Author Topic: Raising Credit Score  (Read 1835 times)

rulesofacquisition

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Raising Credit Score
« on: December 07, 2015, 07:12:09 AM »
I can't seem to find anything on this with the search feature, and I do realize credit score is not a good indicator of financial health, but with that said, DH has been working on improving his score. He paid off a car on time a couple years ago, and also paid off student loans that were delinquent, but paid as agreed after he worked out a repayment schedule. Collections paid and over 10 years old and repo also 10+ years ago. He applied for a CC on his own and got a $4500 limit, and his credit score is at 760 now (was in the 500's, I believe). The only other current item is a $1000 CC with another bank (me as cosigner). It gets used on a regular basis and paid in full every month. How does the score work, and any way to work things to increase it?

zolotiyeruki

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Re: Raising Credit Score
« Reply #1 on: December 07, 2015, 12:22:39 PM »
I'm not an expert, but my understanding is that your credit score is based on your available credit and your credit history.  I'm not sure why you'd need a higher score than 760--that is quite respectable, especially considering the history.  The actual calculations are shrouded in secrecy, but the general principles are not.  Basically, if you make all your payments of debt and other obligations (like utility bills) on time, and if you're not maxed out on your lines of credit, you get a higher score.

DaveR

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Re: Raising Credit Score
« Reply #2 on: December 07, 2015, 01:33:17 PM »
The best way to increase the score is to get more credit and use it responsibly for a long time.

There is quite a bit of good info on scores out there. Try this to start: http://www.myfico.com/crediteducation/whatsinyourscore.aspx

The two biggies are payment history and credit utilization (amount owed as a percentage of available credit). If you have a $4500 limit but cycle through $4000 of charges that you pay off each month, you have a high utilization ratio. Work to get the limit upped or get another CC.

It may seem counter-intuitive, but when I got several new CC, more than doubling my aggregate available credit limits, my score went up about 25 points.

aj_yooper

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Re: Raising Credit Score
« Reply #3 on: December 07, 2015, 02:08:39 PM »
I use Credit Karma and Credit Sesame to monitor our credit.  They show how your credit score is determined in broad terms and also have a simulator to see what happens if you take another loan,cc, etc..  One aspect of the score rating is the age of the credit cards, so don't cancel accounts that you seldom use.

Your husband has done a great job in restoring his credit!

kpd905

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Re: Raising Credit Score
« Reply #4 on: December 07, 2015, 06:46:53 PM »
760 will get you the best rates on mortgages, so what is your reasoning for wishing to go higher?

rulesofacquisition

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Re: Raising Credit Score
« Reply #5 on: December 07, 2015, 07:28:57 PM »
I didn't realize 760 was already at the point of not really worrying about it. I think a low utilization ratio has brought things up, as we don't want to charge more than we can pay in a month. So it seems like he's been doing the right things without realizing it.

bridget

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Re: Raising Credit Score
« Reply #6 on: December 10, 2015, 11:28:34 AM »
Yeah, I think at this point the main thing that can be done to raise the score is time. Just keep doing what you're doing, and it will inch up. There's no need to try to boost it more in the short-term; he won't be turned down for credit where he is now.

Someone upthread mentioned opening another cc to make it so your credit limit/credit use ratio gets better; this helps, but it can sometimes be a wash. The average age of all of your credit lines is also a factor in your credit score, and if you have a brand new line of credit (which comes with a credit inquiry, which is also a negative factor), that average age gets dragged down.

Before opening any new lines of credit, to try to improve the credit use ratio, call your current credit card providers and request an increase in your credit limit (even, or perhaps especially, if you have no need for an increased limit). As long as you're paying on time, and not asking too often, they'll often raise the limit a few thousand dollars just because you ask. Voila, you get all the benefits of improving your credit use ratio, without hurting the average age of your credit or incurring an inquiry.