I always get a kick out of the recommendations I get from CreditSesame and Truecredit on how to improve my credit score or at least the factors that they think are hurting my score. Here is the current list:
- None of your real estate accounts show a credit amount. [Experian] Lenders may be able to better evaluate your creditworthiness if there is more information about your accounts on your credit report.
My file may be impacted by a lack of mortgage on file? I get this one for a younger couple but they can see the age of my credit file. They know my birthdate and should be able to determine my mortgage was paid off years ago. That to me indicates stability and net worth. Come on guys, update your model here.
- You have too many open bank credit card accounts. [Experian] Having too much available credit can sometimes lower your credit score. Lenders may feel that you have the ability to spend more than you could potentially pay back. However, you should avoid closing too many accounts – especially the oldest accounts on your credit report – because it could lower your credit score.
I‘ve got to agree with this one. With 96 total accounts and 18 current open accounts that may give a lender pause when considering my application. But a reconsideration letter with the following statement always beats this concern: “I have NEVER BEEN LATE WITH A PAYMENT”
- Your oldest revolving credit account was opened too recently. [TransUnion, Experian , Equifax] Time is an important factor for a healthy credit score. Giving the accounts time to mature may allow creditors to better understand how you pay your debts.
This comes from recent openings of charge cards from card issuers and is a direct result of my activities with travel rewards cards. I’m not going to lose sleep over this one as I still have a “healthy credit score”
- The sum of your bank credit card account balances is too high. [TransUnion, Experian , Equifax] High credit balances may be considered by lenders to be a negative factor when determining creditworthiness. Paying down your balance may improve your score.
This is a temporary error on my part. Sometime during a billing cycle I allowed my outstanding balance to exceed 50% of my credit limit on a given card. OOPS I screwed up. Keep them under 50% of available credit.
- You have no real estate accounts that can be used in determining a credit score. [TransUnion, Equifax] 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.
Rinse and repeat response number 1
- You have too many inquiries on your credit report. [TransUnion, Equifax] Excessive inquiries have a negative impact on your credit score. Limiting the number of credit applications you complete may improve your credit score.
Guilty as charged. Note they don’t say too many recent inquiries (which does lead to denials) but just too many inquiries. For those of you concerned about this factor, I currently have 19 inquiries with Experian and still get approvals. I’ve had as high as 22 within the last two years. I think you’ve got some leeway if you pay your bills on time.
I take these recommendations with a grain of salt. Don’t let them scare you away, but only act as warning signs of the things they are looking at in your file. Remember that my file is a mature credit file with 90+ entries and a perfect payment history. Go slow. Watch the warning signs, but it is ultimately that credit score that will determine your success. Keep it over 700.
Your credit is one of your most important assets.