FI = low FICO score

[Major Tom]

I used to have multiple mortgages, but they dropped off my credit report a few years ago. Now, my only credit is 3 credit cards, one of which rarely gets used. I use the other 2 to pay as many of my regular expenses as possible, and pay them off in full every month. The expenditure is always a small fraction of my total available credit.

When BofA and Amex began making FICO scores available for free, I was concerned that my lack of installment loans, such as a car loan or mortgage, would hurt me. According to the blurb that came with the FICO scores, it actually has, along with the fact that I have "too few accounts". However, given that my score always comes in at around 840, give or take, I can only imagine what it would be if I had an installment loan or two on my credit as well.

bingybear's advice to make sure you only use a small fraction of your available credit, and to pay the balances off in full every month, is what I do, and it seems to have worked for me. It's great to have a high FICO score - I only wish I needed to borrow money

 

[Walt34]

The last time I looked was about two years ago and it was a tad over 800, I don't remember the precise number. I have four credit cards, paid off in full if I use them, no mortgage or car loans.

I agree the OP should dig a little deeper to find out why it is so low. He is probably paying higher insurance rates than he should be because the companies think he is irresponsible because of the low credit score.

 

[rodi]

Well I tried to get: https://www.annualcreditreport.com/index.action

TransUnion shows long history of single credit card.

Equifax asks me questions about nonexistent loans and then denies showing my report. Allegedly this is common practice so you are forced to pay them for report.

My credit card reports it for free. So I see Equifax giving me 660 score. I think having single card and buying cars or anything large in Cash means I am a credit risk

I have credit around 800. From what I gather from sites like creditkarma - the amount/number of cards is a factor in your credit score. Having only 1 card is probably a factor in the lower score.

I have 4 Visa cards (one was Amex - but costco made us change). One I don't use much - but it's over 20 years old - so it helps because of the length of time. The others offer points and/or cash back... As others said - I use my best points one for everything and pay it off each month. Even my health insurance payments are set up to autopay from the points credit card.

I'm on the fence about opening another card or two - just to improve my credit.... If an awesome points/mileage card deal comes along, that will push me to do it.

 

[ShokWaveRider]

Always over 800 here too. Just 2 Credit cards NOW. One I had closed the account because I never used it, but it did nothing for my score.


However, I have leased cars for 15 - 20 years so that may help.

 

[eta2020]

I have credit around 800. From what I gather from sites like creditkarma - the amount/number of cards is a factor in your credit score. Having only 1 card is probably a factor in the lower score.

I have 4 Visa cards (one was Amex - but costco made us change). One I don't use much - but it's over 20 years old - so it helps because of the length of time. The others offer points and/or cash back... As others said - I use my best points one for everything and pay it off each month. Even my health insurance payments are set up to autopay from the points credit card.

I'm on the fence about opening another card or two - just to improve my credit.... If an awesome points/mileage card deal comes along, that will push me to do it.

Well I was able to get other 2 reports and they were flawless with single credit card over decades. (or more like last X years)

I doubt I would not be able to negotiate lowest mortgage rate if I wanted it.

 

[braumeister]

Not to derail this thread (much), but I have a question about this issue.

I have 12 different credit cards, but only use half of them somewhat regularly (various reasons involving hotel/airline points, cash rebates, etc.).
The other half I use about once a year simply to keep them active.

I've always been told that I shouldn't close old credit cards because that's a negative on my score. Frankly, I don't really care about my score except that it is a factor in my insurance rates.

Should I close the cards I don't use much or not?

 

[FIREd]

I can see my FICO score whenever I log in to my American Express account. My score is usually >800 (no debt and I have not worked in 6+ years).

Factors mentioned as affecting my score negatively:
1) lack of recent installment loan information (no student debt or car loans)
2) the age of my oldest account and/or the average age of my accounts is relatively low (my oldest account is 20 years old, but I did open new credit card accounts in the last 5 years which brought the average age down).

In the Spring, I charged an expensive trip to my credit card. It used up less than 10% of available credit and I paid it off immediately. But my credit score still took a 50 point tumble the following month. It recovered slowly over the next 3 months but it seemed excessive.

 

[Walt34]

I've always been told that I shouldn't close old credit cards because that's a negative on my score. Frankly, I don't really care about my score except that it is a factor in my insurance rates.

Should I close the cards I don't use much or not?

I guess what I would do is simply close them over a span of time, such as two or three years so there would not be a sudden change. Or you could just put them in a drawer and let the issuers decide when to close them for non use. This would also spread the change out over time.

A few folks here worked in the finance industry so I'd see if they have suggestions.

