Improving credit score?

motion · 10-27-2006, 07:46 AM

FICO gurus:

What a frustrating topic... my FICO is stuck at 710 and nothing I do seems to improve it. I hear of people with scores in the upper 700s, low 800s. How do they do it? I know the basic rules, but even when applying them, its making no difference in my score. I have a sneaking suspicion that its due to the fact that I have a large number of mortgages and I'm going to just be stuck with it. Any ideas?

Here's a snapshot of my situation:

No 30/60/90 lates in past several years
15+ year credit history
No public records
No collection accounts
5 credit cards, all with low balances (around 10% of limit)
18 inquiries in past 24 months
10+ mortgages
3 vehicle loans

I'm going to be looking for a construction loan at some point in the near future and need to get the score up to around 730-740 to get the best possible terms/least hassle with the process.

Porsche-O-Phile · Porsche-O-Phile's Garage

Focus on debt-to-income ratio.

Moneyguy1 · 10-27-2006, 07:52 AM

Investigate the nature of inquiries. Some suspicion of creditors making inquiries to lower an applicant's score in order to demand a higher interest rate. Personally, as a financial advisor, I think the FICO score system is flawed, showing only a snapshot. Consider an individual who charges practically everything and pays in full every month. Inquiry made the day before payoff will result in a different result than when the balance is zero.

motion · 10-27-2006, 07:52 AM

Jeff, I am always a stated package, so no beans.

Jims5543 · 10-27-2006, 08:00 AM

Most of the big players I know who invest in and develop realestate use private funds from investors. Most times this results in a slightly higher interest rate but the money saved in closing costs and quality of life from lack of BS from the bank is the big pay off.

A friend of mine developed a 100 lot high end subdivision from the infastructure to building every house in it. He used a wealthy financial backer. They both made millions. He went back to the weatlhy backer to do another subdivision and he told my friend he made enough money off the last endevour to do it himself.

He took the chance and did it himself and has not worked since finishing the second project. That was 10 years ago and as he explained it he would have to dream up ways to figure out how to spend all the money. BTW- He retired at 29 years old.

I would suggest looking for a financial backer and start to get away from the banks and that stupid credit BS.

Evans, Marv · 10-27-2006, 08:12 AM

Bob is right about the snapshot situation. If you have outstanding credit balances, try to pay them off or down when you know a check is going to be made. You can't do anything about the income-debt ratio except to try to lower it by reducing revolving credit at the time. Mine is 809 last time I was aware of it about 3 months ago, but I don't have any mortgages or other debt except for credit cards. I run them up a bit, but pay them off each month.

techweenie · techweenie's Garage

Okey doke.

It's a formula.

Use up to 30% of available credit. Aside from the obvious 'Don't miss payments,' do not allow credit cards to "lie fallow" for more than 4-5 months. Run up a balance and pay it down.

I'm only @ 784, but I have a friend with a 'perfect' 850, so I know a bit about this.

asphaltgambler · 10-27-2006, 08:21 AM

From your info I'd say the biggest deal/ hinderence is the 18 inquiries.

That is a lot in two years time. Since that is water under the bridge I would then concentrate on getting the CC debt to zero. That will make a slight difference all else being equal and may push you to or over 720

All the researsch that I have done indicates that anything past 720 results in diminishing returns. 720 + is the real last hurdle if you are already there the cost of borrowing decreases very little.

motion · 10-27-2006, 08:40 AM

Jim, I'm not looking into developing anything.. just personal stuff.

Does anyone know, positively, that cancelling a credit card or two will hurt/help? That's an option, just from a simplicity perspective.

The inquiries may, in fact, be killing me. I've heard that an inquiry can cost you 3-5 points. If that's the case, might I be looking at 20 points or more because of the inquiries? Possibly, I should start writing letters to the inquirers asking them to pull the inquiries. ???

TerryH · TerryH's Garage

Coincidently, I recently checked my credit history through Equifax online. It's free once a year, but they don't provide FICO scores for free.

I'm above 800 (according to our last refi) and have had lots of inquiries. They are mostly from finance/mortgage companies sending junk mail. We must get 20 offers a month for every credit card and home equity line imaginable. American Express is probaby the worst. There were inquiries made by credit companies I use so it appears they are checking on their current customers too. Not sure how much weight to put on inquiries.

I had something like 7 open accounts and 16 closed accounts. Never had a collection or charge back.

Wish I had printed out the results.

Jims5543 · 10-27-2006, 08:53 AM

Quote:

Originally posted by motion
Jim, I'm not looking into developing anything.. just personal stuff.

Does anyone know, positively, that cancelling a credit card or two will hurt/help? That's an option, just from a simplicity perspective.

The inquiries may, in fact, be killing me. I've heard that an inquiry can cost you 3-5 points. If that's the case, might I be looking at 20 points or more because of the inquiries? Possibly, I should start writing letters to the inquirers asking them to pull the inquiries. ???

When I bought the business I own now I seeked a private individual I knew that could loan me the money.

2 reasons.

1. What bank will give me a business loan for a new business?

2. I needed to close this deal fast and did not have the time nor the patience to play with loan officers, credit ratings etc..

