Comments on: No Loan Required For High Credit Scores

By: Mike

Mike — Thu, 09 Nov 2006 05:01:08 +0000

My score from Transunion is 773. I paid off my mortgage 2 years ago. The only debts I have are credit card charges from the current billing cycle, I always pay the balance due in full and on time. Below I have cut and pasted their suggesting methods to improve my score.
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There are not enough accounts in good standing on your credit report. [TransUnion] Having credit available to you is a sign that you are able to manage your finances responsibly. Lenders like to see that consumers have a large amount of credit available to them, but not so much that they could spend more than they could afford to pay back. If you currently have multiple accounts open with high balances, try reducing your balances below 35 percent of your limits to improve your score. If you do not have many open accounts, consider opening a new credit account or asking your creditors to increase your limits in order to improve your credit score.

There are not enough bank installment accounts on your credit report. [TransUnion] A healthy balance of credit and loan accounts is key to achieving a high credit score. It is important to build a record of responsible credit use over time with different types of accounts. Consider opening a new account to strengthen your credit report and improve your score.
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I’m thinking of getting another card, EmigrantDirect’s 1.4% cash back card, in addition to the two cards I already have and have had for about 15 years.

But I can’t see going through the hassle of getting installment debt I don’t need and have to write an additional check every month.

By: Foobarista

Foobarista — Wed, 08 Nov 2006 21:21:01 +0000

One other thing is that “debt” need not be an ongoing thing that you pay down. If you actively use a credit card, you have “debt” even if you pay it off every month. Your credit report doesn’t have separate sections showing “debt that is paid off every month versus debt that is being serviced over time”. It just shows “current balance”, which is whatever your CC balance happened to be when the credit card company did its report to the credit reporting agency.

As for outfits like Prosper: using Prosper to “build credit” only counts if Prosper reports in an ongoing way to credit reporting agencies. Does it report “paid as agreed” as a debtor pays down their loan – which helps the FICO score – or does it only report if someone misses payments or defaults – which obviously hurts it? I don’t know.

By: John Wilks

John Wilks — Wed, 08 Nov 2006 14:07:45 +0000

I couldnt agree more. You wouldnt believe how many people on Prosper put “trying to build my credit” on their form. Then they ask for $25,000 at 29% for the next 3 years!!!