How to improve a low credit score

Do you have a low credit score?

First step is to get your absolutely free credit report & score, if you haven’t already. Your next step is to determine if your credit score is actually considered “low”.

Sometimes it’s hard to figure out what exactly is a good or a poor credit score. The best credit ratings are 770 points and up. Freddie Mac, for example, considers anything above 770 an “A plus.” A FICO score of over 750 will get you an “excellent” rating from Lending Tree, while Fannie Mae says a 740 is excellent. CBS reports that if you have a 720 or more, you have no worries at all, since that number is in the same level category as an 800. Fair Isaac has declared that anything over 700 is “golden.” Even a person with a credit rating of 650 or better can be considered a prime borrower, as long as there are no records of late payments on their record.

In Summary

If your credit score is below 700, you may not qualify for some of the best interest rates on credit cards, loans or mortgages. This means that just by having a credit score of 695, instead of 725 (just an example), you may end up paying thousands more in interest on any new credit you are granted, which you can avoid by just taking some simple steps to increase your credit score before applying for a new personal loan, auto loan or mortgage. It is widely believed that a credit score of 720 or higher is ideal.

How to improve a low Credit Score

If you have a recent bankruptcy on file, repossession, foreclosure, missed or late payments… it will take time to bring your credit score back up after such a blow. If you are in this position, in the mean time just be sure to borrow “within your means” (although you may have trouble getting approved for any new credit) and don’t overextend yourself. Keep paying your bills on time, and you will be back on the road to raising your credit score.

If you pay your bills on time, don’t have a recent bankruptcy on your record, and don’t have any missed payments or collections on file, look at your credit card balances. Normally you will want to keep your debt-to-credit limit ratio, on your credit card accounts, below 25%. If you owe more than 25% of your total credit limit on your credit cards, consider paying them down.

Example: if you have a credit card with total credit line of $10,000, and you have a balance of $2,500 on the card, you would owe 25% of your total credit line on that card.

Also keep in mind that even if you pay your credit card balance off each month, it still may be reported to the credit bureaus that you are carrying a balance on that card. It depends on what time of the month your credit card issuer reports to the credit bureaus, they will list whatever your balance is on the day they report it. However, most (if not all) lending institutions are aware of this, so this is generally not something to worry about.

Too many open credit card accounts

Also, too many open credit card accounts can be a bad thing. But, if you already have several open credit card accounts in good standing, don’t cancel them, the added “good” credit history can help your credit score. If you find that you have way too many open credit card accounts and you have decided to cancel some of them, be sure to cancel the most recently opened accounts. Keep the oldest accounts open. Normally the longer your payment history on an account, the better your credit score will be.

Try not to open any new credit card accounts that aren’t necessary. Generally when you open a new credit account, it will lower your credit score slightly, at least for a short period of time.

How you manage your “revolving credit” (credit card accounts) is a big factor in determining your credit score.

Newly Opened Credit Accounts

Usually your credit score will take a slight hit from newly opened credit accounts such as credit cards, auto loans, or mortgages. How many points your score will decrease depends on how many times you have applied for credit in recent months.

However, this decrease is only temporary, your score should rise again after several more months of making your payments on time. Normally this is not something to worry about, unless you have submitted many applications for new credit in a short period of time. That may indicate to credit issuers that you are beginning to overextend yourself (applying for too much credit), or that you are being denied credit and you keep trying other lenders hoping for a different result.

Short Credit History?

If you have a very short credit history (length of time you have been using your credit), that can also be a reason as to why you have a low credit score. Keep paying your bills on time and follow good overall credit management, and rest assured – with time – your score will rise!

No Credit History?

If you have absolutely no credit history, your credit score will most likely be low to start with. You can get started by applying for a credit card in an attempt to establish your credit history, or if you are trying to obtain an auto loan, but haven’t had any luck getting approved because of a short credit history (or no credit history), you can ask someone you trust to help you by co-signing on a loan with you.

These are just 2 of the ways you can start establishing your credit, but probably the 2 most common ways. When you are approved for your first credit account, be sure to pay your bill(s) on time, and you will be on your way to a better credit score!

Photo credit: CafeCredit


  1. Joe

    I am a US natural born citizen that had lived many years outside of the country. When I returned, I had, literally $2 in my pocket and a credit score (from a wild early 20’s) of about 520. I got a job, worked with creditors and 2 years to the day, after moving back to America, bought a small house on $30k a year income, 2 years after that (now) with a better job and my wife able to work (US permanent residence) both our credit scores are over 740. It can be done! It can be done!! I am living proof. Keep paying off those debts!

  2. Katy

    A debt over ten years has appeared as more recent after the bad debt was sold and new collectors attempted. Does this ever end?

    1. Joe

      You need to contact the credit bureaus and dispute the old debt. It shouldn’t be on your credit report if over 7-10 years old. That being said, you could still have bill collectors attempting to collect a debt that isn’t suppose to be on your credit anymore.

    1. Ronald

      I had a low credit score and I got it up 100 points in 3 months. You want to pay off your credit cards and keep them but pay each month. You want to pay off any outstanding debt. If you need to get your credit up take out a cash advance on a credit card you have paid off then put the money in the bank and after 25 days pay the card back. They expect people that are getting cash advances are spending the money not re-establishing the ability to show you can get in debt and pay it right off. Your score will jump quickly.

    2. eric

      I was below 500 a couple years ago plain and simple go to who you bank with and get a secured credit card give the bank $300 and that will be your credit card spending balance. that’s what I did after 1 year they Gabe me my $300 back and upped my credit card to $600 my score started improving is been a little over 2 1/2 years now and I’m at a 665 credit score sick with one or 2 credit cards gabbing to many affects your score. be patient

    3. Jo

      My credit score was 470 1 year ago. It is now 526. Pay your credit cards on time and all your bills. If you pay slightly more than the minimum account required on credit cards that shows lenders you can afford to make repayments boosting your credit rating.

  3. AJ

    The whole financial system in this great nation is a huge scam! Credit Cards are the worst!
    Who are the Boobs that work at these places? DISCOVER is a bad one, Capital one is a bad one too the list goes on ! For all of you people out there just don’t do business with them! They send and offer don’t be tempted to get it.. boycott the cards.. I often wonder what Uncle Sam’s credit score is? Does anybody know?

    1. Justin

      Well I do think credit cards companies tend to take advantage of people in certain cases, but I also know they are a necessary thing to have for many reasons. One reason would be that they are a good way for someone to build credit when they are young and have no credit history, another reason would be sometimes you need to buy or pay for things that you can’t afford to pay cash for. I think we all know Uncle Sam must have a fairly high score considering he owes most of the world money!

  4. Johnny

    Okay I read admin and PK comment lol it’s funny cause I don’t know why they are arguing lol I have been on both sides so I think I’m better at explain. Yes credit is based on computers and boobs sitting behind them. As for the fact anyone can mess up someone else’s credit with alittle information. Credit is not something for everyone and if you can pay for stuff out in full that’s great. As to many they can’t pay it off so they use credit as to the aspect that someone is using credit of there own free will. In the US credit is one of the most complicated and dumbest thing. As to it being a scam yes it is for really you don’t need to buy anything you don’t need. As to many places or companies have left the bank system and it’s more of a way of gaining profit instead of helping ppl get what they want. It’s not a need but more of an option. As you said PK you make 20k a month so realoy even with your income credit really little plays in effect. There are ways around credit and they base everything as being equal. Credit score are some of the most easiest things to build an generat. I went from being burned and left with a score around 520 something in 2 I was able to get back to 580 and entered the 3-4 around 600 I mean it’s more than payment. You have the income then sure your credit isn’t affected much. But complaining about it while saying you make that type of income just means you don’t know what to do or how. Credit can’t be based on income and equity alone. Your a land lord then you should know that. I have help others ppl generate credit scores that are unheard of from bad to good or fair it’s based on how much you know about the system and there are loop holes. Just need to know how to use them and it’s sad you can’t generate a 700 credit score with that tyPe of income I make a quarter of that now and have over 50k in med bills and still have a good credit score.

  5. reggie

    my experience i had one repo a bunch of unpaid credit cards that were late collection accounts up the a$$. one day i said well lets see if i can figure out this credit thing. my situation i went applied for cap one secured card credit limit 200 paid it on time for 6 months. no change in score ok about a week later all kinds of credit cards came in the mail, ok. they say 3 is the limit so i got 2 more, once i payed on time score went from 570’s to 580’s. next month everything on time jumped to 600. next month on time jumped 620. i finally stopped it at 634 then i maxed all them out to see what would happen and also opened a snap on tool account maxed it also lol.score went from 634to 570’s in a month lmfao. ok lets see what happens if i pay on time maxed for 4 months. today i looked 574 to 585 all maxed except snap on cuz it comes out automatically and i havent bought any tools. what im trying to say is no situation is to bad to fix. within a year u can be back in the green this is how people keep filling bankruptcy every 5 years. my ex filled chapter 7 and a year went by and she had better credit than me which i never filled. so a starting point is a secured card and build from there it only takes a year to clean up. that house u want it will prolly be there next year after u get ur score better the way the housing market is. also shop around people still think there houses are worth alot more than they think, move to the next if they dont budge the next guy will guaranteed!

  6. Jay R

    Don’t only worry about Credit cards taking down your score. I got hit last month with a fatal credit blow. I recently went back to school to complete my MBA which placed my student loans I was paying on back into forbearance. During this time period I received a notice of an uncut. student loan that was held directly by the institution that I owed on from back in my BBA years that still had a balance on it. I filled all the correct paperwork at the time with the university to process the loan and add it to the deferment list while I was completing my masters and nothing more was mentioned. 8 months later I graduated and 4 months after graduation I receive a letter from the IRS! They stated that my university had sent them a debt (which was now twice the amount as before) for a non-payment. Although I had documentation to back up my statement that the debt was supposed to be deferred for the time period I was still told I had to pay the IRS off with the additional balance. I agreed to do so and set up a payment schedule with them. Two months later and after two payments had been taken out, I received a letter of a tax lien on my property! I immediately contacted the IRS and they placed the lien on my assets since I didn’t pay off the debt in full but elected to set up payment arrangements (this was not told to me during the initial discussion with the IRS). So that being done I pulled my credit report to see how this affected my rating. I had a credit score of 704 only 1 year earlier and with no additional payoffs or missed payments on the report, the lien dropped my score to a 420!! That’s right, my score fell 284 points overnight. I have spent the last 3 months fighting this to get it straightened out but it looks to be a losing battle no matter where I go with it. The lesson learned here is that nothing short of bankruptcy will ever destroy ones credit and livelihood worse than a tax lien. It is a wicked beast that all should avoid like the plague.

