Credit Advice Q&A

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.