Credit Score Should Be Higher?

[El Cheapo]

Hello all,

I'm getting ready to buy my first house, and need to start shopping loans.  My credit score is 722, which I guess isn't so bad, but not good enough for the lowest rates, and I think it should/could be better.  I'm not sure why it isn't higher since there's nothing negative on my report as far as I can tell, and I have all the positive indicators aside from a mortgage history.  I've never had late payments on anything, I've had a student loan and auto loan in the past which are both payed off, long credit history, etc...  I've downloaded my tri-bureau report and verified this, so I'm not sure what the problem is.

Is my score sound 'normal', and the lack of mortgage history is what's bringing it down?

[maizefolk]

These are the three that seem to trip up lots of MMMers: Average age of your open accounts. Number of open accounts. Debt to credit ratio.

[El Cheapo]

would closing a credit card that was lost/stolen affect account age if the new card is with the same bank? 

My debt credit ratio is fine.  As far as open accounts, I have a personal loan, and 1 credit card.  Is more better?

[chasesfish]

Banker here.

My guess is length of your longest active tradeline.  I recommend getting/keeping a no-fee visa/mastercard, preferably from the same bank you use for online banking so you don't forget about it, then using it a couple times a year to keep it active.  My bank has a crappy almost no-reward Visa but its also no fee.  It shows up on my online banking and I've had it for 12 years.  That's the only tradeline I keep since I've moved four times, churn credit cards, and have no auto/student loan debt.  With that one long tradeline, I can score in the 800s.

This is also an age thing, you need to have credit for 7-10 years to start scoring in the 800s

[maizefolk]

Yes, all else being equal more, older lines of credit produces a higher score than fewer or younger lines of credit. But my understanding is that the number matters less than the age so in the short term opening more lines of credit will tend to bring your score down, not up.

Your credit report should include the age of each account so you can check if your single credit account's age reset when you replaced the card. (My guess is that it's the same account if they just cancelled the old card and sent you a new one with a new number.)

I pay off my credit card balances in full each month, yet my score seems to jump around 10-15 points depending on when in the billing cycle my credit cards reported balances that month (even 10% of your credit limit utilized starts to count against you).

[Davids]

An easy way to increase your credit score is to pay most of the balance before the statement date. Say your statement date is the 21st of each month, pay most of your balance except for a couple dollars on the 18th of the month so that your statement shows you owe $2. The debt/equity ratio is based on what gets reported to the credit agencies on your statement so they will just see the $2 balance. Obviously you still pay the remaining $2 before the due date.

[El Cheapo]

hmmm... I'm 39 and have been using credit since 2002.  I've also been a AU on my parent's credit card since 1990.   I did switch banks in Aug 2012, so my credit line with them is only 6 years old.

How do closed accounts factor into your score?  There are 3 closed accounts on my report that were only open for 2, 4, and 4 years.  The last one was closed in 2014.  They were always in good standing.  Is there a certain number of years after which they are no longer considered in the score?  Two of those accounts were credit cards for official travel while I was in the military.  We were told they wouldn't affect our credit report, but it seems that wasn't true they're on my report.  Perhaps I can have those removed if it would help.

[kitty_boos]

After years of reading/learning from this forum, finally registered...just to respond to your post. LOL

Anyway, last year my husband was in the same situation as you.  Credit score of 721 for months on end and had great credit.  1 installment loan, a couple credit cards.  Everything paid on time.
Made no sense why it was stuck at 721.

He opened up another credit card for the airline points and voila, the following month his score jumped to 765.  Only change having opened that card.  And his scored has continued to climb (with no other changes other than using the cards and paying them off in full each month).  Today it's 802.

Not saying I believe 100% opening a new card would benefit you the same way.  Just our experience.   Worth a thought anyway.

[frugaliknowit]

This should be insightful:  https://www.myfico.com/credit-education/credit-scores/credit-scores-and-credit-reports

Also, if you get free credit reports from your credit card issuer:  With the report I get from Capital One I can navigate to where it explicitly suggests what I should do to raise my credit score.

[El Cheapo]

This should be insightful:  https://www.myfico.com/credit-education/credit-scores/credit-scores-and-credit-reports

Also, if you get free credit reports from your credit card issuer:  With the report I get from Capital One I can navigate to where it explicitly suggests what I should do to raise my credit score.

Thanks for the link.  I don't know why I never thought to go directly to the source before!  So according to FICO, the breakdown as far as how much a variable affects your score is:

35% Payment history
30% Amounts owed
15% Length of credit history
10% New credit
10% Credit mix

This is starting to make a bit more sense.  My payment history is perfect, so the most important factor is taken care of.  But digging into the details of what they consider for 'amounts owed', it's not just credit cards, but also includes the amount outstanding on any loans.  I have a personal loan with a $19k balance remaining, and the limit on my only credit card is $27.5K, so perhaps my credit/debt ratio is too high when the loan is factored in.  They also consider the percentage of the loan that has been payed off.  I do have the cash on hand to pay the loan off right now (potential house down payment), but the interest rate on the loan is 4.25%, so not worthwhile according to the 'investment order' rules.  I'm not in a huge hurry to buy a house, so I think I'll put it off for a while and open a new credit account to raise my credit limit.

Yes, my card issuer does have credit reporting, but the suggestions are mostly contradictory and make no sense:

Helping: 

- You have few or no accounts that were opened recently. 
- Total of all balances on bankcard or revolving accounts is not too high.
- The balances on your accounts are not too high compared to loan limits.
- There are no or only a few recent delinquencies on your accounts.

Hurting:

- The date that you opened your oldest account is too recent.
- Lack of sufficient credit history.
- Lack of sufficient relevant real estate account information.
- No open bankcard or revolving accounts in your credit file.

After years of reading/learning from this forum, finally registered...just to respond to your post. LOL

Anyway, last year my husband was in the same situation as you.  Credit score of 721 for months on end and had great credit.  1 installment loan, a couple credit cards.  Everything paid on time.
Made no sense why it was stuck at 721.

He opened up another credit card for the airline points and voila, the following month his score jumped to 765.  Only change having opened that card.  And his scored has continued to climb (with no other changes other than using the cards and paying them off in full each month).  Today it's 802.

Not saying I believe 100% opening a new card would benefit you the same way.  Just our experience.   Worth a thought anyway.

Glad to be an inspiration for registering! 

Based on the info above from the FICO site, I think this makes sense.  In my case I think adding another card will be helpful.  It may lower my score in the short term, but the overall credit limit is a more important factor.  Also, the time spent waiting for the new card to be considered 'not new' will also be age added to my oldest card, and time spent paying down my loan balance.  So in the end my score should come up a lot. 

[oldladystache]

You can also ask them to increase the credit limit on your one card. that will help your ratio of debt to available credit.

[El Cheapo]

Coincidentally, I just did that about an hour ago.  Got the limit raised to $35k.  Should help a bit.