  7. Rachel

    It’s definitely a bit shady I must admit. When I was 20K in debt my credit scores went up? My average was 780 across the board even with a negative public record and a couple of late payments. I found this baffling and kept thinking it must be wrong but I would check over and over and it was always almost in the 800s.

    Now I paid off all my credit cards and only kept a couple of them but only one has a balance and it’s not big. My scores are now ranging from 695-700!!!!!!!!!! So basically I am being punished for not keeping all my credit cards and charging them up the wazoo! I am being punished for not being in debt.

    Your credit score should be high if you pay off your bills not low as a result of it. As long as you have some kind of credit history somewhere along the way where you paid people off then it should be high and perfect if you pay off things quickly. Shouldn’t matter how old the history is. Dave Ramsey teaches on the credit check scam and the whole mentality that you have to have credit.

    1. Jeff with a G

      Rachel, I am sorry but I see this a lot. People become responsible, they learn that they were spending too much and they pay down their balances and close out half their credit cards. I am not against someone closing out their credit cards if it is what you need to do to prevent yourself from running up a huge debt again.

      However, what I would recommend to someone that wants to keep their credit score high, keep those cards open and use them only once a month for minimal things. If you have to close some of them to keep yourself from spending too much (I respect anyone that can look inside themselves and say they have to do that in order to be disciplined) then only close out the newest cards. Closing out your oldest cards will hurt your credit score.

      Rachel, please don’t look at it as having bad credit for doing the right thing. Look at it as you were willing to except a lower credit score in order to ensure that you will be able to maintain a healthy financial state in your future. Trust me your score will continue to climb back up if you give it a little time.

  8. Jennifer

    I used the score estimator and it said I should be 690-740, but my actual scores range from 690 to 709. I have 2 loans and 4 credit cards. All credit cards have $0 balances. One card is 6 yrs old, one is 3 yrs old and the other 2 I opened within the last couple of months, like an idiot. I’m thinking about closing one of those because I figure they’re probably why my score is low right now; would it be better for my score to just leave them open? And should I definitely use my credit cards more?

    1. admin Post author

      Jennifer, you might consider just leaving all your CC accounts open for now, and you can just continue not using them. Using your credit card accounts won’t really help your credit score, keeping all CC balances as low as possible is what will help your score the most. So if you are not currently using them at all, if that works for you, then I would just keep doing what you’re doing. Zero balance over multiple credit cards is just fine for your credit score, it shows responsible revolving credit management.

      Later you might consider closing your newest accounts if you find that you do not need them, it’s usually best to keep the older accounts open. But keep in mind, closing your newest accounts shouldn’t help your credit score. Since you have zero credit card balances, it shouldn’t hurt either though. What did probably hurt your score at least a little, is the hard inquiries on your credit and the new account, both of which will put a temporary ding in your credit, which will diminish over time.

  9. Mick D

    Admin, I totally agree with the possibility of improving your credit score. At one point, my score was a 440!!! I literally, did nothing and just waited until I finished school to repair my credit (2 yrs). The 1st step is getting your report, the second step is DISPUTE EVERYTHING!! Wait till some of the items drop off, apply for an Orchard Bank card, and don’t spend more than 30% of your credit limit every month. Pay your balance off in full EVERY MONTH…and watch your score grow. My score is now a 675!! It’s not perfect at all..but a huge step from 440 two years ago. Credit is about being responsible w/ your money. If you can’t pay for it in cash, you can’t or rather shouldn’t pay for it using credit.

    1. admin Post author

      Mick, sounds like solid advice to me. With some time, the correct knowledge, and some patience, it’s very doable! Keep up the good work!

  10. Kay

    Dear Admin,

    I have just made a large payment on my Bank of America credit card to reduce the debt from $20K (near limit) to $18K. Can I ask Bank of America to report the new balance now or do I have to wait until they automatically do it themselves?

    Thanks for any insight,


    1. admin Post author

      Kay, you can certainly ask BoA of they will report the new balance now, but I don’t know if it will do any good. As far as I’m aware they typically report the account to the credit bureaus at the time they send out the statement, and I’ve not had any experience with CC companies taking requests for reporting the accounts early. Your best bet is to find out what date they send out your statement (if you don’t already know), and try to plan on making your payment shortly before that, so it will be applied to the balance just before they report it. But if you do ask them about it, I’d love to hear what they had to say if you have a chance to get back to us!

  11. Cathy

    Very long story short, I have decided to file for bankruptcy. I have thought about this for a very long time, and I am very ashamed that it has come to this. Some of it is my fault, some of it not, but what’s done is done. There’s no other way out. I have two questions.

    My first one has to do with auto loans. I desperately need a new car. I am filing for bankruptcy in April, and my attorney says the whole thing should be discharged by the fall. He says if I get a loan before the bankruptcy, it does nothing to help my credit, but if I wait until after the bankruptcy is discharged (not filed), my on-time payments will help me get my credit back up. In either scenario, my parents will have to co-sign with me. I am very concerned about what this does to THEIR credit. Obviously, I know if I don’t pay on the loan, it will hurt their credit. But what do credit agencies think if my parents co-sign on a loan with someone with very bad credit vs. someone who has just filed for bankruptcy? Is their credit affected in either scenario?

    My second question has to do with building my credit back up. I am 38, single, well-educated and gainfully employed. I have paid cash for everything since 2005. At that time, I was drowning in credit card debt (my fault) & I could never get out from under it. Once I resolved to pay cash for everything, it only got worse because I never had any extra money to try & get ahead of them. (I should have filed for bankruptcy then. This is the point where I started to feel that the credit system in this country is rigged in favor of the banks.) In any case, I recently came to the realization that I was never going to get out from under this debt & that all the money I paid might as well have been burned since it hardly did anything to reduce my balances with the interest rates I was being charged. (Also, I have a hefty student loan payment, which I know can’t be discharged in bankruptcy). My question is this: How long will it take to recover from this? And what’s the quickest way to do it? Or should I just accept that I will never be able to buy a house, or ever finance anything on my own ever again? This bankruptcy literally feels like the end of my life, which is why I put it off so long. Is there any hope?

    1. admin Post author

      Cathy, your parents credit will not be negatively affected at all unless you fail to make your payments, or have missed/late payments for that account. I know it must seem like the end of your life, but as I’m sure you know, it’s really not. You are lucky you have parents who are able/willing to help you out with obtaining an auto loan, many people I’ve talked to in your situation do not have someone to help them out in this way. That will be a great start in rebuilding your credit. I would also recommend a pre-paid credit card as well to further help with that. Also, ask your local bank or credit union about a “credit builder loan”, which is essentially a small, short term loan from the bank/CU which is put into a savings account, and at the end of the loan you are able to withdraw that money. They will charge interest on the loan, but it’s still a great way to build up your credit without actually buying anything, or taking on more debt. On-time monthly payments on your existing student loans should also help with your credit recovery efforts. Even though it will remain on your credit report for 7-10 years, even 2 or 3 years after your bankruptcy, you may find that you are starting to look much more favorable to potential creditors/lenders!

  12. Erin

    My middle credit score is 5 points away from me getting a home loan. I have a $3900 credit limit Discover that has been hovering around a $2500 balance for a few months. I paid the card down to a balance of $350 on Jan 11th. Discover reports on my statement cycle which was January 19th. Tomorrow is February 2nd. If I went to my bank tomorrow, do you think my middle score will have improved 5 points by then? The homeowners accepted my offer and I’m trying to give this score as much time as possible but I’m running out. Thank you in advance.

    1. admin Post author

      Erin, sorry for the delay on this reply, but I would love to hear back from you on what happened. I would say yes, based on what you described, that your score would probably rise at least the 5 points you needed to get your home loan.

  13. Bon

    Banks, credit, and loans are ALL a system created to keep us all slaves to the system. It takes forever to build good credit but it takes one bad event to get bad credit. If a person hits a bad season due to unemployment or some other situation the system could care less. And it takes YEARS to recover from just a few months of a rough season. Credit is a joke and a slave master created to keep us all slaves to a system setup solely to make banks money. The bottom line for banks are no longer to secure the public’s money or assistance with any other endeavors that requires additional finances…it is to make money! The way banks treat people these days it is better to go to Big Louie down the street who will break your legs if you don’t pay up. Don’t be screwed by the system any longer. Keep paying cash for EVERYTHING and stay free from this modern day slave trade.

  14. Ken

    I have a credit score of 685, late payments that are over two years old. With this score is it still possible to get a mortgage loan.

  15. JamesMS

    I checked my scores through three websites last month. The first being truecredit which gave me a median score of approximately 615, the second being selectidtheftprotection which gave me a median score of about 570 and the third being myfico which gave me a median score of about 559. All of that leads me to my first question being, how do I know which of these scores I should actually be focused on as far as which one lenders look at when the do an inquiry on my score?
    (Also, when I checked my truecredit score it went up to 649 and my myfico score went up to 629 (69 points) is that possible in a span of just a month?)

    I have two credit cards, both with a 300 dollar limit, one being a Wells Fargo card and the other a Best Buy Rewards Zone card(which I applied for in order to improve my score), I am also a co-signer on an auto loan that has roughly 8K left on it and has been paid off on time each month, I do have student loans but filed for forbearance on all of them, I have about 900 dollars left to pay on a Military Star Card, I have one delinquent/defaulted account with DynoWatt Energy Company from last year.

    My question is, based upon what I just said, what are my chances of getting an auto loan through a credit union. I never really cared about my credit score until just recently, but this whole year I have been paying everything on time and as I have said above, my scores have increased. Any kind of advice would be greatly appreciated. Thank you.

