Improving My Credit

[maggotspawn]

Hey guys. I just recently paid off of my student loans. Checked my credit and it was fair at 650.
I applied for and got a credit card. I've been using it and paying off the balance before it's due.
This seems to have no affect on my credit score. My brother, who used to be a loan officer, said I should let the balance become due, before I pay it off. Does this sound right?

[GuitarBilly]

Paying off a credit card every month is good practice to save you money on interest but it may not help your credit at all, a lot of companies don't even report accounts with a zero balance, since you are not really using credit per se when you do that.

Running a small balance (under 30% of the available credit line) should boost your credit as it will be reported as a good utilization ratio. You can also pay them off on the due date, like your brother said, since by the date the balance becomes due, it has already been reported to the bureaus. But a low running balance seems to give better and faster results.

[ajaxlepinski]

I sold mortgages from 2006 to 2007, during the mortgage backed securities scams, just before the crash in 2008. I worked for HSBS Bank under their HFC trademark (that they purchased a year or so earlier).
I couldn't stomach it so, I quit after 10 months.

I had to review dozens of credit reports.
We were trained to BS people into borrowing more money than they needed to increase profits for our company.
We would give them a 12% interest rate and tell them "come back in 6 months, after making timely payments and your score will go up. When their score goes up, we can rewrite your loan and give you a better rate." Of course, your credit score never goes up that fast... it was BS just to get them to sign at 12%.
We also tried to talk them into signing up for HFC Credit Cards. Any time you get a new credit card, your score drops a bit... we were told to say it won't affect your score. These scummy tactics were what made me finally quit, after 10 months.

The truth is, only Experian, Transunion and Equifax know how your score is calculated - if you visit their websites, they don't offer any guidelines for improving your score.
When you review your credit score, for example, on your credit card's website, they give you a few obscure and cryptic reasons for your score being what it is.
There are guidelines that you can follow, to improve your score but, it takes years for your score to creep up.

Someone once told me to make minimum payments (once in a while), so the credit card service could collect a fee (usually over $30) AND 27% interest..... The person told me that this would help my credit score because, credit card companies liked making money on you.... Sounded like Urban Myth but, if it were true, is it worth the $40 to gain 1 or 2 points on your score?
When we reviewed Credit Reports, late payments were a BIG RED FLAG.
As far as a Loan Officer is concerned, early and on time are the same thing but, you're better off making your payments early.... definitely on time (by the due date).

I would suggest, getting one or two more credit cards and taking an auto loan.... and continue making your payments early.
The Credit Services like seeing multiple creditors being paid off on time, more than anything else.
My Credit Score jumped from 815 to 847, during the last three months that I had my recent car loan. Once I paid it off, my score dropped to 798.
It's voodoo math that doesn't really make sense.

BTW: I took a screenshot of my credit score at 847 to brag to my g/f
I got my first Macy's credit card back in the 80's and I made sure to never spend more than I could pay off each month.
A few times, when I took vacations, I'd put a lot on my card and I made partial payments but, I was careful to never took more than three months to pay off a credit card balance.
It takes years of being careful to raise your score 100 points.

EDITED a bunch of times for accuracy, readability and foggy memory.

[itchyfingers]

I've always heard you should pay it down to zero every month, crazy that it isnt helping your score, MS. I only have one credit card, its a Chase. On the app, they have a cool feature where you can not only track your score over time, but there's this little calculator called "Credit Journey" that you can use to simulate what would happen to your score if you: add a credit card, add a loan, raise the credit limit, allow a delinquent payment, eliminate your balances, go into foreclosure, go into collections, etc. Worth looking into if you're seriously planning to raise your score, I'd recommend it.

As a college student, I feel like instead of taking calculus or sociology, I would have been much better served taking a class in credit and debt. I was pretty bad with credit cards when I was young and broke. I'd use one card to pay off another, alternate which balances got paid each month, and generally max them all out. Set me back big time. I've been crawling out of that for a couple years now. I was planning to eliminate all CC debt this year, but our dog is undergoing chemotherapy, which is not cheap, and has delayed my plan by a few months. I still have $347k worth of debt (my mortgage mainly) yet I have a low A rating.

[jgreenwd]

My rating dropped 40 points when I paid off my house, since I no longer had that "credit" utilized.

[IndyWS6]

I sold mortgages from 2006 to 2007, during the mortgage backed securities scams, just before the crash in 2008. I worked for HSBS Bank under their HFC trademark (that they purchased a year or so earlier).
I couldn't stomach it so, I quit after 10 months.

I had to review dozens of credit reports.
We were trained to BS people into borrowing more money than they needed to increase profits for our company.
We would give them a 12% interest rate and tell them "come back in 6 months, after making timely payments and your score will go up. When their score goes up, we can rewrite your loan and give you a better rate." Of course, your credit score never goes up that fast... it was BS just to get them to sign at 12%.
We also tried to talk them into signing up for HFC Credit Cards. Any time you get a new credit card, your score drops a bit... we were told to say it won't affect your score. These scummy tactics were what made me finally quit, after 10 months.

The truth is, only Experian, Transunion and Equifax know how your score is calculated - if you visit their websites, they don't offer any guidelines for improving your score.
When you review your credit score, for example, on your credit card's website, they give you a few obscure and cryptic reasons for your score being what it is.
There are guidelines that you can follow, to improve your score but, it takes years for your score to creep up.