You are correct every credit inquiry is a 3+ point hit. I was pissed at a mortgage broker once because I discovered he ran 7 checks, I am pretty sure he did it to screw up my credit rating.

Its all a big joke, a game.

Even if your endevor is personal so what, there is always someone who is willing to loan money on a project for a small profit. Then you get an end loan and pay him off.

nikita76 · 10-27-2006, 09:02 AM

Dont close any accounts!!!!!! Credit is also based on how long you've had a particular card! People are runnin' around paying down credit cards then closing them thinking they did the right thing! Quite the opposite. Pay down your credit, even pay off but never close a good account! Why are you averaging just under 1 inquiry per month? Thats alot of people looking at your credit based on the snapshot you listed earlier.

Nikita

motion · 10-27-2006, 09:18 AM

I've been on a buying spree in the past year buying houses. Lots and lots of mortgage company inquiries spread out over 12 months or more. Plus, I'm sure my credit card companies have been hitting it with all the activity, wondering what's up.

Dantilla · 10-27-2006, 09:41 AM

I have an 800+ score.

One credit card (paid in full), and a couple mortgages.

A good friend was told by our mortgage broker friend that he will not acheive 800 with as many mortgages as he has. He ownes several duplexes, financed individually, along with a bunch of other real estate.

Your ten mortgages may be hurting your score.

Why have more than one credit card?

pwd72s · 10-27-2006, 10:48 AM

Yeah, it's kind of funny how people crawl out of the woodwork, offering to loan you money when you don't have the need or desire to borrow any....

asphaltgambler · 10-27-2006, 10:50 AM

Pay down revolving credit; do not close them. Best scenario is all accounts current, open and zero balance.

closing any lines of credit will hurt your score.

pwd72s · 10-27-2006, 11:10 AM

Question...worried about identity theft, we've read that it's wise to check your credit report. BUT...every online service we've contacted requires us to provide info we'd rather not post on the net. All it would take is for one of these credit reporting firms to have a badass employee who sells info, and in our effort to prevent identity theft, we could be helping the thieves.

So, just how secure are these sites????

EdT82SC · 10-27-2006, 12:30 PM

Pay off those credit cards, and ask them to lower your credit limit. If you have a high amount of available credit then that is potential for trouble, and therefore it lowers your score. If you ever need a higher credit limit again you just call them again, and ask them to raise it.

Closing accounts does actually raise your score. From 2000 to 2003 I refinanced my house 5 times. The act of paying off and closing the old mortgage raised my score each time even though I was getting a new mortgage for the same amount each time. The last time I checked my score was 801.

TyFenn · 10-27-2006, 04:03 PM

Quote:

Originally posted by Jim Cesiro
Most of the big players I know who invest in and develop realestate use private funds from investors. Most times this results in a slightly higher interest rate but the money saved in closing costs and quality of life from lack of BS from the bank is the big pay off.

A friend of mine developed a 100 lot high end subdivision from the infastructure to building every house in it. He used a wealthy financial backer. They both made millions. He went back to the weatlhy backer to do another subdivision and he told my friend he made enough money off the last endevour to do it himself.

He took the chance and did it himself and has not worked since finishing the second project. That was 10 years ago and as he explained it he would have to dream up ways to figure out how to spend all the money. BTW- He retired at 29 years old.

I would suggest looking for a financial backer and start to get away from the banks and that stupid credit BS.

Agreed. Two of my friends from high school did this, admittedly, at the level mentioned above. Man, there are not enough swear words in the English language for me to call those two lucky SOB's.

I know it really has nothing to do with improving your credit score but, if you can, you might want to look into this type of financing. I would think, if you got a loan from the construction company (which might not be impossible based upon your prior endeavors) you could tell the bank what you really think of them.

Best of luck either way...

Steve Carlton · 10-27-2006, 06:11 PM

Quote:

Originally posted by motion
Does anyone know, positively, that cancelling a credit card or two will hurt/help? That's an option, just from a simplicity perspective.

The inquiries may, in fact, be killing me. I've heard that an inquiry can cost you 3-5 points. If that's the case, might I be looking at 20 points or more because of the inquiries? Possibly, I should start writing letters to the inquirers asking them to pull the inquiries. ???

The top factors contributing to your score not being higher are listed on your credit report next to your score. I suspect the top two will be "too many recent inquiries" and "too many recent accounts." Supposedly, the top two factors carry 70% of the weight and the bottom two 30%.

It's my understanding that multiple mortgages or installment loans have no adverse effect on your score. I've heard from one of the bureaus that your theoretical highest scores are generated when your revolving balances are about 5% of your credit limit (even better than a zero balance), and not combined (card by card). Multiple inquiries made for the same purpose within 21 days of each other should count as one inquiry.

Cancelling a card might help you if you have a score factor reflecting "too many revolving accounts," or some such. Cancelling an old card can hurt your score.

Creditors will not remove inquiries. "Soft" inquiries that don't show up on a lender's pulled credit report (but do show up on a report you request directly) don't affect your score. The score you get directly from the bureaus may not match too closely the scores a lender will get, either. Supposedly inquiries do lose you a few points each, not counting multiple ones made in a 21 day time frame.

Where are you getting your score, from a mortgage lender or from the bureaus as a consumer copy?