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Question about debt in regard to credit score
Posted on 9/9/15 at 8:21 am
Posted on 9/9/15 at 8:21 am
A few months ago I was having trouble qualifying for a mortgage because I had no credit history.
I signed up for my first credit card and then I bought a bed and a TV for my new apartment from a furniture store with a 3 year note at 0% interest. I did this to get CC points and build credit at the same time, and I was going to buy a TV and bed anyway so may as well do it on a 0% note and have another source of debt for my score.
I've looked into how the score works, and length of history is a factor. My question is this- once I pay off the note, does my history for the note become 0? The monthly payment is so easily manageable that I was going to take the full 36 months to repay it. My thinking was that this would increase my average age of accounts. But if you close a credit card, I believe you lose it's age history in the factor of your average age of accounts. So when I pay off the note will I no longer have the account factor into my average age of accounts?
This is important as I'm looking to buy a house in the next few years, and I'll want to time things right with my credit score if need be. I don't think my score would be great with just one account, the credit card. My bank said that ideally they look to see 3 different sources.
I signed up for my first credit card and then I bought a bed and a TV for my new apartment from a furniture store with a 3 year note at 0% interest. I did this to get CC points and build credit at the same time, and I was going to buy a TV and bed anyway so may as well do it on a 0% note and have another source of debt for my score.
I've looked into how the score works, and length of history is a factor. My question is this- once I pay off the note, does my history for the note become 0? The monthly payment is so easily manageable that I was going to take the full 36 months to repay it. My thinking was that this would increase my average age of accounts. But if you close a credit card, I believe you lose it's age history in the factor of your average age of accounts. So when I pay off the note will I no longer have the account factor into my average age of accounts?
This is important as I'm looking to buy a house in the next few years, and I'll want to time things right with my credit score if need be. I don't think my score would be great with just one account, the credit card. My bank said that ideally they look to see 3 different sources.
2
Posted on 9/9/15 at 8:34 am to Tigerfan56
For optimal credit score, make sure you carry debt no more than 30 percent of your available credit.
If that credit card had a $1500 limit, pay the balance down to $449, then keep paying payments. If it had a $1500 limit and you put $1200 on it, it will actually harm your credit score.
If that credit card had a $1500 limit, pay the balance down to $449, then keep paying payments. If it had a $1500 limit and you put $1200 on it, it will actually harm your credit score.
Posted on 9/9/15 at 9:30 am to Tigerfan56
Your length of credit will not greatly be affected at this time but your payment history can at least be built. Pay off the loan within the 3 yrs. Pref going the whole term if payment history is your goal. Don't close any accounts. If the balance 0 it has nothing to do with your payment history. It is good to have a mix of credit. You currently have a revolving credit. It would be beneficial to add an installment loan. Look into a credit building loan. You would essentially "borrow" your own money. You receive a loan except not receive any funds. You would pay into an account every month and the money would be yours at the end of the terms.
visit creditkarma and myfico message boards for a wealth of knowledge
visit creditkarma and myfico message boards for a wealth of knowledge
This post was edited on 9/9/15 at 9:32 am
Posted on 9/9/15 at 2:42 pm to anc
When applying for a mortgage I found this to be true (pulled report multiple times as I improved score)
-Credit history length is big deal
-More open accounts = positive
-Have over 50% accounts with $0 balance (read credit cards report monthly at 0)
-Have overall revolving (cards) credit <5%
-Installment loans add to credit mix and is positive
-Try not to have credit inquires <6 months old
-Credit history length is big deal
-More open accounts = positive
-Have over 50% accounts with $0 balance (read credit cards report monthly at 0)
-Have overall revolving (cards) credit <5%
-Installment loans add to credit mix and is positive
-Try not to have credit inquires <6 months old
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