    1. admin Post author

      JamesMS, if you want to pick a credit score which would most closely reflect what the score lenders are looking at, your FICO score is definitely the one to focus on. Most lenders will use a version of your FICO score to determine your risk for the credit you are seeking, even though it may not be the same exact version of FICO that you are seeing, it will usually be pretty close.

      Yes it is definitely possible for your score to rise that much in a month, the usual suspect for such a jump is usually a big reduction in your credit card debt. If you reduced your balance(s) by a significant amount, which at the same time lowers your debt-to-credit limit ratio, it’s not uncommon for a score to rise 70 points in one month.

      Depending on how old the auto loan is that you mentioned you were a co-signer on, it sounds like you may have a good chance of obtaining an auto loan. If you are approved, your interest rate probably won’t be the best they have to offer, but you have to start somewhere right? The DynoWatt Energy account you mentioned will hurt you, but otherwise it sounds like your chances are pretty good. It might be a good idea to go in and talk to them, let them check your credit, and they should be able to either approve or deny you right there. Just make sure your credit card balances are as low as possible before you go to apply, and give them time to report the low balances to the credit bureaus… as I mentioned before, paying down your CC’s as much as possible is usually the quickest way to boost your credit score. Good luck!

  16. bri

    Thankyou. Guess i just have to wait it out. one last question, if you dont mind.

    The lender on the ninety day late put a statement on it saying “Account previously in dispute – now resolved, reported by credit grantor.”

    Basically what happend is they called me and said i was sixty days past. I asked if a double payment would catch it up they said yes. i sent them double. Then they sent me a notice. i called again. They said i was thirty days past. i told them what the last conversation i had with them was and it should have been caught up. Lady said something about how they apply payments or something. This whent back and forth from july to october of last year on phone calls. i was sending them a couple k here and there figuring at some point it would be all set. But nothing they said made sense. i had stopped receiving any bills but got some kind of notice. So basically i refused to pay them anything until they sent me a full account history. By the time the account history showed it was ninety days past due and i had already been hit with a sixty day and three thirty day lates from our three months arguing before. and they wouldnt let me pay anything on it at that point because they said it was over ninety days. i fought with them for two weeks onthe phone and finally they said they scheduled a “foreclosure date” (no court or actual sale) and i had to pay a full reinstatement fee. so i went ape shit and hired a lawyer, which basically said there wasnt much he could do and charged me another 1500 to basically give their lawyer 1500 and pay the reinstatment on top.

    i still dont understand what happend with the payments and schedule. i Figured out they had some listed in some sort of temp account and never applied it, but dont know why i think it was less than a fullpayment from overpayments or something.
    i do believe i was late, but i believed they were applying the money screwy as well so i basically just told them to kiss off until i got the account statement. Didnt work out well..
    But the “account previously in dispute now resolved, reported by credit grantor” does that matter?

    1. admin Post author

      Bri, I don’t believe that the “account previously in dispute now resolved, reported by credit grantor” will by itself hurt your score. Those are usually those kinds of things that lenders will see and wonder what happened, but not necessarily something that the credit scoring systems will look at to determine your score.

  17. bri

    probably should mention. i had one lender tell me at least twelve months from my ninety day late. Another told me 24 months from the ninety day late. My local credit union just looked at me like i had two heads and said they had no idea.

    There guidelines they go buy for lates on mortgages and time frames?

    This is just strange for me. i have owed five times more than i owe now and paid it all back. now i only owe like fifty k, and have money to put down and am getting no’s. I paid back over a 140k just in the last six years. And they look at me like im from another planet when i inquire on another mortgage note (even though i already have paid a couple off). Thankyou for your patience i just really dont understand the problem i guess when talking to lenders right now. I dont consider myself high risk. no defaults. i dont get it.

    1. admin Post author

      Bri, unfortunately that 90 day late is pretty bad in the eyes of a lender, really just one step away from default. I would give it another year or so and see where you are then, especially if you can demonstrate good revolving credit management in the mean time, which basically means putting charges on your CC and paying them off every month. Your past credit history, other than some lates, sounds pretty good… but the lender will not only want to see that you have paid your debts in the past, but that you are able to pay your debts now and in the future as well.

      If you can look at it like this it’s a little easier to understand: say an acquaintance of yours wants to borrow money, lets say $5000 for medical bills. You know for a fact that this person has had trouble making their mortgage payments in the past year, and you don’t have a lot of extra cash, so you need to make sure this person will make monthly payments to you so you have the cash flow to pay your bills. Would you be reasonably sure this person would make the payments to you on time every month? Personally, I wouldn’t feel good about it until I’ve seen plenty of evidence that the problem has been remedied. By obtaining an installment loan, you’re basically promising to pay the payment on time every month, until paid in full. When you fail to do that, it’s a lot like breaking a promise, and recovering from that is very similar to rebuilding trust after lying.

      Your score could more easily bounce back after late payments on an auto loan, than late payments on a mortgage, since your housing payment should be top priority. And the later the payment the worse it is for your credit. So this one will probably take a bit more time to heal.

  18. bri

    5 fixed on first 6 fixed in 2nd,

    how long until the credit score goes back up? i have thirty and sixty day lates on cars before it it recovered fairly well. it started at a 746 last year before this last drop.

  19. bri

    probably should mention. The property i already have is a income property i live in as well. i haven’t decided if i want the next one for another income property or to by a sfr. But for some reason the bank seems to be less inclined to lend to me at all, but even more so on a income property. i can come up with the twenty percent down but would rather not.

  20. bri

    so what do you advocate for me? i have a fifteen year mortgage loan i still owe fourty k on with a 2017 payoff. A second mortgage for fifteen k also with a 2017 payoff. ltv is a bout thirty five percent. I have a sixty and ninety date late from the end of last year so currently dont qualify for a good rate at the moment. But want to buy a second property. i had another property as well and sold it. i have no auto loans. i just applied for a visa and sears card trying to boost my score since i had no credit cards just mortgage loans. The cards i once had i paid off in 2002/2004 but have had a hundred k (thirty k in credit cards i used one for the downpayment on the first property in a round about way) in revolving debt which i wrapped into a property loan back then. Have had five auto loans, but with a couple lates on each and early payoffs on all. one loan i only kept for two months. Because of the lates last year (near foreclosure but i reinstated before and court filing it just shows ninety days past), my credit pulled at a 550 then. when i applied for a visa and sears card yesterday the visa person talked to me on the phone today and said my credit now pulls at a 704. There are not judgments or defaults on it. i am still not high enough again in credit to get a good mortgage rate though, and some lenders wont touch me for the newproperty purchase because of the sixty day and ninety late from last year.

    my plan is get the sears card, visa card, and attempt to boost my score back up asap. I cant even refi the existing property and cash out currently with a good rate. My plan was to not worry about credit right now and just pay it off asap. But now i want another property again.

    as i said, i have a long history of credit. currently pulled at a 704 but i didnt ask if that was transunion, equifax, or what.

    1. admin Post author

      Bri, without knowing your rates on your current mortgages, if it were me I would want to pay off the second mortgage before doing anything else, assuming that one is the higher rate of the two (which is typically the case). Not only would it look better on your credit report to pay off the second mortgage, it would also give your credit some time to heal from the late payments you mentioned. If I were the lender looking at your credit history as you described, I would like to see the second mortgage paid off, responsible revolving credit management (low cc balances) and more age on the late payments – 90 days late really drags down a credit score.

  21. bri


    yes. credit supplys us financial resources for purchasing larger items. Provides liquidity to our finances since we don’t have the funds to provide our own. And is sadly one of the few windows open for the average person to accumulate assets and wealth over time through leverage. Unfortunatley for those who do not understand the tool credit is, it can also lead to ones financial demise. It can be a life jacket or a stone to one treading water depending on how the tool is used.

    Unfortunatley many attempt to “live” on credit. Meaning they use it for a lifestyle or to purchase what they cannot actually afford. And for some reason can’t see thirty thousand dollars credit when buying a car for instance, is the the same or often more than thirty thousand dollars in their hand. If they had to actually part with thirty thousand in CASH you wonder if they would make that purchase. But credit is not looked at as the same by most as it is almost surreal (until you are trying to pay it back).
    Perhaps one of the major flaws with people in credit. is for some reason they dont equate credit with real money in their hand that they are giving up. As well as what i mentioned, living or buying things beyond their real means. And the financial industry will just spread the payments longer for you fifteen yr mortgages to twenty, then to thirty, then to fourty years or more now. Car loans from four to five, to six, now to seven years possibly. This is how they sucker you in. The smaller payments dont seem as much, it is just a signature, etc. etc.
    cash back on cc cards, low introductory rates, bonuse miles. All these things are great for the FEW they make them payoff. The industry counts on the majority that wont and those that dont relate money owed to ACTUAL money.

    1. admin Post author

      Bri, I agree. Many people get caught in the debt trap borrowing more than they can really afford, just so they can keep up with the Joneses. I hear about way too many people going 5, 6 or even 7 years on an auto loan that they will probably only keep 2 or 3 years before they trade it in, probably still being upside down on the thing. Paying 5% down on a 30 year mortgage which they will probably never be able to pay off, because they keep refinancing just to lower the monthly payment so they can afford their other loan payments ( student loans, credit cards, car loans etc).

      There are some people who will always overextend themselves financially no matter how much money they make. These are the people who will always buy more car than they need just because they can afford the monthly payment, regardless of the length of the loan. They may refinance their home every time they calculate a savings on their monthly payment regardless of the fact that they might be starting over on their 30 year mortgage.

      Then there are those who know how to use credit to their advantage, only borrow what they need to borrow, pay off debts as quickly as possible, don’t carry a CC balance, use rewards cards wisely, etc. That’s what I am advocating here. If you play the game of credit right, it can be an asset instead of a burden.

  22. bri

    i agree with pk. Coming from a family with some millionaires, it is the middle class like me that actually worries about credit. if you have money, businesses, assets, and substantial incomes. you can finance your self and credit doesnt mean jack. Credit and credit scores are for us suckers that dont have the means to back our own financial selves. Not to say the millionaires in my family have no credit. But almost none and not stellar. And they really dont care either.

