So I'm pretty on top of my credit (just pulled FICO scores at Transunion and Experian, I'm at 799 and 809, respectively). I have a pretty good sense of how the scoring works, but am confused on how taking larger loans (e.g. auto loan, mortgage) works to impact your FICO score.

My questions comes in 2 areas:

1) I have an existing auto loan, I can just pay it off but it's at a very low rate. Is it to my credit score benefit to keep the loan alive? I've been told this, hence I just keep making the payment, but obviously it's better to save on the interest since I can afford to pay it off. I want as high a credit score as possible due to the question below.

2) Related to the above - I'm looking to buy a place (would be first time buyer) - obviously want to keep my FICO score where it is today. Out of curiosity, after I execute the loan... how exactly does using the home loan impact one's credit score?

I'll let the OP handle the credit question, but if you want to save on interest and still keep the loan open you can probably pay off most of it and then continue paying off a few $ per month for the remainder of the term. That's probably a good idea for someone without much credit history. I don't know if it would help you. Although I would also consider one of my personal rules of finance, if anyone wants to loan me any amount of money at less than 3%, I'll take it. I have a pretty big car loan but at 1.9% I'm not paying it off any sooner than I need to.

Auto and home loans don't count toward UT, just credit mix, having them on your CR is a slight plus. Positive trade lines continue to report for 10 years after closing so paying off your car will do little to no harm to your score. Keeping credit card balances as low as possible and not applying for any new credit before mortage shopping is all you need to do to keep your score where it is.

Be careful not to come close to maxing a card with a big purchase in the month or 2 before shopping, even if you plan on paying in full it might report mid-cycle before you pay the bill.

Ok so I have a serious question for this thread.

I was arrested and taken to the hospital a couple years ago so they could sedate me. I spent the night in the hospital in police custody.

I later got a bill for my medical services and basically told the hospital to *** off and get the police department to pay for it because that is who was responsible for the debt. Not sure about this legally but I was told this is the case by a police officer and lawyer but never looked into the law myself.

Fast forward to a few months ago. I started getting calls from some collection agency, I assumed it was about something else non related and went about my life (dumb yes but I still haven't learned all of my debt lessons yet). Today I decided to pay off all my debt this week and get rid of the annoyance. I did my free credit report and found a $545 debt to the hospital that was bought by a collection agency. This number is significantly lower then the bill the hospital sent me.

My question is how do I make this go away without paying it. Am I actually responsible for it? Where can I find the information I need to to decide whether I should be paying it or not?

Yeah the Amex Starwood is a favorite of many. I am waiting for the bonus to jump up to 30k again and am currently using the crap out of my Sapphire Preferred and Ink Plus. But Starwood points are really valuable, especially with Cash & Points redemptions.

This is a perfect answer tbh.

With your credit scores I don't think it really matters what you do. I would pay off your auto loan if you can unless you like having that $$ in your bank account or are getting a higher yield with the money than the interest is costing you. As mentioned, the loan will show the payment history for 10 years even if you pay it off.

When house/mortgage shopping one of the most important factors for a person with good credit is having as few inquiries on your report as possible. And as mentioned, not accidentally screwing your utilization up by nearly maxing a card out.

I really am not sure. I would again recommend creditboards.com or try these threads:
I'm a debt collector - AMA
Ask Livinitup0 about debt collections

Thanks, d10 - but I think the auto loan I have is structured at fixed payment levels - so if I did as you suggested I think I would just pay it off faster.

Ah, that is good to know, especially the bolded - thanks! So to confirm, for mortgage/auto loan - as long as your paying it on time (e.g. no negative marks in those accounts), it's simply calculated as part of the "Credit Mix" part of the FICO score? And, if you pay off an entire auto loan/mortgage, it still stays as part of your Credit Mix for up to 10 years after?

And for utilization - it's just your revolving credit available?

Not sure if someone mentioned this - but I keep very high credit limits (and every 6 months or so will try to increase my lines) so I keep my utilization levels very low, like below 5%. This is I believe a big part of one's FICO score (utilization rate).

One thing to mention on this - don't let the scare of too many inquiries stop you from rate shopping when making major purchases. Most major scoring models will lump inquiries within a 10-14 day period together and call it just 1 when they do the scoring model. They still show on the bureau as multiple inquiries and the score "reasons" may still say "Too many inquiries" but in reality as I understand the algorithm it will only count as 1.

