High credit scores for young adults?

[Greg Bernhardt]

Is it possible for people under 30 to have excellent credit scores? I just checked mine and it is only in the 65th percentile. With a couple credit cards and loans, I've paid all my bills on time. I think what is hurting me is average credit age. My average loan and credit age is only 5 years. Makes me think I can't reach a high score until I'm in my 30s? Any advice?

 

[Ivan Seeking]

You get a bump whenever you pay off the balance on a loan or credit card.
Keep your debt to debt potential ratio low.
Increase your credit limits whenever possible
Major purchases paid off, help
Being a homeowner may be highly significant... not sure how that plays in.

We use an airmiles card for most of our spending, but we pay it off each month. This shows a lot of activity but no [or a low] balance due. As for the airmiles, obviously you lose if you don't pay it off each month.

 

[Greg Bernhardt]

Do you happen to know what credit score everyone starts with?

Increase your credit limit whenever possible

That should be easy to try!
http://www.creditcounselorhut.com

 

[Office_Shredder]

I've heard that paying off your credit card completely each month is not as good for your credit score as if you keep a small balance, but always passed that off as mastercard propoganda

 

[Ivan Seeking]

If you have the cash for a purchase, use a card and then pay it off.

But be sure that you actually pay it off!

 

[Ivan Seeking]

I've heard that paying off your credit card completely each month is not as good for your credit score as if you keep a small balance, but always passed that off as mastercard propoganda

I've heard this as well. But at one point, I actually evaluated credit reports as a part of my job. Zero balances were always counted as a plus. It may vary depending on the company.

 

[Ivan Seeking]

Do you happen to know what credit score everyone starts with?

No. Once upon a time, someone explained it to me, but my first real exposure to the subject came long after my own credit was well established.

 

[Evo]

I've heard that paying off your credit card completely each month is not as good for your credit score as if you keep a small balance, but always passed that off as mastercard propoganda

I've read that also, a consistent on time pay history is better than early payoff. Having to check credit to establish credit lines for clients for the past 20+ years, I have to agree that how soon you pay something off is not even reported, AFAIK, I've never seen that on a credit report (the kind of report that you see as a creditor). As soon as you stop paying, nothing is reported anymore.

I don't know if the amount of debt you carry is considered in a personal credit report, it may be considered for a business as far as something like a Dunn & Bradstreet rating.

 

[Ivan Seeking]

I have to agree that how soon you pay something off is not even reported,

Exactly. It shows as a zero balance with the maximum historic debt. But you are right that an established, consistent payment history, is a big part of the target. I understand that you also get bump when you make payments that exceed the minimum payment.

You still need to increase the debt capacity. An excellent history with a $100 limit doesn't carry much weight.

 

[rootX]

But be sure that you actually pay it off!

My problem is whenever I use my credit card, I forget about paying it off because first the billing address is my parents home and second I use second bank account for the credit card which is not for the saving/cash flow ins purposes.

 

[leroyjenkens]

I've been trying to build my credit. I recently got a credit card after having to jump through a bunch of hoops. I couldn't even get a simple gas card when I first started trying to build credit. I don't understand how people just get credit cards sent to them without even asking. Not only did I have to ask, but I had to go to the bank personally, get a secured credit card first and pay it off on time for a year, then I had to call them again after a year and give them all of my information again, have 2 references that don't live with me, fax all of that to them, build a rocket, fly to Mars, cure HIV, cancer, and maple syrup urine disease and then they finally sent me the real credit card.

Should I just let this credit card sit here on my desk? I heard that just having the credit card for a long time builds credit. Or do I have to actually use it? It's only a 500$ credit limit. Should I call them and tell them to make that higher?

This whole credit thing is such a game. I heard just checking your credit too much can make your credit go down. And things can appear on your credit report out of no where, like missed payments. I had one on my credit report. These people say I owed them money 4 years ago, never told me I owed them money, and somehow had the authority to put a "no payment" on my credit report. I wish I could do that. Just pick someone I don't like and put like 20 no payments on their credit report, just to mess up their credit, since apparently anybody can do that.
I wrote a letter to the credit companies disputing it and they took it off.

 

[Danger]

Greg, man, I got to tell you...
When I saw the title of this thread, I was right on the brink of reporting it as a spam post... until I noticed your name on it. Could you maybe relabel it as something less... uh... spammish?