    1. admin Post author

      bri, you definitely have a point. If all of us paid cash for everything we purchased, there would be no need for credit. Since most of us don’t have the means to buy all the things we want/need with cash, credit suddenly becomes very important! It can be costly for those with bad credit, but it can also be very helpful, and make financial sense, to those of us with great credit.

  23. smedheat


    my Experian score is 596. It used to be way worse! I just opened a secured credit card account (practically the only card I can get right now). How long will it take to get out of the subprime range? over 650-660ish??? assume low utilization, no new debt, perfect payments etc.

    1. admin Post author

      Smedheat, for this one I would like you to try out our credit score estimator, plug in your info and then change the scenario to reflect what you are asking, to see how your credit score might change over time. Also, has a great credit score estimator tool to tell you “what if”, which includes more tips and tools for improving your credit score. Without knowing more details it’s really hard to accurately answer your question, but I hope this helps!

  24. SRLClark

    Hey Admin,

    You’re welcome. As I said, I really appreciated your advice. And I’m very happy with the new car.

    Funnily enough, the day after I got approved both for a $13,500 loan on a Honda Civic at a rate of 0.9% and for a $15,000 loan on a Mazda 3 at a rate of 1.8% (the latter of which I didn’t take), I got turned down for a loan of $750 on that furniture I was telling you about! So I just bought the furniture outright in the end. It’s a shame, but good not to take on too much debt and, as you said, the auto loan will be much more important on my credit report than the furniture would have been. I’m still looking for a TV and may try to get that on installment to help my credit

    Once again, thanks for the advice. I think this is a very useful website you’ve got going here. It helped me a lot with my car purchase and I’ll check back on here in a couple of years when I’m looking for mortgages.

  25. SRLClark

    Thank you, Admin. I waited for the credit bureaus to receive news that I have paid off my credit card balance. In the meanwhile, I did ask Chase to extend my credit line (I asked before I read your response) and they agreed to raise it from $1,200 to $4,000, somewhat surprisingly.

    Anyway, as a result, I just got an auto loan from Honda at a rate of 0.9%. Spread over a 30-month loan, it only means a couple of hundred dollars in interest, and so is saving me about $2,000 compared to what I would have had to pay a month ago.

    So thank you so much for your advice!

    1. admin Post author

      SRLClark, excellent news! Thanks for coming back and posting the update. I love hearing how things turned out, especially when it’s good news 🙂

  26. ken

    I currently have a credit score of 692 which is the lowest of the three reports. The credit agencies think I have a high balance on revolving credit but those lines are paid off at the wrong time of the month. Beginning this month I will pay them off right before the statement comes out so my debt to credit ratio will drop below 30%. I believe this will raise my credit scores in the 705 to 715 range. The question i have is, I want to refinance my home to pay off small rental property mortgages to reduce my monthly bills. Will i have a problem getting a mortgage if i have late payments that are over two years old but besides these everything else is fine.

    1. admin Post author

      Ken, sounds like your chances of being approved for a refi might be pretty good, especially if you are able to pay down your CC balances to below 30% debt to limit ratio. A two year old late payment will be a lot less of a burden on your credit score than a 6-12 month old late payment, so that’s a plus. It sounds like you have good credit, just with a couple dents. If you have a good long credit history especially on your mortgages, with no negative items there, I like your chances. Good luck!

  27. SRLClark

    Hi Admin,

    Thanks for the comments. What you say makes sense.

    Unfortunately, I do not think that I will be able to get a co-signer. I am from the UK and all of my nuclear family lives there. My ex-girlfriend could have co-signed for me, but the ex- part will probably rule that out…

    Given that, will the bump to my credit score at least serve to reduce my interest rate somewhat? If so, I will wait another three weeks or so and buy the car then.

    I’d also like to ask about my long-term future. Presumably having the car loan as an installment loan will help me when, in a couple of years time, I look for a mortgage. Is there anything else I could do to help that? I need to buy some furniture (a sofa-bed and coffee table/end table set) and a TV, TV stand, and DVD player in the near future. I would prefer to pay outright, but I noticed that both the stores I’m looking at for these purchases offer them as installment loans. Would relatively modest installment loans be a good idea or will the car on its own be sufficient to help me get a
    mortgage at a better rate in the future?

    Also, should I ask Chase to raise my credit limit so as to prevent my utilization ratio becoming extremely high if I need to make any major purchases on credit card in the future? And, if so, when should I ask them? Now, or after I have demonstrated several straight months of low-level payments being paid back immediately? I recently set the card to be paid in full each month by auto bill-pay so that should be a set in the right direction.

    Thanks again for the advice.

    1. admin Post author

      SRLClark, I would still recommend waiting a few weeks as you mentioned for your score to show the updated accounts, and what comes with that which should be a higher credit score.

      While I hate to recommend excess borrowing to anyone, a good mix of credit account is what pretty much every lender wants to see, so it could be in your best interest to obtain installment loans on the things you mentioned instead of paying outright for them. Even if they are short term loans, paid off accounts such as those would definitely look great on your credit report. Keep in mind, that sort of loan may not have as much of a positive effect on your credit score as something like your credit card and auto loan would. Be sure to ask them if the credit account is reported to the credit bureaus, if it’s not, it would be pointless as a help to your credit. You might also want to talk to your potential mortgage lender and ask them these questions to get some more specific answers. But in the mean time, you want as many good items on your credit report as possible while maintaining good payment history and low revolving credit card debt.

      I would wait a few months before asking Chase to raise your credit limit, like you mentioned it would probably look better if there was a bit longer history of you paying off the card each month before asking for a credit line increase.

      Looks like you are definitely moving in the right direction, and I hope you are able to get an auto loan with decent interest. That may not happen on your first try, but after the first time things get much easier as long as you pay your bills on time and don’t overextend yourself. Good luck!

  28. SRLClark

    Hi Admin,

    I’m trying to get a car loan right now. My credit score is a little low to qualify for a good rate. It varies between the three bureaus but roughly 650-660. There are a few reasons for this:

    1) I’ve never owned a car in the USA before, nor have I had a mortgage, or any other installment loan, and my credit history is too young.
    2) I missed a couple of credit card payments by 30 days in the last 18 months, because I was a student and just couldn’t cover them. (Now I’m a professor and my salary nearly quadrupled, so that shouldn’t be a problem again). Everything was always paid within 60 days.
    3) My debt-to-credit utilization rate is too high. Until earlier this week, it was 78%, but I got it down to 61% when the most recent statement was posted to the credit bureaus.

    Clearly, there’s nothing I can do in the short-term about either item 1 or item 2. But here’s my question. I purchased a plan with Equifax. From that plan, it seems as though my credit score could get over the 700 mark, which would help me a great deal with the car loan, if I reduce my debt-to-credit utilization ratio. Last week, with the 78% DCUR, my Equifax credit score was 643. This week, with the 61% DCUR, my Equifax credit score is 656. On the website, it allows you to predict how altering the DCUR will affect your credit score. It says that if my DCUR were 3%, then my credit score would be in the range of 703-723. Now, as it happens, my DCUR is in effect 3%, because one of the items on my credit card bill was a $750 deposit on a car that I got reimbursed before purchase because of the interest loans. Apart from that one item, my credit card bill is just $37.

    I only have a $1300 credit limit, so the difference between a balance of $787 and one of $37 is a DCUR of 61% in the first instance and of 3% in the second instance.

    Unfortunately, I got the reimbursement just hours after my credit card company (Chase) had reported my statement to the bureaus.

    Here’s my question: do you think the online scoring system is accurate? That is to say, would it really bump up my credit score as much as they say it would if my credit card balance were $37 rather than $787?

    And, if so, what can I do about it? I spoke to Chase, and they said that they would send me an updated balance report that I could to loan providers. Would that work? Or should I wait a month, pay off the $37 credit card bill, buy something small so that my next balance is, say, $13 and get a DCUR of 1%? Waiting a month for a car would be inconvenient, but definitely worth it if my credit score would really be bumped up from c. 656 to c. 705, as the latter credit score might enable me to get an interest-free loan on the car purchase.

    But do you think that such a loan is really realistic given that I would have the other two negative items on my credit report in any case? Would the 700+ score make up for them?

    Any help you can give me on this matter would be greatly appreciated!

    1. admin Post author

      SRLClark, it might be in your best interest to wait until Chase sends the update of your account info to the credit bureaus. It may not seem like it, but having a 1-10% utilization percentage (or DCUR as you put it) makes a big difference vs. 61% utilization, and will have a significant impact on your credit score. It wouldn’t surprise me at all if your score were to jump to over 700. The online score estimators are usually fairly accurate, so this is probably a good estimate.

      The problem will be getting approved when you actually go to get the auto loan, since you have not had any installment loans in the past. Lenders will often obtain a customized FICO score based on your risk for the specific type of credit you are seeking. In this case they might get a score geared more toward determining the probability that you will repay the auto loan without any late payments/defaults. Since there’s no history to look at for that specific purpose, you may have trouble obtaining the loan without a co-signer. Even if your score is technically high enough to qualify for the low or zero interest financing, the fact that you have not had an auto loan in the past will hurt you.

      It’s likely that you will need a co-signer to obtain a loan with the best terms, if you have access to someone who will “vouch” for you on your auto loan (co-sign), preferably someone with an excellent, long credit history, that would be your best bet. After you are approved for your first auto loan, as long as you make the payments on time every month, your chances of obtaining a loan on your own next time, without a co-signer, will be very good.

      Do you have access to a qualified and willing co-signer?

  29. JB

    admin, great posts here. I have a dilemma also, in ’08 i and my wife purchased a new home and a year later I bought a brand new truck. I don’t understand this i tried to apply for a credit card but was denied I don’t get this at all, I am current on my mortgage payments and the truck payments but i still cannot figure this out. I’ve cleared my past accounts and paid them off, is it because they still stick on the credit report, if so for how long

    1. admin Post author

      JB, if you have derogatory items on your credit report, such as late payments, collections, liens judgments etc, those will remain on your credit report for 7 years. Sounds bad, but if you have any of these items, the more age on them the better. So as time passes those negative items will affect your credit score less and less, assuming no new negative items are reported, your score will rise with time. Try applying for a secured credit card, just make sure that the card issuer reports the account to the credit bureaus.

