four years ago, my scores were around 790. 
          
          Since I don't have any blemishes on my credit history, I assume the drop in score is due to the limited amount of credit I carry. I rent my place, my vehicle is paid for, and I only carry a single credit card. 
          
          For someone in my position, what's the best and quickest way to improve my credit scores? I've heard that perhaps I should pick up 3 more credit cards or so, and rotate my purchases on each. Would that do it? 
          
          Thanks,
          
          Scott...

Jon Holdman · Answer

Nope, they see both your high balance and limit.  That ratio is a key factor in your score.

Curt Davis · Answer

Paying off debt and not using credit cards will help.

Bryan Hancock · Answer

The FICO score calculation is a big mystery that is closely guarded by each bureau.  I would do a net search and look at the big areas (pie chart) to make sure you are compliant with each of them.  Most lenders don't really care if your score exceeds some threshold like 720 or so.  Anything above that is still considered perfect credit from their standpoint.  It may make you feel better to have a better score, but it provides no additional tangible benefit.

If you can get approved for the first loan as "A paper" then you will have more credit to improve your score going forward.  Getting more credit cards will reduce the average length of your credit history, which may do more harm than good.

I would suggest finding a lender that will treat you as "A paper," getting a mortgage, paying on it, and improving your score that way.  Getting extra cards sounds risky to me.

Amerisave.com allows you to put in your parameters for a loan and get a huge points (including "negative points") versus rates matrix to pick the right loan product.  Check there to see if 720 is the current threshold for the best products from lenders with the best product for your financing scenario.

Steve M. · Answer

go to www.myfico.com (I am in no way related to this website)
          
          raised my credit score over the span of 6-8 months by about 120 points or so!  Did some PFD, GW Letters, etc.... didn't have to pay one of these weird companies to fix my credit for me!  All it took was some paper, a printer, & some stamps :)  
          
          LOTS of info, and many smart people there willing to help out ... Kind of like the BP of Credit :)
          
          I still go by there from time to time!

Lynn McGeein · Answer

Definitely watch out with multiple applications for the same thing if it's not in a 2-week period.  We moved to a new state recently, so figured short-term rental best until we find a great deal.  Credit dropped over 40 points in last year and reason given is too many inquiries and too high balance on the credit card.

We thought we were being smart keeping a pre-approval letter active as the great deals seem to go same day around here and most want a pre-approval with the contract.   Naively thought if you hadn't bought a house yet, renewing the pre-approval wouldn't affect your credit, but apparently the hits every 3 months are affecting us greatly.  So we're actually being punished credit-wise for the common-sense strategy of living in a short-term rental, waiting for a great deal, and being ready to move fast when it comes.

And why have a credit limit if you can only use 30% of it?  Seems to me the bank would want to just lower your limit if you're never going to use it, starting a vicious cycle of lower limit, lower 30% figure.   We pay it to zero once or twice a year, and could pay it off any time but would rather keep cash on hand for downpayment or reserves on property.  We've had it forever and it's a great rate, but balance is high when we fix up a property or pay our kids' tuition with it (rate is as low as student loan I could get), and apparently, that's enough to ding our credit.  Ridiculous.

Geoffrey Murphy · Answer

Any suggestions guys? I hear alot of this stuff you can do on your own but do you think ita worth riaking it or???? Just need a sense of directions guys, im young and i want to be able to say i have a 750+ credit score accross the board! :)

Geoffrey Murphy · Answer

What are you guys reffering when you say "credit counseling agency" or "Credit Repair"? are you guys talking about those companies that you pay to dispute things on your credit reports ect... if so, should you do it on your own? or....

Dick M. · Answer

I was told they can't see your credit card limit, just the highest balance you've had on it. Is that right?

Tracey Williams · Answer

Agreed, To many inquires from lenders do affect the score

B Tate · Answer

My mother just got a loan and had to get a few things removed from her credit report and the difference in a 790 and 801 made a pretty big difference in the rate she was able to lock in. She had good success using the rapid rescore method. Also i am considering refinancing and someone told me that if i get my Mom to add me on her oldest credit card it will make it look like i had that card for the 15 years she has had it and it will help my credit score alot. Anyone have any knowledge about doing that >?

How do I improve my credit score?

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