Building Credit Score - Tips & Tricks

[SimonBelgium 49]

Updated to include co-signing by USC spouse (or other USCs with good credit)

[icv21 110]

This is so helpful!!! I was looking some info around the forum since in the US they seems to check your credit history to get a phone line!!! ( so different from Spain )

Found your post the first and just what I needed to know. Thanks for helping

Ps: I also use transferwise to send some money from Spain to my US account it's a great service!

[SimonBelgium 49]

This is so helpful!!! I was looking some info around the forum since in the US they seems to check your credit history to get a phone line!!! ( so different from Spain )

Found your post the first and just what I needed to know. Thanks for helping

Ps: I also use transferwise to send some money from Spain to my US account it's a great service!

Glad I could help... And yes, many things in the US are quite different from what we know in Europe...

[Ontarkie 14,218]

~~Post removed as requested~~

[Póg mo 1,749]

I started with a $500 Capital one credit card in November 2013. After about two months I opened a Walmart store credit card. Six months after opening my capital one he card, my limit was raised to $2,000. I then applied for a Discover card and given a limit of $1500. About six months later,. I requested higher limit from Capital one, and it was raised again to $3,000. Walmart also raised my limit to $1200, after I requested it. Every three months I would request a higher limit from Capital one and Discover. Walmart then offered to give me a real credit card, but unfortunately this meant they closed my old one, so year's worth of credit history was essentially removed. In July of last year Discover raised my limit to $5,000 and in August I applied for an auto loan from ally. The interest rate was high 8.9%, so I refinanced at a local credit union for 3% in November. In December wells Fargo sent me an application for a credit card with I think 8% APR. I applied and was given a 9,0000 dollar limit, which I thought was good given they rejected my application about 12 months earlier. I was just yesterday approved for a $140,000 mortgage. The main thing for building a good credit score was to pay my credit cards off as soon as possible, use them to make regular purchases and keep requesting to increase my limits when possible. The more credit you have available, the more credit card companies seem willing to raise your limits. And never ever close open credit card accounts, which means you should avoid credit cards with yearly fees, which you might be stuck paying long after you want to quit using them. Personally I think it's a good idea to open accounts in clusters, so your length of credit history will recover faster.

[SimonBelgium 49]

Update April 14, 2015, my personal experience at the credit union.

[bookworm123 7]

Been in the U.S since July 28 2014 and as of today,I have a 750 credit score,amex with $9500 limit,Cap One $3000,Chase $4000 and Macys $2500.I started out as an auth user of most of my husband's credit cards (amex,discover,cap one,credit one) which gave me a head start of a year of credit history.Discover denied my application because of credit history,lol.I also make sure my credit utilization is below 15% and of course paying on time is a must.I am still piggybacking on all of my husband's cards to increase my limit and improve utilization and he is also on my cards.No personal or car loans in my name yet but hopefully can buy a house next year.

[ggodoi 9]

I started with a $500 Capital one credit card in November 2013. After about two months I opened a Walmart store credit card. Six months after opening my capital one he card, my limit was raised to $2,000. I then applied for a Discover card and given a limit of $1500. About six months later,. I requested higher limit from Capital one, and it was raised again to $3,000. Walmart also raised my limit to $1200, after I requested it. Every three months I would request a higher limit from Capital one and Discover. Walmart then offered to give me a real credit card, but unfortunately this meant they closed my old one, so year's worth of credit history was essentially removed. In July of last year Discover raised my limit to $5,000 and in August I applied for an auto loan from ally. The interest rate was high 8.9%, so I refinanced at a local credit union for 3% in November. In December wells Fargo sent me an application for a credit card with I think 8% APR. I applied and was given a 9,0000 dollar limit, which I thought was good given they rejected my application about 12 months earlier. I was just yesterday approved for a $140,000 mortgage. The main thing for building a good credit score was to pay my credit cards off as soon as possible, use them to make regular purchases and keep requesting to increase my limits when possible. The more credit you have available, the more credit card companies seem willing to raise your limits. And never ever close open credit card accounts, which means you should avoid credit cards with yearly fees, which you might be stuck paying long after you want to quit using them. Personally I think it's a good idea to open accounts in clusters, so your length of credit history will recover faster.

Closing a credit card will not impact your score the way you are stating in your post, after a credit card account is closed it remains in ones credit report for many years.

[ggodoi 9]

I started with a $500 Capital one credit card in November 2013. After about two months I opened a Walmart store credit card. Six months after opening my capital one he card, my limit was raised to $2,000. I then applied for a Discover card and given a limit of $1500. About six months later,. I requested higher limit from Capital one, and it was raised again to $3,000. Walmart also raised my limit to $1200, after I requested it. Every three months I would request a higher limit from Capital one and Discover. Walmart then offered to give me a real credit card, but unfortunately this meant they closed my old one, so year's worth of credit history was essentially removed. In July of last year Discover raised my limit to $5,000 and in August I applied for an auto loan from ally. The interest rate was high 8.9%, so I refinanced at a local credit union for 3% in November. In December wells Fargo sent me an application for a credit card with I think 8% APR. I applied and was given a 9,0000 dollar limit, which I thought was good given they rejected my application about 12 months earlier. I was just yesterday approved for a $140,000 mortgage. The main thing for building a good credit score was to pay my credit cards off as soon as possible, use them to make regular purchases and keep requesting to increase my limits when possible. The more credit you have available, the more credit card companies seem willing to raise your limits. And never ever close open credit card accounts, which means you should avoid credit cards with yearly fees, which you might be stuck paying long after you want to quit using them. Personally I think it's a good idea to open accounts in clusters, so your length of credit history will recover faster.