  30. Derrick

    I owed $2300 on a credit card, and $4300 on my vehicle and paid them both off. I only have 1 other credit card that has a max limit of $3000 and I owe $500. I recently paid off those accounts. But my credit score dropped from 695 to 635. What would the reason be for this. I have no late fees and really no other credit things. Thanks in advance.

    1. admin Post author

      Derrick, it’s really hard to say why your credit score would drop like that, without knowing more details. Did you check your score from a different credit bureau, or maybe a different credit scoring model? Your score can vary from one bureau to another, for example there’s a possibility it could be 695 based on your Equifax report, and 635 based on your data from TransUnion. Another possibility is you checked two different scoring models, such as FICO vs. TransRisk. Each model typically has different ranges and algorithms to determine your score.

      Paying off your accounts shouldn’t be the reason for the drop, sounds like there’s something else going on.

  31. anto4316

    Hay admin.I’m 22years old.iv never had a credit card or any bills in my name till this year.o and no loans eigther.I now have rent lights water and a Sprint cell bill.I bank with Bank of America .my banker told me about a credit card that I can get through the bank that acts like”training wheels”.the amount I give her when I open the account would be my spending limit and she says it would be totaly insured by the bank.what do you think?o and Sprint sent me a score through the mail that said it was 1200.looking at all these comments and speaking to some family and friends leads me to think that that score is bogus.I want to start working on my credit but need some advice.

    1. admin Post author

      Anto4316, what you’re referring to sounds like a prepaid credit card. That’s one of the things I recommend for people who are trying to establish credit, it is an excellent way to establish a payment history with a credit account without having to actually borrow money. I would definitely recommend it.

      Something else to consider is what’s called a “credit builder loan”. Many banks and credit unions offer it, even though they may not advertise it. It’s essentially a loan your bank provides you, but you don’t get the cash. The payments you make to them is put into a savings account or a CD (certificate of deposit), which you can withdraw at a later time. So there’s really no risk for your bank, but at the same time it helps you build good saving habits and a good credit history at the same time. Definitely something to ask your bank about. They will charge you interest on the loan, but it’s still a great option for building credit. If your bank doesn’t offer it, check with other banks and credit unions, it’s a good bet that you will find one who does.

  32. Rickos

    Thanks for your answer Admin.
    So the the condensed version is that if you don’t have a mortgage, your credit mix is F???

    I probably will be looking for a mortgage sometime mid summer next year. Yes, my credit history is short because I was out of the country for many years. I couldn’t even get a car loan when I got back without my brother cosigning.

    Actually, I’m pretty proud of how fast I moved up the credit score ladder. My Freedom card is only a month old, and apparently, Chase is using their own credit scoring system, because on the back of the paper that says which purchases qualify for 5% cash back every 3 months, they had my score, which they said is 733.
    Quote :
    Scoring system name : Application Score
    Source : Chase Bank USA, NA

    “Scores calculated using this source can range from a low of 100 to a high of 990.”

    They gave me a credit limit of $4,000.

    “Key factors that adversely affected your credit score :

    Go figure…
    Of course, I bank with them, have my paycheck direct depostied, for almost 2 years now.

    1. admin Post author

      Rickos, interesting… I wouldn’t say that a person’s credit mix would rate as an F if no mortgage shows up, I’m guessing it’s mostly due to the fact that your credit age is so young. Has your new Freedom account been reported to the credit bureaus yet? They will typically report to the credit bureaus at around the same time they send your statement/bill. I’m not positive on whether or not they report to the bureaus at the time the account is opened.

      Your application score will definitely vary from your credit score, as they are not really the same thing. Chase probably has their own algorithm for determining your application score, which is basically just a number generalizing how good the info your credit card application looked to them. There are so many different scores floating around out there, it can get very confusing.

  33. Rickos

    Hi. I have read here about having too many credit cards. I have 4. A Cap1, a FIA, a Chase United, and a Chase Freedom. Only my 2 Chase cards have balances, and my util is at 15%, soon to be 9% at the end of the month.

    Question. Is 4 cards too many?
    Question. I also have a car loan (18mos left) and CitiFin personal loan (3 mos left). I have no baddies on my report. My history is short, 3y 5m. My report says I have a poor credit mix. Besides a mortgage, what else can make this mix better?

    Thank oy.

    1. admin Post author

      Rickos, having 4 credit cards is not necessarily a bad thing, since you already have the cards, you might want to just keep them all open or you risk raising your utilization percentage, if you were to start closing some of the accounts.

      Sounds like you have a pretty good mix of credit accounts, the big one is a mortgage, but if you’re not yet in the position to obtain a mortgage then sounds like you are doing very well managing your credit.

      The biggest thing at this point is probably your short credit history. Unfortunately there’s not much to do about that except letting time pass while making all your payments on time.

      Are you looking to apply for a mortgage in the near future?

  34. not admin

    I’m not the admin, but to Joe, you don’t rob peter to pay paul, don’t over draft just to pay another credit card. Also try to get another credit card as well, having 2-3 is good just incase things happen. If you’ve been turned down for a lot of cards it’s because your debt to credit ratio is too high like admin mentioned.

    adding another card and barely using it would lower the credit debt ratio as well. I have 3 cards I use for gas only it’s all about moderation and keeping under the balances. I try to keep mine under 20% at all times. Remember if you don’t use the card they’ll likely cancel the service, and they cancel a card your credit will go down due to higher credit to debt ratio.

    If you plan on getting a secured card, try a local credit union I was able to get a card in my hand the next day. Since credit unions are generally non for profit they usually don’t have as much crap as they do on most online ones. Stay away from first premiere and zero % cards from mym experience has nothing but a nightmare. Wells Fargo offers secured card as well, but a installment loan is better way to build credit. Regions offers 3% interest rate for secured loans. Just pay off your card down under 1,250, then save 2,000 or so and bring it down for a deposit on a $2,000 loan. This will build a lot more credit than a credit card.

    importance of credit worth from lowest to highest

    retail card (like store only cards) very little credit
    credit cards
    installment / auto personal loans etc
    home mortgage

  35. ugh

    As a “broke college student” I ran up a hellacious credit card bill of about $6k. I have had one citi visa student card for 3 years, limit of @5200, and It’s balance is at 99%. My second credit card is a CapOne Mastercard, limit $750, also almost to the limit.

    I also allowed an ex that I was living with at the time to purchase a TV from Conn’s in my name. It’s a 3 year term loan and is always paid on time. I have never had a late or missed payment (confirmed today by checking on any credit cards or regular bills (cell phone, utilities). I have paid off a small student loan in full, which is reported on my credit report.

    My problem is that I work a minimum wage job in an extremely small town and barely make enough to pay these bills and drive the 26 miles to and from work every day. I have ALWAYS paid at least the minimum (and a few dollars more if I can afford it) but I can’t ever seem to pay more.

    Any advice or tips? I’ve heard it would be better to pay off the smaller balance first if possible and then use that money towards the bigger balance. Do you recommend this or should I put as
    much as possible into the bigger balance?

    The good (ha!) news is, both of my cards have low interest for this day and age. The Visa card is 11.9% and the Mastercard is 14%. I don’t have BAD credit from what I understand, just… stretched too thin credit?

    1. admin Post author

      @broke college student, I’ve been in your shoes and I know it’s not fun! But you’re lucky to have relatively low interest on your credit cards though, just try not to be late on any payments or they could jack it up quite a bit.

      I would suggest just keep making the minimum payments on the TV loan you mentioned, as that sort of loan will typically take a back seat to credit cards, in terms of which one to pay off first. Other than that, from my experience it does not matter which credit card you pay down first. You could start with the lower balance card though, it may seem a lot less overwhelming trying to pay down $750 than $5200, that’s how I did it, paid the lower balance first, it made me feel like I was getting there quicker that way.

      It sounds like you have good credit, like you said, just stretched too thin. The problem is in the eyes of a potential lender, they are one of the same. When I was in your shoes I was unable to obtain an auto loan without a co-signer, and the credit card companies considered me too high risk to grant me any more credit, or increase my current credit lines. You are likely experiencing some of those same problems now. Unfortunately without much of a credit history, and high CC balances, even if you have never had any late/missed payments, you are still put in the same boat as people with “bad” credit. The good news is if you are able to pay down your balances to below 25-30% and continue to pay your other bills on time, your credit will begin to look much better to creditors.

  36. Joe

    Hi Admin,

    Thanks for your response and much appreciated. My credit limit is $5000, but right now I am at 3500, so you would suggest I get it down to about 1200 or so? I should be able to do that within the end of this month.

    I have a question though, I have another bank which I use to pay my bills through, it actually allows me to have a $1000 overdraft. What do you think if I were to withdrawl that and put it towards my visa? and keep paying the overdraft and credit card every two weeks or so?

    or would this also hurt my credit score being in the whole with a checkings account?

    Also, regarding my phone bill, how come one phone bill shows up on the credit bureau, but the rest dont? theyre all the say company, which is why I am confused.

    Do you think just having one credit card can help my credit? the people at equifax said that I need to get more credit by applying for more and having more accounts reported? that just doesnt sound right to me because i would just find myself spending more than i really need to.

    would you suggest I get another credit card secured? like going to my other bank, putting up like 300-500 bucks and asking for a credit card?

    Thanks so much Admin

  37. Joe

    Hi Admin,

    For the past 7 years I was working overseas and came back about a year ago. I have a decent job. In this past year I was able to get a credit card with a $1000 limit and 7 months later it was increased to $5000. However, in between that time i have been driving my dad to work and picking him up from work everyday, just to get to work. I have tried multiple times to get a car loan and i got the same answer everytime (YOU NEED A CO-SIGNER). Now, since i have been home, I have applied for about 10 different loans, not all for cars, some for credit cards and some for department stores. I really didnt have much to come home to, so i had to figure out a way to do it on my own. Well, I sure learned quickly about how important credit is. As of now, my credit score is 627. My current balance is $3500 on my credit card and I pay my cell phone bill and credit card early every month. Also, I pay for my mom’s cell phone under my name, but for some reason, it doesnt show up on my credit report, nor does my internet or cable (all which are under my name). Please let me know what I can do to figure out my situation and how long would it take me to actually get approved for a car loan? thanks Admin

    1. admin Post author

      Joe, unfortunately utility companies, cell phone providers and internet service providers do not generally report your payment history to the credit bureaus.

