Credit Score Help

[Reuttersismoving]

My wife and I have barely any credit history. We payed off a car loan in one year and that boosted our credit score to the excellent range, yet we are unable to receive good rates on any loans we take out because our history is too short. Without paying thousands of dollars in interest how do we improve our credit history? We recently bought an RV for living in and are discussing how quickly to pay it off. If we pay quickly we loose out on our credit history and have a harder time in the future getting a good rate on a home mortgage. If we pay it off quickly we will still have the same problem of ridiculously high interest rates because of a lack of credit history, all the while saving thousands on interest.

[Paul der Krake]

You get a card or two, and use it a little every month while always paying on time.

And then wait.

[Chrissy]

+1.  My Netflix is automatically charged to my oldest credit card every month in order to keep the card active.  $8/mo.  The card gets no other use.

[frugaliknowit]

1.  You do not have to pay any interest to improve your credit score.  Just get a card or two and pay off the balance each month.  Make sure they are "no fee" cards that report to all three credit bureaus. 

2.  You do not hurt your credit score by making extra payments on your RV. 

[darkadams00]

Every expense that I can get paid automatically via credit card is put on our card. Then that card is paid monthly via automatic draft. That gives us the max rewards dollars, keeps the credit card active and the credit rating up, and automates the payment of regular expenses. Then I really only think about irregular expenses and investments.

Never pay interest and never pay an annual fee. Simple.

[daverobev]

Generally what others have said is true. If you look you'll see what your score is made up of. A very significant chunk is history/paying on time.

Things within your direct control are utilisation - when the account 'posts' (usually but not always the statement generation date), try to have less than 30% utilisation. If you use 70% one month but only 15% the next the 'hit' of having 70% will be gone; it is always current utilisation, history doesn't matter for this particular chunk.

If you have only one card with a $1k limit and you have a balance of $950 every month... apply for an increase!

[Calvawt]

It doesn't even take monthly activity to get the benefit from a credit card, you just need to use it often enough to keep the account open (once a quarter maybe) and obviously no need to pay any interest.  About 35% of you score is payment history and another 15% is the length of history.  You can still have a great score with limited history, just make sure you NEVER have any late payments.

My advice (as someone that gives credit scoring classes) is to get an account or two open now and in a few months you should recover form the hit or opening two new accounts.  After that you should see some points added here and there.  Make sure its a no fee card and that you pay attention to the balance (even if you pay in full, once the statement generates that is what looks like your balance when reported).  You want to keep the reported utilization between 1-9% to maximize your score.  You will also get a small bump from a more diverse credit mix (the scoring system likes a combination of account types).

Good luck!

[shotgunwilly]

Read up on how credit scores are determined then build a plan to favor those conditions.  For example, a large part of credit score is utilization ratio.  The amount of used credit to available.  I increased my limits on my cards, and actually got several new ones.  While the application for new cards takes a small initial hit to your score, it will quickly rebound if you are using a very small amount of credit, and paying it in full every month.  Try to keep utilization below 20%.  Obviously, never miss a payment.  Having different types of credit helps. ex, A mortgage, a car (or rv) loan, credit cards, etc.)

I apply every single expense i have, excluding rent, to my credit cards.