You being approved for a 140000 mortgage dnt depend on your credit score, your credit score might dictate what interest rate you get while your income dictates how much you can afford to lend.

[SimonBelgium 49]

Closing a credit card will not impact your score the way you are stating in your post, after a credit card account is closed it remains in ones credit report for many years.

This is not what I read so far. Once you close a credit card, it is gone the next month. Only mistakes you make yourself remain on your credit report for years.

[ggodoi 9]

If anyone has more info, tips, tricks etc, I will update the text above accordingly

Closing an account does not hurt your score like you are saying, it stays on the report for many years. If somebody has subprime cards with high annual fees that they dnt use anymore they can close it without fears.

Also you say that if you dnt use a credit card you are hurting your score, where did you read that ? That is wrong information.

Myfico.com is a great website to learn about credit in general, in their homepage to the top right corner click connect with the community, that is their forum. Anybody wanting to learn about credit in depth should pay them a visit.

[ggodoi 9]

This is not what I read so far. Once you close a credit card, it is gone the next month. Only mistakes you make yourself remain on your credit report for years.

CLOSING CREDIT CARDS

THE FACTS

Closing a CC (credit cards) does not lower your FICO scores in and of itself. When deciding to close a CC there is two important things to consider. In the short-term, closing a CC can have an adverse affect on your UTIL percentage calculations and this in itself can definitely lower your scores. In the long-term, a closed CC in good standing (nothing derogatory reporting) with a $0 balance will generally be deleted from your CRs (credit reports) after 10 years. Once this account is deleted, you lose the history and age and this might lower your scores.

SHORT-TERM

The most important factor to consider when closing CCs is the affect on your cumulative UTIL percentage calculation; this is the total sum of all of your CCs CLs (credit card limits) divided by the sum of their balances.

Utilization Percentages

To fully understand what Utilization percentages are, you must understand FICO scoring has two types of util percentage calculations, one that looks at the extent of utilization on individual revolving accounts (i.e. CCs, overdraft protection and sometimes Helocs) and the other is cumulative and looks at the extent of utilization on all of your revolving accounts.

Example

Card 1: CL 5K, balance 1,000 = 20 percent util

Card 2: CL 3K, balance 800 = 27 percent util

Card 3: CL 2K, balance 1,000 = 50 percent util

The total CL (credit limit) is 10,000 and the total balance is 2,800, so the cumulative UTIL is 28%. Not bad but not ideal.

Let's see what happens if you close one of them.

Close Card 1# and pay off the balance:

Total available credit decreases from 10K to 5K

Cumulative Utilization: 5K CL, balance 1.8K = 36 percent

YIKESGetting worse!

Closed and opened CC TLs are weighed and scored equally by FICO. You will not be punished by simply closing a CC as long as it is in good standing, has a $0 balance and your cumulative Util remains at 1-9 percent. Increasing the CLs (credit limits) on the cards you plan to keep open before you close the card(s) you don't want might be helpful as this too helps to keep your Util percentage low.

Also open and closed accounts age the same. Closing a CC has no affect on average age of accounts or credit history length.

Tidbits (this section is courtesy of moderator, Lel)

- If a closed CC account with a balance continues to report the original credit limit, then both the balance and the CL of the closed account will be used in the utilization calculations.

- If a closed CC account is reporting a zero CL, even if there is a balance on the CC, the card will not be included in the calculations.

- If a closed CC account is reporting a non-zero CL but has a zero balance, the card will not be included in the calculations.

- If a closed account reports a CL that is equal to the balance (balance chasing), then this will be included in the calculations. This is the worst-case scenario with regard to utilization.

LONG-TERM

In the long-term, closing a CC in good standing with a $0 balance will generally be deleted from your CR after 10 years. Once this account is deleted, if your length of credit history and/or average age of accounts decreases in the number of years, your scores might drop.

FINAL NOTES

In the short-term, there should be no adverse affect to your FICO scores, average age of accounts, or the length of your credit history, provided there is no increase in your util% calculations after you close any CC(s). In the long-term, a CC in good standing (nothing derogatory reporting) with a $0 balance will generally be deleted from your CRs (credit reports) after 10 years. Once this account is deleted, you lose the history and age of this TL and this might lower your scores.

[Portlandia 15]

Has anyone tested this last piece of advice out here in USA? It would be exciting if it is true. I just came here as an international graduate student, and have decided not to work for the first 6 months. I just got my Oz Amex transferred to USA (with minimal limit of $2000, but better than nothing as a start). I'd be stoked if they fed my Oz account age into the FICO formula as I got the card in 2012! I'll update my findings here once I start to see scores.

Yes, this works. My Amex card is reported on my credit report as having an 8.5 year history, which has really helped my FICO credit score. They didn't transfer my credit limit either, and just gave me the minimum $2000 limit, but they've increased that since.

[loba2000 2]

Hey guys almost a month ago I opened an account with Bank of America. But now I want to open a bank account in Chase and want to close my Bank of America checking account.

So will closing my Bank Of America checking account hurt me in any way?

[SimonBelgium 49]

Hey guys almost a month ago I opened an account with Bank of America. But now I want to open a bank account in Chase and want to close my Bank of America checking account.

So will closing my Bank Of America checking account hurt me in any way?

No, only credit lines are reported