      You do have one important piece of the puzzle though, a credit card. The problem is your balance is too high, about 70% credit utilization, if your total credit limit is $3500 as you mentioned. That is really bringing down your credit score. If there is any possible way you could work on paying down your balance, that would be a big help to your credit score and your chances of getting an auto loan. Below 25% utilization would be best, which sounds like for you would be a target balance of $1250. That would be the first thing I would recommend.

      Once that goal is achieved, I would recommend saving for a decent down payment first to show your lender that you have some cash to put down on a vehicle. That should help your chances quite a bit. You may need to start out with a very small loan such as in the $3,000-$4,000 for example, with a down payment of let’s say $1,000, and a good credit score, you are much more likely to obtain your first auto loan. After about a year of paying on your loan, assuming all payments are on time, it should become much easier to get another one at a later time, probably with much more attractive interest rates.

      No matter how small your first auto loan is, ($1500, $2000, whatever it might be) it doesn’t matter, the most important thing is to get one, and prove you can pay it on time every month.

      First thing’s first though, pay down your credit card, otherwise your chances of being approved for any kind of loan are very slim. Lenders love to see good revolving credit management, which basically means keeping low balances on your credit cards. Good luck!

  38. Construction Worker

    My husband (Construction Worker) and I, have been married almost 30 years. He is 53, I am 48.

    Fact 1: We have never been late on any payment…ever.

    Fact 2: We have very little debt. Last year, we consolidated all our debt (slightly under 100K), into one loan, which does include our mortgage. Our home is worth (in this market 700K).

    Fact 3: I do not remember our credit scores ever being lower than 780 in at least 10 years. Typically 780-810.

    Fact 4: We have only had one credit card, which is in my name (I am the wife) Macy’s/AmEx, for at least 3 years (low balance, used rarely and almost paid off).

    He recently took another job in manufacturing, related to construction which pays a salary similar to what he had been making before the economy/construction industry took a dive. (Salary 80K)

    We have always thrown away, “Pre-approved” offers for credit cards, as one has always been sufficient.

    Got a copy of each of our credit history’s, which CONFIRM no late payments ever, and only one loan (100K). It also showed the one card Macy’s/AmEx with a balance of ($300.00). The report shows always on time throughout our lives (never late even once…”paid/closed.”

    QUESTION: My husband recently contacted a credit card company, which sent “him” a pre-approved offer for a credit card. No problem…. Days before the card arrived, a letter confirming approval was sent. This letter stated his CREDIT SCORE was only 738 (Letter stated EXPERIAN).

    With no late payments ever, little debt (under 100k), and no other debt at all (no car loans, no credit cards, etc.), how could his credit score have fallen to 738?

    I got copies online of our credit histories to confirm all previous accounts close, “never late” and “closed.” So, it’s not as if there’s something to dispute. The credit history is accurate.

    How does one go from a 800 credit score to a 738 credit score, under these circumstances?

    Thanks very much.

    1. admin Post author

      Construction Worker, One very likely possibility for the difference in the score your husband typically has when he checks it himself, and the score stated by his credit card issuer, could be the fact that there are several different credit scoring models, and even different variations of each scoring model based on what the lender is trying to determine his risk level for, which is this case is a credit card.

      Since it sounds like he had not previously had a credit card in his name, the 738 score you mentioned could’ve been what I call a “credit card” credit score, which is a score specifically made to reflect his risk as a credit card applicant. If he had not previously had a credit card, it would make sense that this specialized score could be slightly lower. This score could be different from one focused on his risk as a mortgage applicant, auto loan applicant, or just a general credit score (one not focused on any certain thing such as credit cards) such as ones typically offered to consumers.

      Unfortunately there’s not just one “real” credit score, things would be a lot easier to understand that way! I know it can get very confusing, but I hope this helps answer your question.

  39. big rick

    hello all, the system is jacked up and always has been. I know for a fact that the system has a hidden formula that is a gaurded secret. I know for a fact the elite of our country has there credit polished by the three major crdit bureaus to ensure they are not attacked in congress. We do not live in a perfect world and by no means is anyone out there to protect you. I have perfect credit, not lates, collections or chargeoffs but because one credit card was at 50% dti my credt score dropped to 639. this is garbage and of course unfair. Oh yeah the reason my payoff was not there at the end of the month is that i was on vacation. It was not late i just caried a balance over for another month. Since our country no longer makes money on stuff we make, instead we make our money on how well teh banks can cheat you plain and simple.

    1. admin Post author

      Big Rick, the system may not be perfect but we have to play the game to enjoy the benefits of good credit. That’s unfortunate about your score dropping so quick because of your cc balance, the good news is all you need to do is pay off your card and your score should be back to normal the next time your card issuer reports your account activity to the credit bureaus, which is typically once per month when they send your bill/statement.

  40. Drea

    I just found out that my fico score is 250. It will take me forever to get a higher score. I wanted to be a first time homeowner before I turn 50 in two years. I am single and struggling to pay the rent and bills I have now. I have been reading everyone’s comments and still feel there is no hope for me.

    1. admin Post author

      Despite the negative comments here, with a little time and effort, I assure you it’s very possible to raise your score. Something does sound off though, FICO score range is between 300 and 850. Are you sure it was your actual FICO score?

      Just be sure to pay down any credit card debt you may have, and keep making your payments on time. Without knowing any specifics about your credit and financial situation, it’s tough to give any specific advice. But those are a couple of the most important things to pay attention to when trying to raise your score. Good luck!

  41. InvolvedConsumer

    I agree the Fair Isaac or FICA credit scoring system is a money racket. Yes, it is important to have some sort an unbiased system to evaluate credit, however, to device a system for primary goal of making money is a real issue. Consumers are held hostage to this system. Banks must pay for the data, individuals can only get one FREE report a year of “their” personal information WHICH NO LONGER INCLUDES THE SCORE. It requires a fee to get your score. Credit monitoring is now sold on a monthly basis by financial because your score changes every time you use a credit card, pay a bill, don’t pay a bill, change professions, move, etc. Further, this organization will not publicize the method for evaluating the score because it will no longer be able to make money if their system is published.

    I had a bank mixup a number of years ago where my auto pay was deducting from the incorrect account (this was when online banking was getting started) so for 3 months everyone at the bank and car loan company was scratching their heads wondering why my payments weren’t making it to my car loan. Then, for some unknown reason, the autopay system had a glitch and my payments didn’t go out at all. This happened to us again recently, but fortunately, I “attempted” to log on and was able to reset my accounts. The bank supposedly sent a notice to the car loan company to correct the situation, but unfortunately, it didn’t seem to take. Now, I have three 30 day notes on my credit. I have also just learned that after 7 years, this does not disappear from your record, nor will the car loan company try to correct this error due to ?audits?. So, I am doomed with this glitch in the system forever. Further, my personal information has suddenly changed on the reports. I no longer have any record of my professional career past college more than 20 years ago. From what I understand, your profession weighs “heavily” on your reporting as does the number of foreclosures in the area you live.

    I opened a credit card a couple of years ago, used it a while and then didn’t use if for a number of months. I called the card company to close the card, but they insisted I keep it open. A few months later, they closed my card. We are told not to open cards for identity safety and such, we are told to keep cards open even though we don’t use them to keep the credit available, but then we are penalized if the card company closes the card or if our credit limit goes down. It is a vicious cycle and there are not win-win situations.

    I had a score of 810 about 8 years ago, now my score is somewhere between 725 and 760??? However, if I call any card company inquiring on anything, I am quickly informed by their foreign call centers that I am delinquent and have poor credit standing. Card companies are trained to bring up all negative information possible.

    Recently, I called on my Costco Amex because the card did not work at the gas pump. It is a bit embarressing when your card is declined even though there is no balance on the card. We have had this card at least 7 years, have paid in full and on time every month – no balance every accrued. Our credit limit was $3k, but was reduced to $1k when the market fell. Every blue moon, when we purchase more than gas and food, we go over the limit. On these occasions, we are reported for being over the limit. Please note, we were not declined at the gas pump because of this…Amex did advise there were some issues with the pumps and assures us this was fixed. We have asked a number of time for a credit increase of $500 to $1k, but have been advised that we are a high credit risk due to delinquent accounts and long term outstanding debt. We do not have long term debt other than a mortgage and the only delinquent account is as noted.

    I pass this information along in hopes that enough people begin raising awareness of this opportunistic behaviour and hopefully credit monitoring/reporting will find it’s way to more realistic and judicious practices. Everyone has been affected by the recent economy, taking advantage of this credit situation by forcing patrons to pay to even see their person score is very poor form.


  42. Getting Real

    I have to say that admin has valid points. The system regardless of the clear flaws, is what we have to work with. If we are real with ourselves we would see that most of the bad situations we find ourselves in are a result of our own bad descisions. Yes, things do happen out of our control that set us in a finacial tailspin but more often than not it’s our own doing. I have taken a long hard look and I’ve taken responsibility for my descisions. That is why now I will make good choices in order to reap the benifits later. I suggest you do the same.

  43. irritatedwithcredit

    I agree that the credit system is slanted toward the banks and credit card companies. To make matters worse yet, a lot of companies like utilities ONLY report it if you DON’T pay them. You can pay your comcast bill for years on time or even in advance and you will NEVER see that on your credit report but the minute you pay them late, its on there in a flash. I have a “POOR” credit score and have NEVER paid anything late nor do I have judgements or bankruptcies etc. I simply pay for everything as I have funds available to do so. I have one small credit card for emergencies, no car loan, no mortgage etc. Funny thing is, about 15 years ago I was young and irresponsible with my money and wasn’t worried about a credit score. I went to get a 20k vehicle loan with a cosigner with me because I KNEW my habits were bad but much to my surprise was told “your credit isn’t bad–you don’t need a cosigner”. Just more proof that the system is very flawed.

