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Pumping credit

2007-05-15 17:49:32.215968+00 by Dan Lyke 5 comments

Charlene and I are projecting out some economics, both personal and national, and thinking that it'd be good to be in a position to buy a house in two or three years (sometime when mortgages aren't running at 2.5-3x rents...). So we're starting to get our ducks in a row, and one of the things we're playing with is looking at our credit scores.

Both of us have pretty good scores, I've actually got a slightly worse one than hers because we recently got a joint credit card that we put all of our household expenses on (for the sake of the 1% rewards) and they did the check on my credit record, but not hers (for some odd reason, because the card appears on both of our reports), but if we have a few years to prepare, why not go for a perfect one?

Anyone out there have any credible references on how to boost a high 700s/low 800s score up those last few points?

[ related topics: Economics Real Estate ]

comments in ascending chronological order (reverse):

#Comment Re: made: 2007-05-16 15:29:30.957478+00 by: ebradway

Check out Suze Orman's books and info on credit scores. She's in pretty tight with that industry. The score is an amalgamation of available credit, balance, and payment history. Some basics:

  1. The credit pumping companies are bogus
  2. A score in the mid-700s gets you the best rates. A higher score doesn't improve things. A steady paycheck for a couple years is the other key component for mortgages.
  3. Don't cancel your credit cards. Keep them open. Buy something cheap every month and pay it off every month.
  4. Pay off high balances.

Improving your score is easy. The first step is to get your three credit reports. This site (annualcreditreport.com) is run by the three reporting agencies to help you with the requests. Go through them with a fine-tooth comb. Ask to have anything negative more than a few years old removed. Ask to have anything negative investigated - doesn't cost you anything! Don't bother buying scores until after you finish cleaning up the reports - or buy a report service that gives you unlimited scores. Suze Orman's service will even analyze your reports and give suggestions on how to improve and how much it will improve as well as estimates for the mortgage rates you should qualify for.

I just went through mine for the second year running. One of the reports still had my name wrong! If they can't get your name right, just imagine what else could be wrong! I'm not buying scores this year because I'm not applying for credit until 2009 and I have big things dropping off next year (corresponding with 7 years post 9/11 and the dot-com bust). I plan on buying a house in 2009 or 2010 and have begun the legwork on my credit already.

#Comment Re: made: 2007-05-16 16:04:21.952912+00 by: Dan Lyke

The only thing negative on mine is that one credit check for that card (which I'm actually kinda surprised about, I have occasionally had a month slip my mind), so I guess we'll just carry on doin' what we do.

#Comment Re: made: 2007-05-16 19:27:42.235513+00 by: ebradway

Actually, if you are trying for the best rates, the mortgage companies will pull full credit reports from all three bureaus. They will also request that every item be updated (it's a special kind of report that credit cards never ask for).

Your score will likely only be used to separate the weed from the chafe. Don't fret it. But don't apply for any other credit at least six months before applying for a mortgage.

#Comment Re: Credit scores made: 2007-05-17 12:54:03.085948+00 by: m

I am not really sure just what they mean. I have seen mine go from 816 to 766 then to 824 over three monthly reporting periods for no discernible reason. The score then tapered back down to the 800s. The only reason I know is that a credit card provides free access to one of the major scorers. My income hasn't changed. I haven't borrowed any money since the early '80s, I always pay my credit card bill off on time, I wasn't late on bills, and there were no known credit checks for insurance or anything like that.

Everybody loses a month now and then -- unpaid bills aren't reported until they go more than 30 days overdue. This usually gives you 45+ days to pay after you get one. And, as said above, a score of 750 or more will get you the best rates for just about anything.

Credit scores are are for the most part another artificial anxiety scheme meant to separate people from their money.

#Comment Re: Credit scores made: 2007-05-17 16:40:57.362122+00 by: andylyke

It beats hell out of me. I've got about $200,000 in available credit line among credit cards and home equity lines, against which I have a revolving $3000 or so on the cards that's paid off every month. Experian gave me an 820, saying that the ratio of debt to available credit is too high.