I'm assuming that this is going to fall under some sort of personal responsibility clause or something and you are probably responsible. To know for sure you should consult an attorney or other legal counsel most likely. Be better if you have a friend who is one or who has a parent that is one so that you don't have to pay for a $545 debt (not really worth it).

You might also try calling a credit counselor who will usually do the consult for free. Credit Counselors of America is probably one of the more popular.

The only advantage to having a loan for a while is the # of repeating payments that are paid on time, which is part of the length of history.

As I mentioned a little earlier in the thread, asking for a credit limit increase almost always requires a credit inquiry. If you are ok with an inquiry, you may be better off using it while applying for a new card that might complement your current lineup. If you have no interest in signup bonuses, anniversary bonuses, and bonus spending categories then this doesn't apply. And yes, utilization rate is a big part of your score (30%).

so 0% utilization is the best? I've heard you want 30-60% utilization to show that you use your credit

0% utilization would literally mean you don't use your credit cards at all. Utilization is not the amount of balances you keep on the card and let build interest, it's the amount you've charged against your credit limits at any given time.

0% would not tell them a lot of info about you, because you wouldn't be using the cards. 0% is not ideal, but other than that, the lower the better.

Here is a graphic:



And here is the article that it came from: http://www.creditkarma.com/article/C...zationAndScore

Thanks, and great info.

Sorry, didn't qualify. When I request a credit line increase on an existing credit card, I make sure it's a soft inquiry (which has no impact on your credit score). For example, my last increase a couple years ago on my AMEX Blue Cash was like +$10k. When I requested it, it was only a soft inquiry (I pulled my credit score a couple months after the increase and didn't show as a hard inquiry to verify).

If it's going to be a hard inquiry, I wouldn't bother with the credit line increase request. I'm not sure what the deciding line between a soft and hard inquiry is for a line of credit increase request, but I can't imagine it hurts that I make good money and have a lengthy history with most of my cards.

I think hard inquiries don't have a huge impact on your credit score (I think I read somewhere a single hard inquiry can be up to -10 points, but fall off I believe after 6 months or so), but it does impact your score.

Here's a good explanation describing the differences between a soft and hard inquiry for those who are interested:

https://www.lendingtree.com/credit-r...d-pull-article

k cool. I've been charging up to 30% by the end of the month, so depending when they check it, I'm in a good range. thanks

How do you know if it's going to be a soft or hard pull?

i have a poor credit history but have been on the right track for a few years now and am quite stable financially. at times i have shot myself in the foot by simply forgetting to pay things even though i have the money. my goal is to have good credit in time for our next mortgage application (5-7 years-ish, most likely).

couple things -

1. i have a single, low limit credit card that i rarely use. in fact for about a year i literally didn't use it, had zero balance so no payments. how does this show up on credit history? are those considered "positive" months since i was in good standing even though i owed nothing? obviously they help with length of history.

2. as a follow-up to this, would having three low-limit cards that i rarely or never use increase the overall ratio of positive months or whatever the term is, since they are each counted separately? is this a good way to increase my ratio of "on time" months since i still have some negative accounts on my history?

3. i know some other regular bills, such as cell phones, can also show up on your credit report. are there certain types of services or accounts that are advantageous to set up and pay automatically in order to improve your positive payment history? i am thinking of, like, subscriptions or certain types of retail clubs or something like that.

4. is it possible to add someone to certain types of loans, such as an auto loan or even a mortgage, in order to improve their payment history / credit mix? we have a bunch of accounts on auto-pay that are in my spouse's name where i could be building positive history if this could be done. we share all household expenses / combine finances.

thanks, and great thread.

I've seen a number of 3-5% being thrown around before for optimal usage amount

Thanks for the thread OP.....very helpful.

Here's my issue and maybe you can help..I screwed up my credit from a young age with credit card debt/lawsuits/etc....

About a year ago, I had my score at mid 500's and recently checked again and finally made it to 630......I realize that although these things take time, maybe there is something I can do, maybe there are a bunch of things I can do to up my credit.

I have a hard time even applying for new cards, or getting increased limits on the ones I already do have......It Sucks!!!!

The crazy thing is that I'm not even the kind of guy that needs a lot of credit, I make close to 300-400K a year at this point and I more WANT than NEED the credit.

I even own property (total of 13 units) under my name but can't even get approved for a car lease!!!

Here's some questions....

I'd pay someone money to fix my credit and get it to a more decent score....how much do you recommend I spend?

