FICO Scores

[Bluffmaster25]

I wanted to talk about FICO scores. My scores are presently in the 600s, a situation I am not too thrilled about. Due to about two months between jobs, I ended up dinging my credit history.

Since then I have been on a tear to rebuild my credit to a respectable 700+ range. Does anyone have any advice on quickly rebuilding the credit? I know that rasing your scores takes some time but if you have been able to share your thoughts on the matter, I would really appreciate it.

[phaedra]

Unfortunately there is no "quick" way to rebuild a credit score. As long as you pay everything on time, your score should rise a little each month. Also, if your debt ratio (amount of debt/available credit lines) is lowered each month, that should help too. That means paying off more than you charge if possible. It's a gradual process, but you'll get there in time. :0

[AshleyJordan]

It's important to note also that some small things can impact the score. . . for example in the past few months I've had a ton of inquiries for my credit report-- caused by applying for about a half dozen mortgages and also for a rental apartment. . . I also accepted an Amex offer I didn't apply for.

Just the uptick in activity- none of it negative- has lowered my credit score by a few points. . . having requested so much credit in such a relatively short period of time.

[Bluffmaster25]

Thanks guys for the responses. The thing is: My revolving credit was never that high (perhaps $2800 max). Due to the aforementioend dings, I became very concerned and paid down the debt. So I am hoping to pay the last $1000 by the end of this month and I should be free and clear.

Ofcourse I wouldn't want to close my credit card accounts to skew the credit/debt ratio, but I do want to increase the score significantly. My payoff pattern:

Starting Debt $2800
Payoff
Nov 06: $800 Fico Score: Went up 12 points
Dec 06: $1000 Fico Score: Up 26 points

I plan on making another payment of a grand in Jan 07 which means that my score will probably go up another 22-26 points. After that, I don't plan on using credit cards at all. So I am not sure if the advice of making payments on time will really apply to me.

I know that many folks use their credit cards and pay off the balances each month but I really don't want to be playing with fire like that.

I guess I'll have to wait it out. Thanks for the advice!

[arrow]

How do you get your FICO score, again?

And is that site with the free credit reports www.annualcreditreport.com? Just checking b/c there's lots of frauds out there.

[phaedra]

That is the official site. It's pretty easy to use.

How do you get your FICO score, again?

And is that site with the free credit reports www.annualcreditreport.com? Just checking b/c there's lots of frauds out there.

[SmilesSoSweet]

It's important to note also that some small things can impact the score. . . for example in the past few months I've had a ton of inquiries for my credit report-- caused by applying for about a half dozen mortgages and also for a rental apartment. . . I also accepted an Amex offer I didn't apply for.

Just the uptick in activity- none of it negative- has lowered my credit score by a few points. . . having requested so much credit in such a relatively short period of time.

A friend of mine that works in the mortgage business said that this is basically true. It looks bad on your credit if your credit is being requested too often, which is why a yearly credit check for yourself isn't bad.

Now if you're looking for a house and need to get pre-approved, then it wouldn't look as bad if three or four different mortgage banks pulled your credit around the same time because they know that you're looking to buy a house.

But (from what I've been told) say in one week you get your credit pulled for a mortgage, a car loan and for anything else that aren't related to each other, that also looks bad.

I say just continue to pay bills on time and keep your credit line in order, then your score will eventually get better.

[AshleyJordan]

yeah. . . as i was looking at the mortgages i also got a new rental and an Amex. . . but the drop wasn't even ten points.

[dengeist]

Some things are repairable. The percentage of debt you have on your CC can drastically effect your FICO score. That's the most easily repairable part of your FICO score. If you're over 70% of your limit on any CC it'll lower your score. If you have any CCs that are about 70% of your limit pay those down first. That should up your FICO a little.

Unfortunately, defaulting on student loans and paying CCs late can lower it. That stays on there for SEVEN long years. I know this because after college, I went to Charleston for Border Patrol training and my grandmother wasn't sending me my bills on time and that was almost SEVEN years ago. So I'm excited that my seven years are almost up.

[AshleyJordan]

Unfortunately, defaulting on student loans and paying CCs late can lower it. That stays on there for SEVEN long years. I know this because after college, I went to Charleston for Border Patrol training and my grandmother wasn't sending me my bills on time and that was almost SEVEN years ago. So I'm excited that my seven years are almost up.

Ouch! I loved my grandmother dearly, but if she had done that, I would've been extremely pissed off at her!

It's also my undestanding that with some adjustments (i.e. my dip because of credit inquiries,) you can talk to the FICO Gods and they'll remove the adjustment. . . I should probably look into that, but I guess the hit was so small I don't really care.

[beeblebrox]

I looked on the site, but didn't see my FICO score other than buying it.

[MsClear]

Yeah, FICO scores aren't included with free credit reports. You usually have to buy them. Sometimes, you can get a "30 day trial" of a credit watch service that will give you your score for free, but you have to be super vigilant and cancel it or they stick you with fees. I did that once, but now I usually just get my free credit reports.

[cheshrcarol]

I've paid like $5 a couple times for mine.

[dengeist]

Last time I checked, which was like last year. They show you your credit record for free, but it was like $5 or $12 for the FICO score (can't remember which).

Keep in mind a FICO is very dynamic and changes frequently.

