Tuesday, August 03, 2010

Credit Report

After reading this review of Credit Karma, I decided to try it out. While it doesn't give you a full credit report (showing all your card and payment information), it's much more useful in figuring out how to improve your score. They make money by offering "ways to save", basically recommending a new credit card or other offer.

My credit is pretty good, but it could be better. I always pay off my credit card balances and I have a long history (for someone my age). Here's how it could be better:

  • My balance (which will be paid in full this month) is 27% of my credit limit (because I bought my computer using a credit card). Ideally, it would be less than 20%. I can fix that by spending less and/or asking for an increase in my credit limit.

  • Although my oldest line of credit is 15 years (I don't know how), the average of them is 8 years, and ideally it would be more than 8. So getting a new credit line is not ideal. Keeping the old is better.

  • I have 12 total credit accounts (open and closed), but the best scores come from having at least 20 accounts. But see, the last point said it's bad to open new ones, and who needs 20 credit accounts? I don't know how I even have 12!

  • I had one hard credit inquiry in the last 2 years. I don't know why. Actually, I think that what happened is that I switched BofA cards, when I thought I was just signing up for a new service. That would mean my oldest credit card account was closed, which is also bad. What a rip off.

  • This is the most ridiculous one: my total debt, which is about in the middle of their categories, is in the worst category for credit score. I either have to accumulate a huge amount of debt or pay it all off to improve my score. In fact, a large amount of debt is better for your score than none at all.

So now I'm off to get my real credit report.

And I was wrong! My oldest (BofA) card is intact. That hard inquiry was when I applied for (and got) a card at Ann Taylor. That was dumb. But I'm pretty sure I did save some money on what I was buying that day. Anyway, it was almost 2 years ago, so it should go away pretty soon.

The total accounts includes things like utilities, so if I were paying any of those, that would help.

Now I'm going to call my credit card company and ask for an increase in my credit limit.

Unfortunately, applying for a credit increase may involve a hard inquiry. Hrm. They review my account every 6 months and sometimes decide to up the limit on their own. So instead of applying, I updated the information they had on me (which must have been that I was a student with no income) and hopefully next time it will increase. I'll keep an eye on that.

In the meantime, I won't be charging a computer every month, so my usage will go down on its own. I don't think there's much else I can do. That hard inquiry will go away soon, and I'm happy for now not being responsible for the utility payments. I guess I could take out a mortgage. Or pay off all my debts. Either/or.

How's your credit?

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