  44. Recovering Shopaholic

    Ok, So I USED to have excellent credit, at the time I had a great paying job (for my age at the time) and I had about 8 credit cards, both store and bank credit which I paid off every month. THEN, i got really really sick and couldn’t work for like a year so all of my credit cards went into my collections… Since then, I HAVE applied for new credit, but have been denied every where. I pretty much had a card from each bank, so no one wants to deal with me anymore (even If I’m slowly paying off the old debt, new job isn’t as well paying as the old one) They are a total of about 3-6k in collections, plus tons of medical bills from when i was sick. Now, I’ve got a subprime auto loan that rapes me in interest charges, and a new “secured” credit card that I just got with capial one. I make both of my car payments on time (although my first car payment isn’t under my name but it is my car) and Now I’m using my secured card mostly for gas and small purchases I make on a regular basis every month anyway and paying it off completely before the due date.

    How long after practicing good credit habits (like i used to have) would it take to bring my credit up to parr? I’m only 22 So my negatives are still rpetty fresh (within the past three years) and I’m interested in getting a mortgage within the next year-year and a half. Is it worth paying off my collections? If I DONT pay them off (they keep switching agencies every so often) and keep up my new credit, and eventually get another secured card, how long would it take (if possible) to bring my credit back to EXCELLENT?

    PS, I think it’s hilarious to find “Rich People” defending their credit and ability to pay for their “things” in cash, posting on a IMPROVE A LOW CREDIT SCORE FORUM. LMAO!!!! I’m sorry, but if that’s really “your case” WTF are you doing HERE? just my opinion. now HELP ME ADMIN,

  45. aveeno

    I have NO credit and need one asap. Is it possible to purchase a trade line or attach my past rental payments or other payments ie comcast or metro? Would this give me a score in a few days?

  46. hkline

    I have 18 negative accounts on my credit report. The plan for now isto loan from my 401k and payoff as many negatives that I can. Say I paid 10 9 10 of them off, can you estimate how many points my score would increase. I would also like to know a good affordable credit repair program that we could use to increase both of our scores. I do not have enough credit card debtto consolidate.

  47. Lee

    Admin, I understand that you are trying to be helpful, but in fact I find the others to be more realistic. I had a bankrupcy 7 years ago. That was a decision I made based on having credit problems for 7 years. Well the “system” changed the rules and now that stays on your report for 10 years. Not fair, and certainly would have been part of my decision 7 years ago. I have resorted to paying for two credit cards that have an annual fee of $50.00 plus monthly fee of $6.00 each and they charge me $7.00 if they do a direct deposit from a debit card for the $6.00 fee! The only reason I have these cards is to build up my credit score which is 704 as of today. I remember laws being written to avoid loan sharks! When I tried to get a real credit card 2 months ago, I was denied credit from my large national bank (RBC) that I have been with for over 2 years because I had an exisiting bankrupcy on my record (the 10 year thing). My bad for having too much credit then losing my job and having to resort to bankrupcy. It has now taken 20% of my life caught up in this shark driven system.

    1. admin Post author

      Lee, I realize that many people are forced to do things like filing for bankruptcy, and it can cause bitterness towards the banking and loan system. But the reality is most people need good credit to buy the things they need/want in life, such as a house, cars, etc. Not only that, you generally need good credit to rent a decent place to live, avoid large deposits on newly opened accounts (such as cell phones, utilities, cable, etc.), and employers will often check your credit as well before considering you for the position. Some say the system is flawed, that may be, I’m not here to debate that. What I am trying to do is advocate the advantages of having excellent credit, while trying to provide some useful info on how to improve a low credit score. If you “play the game” right, it definitely has its advantages.

      Sounds like you’re on the road to having a much better credit score though, congratulations!

  48. David W

    I have a credit score in the high 500 due to late payment on two credit cards. I have three credit cards, some bill under my social (utilities, cell), and no car or mortgage payment. I have been paying my card on time (twice a month) and been trying to keep my balance below a third.

    I have been told that I need to let my card carry a balance and pay interest in my scenario to raise my credit score, is this true?

    1. admin Post author

      David, in my experience, that is not true at all. You can pay your credit card balances in full every month and still reap the benefits of the good payment history, no need to incur interest charges from the credit card companies. If at all possible (with the help of a co-signer perhaps) an auto loan would look great on your credit report as well. But be careful not to borrow more than you can easily make the payments on, even very small loans and credit card payments will be great steps toward building your credit score back up.

      1. Vince

        To admin – The whole credit report system confuses me, my credit score went from 813 to 808 for paying off a $500.00 balance. why is it when you pay your debt off they lower your score?? Shouldn’t it be the other way around? You charge something on your card they lower your score, you pay it off they lower your score! I mean C’mon now!

        1. admin Post author

          Vince, that does sound odd. Are you sure there wasn’t another reason for the sudden score drop? Among many reasons for such a slight drop could be a hard inquiry, CC balance increase, new credit account, etc… also, what sort of account was it that you paid off? Credit card? Loan?

  49. Jessica

    At admin- thanks for flaunting how much you make, life must be sooooo easy for you. Theres a reason why you have good credit, it goes back to the days of class, lower class work their fingers to the bone and get eleven bucks an hour while lawyers scam the hell out of people and make 300,000 a year! The higher class will always win, whether they inherate it and sit on their butts looking pretty or they do barely anything and make 100 bucks an hour. My husband got a car loan and got laid off after 6 months of having the car, it was reposessed by 11 months after we spent all of our savings on payments, meanwhile we lost our apartment and also got an eviction, so we were homeless with our 1 year old daughter. He finally got a job again, and I got a job at burger king, I’m a high school graduate with a skilled certificate and I was working at burger king. Now my husband brings good money and were trying to get our own apartment again after 3 years and we can’t get a loan for debt consolidation and to help with moving expenses and buying a car out right so we aren’t screwed with another car payment. But here we are with a 525 credit score because of a car loan which were paying off and no one will help us. Yet I drive down the road and see foreigners who can speak any english and their driving brand new cars, this country is all screwed up! No wonder gas is 4 bucks a gallon!

    1. admin Post author

      Jessica, tough times can happen to any of us. It’s not my intention to “flaunt” anything, just to get the word out about how valuable it can be to have great credit. I’m sorry for the troubles you and your husband have had, but if anything can be taken from the information on this site, it’s that you can improve your credit score and once again enjoy the benefits that come with great credit, even if your current credit score is 525, as you mentioned.

      I’ve had some hard times in my day and as a result I haven’t always had great credit, but now that I do, I try to advocate the benefits it can provide and hopefully help some people at the same time. I’m sure it must seem tough now, but just hang in there, better credit will come with time and good management.

    2. Veru

      DS —

      Must be nice to be so sure everything you have you earned personally, and that people who have less are inferior to you.

      It’s BS, but you’ll never know the difference.

      However, everyone reading your post either knows you’re a judgmental jerk, or is one too.

      Way to be a waste of oxygen.

  50. Markus

    How about the banks that jacked my credit card interest rates from 5.99% to 32.99% (making it impossible for me to ever pay them off) because they can.

    Cerca 2006-2007, I took about a 75% drop in income due to the worst economic collapse in damn near a century. I COULD have paid of the balances and not accepted the terms … IF I HADN’T TAKEN A 75% DROP IN PAY!!!

    Of course they were willing to work with me … like dropping the interest from 32.99% to 29.99%!!! WOW, what a deal!!!

    I would have been far better off had I just lost my job and collected unemployment. My credit score went from 755 to 576. Twenty plus years of good credit gone in a heart beat. Now I get to wait another seven years to hopefully have this total B.S. removed.

  51. Joseph Bronson

    I agree with the others. I only have one Cap One card and pay it in full every month. Everything I own is paid for. I’m not a big fan of paying for everything on credit. I recently decided to build a new home and was approved buy they wanted me to open a couple more credit cards to put my fico at about 760 to get the best interest rates. It all seems like a big scam! On one hand, they say don’t have any debt and then the credit companies punish you for not having enough!
    Can’t the responsible people decided how much credit we want???

    1. Jim

      This exact same thing happend to me. I have no debt other than my car payment, which I pay on time every month. I also have a small credit card that I use but never carry a balance. I’m 40 years old, owned a home previously in the late 90’s, sold it in 2002. I’ve rented ever since then. I was told last August because I have no credit/debt, I can’t get a home loan. Not because I didn’t have money for a down payment; not because my credit score was bad but because I didn’t have ENOUGH credit/debt. The loan officer actually wanted me to open up a few more credit cards to show I have more available credit, with higher limits, than I do now. I told him I wasn’t going to do that because I don’t NEED that availability. There’s a difference between wants and needs, period. After being denied the loan and my credit report pulled (which of course took a negative hit because of the hard inquiry) they wanted me to fill out more applications to take a further hit to my scores? NO WAY!!! What are these people smoking? So, I’ll just keep saving money and eventually pay for a home in cash. That’s what they are driving people to do.

  52. Houston Credit Consultant

    I agree with PK, the whole credit system is the biggest scam ever conceived right after our Tax System. And they are all in on it; the credit bureaus, banks, credit card companies, collection agencies are all in on it together along with the full support of the federal gov’t.

    Bad credit = More Profit for greedy corporations. Period, end of story. Now then, just like the Federal Income Tax system, if you want to win you gotta learn the rules and play the game. Actually, it’s more like a War and you should take it seriously.

    If you have no credit and you get something started, you normally start out with a decent score, not a low one. FICO’s algorithm is primarily based on the idea that the last two years predicts the next two. So one single late payment could drop you 100 points regardless of how many great accounts you have.

    Bad Credit is a term that gets thrown around a lot and means different things to different people. Having a low credit score usually goes hand in hand with having negative or adverse credit information in your report, but not always.

    Generally, if you a lot of bad credit trade lines, credit repair could be an economical and efficient strategy to get things back on track. Kind of like your Ace in the Hole. But Caveat Emptor – Buyer Beware! There are a lot of sharks in those waters.