Someone once told me to make minimum payments (once in a while), so the credit card service could collect a fee (usually over $30) AND 27% interest..... The person told me that this would help my credit score because, credit card companies liked making money on you.... Sounded like Urban Myth but, if it were true, is it worth the $40 to gain 1 or 2 points on your score?
When we reviewed Credit Reports, late payments were a BIG RED FLAG.
As far as a Loan Officer is concerned, early and on time are the same thing but, you're better off making your payments early.... definitely on time (by the due date).

I would suggest, getting one or two more credit cards and taking an auto loan.... and continue making your payments early.
The Credit Services like seeing multiple creditors being paid off on time, more than anything else.
My Credit Score jumped from 815 to 847, during the last three months that I had my recent car loan. Once I paid it off, my score dropped to 798.
It's voodoo math that doesn't really make sense.

BTW: I took a screenshot of my credit score at 847 to brag to my g/f
I got my first Macy's credit card back in the 80's and I made sure to never spend more than I could pay off each month.
A few times, when I took vacations, I'd put a lot on my card and I made partial payments but, I was careful to never took more than three months to pay off a credit card balance.
It takes years of being careful to raise your score 100 points.

EDITED a bunch of times for accuracy, readability and foggy memory.

I can echo the the part about your credit score dropping when paying off a loan part. And how it feels like a lot of it is Voodoo.

I have one credit card and use it for nearly everything. I don't just pay off early, I pay whatever I charge, usually the same day, by transferring funds from my checking account. I have been with the same credit card company for more than a decade and have never carried a balance. I have also used the same "instant" payoff approach the entire time. I recently paid off my car loan (which is the only loan I had; house is paid for, no consumer debt, no student loans, etc.) and my credit score dropped 5 points. It makes no sense.

It also doesn't make any sense that my credit score is only 807 when I have zero late payments (lifetime), zero enquiries or open accounts in the last two years, my current balance is $0 and my depth of credit is 21 years (TransUnion data provided by Chase). I have no arrest record or judgments or child support committments and have never filed bankruptcy. I know people that have multiple cards with balances and late payment histories that have a higher credit score. My score is good, and I'd have no problems if I needed to get a loan, but that's some Voodoo Bullshit right there.

[_ej_]

I've been stuck at 750 for like 2 years

I had 2 late interest payments my junior year of college but otherwise everything has been paid on time. I use my credit card regularly and pay it in full every month. I have a Sweetwater card with a low balance and a student loan. I really wish I could boost it a bit but I don't know how.

[soulsurfer]

ajax- makes a good point. The mystery math does not make sense. But some of it does get revealed when you take a big loan on. There is an income-to-debt ratio that seems to work for them. While that fluxes a bit with how big the loan is, the base line doesn't seem to change much.

30% debt / income is a good starting point. I always shoot for a 25% ratio and I have had a 850 average score for years.

[ajaxlepinski]

Not too shabby soulsurfer! 850 is the highest score possible. Anything above 720 is considered good loan material.

[sleewell]

anything above 750 is meaningless. wont get you any better rates.


just bought our forever home and both cars are paid off and running well = IDGAF about my credit score

[Noah]

It kills me to pay the credit card companies any late fees or interest. Screw that noise.

My theory is the credit bureaus like to see how many balls in the air you can successfully juggle, within reason. One credit card is not enough. You need to get a second. Use it a few times a year, pay as you get the bills. If you're doing it right, this should cost you nothing extra.

They also have ways they can see your assets. Try to put some money in the bank so they know you aren't living hand to mouth.

As far as car loans, mortgages etc, I don't know what the sweet spot is but just live your life like a normal person. Most times you finance something it costs more money, so try to save up and get ahead of things.

[soulsurfer]

Not too shabby soulsurfer! 850 is the highest score possible. Anything above 720 is considered good loan material.

When I bought the house my credit was about 840 something and my ex's was just shy of 800 and she was making better $ than I was at the time. All I had was one CC and what was left of an old student loan.
Neither of us had any negative marks. But she had more CC (a lot of store cards) but she always paid them off each month. I had the student loan and a car payment. Both were getting paid off quicker than required.

Up until we were buying the house, it didn't matter much to me. But I did take a closer look during the first year of owning the house and the math didn't make much sense. We ended up basically swapping credit scores for a while. The household income didn't change much (went up a smidge) and our debt went to 0 except for the house. (we owed less/month vs income)
They (the banks) obviously wanted us to be in debt, but only to a point...and where that point was wasn't clear.

idk - we both still have good credit. We both always shot for less than 25% debt v income regardless of what the banks said they'd offer us. And to your point - it did (does) take years to calculate any '+' score regardless of how well we managed ourselves finacially.

OP - if it were me, I'd keep the debt as close to 0 as you can and just be patient. Your income will grow over time so does your score.

[Kardula]

My rating dropped 40 points when I paid off my house, since I no longer had that "credit" utilized.

mine dropped when I got my new car...too much utilization lol

Credit is a funny thing, use too much and it lowers the score, not enough and it lowers the score. I did a stupid thing to increase my score, which is keeping high running balance on my card. Don't do that, keep the minimum balance you can to boost your score if that's your goal.

[Pepi]

My youngest daughter is clean now and been doing very good. She is trying to get her credit built back up. How can anyone work with companies that work like my screenshot. They are fucked up and a breech to all our secure information due to the information they hold on us. Two weeks after Equifax was hacked both my Visa and Discover card was used by some asshole in Chicago.