 

[SumDay]

Dave Ramsey says eventually your credit score will revert to zero after you become debt free. He also believes this is a good thing. I have to disagree, mainly because of insurance rates.

Mine is about 820 and DH's is 846. Why they are different I'll never know. He barely knows where we bank.

 

[Sunset]

Dave Ramsey says eventually your credit score will revert to zero after you become debt free. He also believes this is a good thing. I have to disagree, mainly because of insurance rates....

Dave Ramsey is wrong.
You would have to be dead before you could have a zero credit score, and that is probably only after you have been dead for a long time.

 

[Sunset]

Not to derail this thread (much), but I have a question about this issue.

I have 12 different credit cards, but only use half of them somewhat regularly (various reasons involving hotel/airline points, cash rebates, etc.).
The other half I use about once a year simply to keep them active.

I've always been told that I shouldn't close old credit cards because that's a negative on my score. Frankly, I don't really care about my score except that it is a factor in my insurance rates.

Should I close the cards I don't use much or not?

If they really bother you, then closing a few, say 4 or 5 of them would not do much to your credit score, and then the effect would only last about 3-6 months.
Unless the 4 or 5 you close are many years older than all your other cards.

In other words, keep an ancient CC open even if used just once per year.
I have one that is 16 years old..... barely used.

 

[eta2020]

Dave Ramsey says eventually your credit score will revert to zero after you become debt free. He also believes this is a good thing. I have to disagree, mainly because of insurance rates.

Mine is about 820 and DH's is 846. Why they are different I'll never know. He barely knows where we bank.

FICO has no effect on Insurance rates in Massachusetts.

It's funny Warren Buffet has FICO of 712-718. I wonder if it effects his insurance.

If I find my is low because I don't use credit I certainly will not start getting Credit Cards and Mortgage or Auto loan.

 

[braumeister]

If they really bother you, then closing a few, say 4 or 5 of them would not do much to your credit score, and then the effect would only last about 3-6 months.
Unless the 4 or 5 you close are many years older than all your other cards.

In other words, keep an ancient CC open even if used just once per year.
I have one that is 16 years old..... barely used.

That's the kind of information I was looking for. Thanks for the tip.

 

[ExFlyBoy5]

Dave Ramsey says eventually your credit score will revert to zero after you become debt free. He also believes this is a good thing. I have to disagree, mainly because of insurance rates.

Mine is about 820 and DH's is 846. Why they are different I'll never know. He barely knows where we bank.

Uh, yeah...not so much. No debt here, a HELOC (with a 0 balance) and several CCs (paid off each month) and like others, a 800+ score.

Sent via mobile device. Please excuse any grammatical errors.

 

[harley]

Well I was able to get other 2 reports and they were flawless with single credit card over decades. (or more like last X years)

I doubt I would not be able to negotiate lowest mortgage rate if I wanted it.

I suspect the one credit card is a big issue. If you have, say, a $10k credit limit and the day they check it you have $3-4k charged on it you would be at 30-40% usage. If the credit limit is lower it could be even higher. That would cause a big hit on your score. You say the other reports are flawless, but what did they give you as a score? Or did they not give a score, just a usage report?

I don't quite understand your last sentence ("I doubt I would not", does that mean you think you could?), but if you mean you think you could get a low rate mortgage with a crappy FICO score and no significant income, you're very likely wrong.

Hmmm...rereading your posts I'm assuming you are retired, but you don't say that. If you have income the mortgage would be easier. But if your FICO score is low it would still be very difficult to get a good rate. Getting a mortgage is incredibly more difficult than it used to be. Even with 7 figure assets and an 800+ FICO score we had to jump through more hoops than a show dog to get a refi, just because we were FIREd and had no significant income.

 

[Bir48die]

Paid off mortgage 18 months ago. No loans. Two credit cards and retired 5 months ago. FICO of 850

 

[Sarah in SC]

Braum, I would pick one of the oldest cards and keep that one active, maybe pulling it out of the drawer a few times a year to use, and cancel any others you don't want to keep.

I generally keep open 3 or 4 older cards with no annual fee just to have the steadying effect, because I open new card for bonuses/miles/points every year and close them after a year. My scores are in the low 800s. I don't have a mortgage but I keep a HELOC that is not used open as well.

One interesting thing I've done a couple of times is add friends as authorized users (I keep the cards) to help with their scores. This one easy thing, done with 3-4 of my cards, will bump up their scores nearly 100 points, even when they have old, bad marks.

 

[Sunset]

...
TransUnion shows long history of single credit card.......

This could be the issue, you should have more than one CC just for safety sake.
I always like to have at minimum a Visa and MC, because some places will not take one of them (it is rare, but has happened more than once).