[Xander]

I have a very good FICO score, but would like to make it better. On my report, it says:

"10 - Proportion of balances to credit limits is too high on bank revolving or other revolving account"
"14 - Length of time accounts have been established"
"11 - Amount owed on revolving account is too high"
"32 - Lack of recent information loan information"
"12 - Length of revolving account history"
"01 - Current balances on accounts"

Umm... ok, how should I fix those?

Also, my residence information and employment information is entirely outdated and filled with holes.

[Bluffmaster25]

Guys, you can go to: www.myfico.com

Also I highly recommend signing up for scorewatch which basically tracks your score with Experian, one of the three credit reporting agencies.

I have been doing this for close to a year which is why I was able to identify the increases in my FICO score. Unless your credit history diverges too much, it would be fair to assume that the other two credit agency scores are within one standard deviation of your Experian score. Hopefully this makes sense to you.

I recommend taking a proactive role in your credit. Not only is it reassuring to know where you stand but it also saves you $$ when you go out to buy that car or home.

[beeblebrox]

Yeah, FICO scores aren't included with free credit reports. You usually have to buy them. Sometimes, you can get a "30 day trial" of a credit watch service that will give you your score for free, but you have to be super vigilant and cancel it or they stick you with fees. I did that once, but now I usually just get my free credit reports.

I was able to get an estimate of 741 on experian. I'll be very careful with the 30 day trial as not to get charged for it. Everything on there was accurate and I liked when it said "never late."

[redav]

I have a very good FICO score, but would like to make it better. On my report, it says:

"10 - Proportion of balances to credit limits is too high on bank revolving or other revolving account"
"14 - Length of time accounts have been established"
"11 - Amount owed on revolving account is too high"
"32 - Lack of recent information loan information"
"12 - Length of revolving account history"
"01 - Current balances on accounts"

Umm... ok, how should I fix those?

Also, my residence information and employment information is entirely outdated and filled with holes.
Well, what you would need to do is:
- Pay down some balances, particularly revolving CC. Note, though, that it is the balance at the moment it is reported, regardless if it is even DUE. For example, if you pay off your balances each month, you will still have a balance if you have purchased anything.
- Grow older, and keep your accounts open. The length of history you have and the length you have had each account matters, so if you are in your twenties, there is no way you can top out this part of your score.
- I'm not sure about the "recent information" one. My first guess is that they are expecting so see certain credit/loan info that isn't there, such as a car, furniture/appliances, mortgage, etc. Not having activity is not necessarily good for a credit score, because it makes them wonder why isn't there any activity.

To fix errors, you need to contact each of the credit reporting companies. Your report should have a line about how to contact them if any of the info is incorrect. I don't think that eroneous/missing addresses/employers will significantly alter a score if at all.

Personally, I check my history, but not my score. If all the info on my history is correct, I pay everything on time, be a frugal spender, use store credit when it makes sense, maintain my accounts (as oposed to opening new ones), etc., my score will be fine, so I don't worry about it much. Also, I don't let anyone pull my credit (& thus suffer dings) when I shop around for credit/loans. Almost always they have a pre-approval method where they can tell me if I qualify without it. And if you have a score in the mid-to-high 700s, you will qualify, regardless, so there's no worry.

[Xander]

Cool, thanks. So if I have a $10K limit, and usually only spend $3K-$5K per CC bill (always paid in full, on time), I should get my credit limit reduced to around $6K? I heard they don't like high credit limits... if it's the opposite, and I'm supposed to increase my credit limit, that's fine too.

[redav]

Cool, thanks. So if I have a $10K limit, and usually only spend $3K-$5K per CC bill (always paid in full, on time), I should get my credit limit reduced to around $6K? I heard they don't like high credit limits... if it's the opposite, and I'm supposed to increase my credit limit, that's fine too.
In your case, I would NOT get the limit reduced. That would put your balance at close to the limit (using a high percentage of available credit) which is a danger sign. Off the top of my head, I don't know what that percentage is supposed to be under, but I think yours (30-50%) may already be a bit high. And absolutely, keep paying it off each month. Good, on-time payment history is THE biggest factor.

However, another red flag is when your limits increase, because that opens the possibility that you can spend more and dig yourself into a hole. So, if you increase your limits, you may not see a positive change right away. (Credit scores are all about responsibility, consistency, & reliability, so they are constructed so that you HAVE to take time to build it up.) Not knowing the algorithm they use, I can only guess, but I think there is a sweet spot of number of accounts to have and total available credit.

[EmberMae]

I used that myfico.com link to get my free score. My score is 753. I'm disappointed it's not in the top bracket, but the only negative it said I had was opening a new account too recently (4 months). My bad. I think in that particular case it was worth opening the account, but I'll have to watch out for that in the future.

[JanTSmi]

Guys, you should check out Creditboards.com. They have a forum like this where people talk about how they are fixing their credit, and also how they are learning how to manage money and stuff.

Go to the website and select forums which is at the top. That should be able to help you. Let me know if it did :)

[Deavan]

I am a BIG fan of that MyFico website...seriously useful!

I had a much higher score than I thought too :)

[Syracuse]

My score is 400 something . . . sucks. :cry:

[Bluffmaster25]

My score is 400 something . . . sucks. :cry:

Don't sweat it too much. The scores fluctuate on a monthly basis. Best course of action (and you should do this today!) would be make sure all of your accounts are current and there are no outstanding negatives that will continue to depress your score. Following that, you can work on cleaning up other items.

I know its frustrating to see the score down there but if you give some time, I am sure you can bring it up to decent level. It is totally worth the effort.