Author Topic: Raising Credit Score (getting a credit card?)  (Read 3587 times)

jdoolin

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Raising Credit Score (getting a credit card?)
« on: January 03, 2013, 07:55:04 PM »
Well, the Mustachian lifestyle is going very well for my family and plans are well under way.

However there are still scars from past poor financial decisions, including my credit score.  It's not awful, but it's not great either.  I'm pretty sure it's like 560-ish.  I went through a credit counseling program several years back and got everything paid off in 5 years (holy crap, I'd have it done in like 6 months now).

Anyway, within a year and a half or so my wife and I are planning to have all other debts paid off (her CC and the 2009 Subaru Legacy loan we got a month before starting to read MMM) and putting 20% down on a home.  I want that interest rate as low as possible, so I want to get my credit score up as high as I can and as quickly as I can.

So what's the best strategy for doing so?  And if getting a credit card is part of it...

I have no idea where to start looking in terms of credit cards, other than the Rewards Mastercard linked from MMM Recommends.

Any advice or suggestions?

Platypus

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Re: Raising Credit Score (getting a credit card?)
« Reply #1 on: January 04, 2013, 01:39:27 PM »
I would suggest using CreditKarma.com to monitor your credit score (it's free, it's safe, I've been using it for a while). It makes soft inquiries on your credit report to see your score, which aren't visible to anyone looking at your credit.

I recently bumped my credit score from 596 to 620 by signing up for a secured credit card through my credit union. My credit union takes $500 of my money and puts it in a secure account so that any debt I put on the card is backed up, and I should be able to graduate to a "real" credit card in a year as long as my score doesn't go down between now and then. Then, when I close the account or transition to a "real" credit card, I will get the $500 back (but without getting any of the interest it would have accrued).

I'm not sure if I would have been able to get approved for any rewards cards given my credit. I know my credit union wasn't willing to give me a real credit card at the time (one month ago).

I'm not sure if this is the best way to go for you, but it worked for me.

chucklesmcgee

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Re: Raising Credit Score (getting a credit card?)
« Reply #2 on: January 04, 2013, 06:35:33 PM »
I want to get my credit score up as high as I can and as quickly as I can. So what's the best strategy for doing so?
Any advice or suggestions?

Check your credit report about 4 months before applying for the loan to make sure that everything is correct and up to date. I might apply for one credit card now, but it probably have a substantial impact on your total credit history. Also if you're denied and have to reapply several times this could hurt your credit score.

Generally I'd recommend the Fidelity Amex (2% back on everything) or the Chase Freedom Visa (1% back on everything, 5% on rotating categories) or maybe the Bank of America Visa Bankcard (1.1% on everything, 2.2% on groceries, 3.3% on gas if you have a bank of america checking account).

Kevin Pietersen

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Re: Raising Credit Score (getting a credit card?)
« Reply #3 on: October 11, 2015, 08:19:02 AM »
Honestly I had horror time with CC debts, I am still in process of clearing them with IVA-Advice.co, it is far from thinking about raising my score anytime soon, I love freedom but I have realized how much mess it can be if we are not good in management of things, but luckily for IVA I am at least with some solution, but it is obvious that it hurts the CC score.
« Last Edit: November 19, 2015, 02:09:23 AM by Kevin Pietersen »

Retired To Win

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Re: Raising Credit Score (getting a credit card?)
« Reply #4 on: October 11, 2015, 08:30:29 AM »
... within a year and a half or so my wife and I are planning to have all other debts paid off... and putting 20% down on a home.  I want that interest rate as low as possible, so I want to get my credit score up as high as I can and as quickly as I can.

So what's the best strategy for doing so?  And if getting a credit card is part of it...

Any advice or suggestions?

As a former credit industry professional, and based on my own experience, I will tell you that credit cards will definitely help improve your credit score (assuming of course you make timely payments). For one thing, the on-time payment history will push your credit score up over time.  But there's another algorithm that comes into play, and that is your credit report's owed balance to available balance ratio.

As you accrue credit cards, your total available balance increases.  If you keep your actual charges low, you will end up with a stronger owed balance to available balance ratio.  And that will push up your credit score as well.

(So don't ever CANCEL a credit card, unless the company insists on charging you an annual fee.)  ;)

Good luck.

lhamo

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Re: Raising Credit Score (getting a credit card?)
« Reply #5 on: October 11, 2015, 01:15:38 PM »
Some credit cards are now offering free access to your credit score.  I have a Mastercard from Capital One that does this, as does at least one of my Amex cards.   Might be worth checking out to see if you can qualify for a card like this, and then you can track the improvement easily.