credit score

[Adcadet]

Credit scores confuse me. As far as I can tell, the actual formula used is proprietary and a huge secret.

Since my wife and I are likely to buy a new house and car in the next 1.5-3 years, we'd like to keep our credit rating pristine.

My wife lost a few cards today, so we've been cancelling them. Our old discover (12 years old, which is almost 1/2 my wife's age) has been cancelled, and a new number has been ordered. Just wondering if this will hurt our credit rating because it looks like we've closed a card we have a lot of history on (we literally put everything on that card), or if the credit card company (Discover, in this case) will report the old and new account numbers as the same account.

Does anybody have some good info on credit ratings, how to keep yours high, etc?

 

[Buck]

Closing credit cards is not a bad thing. It actually helps with the amount of available credit you can be given. You keep your score high by making timely payments, and preventing someone from tampering with your credit stuff (theives, etc.). When it comes time for the mortgage company to check your credit scores, they'll use three popular companies, and settle with the middle score.

 

[sechs]

Actually, closing credit cards can be a bad thing, as you're cutting the average account age. It's also not good to have a bunch of new accounts.

Keep in mind, however, that, usually, when you must change account numbers due to theft or loss, you don't actually get a new account.

 

[Mercutio]

I'm told that a sex change - the demonsterable fact that you are a different gender than the one on your credit report - gives sufficient grounds for constesting all kinds of information.

Not that anyone wants to go that route.
But it's an option.

I have good credit. I've had the same credit cards for years and I pay them off every month. And I paid off my student loans (more an issue for an MD than for me with my BS) within two years of finishing school.

 

[timwhit]

Have you checked your credit recently? Anything over 720 and I would not worry about qualifying for the best mortgage rates.

 

[Pradeep]

myfico.com gives you the real scores. However, auto loan scoring uses a seperate scoring system, the score for which you cannot buy.

Charge cards such as Discover, Amex etc often don't score as well as a true revolving card, such as MC or Visa. In particular, charge cards don't have a credit limit per se, and therefore the scoring takes the highest balance amount as the credit limit.

Secrets to keeping your score high? Don't apply for unnecessary credit (lots of inquiries can hurt), keep your balance to limit ratio low. Balance ratio is a huge part of your score (I believe something like 50%). And of course don't have any late payments. As sechs mentioned, average life of your accounts is also a small factor.

 

[MaxBurn]

Ditto the 720 or so and above. I had a 763 I think when I bought my condo and my loan officer said anything in the mid 700's is considered excellent.

 

[i]

Count yourselves lucky that you have a credit score.

My efforts to avoid credit cards appear to have worked wonders. I applied for a credit card for the first time last month. I was denied because, "you do not have sufficient established revolving credit accounts and you do not have a sufficient number of credit references."

Well duh. A lack of credit would be why I was asking for a credit card in the first place, you dorks. :scratch:


On the plus side, I guess anyone that steals my identity is going to be sorely disappointed.

 

[timwhit]

i, I have heard of this happening to other people I know. Try going to a college campus and pretending that you are a student. Fill out their applications and they will give anyone a credit card.

 

[Fushigi]

Or, go get a department store credit card. They're generally very easy to get. Don't count on a high credit line (expect $200-500) but do count on a high interest rate. Use the card a bit anyway, and let them make a few $ in interest on you. After 4-6 months, they will have made reports to one or more members of the Triad or Credit Bureaus. At that time you should easily be approved for a Visa/MC.

When you do apply for the CC, you may want to try through your local bank as they could also include your bank account history when determining your credit worthiness. Unless your account history isn't good, anyway.

Another option may be to get a car loan if you're in need of a vehicle. I have an H1B coworker who didn't seem to have any problem getting a car loan a few years back despite being new to the US and thus not having established credit here. For that matter he didn't even have any guarantees that he'd be in the US for the duration of the loan.