Give me credit score advice


#1

Long story short:
-Divorced last year, credit score 790s.
-In April, I finished paying off the outstanding CC debt, which I took this on as part of the divorce settlement. It was through a debt payoff company (MMI) and it didn’t affect my credit score, which was still in the 790s in April. This debt was mostly my ex’s; I don’t have a spend-money addiction anymore. :smiley:

The only debt I currently have right now is a car loan through the Bank of Dad, so officially as far as my credit is concerned, I currently have no outstanding debt on the books. My credit score when I pulled it in November has dropped to 760s. In hindsight I should have just financed the car, but I didn’t.

I’m at a quandry. I’ve been in the market to buy a house since April and don’t want my score to drop too much so I can get the best interest rate. Had I known I would be looking for a place for this damn long, I would have opened up a points/rewards card earlier this year so I could recoup the drop in my credit score (from opening up the card) before having to go for a mortgage loan. I’m not sure it’s a good idea to do it now, though. I have no idea how long I’ll be looking for a place to call home, and I don’t want to lower my score by opening a card and then have to negotiate a mortgage. But I my score is dropping by doing nothing, too, so…

Advice? Thoughts? What am I not considering?


#2

@Jim wrote a good article on how to increase the spending limits on cards you already have without a hard pull on your credit report. Increasing your available credit is a quick hack to give your score a boost.
https://wallethacks.com/how-to-ask-your-credit-card-to-increase-your-credit-limit/

I would also look at the underlying reason for your score drop. Is it simply because you have no outstanding debt? If that is the case I would say that taking out a loan just for a credit score increase is a bad idea. Big picture, your interest rate may not even be significantly different going from 760 to even 790. I think having a strong debt (zero) to income ratio is your biggest strength for your mortgage so congrats!


#3

I, too, would review your credit report to see if something else is going on. With my mortgage paid off over 10 years ago and paying cash for cars, I only have a little credit card usage, with the balance paid in full each month. Even with such a limited amount of activity, my score has stayed in the 800’s.

Do you have any open credit card accounts with some level of activity each month? If so, how much of the credit limit are you using (ie, credit utilization %)?

John


#4

I have no lines of credit at all. No credit cards are open, no loans, nothing else. I did print out my credit report about a month ago, which is when I looked at my credit score.


#5

Having a credit card that you use responsibly is a good way to build your credit. The principle is simple. If you don’t have any credit, you may not be able to build your credit. With your credit score, it won’t be difficult to get a credit card. You can just use the card to pay few bills every month and ensure that you pay the balance in full at the end of each month. Ensure that you keep your utilization ratio below 30%.
You probably experience a drop in your credit score because of the hard inquiries that lenders might be making on your credit each time you approach them for mortgage. If you want to shop for loan, it is better you do it within a short space of time so that credit bureaus can treat all inquiries as just one. This will have less impact on your credit score. If you don’t mind, you can actually find useful resources on my website under “Credit Cards” page. If you need further information, you can drop a comment


#6

I agree with the above advice. Open up a credit card, use it responsibly and pay it off every month so you can start building your credit.


#7

Hi Jodyn,

As you have discussed that your credit score are going down, and you want to recoup them.
But here you need to remember that opening a card or applying for credit card not let your credit score down. However holding a credit card and pay EMIs is the best way to recoup your credit score.
It help banks and other financial institute that you are loyal towards your financial payments and you will make sure to pay off your debt on time.
However there are various short tips that you may follow to improve your credit score. Hope it will help you out!


#8

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