How to increase credit fast when you do not have debt.

Charise15

I am in a weird situation. My VantagePoint score is 615 which my Leasing Agent said that that FICO score is a llittle less than the VantagePoint score. They are guessing that my FICO is at a 600. In order to get a VA Home Loan I need at least a 621. They will check my credit score again in 4 weeks. I just do not understand how my score can jump up 21 points in 4 weeks. 

The only debt I have is a car payment which is 312 a month and I owe 16,000.00 on it. Also, I have a credit card that has a 725 limit and I put 200-300 on it every month and pay it off. 

I guess, I am just wondering how can I up my credit fast?

audubonbride2013

I recommend signing up for creditkarma.com.  It's a good free way to track you credit score and see what's dragging your score down.  Judging by the information that you provided, it seems like you are using too much of your available credit.  You really want your credit card utilization to be under 10% each month if you're looking to improve your score.  So if your limit is only $725 on your credit card, then you should try to only use $72 each month.

short+sassy

Yikes!  Yeah, I'm not seeing anything that would explain why your credit score is so low.  I also recommend creditkarma.  It is free to sign up and, although the credit score they give is just an estimate, they are an awesome place to see what is going on with your credit report.  I hope you are not in for a nasty surprise, like a collection you didn't know about.

If possible, for now, keep your credit cards at a zero balance and don't charge anything to them.  It could be, depending on where it was in the credit card cycle when your credit was pulled, that it was showing a high credit card utilization rate.  Even that, though, should not have brought your score down too much.  Keep us updated!  I'm interested to find out what is going on.  I am on a constant quest to figure out how the complicated world of credit scores work and drag my own score up, kicking and screaming.

Charise15

I guess what I failed to mention was that (I was without my job for a month 11 months ago) I did not pay my Khol's card three times (I paid it off) and I owed 1,400 on my GI Bill (which i paid off with my taxes).

I know why my credit score is low. I am just wondering what I can do to raise it? I was told to use 30% of my card each month that is why I am putting 200 or so on it a month. I signed up for credit Karma and Credit.com and that's how I found out my VantagePoint score.

Thanks for the advice. I will only use 10% of my card instead of 30%

Sisugal

Non payment and late payment are dings that will take a bit of time to remove with constant payment ON TIME and using no more than 10% of your allowable limit - paid in full each month.

Are you really financially ready for home ownership? I know you can have 0 down, but that is not wise. Do you have a good 6 months+ of expenses in an emergency fund, moving costs, utility deposits, repair & renovations, decorating , additional furniture & appliances, tools, ladders, yard items?

Don't buy until you have that money IN HAND.
Keep ALL your housing costs to no more than 25-28% of your TAKEHOME pay (that means:
mortgage+taxes+insurance+PMI+HOA,Utilities)

Do NOT rush into home ownership.  Take the time needed to get your finances in order!

Charise15

Yes, I have a pretty big savings and great paying job. I have extra set aside for the inspections as well. I do not have yard things (but by the time my credit is up to par I'll have the money for it) I'm also in school to further my education. I just hit a rough patch (divorce) for a moment. I was working on my savings more than my credit and that's why I am in the pickle that I am in. I'll use only 10% of my card and I'll keep paying it every month and in time my credit will go up. I was just hoping that I could be ready to buy this summer.

Charise15

I also like that 25-28% of my net pay should be my mortgage. I never thought of that.

Thanks guys!

jtmh2012

Charise15 said:

Yes, I have a pretty big savings and great paying job. I have extra set aside for the inspections as well. I do not have yard things (but by the time my credit is up to par I'll have the money for it)

Don't forget to look beyond your closing date. When you're a home owner, you're responsible for everything. If the HVAC blows, you pay for it. There's no landlord to call. Last time I had HVAC replaced, it was $6400. At the same time, I had to replace the hot water heater. It was $1000. Just before that, I had to put on another roof $3900. About a year before we knew we were moving, a thief broke in through a window. The cost to fix one window was below our insurance deductible. We took the opportunity to replace our inefficient windows. That was another $2800. Fortunately, we had a good size emergency fund on hand.

