What am I doing wrong?

Question

I need help raising my credit score. I would like to buy a house in a few years, but with a FICO score of 698,714, and 693, I know I won't get the best interest rate.

I owe $4000 on a car, I have one credit card with a very low balance, and all of my youthful indiscretions were settled and paid off 4 years ago.

Unfortunately my youthful indiscretions included a couple of Charge Off's that won't go away for another 3 years. I've tried everything to get them removed, but I've been unsuccessful. I've also heard that removing the negative items might hurt my score so I've given-up trying to remove them.

I use my one and only credit card very responsibly by always paying the balance in full every month (except for major purchases like my computer) and I haven't had a late payment in over 4 years.

Is there anything more I can do raise my score or am I just doomed to pay a higher interest rate for the rest of my life?

Answer 1

Mostly, you're doing it right. Your FICO scores are in the middle to upper end of the average range (673 to 720, depending on the survey).

Here are ways that can cause small improvements.

Make sure you make a new, small, NECESSARY charge on your credit card each month, and pay it off in full each month, on time. Doing this every month gets you max FICO points for the 35% of your FICO score that is for payment history. A necessary charge could be groceries, gasoline or an auto-paid utility bill.

30% of your FICO credit score is credit utilization: how much of your credit limit are you using as balance? Make sure you keep your balance below 30% of your credit limit, or you will hurt your score. For example, if your credit limit is $700, you need to keep your balance below $210, which is 30% of $700.

10% of your score is for credit mix: what kinds of open credit accounts do you have? The good types of credit are: mortgage, secured auto loan, major credit card (V, MC, AmEx, Disc) and store card (Macy's, Home Depot, etc.). The bad kinds of credit are payday loans, unsecured personal finance loans for purposes of getting cash advances, and overdraft loans. If you have holes in your credit mix, filling the holes will score points. It's safe and advantageous to have 2 major cc's and two store cards. Again, use them every month to make a new necessary charge and pay the charge off in full the following month.

Opening new cc's will cause hard inquiries into your credit history, and these hard inquiries will temporarily cost you a few FICO points apiece. Inquiries and new credit are 10% of your FICO score. However, inquiries fall off your reports in at most 2 years, and they lose their ability to hurt your score as they age.

By opening a few cc's now and using them and paying them off monthly and responsibly for two years, your score will be higher in two years, and you'll be closer to your goal: a FICO 760 score for the middle score of the 3, a situation that will get you the best mortgage rates.

Please vote: Did this help?

Answer 2

Actually you are right in the area of a very good score. Anything over 700 is considered good and you probably can get good rates right now. They won't be the absolute best, but they should be very close. If you paid the charge off's they are really not hurting you right now, or if they are it is a minimal amount since they were over 4 years ago.

One thing you may want to do is open another major credit card. If you only have one that is probably lowering your score a bit, the strange thing about scoring is that they want to see more credit rather than just a limited number of accounts. With your score this should not be a problem to get one. Just do the same thing with this credit card by paying off the balances or keeping them under about 30% and you will be fine.

Answer 3

It sounds like you're on the right track. It does take quite a while for those boo boos to go away. I had the same situation a few years ago. You just don't realize how important your credit is until you really need it. Large payoffs help to hike your score up a little. So if you could find the money, paying off your car would help. Sometimes if you have a delinquent account you can bargain with them by settling with them on a payoff figure if they will remove the delinquency from your history. Don't get discouraged though. I had terrible credit a few years ago and now my score is super high. And I plan on keeping it that way. BTW a good mortage broker can help you find ways to improve your credit and can help you find the lowest rate possible when you are ready to buy.

Answer 4

Wrongs can be different between cultures and can change over time. Some cultures believe that certain food must be prepared in a certain way and it is wrong to do otherwise. That wrong my have evolved before refrigeration was available and so may no longer be applicable. Even so, there will be some who follow the tradition just because it worked for prior generations. For people who believed in the necessity for racial purity some people it was wrong to have integrated schools, shared restaurants and bathrooms. For people who believed in male superiority, it used to be wrong for women to expect equal pay. For populations that were dying because of disease or loss of life in war and natural disaster, one can imagine that homosexuality was discouraged because it diverted sexual energy from reproduction. I suspect that if you check the 10 Commandments you will find that each was described to discourage actions that tended to have bad results for those societies at that time and probably still does. In many cases, just as you have described and to the developed world of the 21st century, these bad results appear quite logical. In Biblical times, only a few understood the logic or had the wisdom. Moses was very wise indeed and knew that the long suffering Tribes would never have believed he could personally have such wisdom but if he described these as the words of God, well . . . . . .

Answer 5

In 3 more years, most of those youthful indiscretions will go away. Until they do, a charge-off is death on a credit score. It says you are or at least were a deadbeat.

Answer 6

Unfortunately, you have done everything you can do.

Even if you admit you were young and made mistakes, and since corrected those mistakes, your mistakes won't simply go away. It takes time to rebuild your credit.

Keep being a responsible credit user and your score will follow. I suggest you wait few years before even think about getting a mortgage. Without enough preparations, it can land you where you started - quite easily.

Answer 7

You're doing all the right things. Those negative things will come off in a few years, and your score will go up. Be patient.

If you absolutely have to get a house right now, you could get a less-than-optimal loan, then refinance when your score goes up.

Answer 8

Actually, your credit score is pretty good. It's the charge off's that are getting you. Maybe you can get a co applicant or guarantor to sign with you. That will help.

Answer 9

Apply for more credit cards.
Sell your car.
Do not make major purchases with your credit card.

Answer 10

your avtar is so hott