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I currently have a FICO of 720. With the credit crunch and stricter underwriting standards ahead, I want to get it up to 750 or higher.
The only debt I have is about $15k on my car. I charge about $1,000 per month on credit cards, which I try and pay off every month during the grace period.
Does anyone have suggestions on how to do so? I've heard that one should keep all credit accounts open and with low balances. Should I request limit increases on my accounts or apply for additional lines of credit? Should I apply for a HELOC (and not use it, or draw very little)? Would paying down my car early make a significant difference?
On my credit report, there is one late payment, which is preventing my score from being higher. What exactly is considered 'late'? I assume it's any that are 30 days or more past due, rather than payments that are received just a few days after the 'due by' date on the monthly statements. Correct? Would it be possible to try and get this late payment removed?
Also, I was wondering if late payments on utility bills (phone, cell phone, cable tv, internet) affect FICO and if I should be worried if I'm occasionally late on those. I don't think they do, but I wanted to confirm this.
FICO Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories as outlined below. The percentages in the chart reflect how important each of the categories is in determining your FICO score.
These percentages are based on the importance of the five categories for the general population. For particular groups - for example, people who have not been using credit long - the importance of these categories may be somewhat different.
Payment History
Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)
Presence of adverse public records (bankruptcy, judgements, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)
Severity of delinquency (how long past due)
Amount past due on delinquent accounts or collection items
Time since (recency of) past due items (delinquency), adverse public records (if any), or collection items (if any)
Number of past due items on file
Number of accounts paid as agreed
Amounts Owed
Amount owing on accounts
Amount owing on specific types of accounts
Lack of a specific type of balance, in some cases
Number of accounts with balances
Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)
Length of Credit History
Time since accounts opened
Time since accounts opened, by specific type of account
Time since account activity
New Credit
Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account
Number of recent credit inquiries
Time since recent account opening(s), by type of account
Time since credit inquiry(s)
Re-establishment of positive credit history following past payment problems
Types of Credit Used
Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.)
Please note that:
A FICO score takes into consideration all these categories of information, not just one or two.
No one piece of information or factor alone will determine your score.
The importance of any factor depends on the overall information in your credit report.
For some people, a given factor may be more important than for someone else with a different credit history. In addition, as the information in your credit report changes, so does the importance of any factor in determining your FICO score. Thus, it's impossible to say exactly how important any single factor is in determining your score - even the levels of importance shown here are for the general population, and will be different for different credit profiles. What's important is the mix of information, which varies from person to person, and for any one person over time.
Your FICO score only looks at information in your credit report.
However, lenders look at many things when making a credit decision including your income, how long you have worked at your present job and the kind of credit you are requesting.
Your score considers both positive and negative information in your credit report.
Late payments will lower your score, but establishing or re-establishing a good track record of making payments on time will raise your FICO credit score.
My wife and I have been blessed with 800+ scores, after starting out in tough times (for us).
jimj's post is right on, but to sum it up it's a long history with no blemishes, a good income/debt ratio, and remember to leave your largest available credit accounts open rather than closing them.
Call the credit card company and see if they would remove the record of your late payment. Sometimes they will, but sometimes they don't... depends on the person you get over the phone and how strict the company's policies are.
When your statement closes at the end of each credit card cycle, make sure the balance is less than 30% of your available credit, but don't go asking for more credit because that will cause an inquiry that might decrease your score.
Paying down your car loan will help your score a little as well.
There's no quick fix. These are just things that will help a little.
Most importantly, don't request credit, pay all your bills on time and make sure you know what's on your reports.
Yes, new credit applcations lowers one's score a bit, but increasing available credit raises it. I guess whether the net effect is an increase or decrease depends on the number of inquiries and the amount of additional credit lines obtained. I'm thinking that opening a $100k line of credit and not using it (or using very little) would improve my score, despite the additional inquiries, but I could be wrong.
Does anyone know what makes a payment considered "late" for credit history purposes? Is it 30 days or more past due? Anything under 30 days late is not considered, right?
Check your credit limit on the cards and reset it to 2x what you spend at the most. So, if you only run it up to $1,000, then the credit limit should be set to $2,000.
Yes, new credit applcations lowers one's score a bit, but increasing available credit raises it. I guess whether the net effect is an increase or decrease depends on the number of inquiries and the amount of additional credit lines obtained. I'm thinking that opening a $100k line of credit and not using it (or using very little) would improve my score, despite the additional inquiries, but I could be wrong.
Does anyone know what makes a payment considered "late" for credit history purposes? Is it 30 days or more past due? Anything under 30 days late is not considered, right?
There standard for credit reports as far as I've ever seen is 30/60/90 days late, there is nothing less but if you're late 5 days it's reported as a 30 late. I agree with the post above, call the creditor and talk nice, I've done it and they've removed it but usually only one time (at least I've only tried it the one time we were late). You have to be careful about canceling cards it can show as a negative for a while which makes no sense but it can.