mnricha927

I was just in a situation where I had zero debt and no credit score as a result.  We were able to get my score up to 730 in just two years by starting with small balance credit cards and a new car payment and every six months we would increase the credit allowance on ever card.  It is really a simple way to increase your debt to credit ratio and help your score jump without taking on anymore actual debt.  You can always decrease them when the process is over, but that's what we did.  Hope this helps

Charise15

I am loving all of the advice that i am getting! Thank you! I am very happy to hear from those who already own a home. I have never owned so you guys are pointing out things (HVAC Windows etc.) that i have not thought of. 

short+sassy

Charise15 said:

I guess what I failed to mention was that (I was without my job for a month 11 months ago) I did not pay my Khol's card three times (I paid it off) and I owed 1,400 on my GI Bill (which i paid off with my taxes).

I know why my credit score is low. I am just wondering what I can do to raise it? I was told to use 30% of my card each month that is why I am putting 200 or so on it a month. I signed up for credit Karma and Credit.com and that's how I found out my VantagePoint score.

Thanks for the advice. I will only use 10% of my card instead of 30%

Ah!  That is exactly why your credit score is low, unfortunately.  The two biggest things that will torpedo a credit score are collections and late payments on bills (credit cards, auto loans, etc.).  It doesn't matter that your Kohl's card is paid off now, your credit score still reflects every time you pay late.  Technically, it is every time you pay more than 30 days late, as few companies will report you for paying a few days late.

Generally speaking, the only thing that fixes that is time.  Late payments fall off your credit report after 7 years.  And making sure you don't have any further late payments.  You could try contacting Kohl's, point out your balance has now been paid in full, and request they remove that information from your credit report.  However, companies usually don't do that.

Credit Karma will also show you, in general, how your credit score is computed and which areas are weighted more heavily than others.

A medium weight factor in your credit score is age of credit lines.  Contrary to popular belief, this is not how long you have had any type of credit...it is the average amount of time you have held your active credit items (ie each credit card, car loan, etc.).

One powerful trick...I it find surprising I rarely read about it...is a little complex, so bear with me.  If you have a really good friend or family member (like a parent) who has had a credit card for 8+ years that they have always paid on time, ask them to add you to the card as a NON-SIGNER.  What this does is add that credit line, and all its goodness, to your own credit report.  Just like that, you now have an 8+ year credit item on your report which will help with your aging.  You also have that long history of on-time payments for that card added to your own report.

One caveat, your own credit history will NOT affect theirs.  And that's a good thing.  BUT, any late payments they have on that card, will now reflect on your credit report.

Is this legal?  Absolutely.  Don't the credit reporting companies know about this loophole?  Absolutely, and they consider it a problem.  But it would take a substantial revamping of both their systems and the systems companies like banks use to fix it and so, at least the last time I checked, this was still a valid strategy for raising a credit score.   

lyndausvi

Your lates are hurting you.

As far as credit card utilization.   It's appears they look at 2 things.  Total utilization and an individual cards.  My biggest boosts seem to be when I only have a balance on 1 card and that balance should is less than 10%.  

Sisugal

You do NOT have to carry a balance on a credit card to built good credit. You can use it and pay it off IN FULL each month.
It is the using and paying in a timely manner that is most important.
(well under limit to improve your score and not paying interest to be MM)

princessleia22

Your maximum balance on your card each month should be 10-20%, so don't spend more than around $75-150 on it as maximum balance, even if paying it off each month. It makes a big difference when they report balance to the agency.  If they reported at your high balance, you are showing nearly 50% utilization right now, which hurts.  Keeping it low could have a very quick effect and may get you to 621 within a month or two. 

I'm in similar situation with a score of 617, due to a credit default a few years ago when I got laid off. My mortgage banker says they like to see 2-3 open accounts, so it may be good to have another credit card, but you also don't want to open any new accounts right before mortgage, so that's probably not a good idea right now. They also mentioned possibly getting a 3-6 month personal loan (or secured loan), which is a quick way to build credit score, but you are looking at a shorter timeframe than that (I'm looking to buy toward end of year).  Otherwise, just timeframe away from the negative lines helps the most.  Items over 2 years have much less effect than recent items.