What is a tradeline? After doing some quick research, I see a bunch of companies offering to sell tradelines...what the hell am I buying here?

Also, some companies offer secondary credit numbers? Is this recommended?

I'm a pretty smart guy, just have been very very lazy with taking care of bills on time and yes it has come to haunt me a bit....

HELP!

Call in and ask them, they will tell you if its soft or hard pull if you ask. If its hard pull its generally not worth it, unless the extra amount of credit will help lower your overall utilization percent by a considerable amount

Also, another question....

I have been using an AMEX that is under my Dad's company name for a few years now, the bill is paid monthly and always on time, but for some reason it does not appear on my credit report.....what do I do about this?

That's right. For a little more information (AFAIK) for a "soft" v. "hard" pull when requesting a credit limit increase on existing CC:

Depending on a variety of factors (income, length of history with the CC company etc), you are likely already pre-approved for bumps in your available credit. So when you request a credit increase, it's possible you're pretty much good to go, hence they only really need to do a soft inquiry.

If you request a credit limit increase that is above that threshold of pre-approval, they will probably do a hard inquiry.

In my experience, when you request a credit limit increase online in your CC account, they will usually alert you to the fact that if they are about to do a hard inquiry, and give you the option to cancel the limit increase. If you're worried about that, you can just call the company and ask them if they are about to do a hard inquiry.

In my experience, Discover has the strictest policy with pre-approved credit limits, AMEX is average. The other banks are easier.

Look at the chart JL posted above. Top FICO scorers (780+) have utilization rates below ~7%. Here's the approximate math for where I'm at - note I'm a single guy who rents so it's easy for me to get very good (for FICO) utilization rates:

Total Credit Card Closing Balances ~$6k-$8k (average month): want to point out that if like many people you have an automatic payment to pay off your entire balance for your CC, the amount that gets reported to the 3 credit bureaus is your closed statement amount (as you will pay off the balance sometime after the account status is posted to the bureaus). Sort of obvious but thought I'd note that.

Total Revolving Credit Available (I have 4 CC): ~$150k

Hence my utilization rate is ~5%.

If you have a family you are going to charge way more on your cards - which is why I posted about the credit limit increase request stuff to maintain solid utilization rates.

Hard inquiries stay on your report for 2 years, but the negative effect on your score will generally rebound after 6 months

They are considered as months not late and your account is likely showing "in good standing" or "pays as agreed". This is a good thing. But beware some companies will close your account after a certain period of non-use. Also see above about having a 0% utilization negatively affecting your score.

Some one said this earlier in the thread that having multiple cards reporting doubles or triples your "history". I'm not sure if this is true, if it is then yes that would help your score. But again as above, 0% utilization is not a good thing.

My understanding is that most of the accounts you mentioned do not show up on your credit report. Typically they only show up if you are very late with payments and they close your account and/or send you to collections.

Again, I don't have any experience with this but my understanding is that yes, if you cosign a loan it will show up on your report as an amount owed.

I would really recommend not paying to have your credit fixed, and not paying to have fake info reported to the bureaus. As gt recommended earlier maybe lookup debt counseling or respected credit repair. Anyone who says they can fix it in a month is probably lying. Also, creditboards.com

Business accounts are reported separately from your personal credit report. Typically it is under the business' EIN, and even if you use your social when you apply it is treated separately. That's why one of the tips in the beginning was to spend hard on a business card if you had to to avoid increasing your personal utilization.

+1'ing what JL said on this. I believe these bills would not show up on your credit report (ie FICO score) as these recurring bills do not represent any sort of extension of credit to an individual.

I'm not even sure massively late payments on these bills would show up on a credit report. (Perhaps they do if say Verizon Wireless takes action against you if you're like 90 days late on a cell phone payment?)

this is definitely not true in england, could be different in america though.

i work at a credit bureau and am finding this thread entertaining, but don't really have much to contribute.

thanks for responding. to clarify #4 above, i am not asking about cosigning a new loan, i am asking about getting added to an existing loan. so for instance we have a mortgage that has been on time on autopay since we got it a couple years ago. my spouse is on it, i'm not, because at the time we applied, we actually got a better rate by just using her income & credit. i am asking if anyone has any experience or knowledge of adding a second party to an existing loan. at this point it should be obvious to our lender (same place we do all banking) that we combine finances and are paying together. also my income is like 60% higher now than it was then.

we are also looking at refinancing and adding us both to the new loan, but don't want to take the hit if adding my credit score to the mix causes a rate hike.