Again, run your report through myfico and it'll tell you why your score is what it is and how to fix it. It only costs $15 and doesn't count as an inquiry and will answer your questions.
This happens to be my occupational line of (22 year) expertise...right up my alley...
**the aggregate sum of your available revolving credit balances should not exceed 30% of the total available credit lines--in other words, if you owe $4500 on ONE open card only with a limit of $5000, (assuming you have no other open cards) your score will take a beating...however, if you owe the same $4500 total on THREE cards with a $5000 limit each, you are at your preferred 30% balance to limit ratios.
Alot of folks make the mistake of canceling a credit card line when they have paid the balance in full...NOPE!! Keep the card open..put it in your home safe,
besides, the occasional 0% transfer options come around periodically(but be careful of these, since payments are applied first to 0% options, and can dramatically increase your interest payments..if you do a zero balance transfer, DO NOT put anything else on the card until the transfer is paid in full, or you will get an unwelcome interest charge surprise!!
**With regards to credit cards, you must pay at least the minimum due BY THE DUE DATE. Installments loans, however, for example auto loans, typically have a 10 day grace period, as do mortgages..but be careful, in the credit reporting world, 11 days is not the same as 10.
...and when I use the term "pay" I do not mean "mail" I mean "post", which is the time the creditor records the payment, and these days, many creditors only post payments received by a certain time of day. (yes really!!) so when in doubt, cut that grace period back a day or so for safety reasons...Keep your eye on the ball...
**Regarding "playing nice with creditors in an effort to persuade them to remove derogatory reports from your bureaus" Do not waste your time. The people you are pleading to are nothing but phone operators, with no clout whatsoever...they are not motivated in any form to support your cause.
HOWEVER the Federal Fair Credit Reporting Act has provisions for consumers to resolve any problems with regards to errors..
It is called a Letter of Dispute...you will need to provide the credit bureaus, Experian, Equifax, and TransUnion your full name, address, date of birth, social security number, along with a complete list of accounts you are disputing. Do not elaborate "I paid them 60 days late, but I paid them" or "My check bounced, but I made it good eventually" YOU SIMPLY STATE YOU ARE DISPUTING THE REPORTED INFORMATION . Provide full account numbers.
When you have sent your letters (certified return receipt is preferred) the bureaus must inquire to the creditors, who then have 30 days to validate the information, or it will be removed. Then the credit bureaus send you new updated reports...This is the legal way to handle things..anything else is simply a waste of time, and you will ultimately wind up writing the letters anyway.
**Paying down your car early, while it will save you interest, will not upgrade your score..paying it late, however will degrade it. This is an installment loan.
the reporting rules are not the same as revolving debt.
Now this next statement is in regards to the times we are living in today..Regardless of a perfect (740+ across the board) credit score--lenders are now reverting to calculated debt to income ratios..that being said, if your ratios (and the tolerances vary by lender) are out of whack by THEIR standards, you will be denied a loan. Yes, even if you have been perfect in every way..it is truly miserable right now...But I choose to remain optimistic..
Regarding the 30% usage of available credit, does the % below 30% (e.g. if you're at 5%) help your score, or is it just that you're penalized if you're above 30%?
I've heard about the letter of dispute...that often, the creditors do not respond on time and the items are removed, even if they're valid. Isn't this what those credit repair services rely on (as well as the fact that the general public doesn't know about this dispute process)?
I've been up to 2 weeks late several times (due to misplacing bills) and only one is showing up on my report. I guess I've been lucky and will definitely keep on top of this now Ill write a dispute letter and try to get it removed. Who knows, that alone might result in a decent improvement to my fico.
If paying off my car early won't help my score, it'll at least help reduce my debt/income ratio if I need to get a mortgage.
Regarding the 30% usage of available credit, does the % below 30% (e.g. if you're at 5%) help your score, or is it just that you're penalized if you're above 30%?
I've heard about the letter of dispute...that often, the creditors do not respond on time and the items are removed, even if they're valid. Isn't this what those credit repair services rely on (as well as the fact that the general public doesn't know about this dispute process)?
I've been up to 2 weeks late several times (due to misplacing bills) and only one is showing up on my report. I guess I've been lucky and will definitely keep on top of this now Ill write a dispute letter and try to get it removed. Who knows, that alone might result in a decent improvement to my fico.
If paying off my car early won't help my score, it'll at least help reduce my debt/income ratio if I need to get a mortgage.
They only report 30, 60, 90+ days late. You should really get a copy of your credit reports from all 3 companies and see what's on them. You are entitled to at least one free report each year from each and maybe more depending on the state that you live in.
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Ill write a dispute letter and try to get it removed. Who knows, that alone might result in a decent improvement to my fico.
