Question:

Why is it that any simulated action I take cannot raise my score over 769 maximum? I pay all of my cards off entirely every month. My Mortgage accounts are amortizing and paid with auto withdrawals. Why can’t my score be raised?

Answer:

The answer actually differs for each consumer based on their personal credit history. In the future, we hope to release a product that will detail the top 3 or four actions you can take to actively manage your credit score over the coming 3 and 6 months along with the simulated change in score. But in interim, I hope this helps.

Two significant factors that compose your credit score are payment history and length of credit history. These two factors can only be changed with on time payment and time. No matter how good you are about your available credit or the types of credit used, this part of your score simply needs time to improve.

Derogatory factors such as delinquencies (30,60,90 days late payments) and collections will hurt your credit for a long time. It can take up to 7 years before those factors stop affecting your score.

Lastly, just remember that credit scores are logarithmic which is just a fancy way of saying the higher your credit score the harder it gets to improve your credit score. That is the final reason that bigger credit score jumps become more difficult.

Question:

I have excellent credit, but I just had an unused Discover card closed by the company because of non-use (19 months). I also had a credit card application declined because I have enough credit already available. Does this hurt my credit score?

Answer:

Closing an old account could affect your credit score in two ways.

• Length of credit history is an important component of your credit score. If your Discover card was your longest held credit card account it probably did have a negative impact on your credit score.
• Also, if you carry a monthly balance on your credit cards, the closure of any credit card account could lower your total available limit. This in turn would increase your credit card utilization, and yes — this could again lower your credit score.

As for the credit card application, in the short term an inquiry for credit will almost certainly decrease your credit score. The amount an inquiry will affect your credit score varies for each person based on other details in their credit file, but to give you a point of reference, my score dropped by 6 points for about 2 months when I last applied for a credit card. My credit score is now 793.

Question:

I have been reading all the entries, and just wonder how long it takes for a credit score to come up. I now have paid off all 11 collection accounts, paid bills on time this entire year, do not have any debt except for 5,000 left on car loan and student loans, all on time, do not have any inaccuracies, applied for Crowne Jewelers credit card-was approved, used the card, and have paid on time for 3 months, and my score is STILL at 545 after a year. What do I do?

Answer:

There is no quick fix in this situation since your past collections and delinquencies will stay on your credit file and impact your score for a few years. There are two things you should do.

1. Continue to pay on time. The negative factors will go away with time but any new one will stay with you for another 5-7 years. This is why I often say good credit takes years to build and a few bad decisions to destroy.
2. Demonstrate your ability to use credit wisely moving forward. This means doing exactly what you have started to do with the Crowne Jewelers credit card — use the credit wisely and pay on time. Your goal should be to open more trade lines. I see that 3-6 credit cards are generally a good number of credit cards. I suggest looking for cards with no annual fees and low rates. The key is to be responsible. Just because you have a few cards does not mean you should use them. Demonstrated ability to keep and use credit responsibly is the goal.

Question:

I have 3-4 old (6-7 years) closed loans on my report. None show past due. Will removing these from my bureau help or hurt my score?

Answer:

By loan, I assume you don’t mean credit card account. Generally speaking, you can not remove a loan from you credit report even if it is closed unless it is inaccurate. So in this case, you don’t have to do anything. Removing anything that is closed won’t really have an affect. Just don’t close old accounts until you read The Do’s and Don’ts of Closing Old Accounts.

With all the great discussion going on at forums.offtopic.com, I thought I would take a minute to consolidate some popular questions and answer them in a centralized location. The quick disclaimer is that these answer are based on my 10+ years in credit and finance but they are still my personal thoughts.

Q. I don’t understand why mine is 730 and not like 800 or something, I have one 30 day late payment… one… in December 2002. How long does that *** last for? And why does it make such a big impact?

A. Credit is composed of many elements. Payment history and length of credit are two key components. From your comment and score, it sounds like those two items are strong and not bringing down your score. The other key elements are your outstanding debt, inquiries, and type of credit. So perhaps you have high general debt or are maxed out on the credit that you do have.

Credit scores are comprised of almost 200 data attributes. It’s very difficult to pin-point one exact reason for a cause. We hope to start by show the top 14 reasons in the our next major release.

Q. How long has this been around? Has anyone actually received updates when your score changes?

A. Credit Karma launched in March 2008.

Technically, your score can change anytime your credit file changes. Some bureaus update their files once per week, others daily. We recommend that you check once per month since most lenders report once per month.

Q. Is 657 good for a single 23 year old with only 2 years of credit history (a credit card and a vehicle payment that just started in November?)

A. Good is relative. Since a large portion of credit is based on your payment history and length of credit, you are probably on the right track. We want Credit Karma to be a single source resource so you can monitor that score over time.

Q. I’ve never heard of this site, it is really reliable?

A. Good question. You should always be wary of sites that take your personal information. As someone mentioned we are BBB certified. In addition, we are also TRUSTe and VeriSign secured. Finally, our press page has mentions of us from sources like USA Today, The Wall Street Journal, and American Banker.

Q. What is the proper credit card usage to boost score?

A. Credit scores are comprised of dozens of attributes, so it’s difficult to give an exact number. A rule of thumb I suggest is 30% utilization or lower. For example, if you have $10,000 of available credit on your credit cards, try to keep your balance at $3,000 or lower.

On a side note, utilization is only counted on the amount the carry. If you pay your balance off in full each month, your utilization is zero.

Q. 758, But i don’t work, am still in graduate school, and have tons of student loan debt…wtf…how does work?

A. Your income is not a factor in credit scores which means a job does not drive the score. If you are in graduate school, I would think you have at least 4-6 years of credit history and that you probably haven’t defaulted or been late on other payments.

Q. 541. How bad is that? Any hope?

A. The score means your are on the lower end of the range. It will be tough to get credit and nearly impossible to get a mortgage unless you improve it.

There is always hope. Good scores take years to build but can be destroyed in days. The simple way is to pay bills on time and to apply and use credit responsibly. You can use Credit Karma to track your progress over time.

Q. By the way do you need to give them a working e-mail address? I dont need any more spam than I already get.

A. You do need a working email as part of our user verification system. With that said, we don’t send spam. If you don’t want any messages from us, we won’t send you anything!

Q. You might want to look into a credit repair service. Sometimes they can get **** legally taken off your report.

A. Be very wary of credit repair agencies. Many will just take your money. The ones that are legitimate are doing things that you, as a consumer, can do yourself.