    1. lynda kramer

      feb. 3 2012 from england, lived in florida for 22 years,,,,,paid cash for every thing,,,,,car, house ect….In my bank account: over 100,000 dollars and my husband said, in america we live on cards…so, I applied at sears,home depot, pennys and bank of america,wells fargo for any kind of card….for a start…any way, they all said, because of NO past credit, can not issue a card….WHAT SHOULD I DO? Told wells fargo, they take full payment and can only start me, at 200 dollar credit….called fargo and they said, sorry, no past credit…That god, they use Money in england….Lynda kramer please email back thanks

      1. admin Post author

        Lynda, I would recommend applying for a prepaid credit card, such as the ones listed here:

        Since you have the money to put up for it, but no credit history, a prepaid credit card would be an excellent way to begin building your credit. Also, can your husband add you on one of his CC’s? If you were added as an authorized user on his account (assuming he has at least one credit card) that would go a long way towards building your credit history as well. Also, any future loans/credit accounts that you can get your name on along with your husband, assuming all payments are on time, will help build your credit as well.

        One last thing, you might want to consider going to your local bank/credit union and ask about something called a “Credit Builder Loan”. I’ve talked about it on here in the past and a lot of people have good luck with it.

  53. lucky you

    admin, you must have a VERY secure job.

    Why would you pay cash for vehicle, you ask? Because you could get laid off next week. And if you paid cash, you could sell it without worrying about it getting repossessed while you’re struggling on other fronts. One in the hand is worth two in the bush, dear.

    1. admin Post author

      Actually I plan for that as well. I make sure I always have enough reserve for a possible time when I could maybe not afford my monthly payments – I live well within my means and save money on a regular basis. I have one car which is completely paid off, so even if I were to lose my income I will always have transportation.

      I’m not trying to promote living beyond one’s means, in fact I always recommend not borrowing any more money than a person can easily handle paying off. Personally (except for my mortgage) I don’t borrow any amount of money unless I could write a check for it right now. My belief is that if you don’t have the cash for it, you can’t afford it.

      But I still borrow money for new vehicles. My excellent credit affords me low interest rates on those vehicles. I know, many will say buy used instead, let someone else take the first couple years depreciation. But I can’t help it, I just love buying a new car every few years. It’s one of the few things that I splurge on, and since I can afford it, I feel that I have earned it. My only point is if you handle your credit wisely, it can be a great asset to you.

  54. Samuel Tate

    i have recently been looking and appying for loans and credits cards because i am wanting to pay £1000 for a bond on a house rental, i cant get this money because i have only had a credit card for 9 months and i paid one credit card payment of £12 one day late. i cant get a house and i cant get a good credit rating because i also found out that applying for loans and credits cards (3 times in total) has slammed my credit rating, why wasnt i told this when i first took out these applications :z

    1. Courtney

      I recently learned you can quickly build credit by doing this:

      1) get $1000 (you will only need it for a week)so use whatever money you can cause you will have it back in a week.

      2) Go to a bank or credit union and put that $1000 on a CD for a $1000 secured loan.

      3)approximately 4 days later the bank will loan you back your $1000

      4) put back the $1000 you used originally to wherever you had to borrow it from or scrape it together from so you wont have a debt from that.

      5) make your secured loan payments of $50 a month for 2 years NEVER BE LATE!

      6) sit back and wait as your credit score goes up monthly because by doing it this way the bank will report to all 3 credit scores monthly instead of quarterly so your scores will rise faster.

      1. jackie

        courtney I read your post. I opened a secured loan of a thousand dollars how long does it take to start raiseing?

  55. PK

    It’s all big scam from BIG MONSTER Banks and Insurance companies to show how much they can keep you on the hook for paying them for the rest of your life. Look how credit card payments now have to disclose how their minimum payment could take you 30 years to pay off.
    I will give you 2 Examples: #1 My Grandfather an immigrant to this country had 150K in the bank and owned a city block in New York city worth Millions.. He has bad credit because of NO credit cards or mortages ever in his name.. Can you imagine that… Example #2 Myself: I own a Lakefront Home worth over 250K free and clear, an Office Building worth 225K, Over 2 Dozen Rental Properties worth over 1.5-2 Million, 12 Vehicles (3 are Exotic Sports cars- Porsches) and I Don’t have ANY loans or mortgages, own 3 businesses that net me over 20K per month and I have Bad credit of 623 from 4 Medical bills from a recent hospitalization… Can you believe that! But one of my Tenants working at the Wal-mart at a little above Min wage has Great credit for Buying a NEW car and credit cards that are choking him to death. He’s over 750… Now if I was a REAL Banker and not just some stupid Computor run/ driven Boob I would know without a question who i would rather loan money to. And we wonder why there is a Banking crisis and a Bailout.. Can we yet see why the Banks have so many toxic assets yet.. Nobody is going to bail out my businesses. Between Government and Banks and Insurance companies they have it ALL screwed up. Let’s get back to REAL Service, when they actually knew you and looked at the person and his history. In 30 years i have only had 4 loans, all paid off in ADVANCE.. Joe the tenant, never had one till the car.. If this country doesn’t change and gets beyond just paper and computers I promise there will be even more toxic assets from failures and foreclosures as Joe the tenant will be next..

    1. admin Post author

      I see where you are coming from PK, however there are many ways to benefit from excellent credit. For example instead of having your $250k house free and clear, you could have a mortgage on it, lets say you owe $100k on it to your mortgage holder. This $100k cash you have could be invested in something yielding higher interest than you would pay on your mortgage (stocks for example). If your mortgage interest rate was 5%, chances are you could make more than that on investments, which in the end would make you more money. This is just one simple example of the benefits of having great credit, with interest rates so low now, you can buy things with other peoples money even if you have the cash to buy it for yourself, and keep your own cash invested in other assets.

      Recently I bought a new vehicle, and financed it with 1.9% financing. I could’ve paid cash for it, but why? I will just pay it off as slowly as I can, and in the mean time the extra cash that loan affords me, will make much more more money than the 1.9% interest costs me. Not to mention it looks great on my credit report that I pay my bills on time. Next time I need a new vehicle, I will do exactly the same thing.

      Another quick example: With my great credit, I am able to easily get the best rewards credit cards. I pay off my credit card bills every month, so I never pay any interest. My rewards card PAYS ME TO USE IT! I get cash back on every bill I pay with it, and every purchase I make. I enjoy my excellent credit!

    2. John Monk

      Scary accurate my friend. My income is 49k, my bills each month are 400, I want to buy a 99k condo. I have 40k to put down, no joke, 40%, but there is ONE red mark on my credit score, a $59 old debt to Columbia House. I also rarely use credit, I have 4k in credit and recently used it all, so my debt ratio is 100%. But I have 40k to put down, with a credit score of 583, and no one will give me a mortgage. Isn’t that insane?
      Sure I can pay the credit cards, but the point is my total debt is 4k and my credit score is low because i don’t use credit.
      In the old days of your grandfather, people like me got loans all the time, the bankers looked at my income, my bills, my downpayment and gladly lent money, because it is a sure thing. Today some pizza delivery boy with a high credit score will get the condo for 3.5% down.
      The banks ruined the economy, and they are keeping the economy down. Mortgage brokers have gotten lazy, instead of researching (working), they do a quick FICO score check and tell you to get lost.
      So now I am paying the bad debt that isnt mine, paying my credit cards, then going to get a mortgage at a different bank.

      1. former Mortgage Guy

        The problem is Fannie And Freddie,the Dodd Frank act, as well as Sarbanes oxley have all combined with current economic conditions to create the destruction of an entire industry. Over 340 major mortgage investment firms have imploded. Minimum fico score for just about any mortgage out there is 620.
        The reason is there is no secondary market for mortgage backed securities in you fico score range.
        Did you stop to think that rather than playing the blame game will get you nowhere.
        Rather than bitching about your circumstances be an adult, grab your pellet sized scrotal sack and RTFU.Ranger the Fuck Up. Pay your debt down and get a single family residence not a condo. If you can’t do that where you live then consider a move to another more affordable area.

        I might also suggest a class in basic finance.

        1. Galadrial

          My problem is that I did have to declare bankruptcy because I “found myself” with a disability and, because of that, my income fell by 50%. I had had good credit…until now. I want to try to get my credit score back above dog poo. It doesn’t matter how much money you have or have not, one still needs to have a place to live. Now what?? I’m not trying to buy a car/jewels/palace, I’m just trying to find a place to live. I didn’t live beyond my means, I didn’t have payments other than a mortgage on a house that I’d lived in for 17 years. Now, living in a tent seems to be my only option….. 😛

    3. loriminnesota

      Amen to that. I have been paying off bills and trying to raise my credit rating since a business partner ran off with all our money more than a decade ago and left me penniless. I worked three jobs for 8 years and finally paid them all off…including all the interest and over-inflated fees they charged me. My credit worthiness, as of last year…was in excellent standing, as a result. Not wanting to go down that road again, I vowed to check my credit score every January to make sure there were no errors. Checked it last night and a $27.00 phone bill that I was told by my former phone company of 15 years was being credited since they changed out a power line and left me without phone service for that particular month…was unbeknownst to me, turned over to collections and immediately charged off, then apparently…promptly reported to the credit bureau dropping my FICO score by 40 points. I don’t have one single late payment on any other of my accounts for years and years, no write-offs, and no nothing. That $27.00 is the only negative mark on my account, yet it put me at what they consider a D-level rating. I have since contacted the phone company who immediately offered to credit the account and mark it as ‘satisfied’ to the credit bureau, which only makes it appear that I paid it off. I am insisting that they remove it altogether as erroneously reported, or I plan to take them to court. All this over $27.00 because the credit bureau does not care if it’s $27.00 or $27,000,000.00. All they care about is that you didn’t pay a bill. No one should have that kind of power over your life.

    4. mike felber

      Is this a real story..just seems if you have been so successful in would have known to pay off your medical debt. No disrespect intended.. just curious.

    5. george

      I would loan to the guy from walmart because he may not have a lot but what he does have he pays for it. You on the other hand have lots of revinue but can’t manage to pay a few hospital bills that only report after failure to pay within 3 months after it goes to collections. U being a rich guy who would u lend to a rich guy that don’t pay or a poor guy that pays with his last nickle


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