Also if your number is stolen, or the card lost, it will take a while to replace, so it's nice to have another handy.

Finally, if you have one CC, why not 2 , just use the second one once every 6-8 months to keep it active.

You can even be paid to do this, AARP just sent me an offer - will pay $100 if I get the card that has no annual fee and spend $500 within a few months of getting it. And it gives a crazy 3% back on gas and restaurants.

The key is, it costs you nothing to get it, they pay you, and it costs you nothing to keep it, plus it will raise your credit score.

 

[eta2020]

This is OP. Just to update you. So I decided to obtain one more Credit Card that is very difficult to get and has 0 annual fees. ( I would not pursue card with fees)

I submitted application. Next screen told me call them. I called them to verify few things and without any problem was approved. Normally this card is out of reach for FICO under 740. My FICO of 660 did not come up during application process.

I agree with posters that in general it is better to maintain good FICO.

 

[audreyh1]

I opened two new credit card accounts early this year, plus I increased my limit on the old Fidelity AMEX in anticipation of the switchover.

As a result, there were three hard credit inquiries, and two new accounts. I watched my FICO score gradually drift down over the late spring and summer, and it dipped just below 800 one month. But it's popped back above 800 now and is higher than several months ago. Maybe it will keep drifting back up and get back to where I started the year.

 

[FireFool]

Well I was able to get other 2 reports and they were flawless with single credit card over decades. (or more like last X years)

I doubt I would not be able to negotiate lowest mortgage rate if I wanted it.

If you only have one trade on your credit report your score will always be on the lower side of any scoring algorithm. Think of it as reading online reviews of two e-bay sellers - one with only a single glowing review, and the other with numerous positive review. Both might be great, but who would you have confidence in as being the better seller - that's the logic for the "Number of Trades" variable used by most scores. Your credit utilization might also be higher than it would if you had multiple cards. If you care to improve your score you may want to open another card or two or three over time. My personal bias though is that it's not worth it if you have to pay an annual fee on any of those.

If you aren't expecting to borrow in the future this may all be a moot point, other than potentially some minor improvement in your car/home insurance if you shop those in the future. If you don't plan to shop insurance that too is moot, since most carriers aren't re-running credit on renewals (and if you live in CA, HI or MA it's not used).

 

[ivinsfan]

This is OP. Just to update you. So I decided to obtain one more Credit Card that is very difficult to get and has 0 annual fees. ( I would not pursue card with fees)

I submitted application. Next screen told me call them. I called them to verify few things and without any problem was approved. Normally this card is out of reach for FICO under 740. My FICO of 660 did not come up during application process.

I agree with posters that in general it is better to maintain good FICO.

Just tell us this card came with a nice sign up bonus and that you made some money trying to raise your credit score.

 

[eta2020]

I don't quite understand your last sentence ("I doubt I would not", does that mean you think you could?), but if you mean you think you could get a low rate mortgage with a crappy FICO score and no significant income, you're very likely wrong.

That is exactly what I mean if crappy FICO is because you have you no history of having many loans/credit cards.

When it comes to mortgage they care much more about your debt-to-income ratio then what your FICO is. (When comparing 2 Households with identical income/assets) I assume someone FIREd has pretty good income from Dividends or pension.

With high ratio even 850 FICO will not help you.

If you pay off your mortgage and DTI goes to 0% your FICO will nose dive (if you have no credit cards or other loans). Do you think Bank will refuse to give you mortgage on vacation house because of that?

BTW it is that DTI ratio that decides how much of the house mortgage you can afford

 

[mickeyd]

I do not believe that FICO has any idea what your/my investable assets are. Think about it. How could they?


They seem to collect CC data and loan data and magic those numbers up to come up with that number. I quit checking my FICO score, but when I did it seemed to vary from 800-825 for no reason at all. I use my CC to buy close to 100%of my stuff and have no loans.

 

[Sunset]

That is exactly what I mean if crappy FICO is because you have you no history of having many loans/credit cards.

When it comes to mortgage they care much more about your debt-to-income ratio then what your FICO is. (When comparing 2 Households with identical income/assets) I assume someone FIREd has pretty good income from Dividends or pension.

With high ratio even 850 FICO will not help you.

If you pay off your mortgage and DTI goes to 0% your FICO will nose dive (if you have no credit cards or other loans). Do you think Bank will refuse to give you mortgage on vacation house because of that?

BTW it is that DTI ratio that decides how much of the house mortgage you can afford

Retired folks have trouble getting mortgages because investments are not the same as job income. You can garnish job income.

Anyone who does not have Credit cards, is either very very poor at handling their money or is a bad credit risk, wait, that is the SAME thing....