[rocketpop]

I have a question???

[Dave]

its a lil hobby of mine...
are u wondering about tiers?

[Papethova]

Curious whats the highest you have seen.

Underwriters I know have seen up to 840's Wondering how high this can go.

[Dave]

I have a friend who does mortgages and he has seen an 840 , but the most common is 830 if you are perfect...

tier 1 is above 730

and if you are married they always take the lower one

[rocketpop]

Sent him a PM instead...

[Nixon]

Originally Posted by rocketpop

--original text removed to reflect edits made by rocketpop--

It all depends upon why a score is low in the first place.

If a score is low because of late payments, shifting around debt won't have much effect. The only real fix for low credit scores due to late payments is to make sure there are never have any late payments ever again, and wait until they age. Get a free credit report, and try to contest any late charges that show up on any of the reports that aren't correct. But if they are valid records, there isn't anything that can be done to remove them.

If a score is low because there isn't a very long credit history, opening another new account will actually lower the average length of open accounts. That would slightly lower a FICO score. The score reflects both the age of the oldest open account, and the average age of all the open accounts.

If a score is low because there are too high of balances compared to the total credit limits, a new loan might help. Using more than half of the total revolving credit limit available is way too much credit. Opening a new loan and shifting off the debit could help if this is the case. Utilizing less than 10% of the total revolving credit limit will give the best score. For high debt balances, the real solution is to reduce the total revolving debt in order to get under 10% utilization. (Here's an aside for anyone else who happens to read this - NOT using any of your revolving credit accounts for a long time will hurt your score too.)

If a score is low because there are way too many open revolving credit accounts already, opening another loan won't help, unless some accounts are closed. But closing accounts is also dangerous. Closing accounts lower your total credit limit available, shortens the average age of open accounts. Unless there are way too many accounts open, closing established accounts will lower the score. Closing an account that show a history of late payments, or over the credit limit charges is a bad idea too.


Finally, opening a new accounts for any reason will have a negative effect on a credit score for a number of months after opening an account.

[rocketpop]

Here are my scores as of today...

TransUnion -- Experian -- EQ
738 ------------700 ------724



I was just wondering by moving my debt from revolving to installment, how would that effect my score if all. All so by taking out an installment would that have any effect on getting a car loan in the near future.

[Nixon]

Originally Posted by rocketpop

Here are my scores as of today...

TransUnion -- Experian -- EQ
738 ------------700 ------724



I was just wondering by moving my debt from revolving to installment, how would that effect my score if all. All so by taking out an installment would that have any effect on getting a car loan in the near future.

The third score from Equifax is your FICO score. This is the score that most lenders depend upon for making their decision. When you go to a mortgage site that talks about what FICO score you need to have to qualify for a mortgage, they are talking about your Equifax number of 724. Each company has their own formula for calculating their score, and different ranges of scores. But it is the FICO score that is available exclusively from Equifax that really matters.

Moving around your debt to a new account will both help and hurt different components of what makes up your FICO score. Whether it helps more overall, or hurts more overall will depend upon why your FICO score is at 724 in the first place (see my post above). If you got your FICO score directly from Equifax, you should have a list of 3 items with your FICO score report that say what are the top 3 factors affecting your FICO score. These will give you an idea on what you need to work on.

The classic financial planning advice for somebody with a slightly low FICO score, along with significant revolving debts, would be to defer large purchases until a later date. Debt consolidation should be coupled with a financial plan to first change the spending habits that caused the revolving debt to be incurred in the first place. The next step in classic financial planning advice would say to pay off the existing debts that you consolidated before incurring new debts. Don't just make the minimum payments on a 5 year consolidation loan, double up on payments, and retire the debt in just over 2 years. It isn't very sexy, but if you follow that classic advice and make sure every bill is paid on time, you will probably have a FICO score in the high 700's in two years.

[rocketpop]

Thanks, Nixon. I have my spending under control, we got into debt because of a wedding and some home improvments. I had only one card that had a high balance and I plan on taking the loan (which I got today) and paying off that card. All my other cards have a 0 balance. We also get about 9k a year back in income tax returns so that will go to paying off the loan way
before its due.