 

[Evo]

Should I just let this credit card sit here on my desk? I heard that just having the credit card for a long time builds credit. Or do I have to actually use it? It's only a 500$ credit limit. Should I call them and tell them to make that higher?

Having a credit card does nothing for your credit rating. Not using it and not having a balance does not reflect on your credit report. The way credit reporting happens is that the creditor reports how fast you pay within 30, 60, or 90 days. Paying more than the minimum payment is not reflected, it doesn't matter. Also, paying off before it's due doesn't matter. These are not things that are reported.

This whole credit thing is such a game. I heard just checking your credit too much can make your credit go down.

Although this doesn't go into your credit score, someone checking your credit history can be alarmed by frequent or recent checks because this indicates that you have been applying for credit.

 

[Jack21222]

When I bought my house at age 23, my credit score was around 680. It reached a peak a year or two after that, when one of the agencies had me at a 780. It was back down to about a 720 last year (I'm 27 now.)

This thread reminded me to check my free annual credit reports. Nothing anomalous on any of them, and I've still never been late on a payment in my life. I decided to not pay the 8 dollars to check my actual score, though... not worth it to me.

 

[leroyjenkens]

Having a credit card does nothing for your credit rating. Not using it and not having a balance does not reflect on your credit report. The way credit reporting happens is that the creditor reports how fast you pay within 30, 60, or 90 days. Paying more than the minimum payment is not reflected, it doesn't matter. Also, paying off before it's due doesn't matter. These are not things that are reported.

This makes it sound like they think that the most credible people are the ones waiting until it's due and then paying the minimum.

Although this doesn't go into your credit score, someone checking your credit history can be alarmed by frequent or recent checks because this indicates that you have been applying for credit.

Why would that alarm them? There's a lot of different reasons your credit can be checked. Instead of finding out the truth, they'll just assume that I've been going hog wild on credit cards?

 

[Evo]

This makes it sound like they think that the most credible people are the ones waiting until it's due and then paying the minimum.

As long as it's paid before it's due, everyone looks the same on a credit report.

Why would that alarm them? There's a lot of different reasons your credit can be checked. Instead of finding out the truth, they'll just assume that I've been going hog wild on credit cards?

When you are asking for money, apprearing to be repeatedly looking makes you appear to be a risk. Remember, this only shows numbers, it doesn't go into your life story.

 

[TheStatutoryApe]

An old friend of mine told me that he had a excellent credit rating when he was in his twenties. He said that this was supposedly because his father opened a bank account for him when he was born and made regular deposits to it through out his childhood.

 

[SELFMADE]

I am 25 and last checked my score was 763

 

[Pengwuino]

Having a credit card does nothing for your credit rating. Not using it and not having a balance does not reflect on your credit report. The way credit reporting happens is that the creditor reports how fast you pay within 30, 60, or 90 days. Paying more than the minimum payment is not reflected, it doesn't matter. Also, paying off before it's due doesn't matter. These are not things that are reported.

The first part is not true from every source I've ever read. The fact that a company has extended you a line of credit is all that matters. If a company gives you $5000 worth of credit, that's $5000 worth of credit regardless of whether or not you use it. The only problem is if you just open credit cards left and right, you'll get a hit based on that action. Of course, if you never use a card, a issuer might simply close the account which will hurt your score.

 

[zomgwtf]

You start off with no credit score, to answer that question. Once you have established credit the push the info through the 'system' and it pushes out a number. There's no 'starting' point that's set in stone.

In order to increase your credit score there are many things to consider. You should get a credit report (from all 3 credit companies) these tell you exactly what's up and how to fix it.

Things that increase credit score:
Having lots of credit and keeping low balances owing at the end of your statement period. If you have $5000 credit and only $500 available this is going to reflect negatively regardless of if you make your payment. If you have the full amount though or let's say 70% of your credit then it'll look positively. The more credit you have the better.

The older your credit cards the better too... so make sure you use your credit cards every now and then because if you stop using a card the creditor may just stop reporting to the agencies. Having old accounts though is very good.

Make sure you don't let any payment go over 30 days late. That's when it gets reported.

However, if you already have a lot of credit cards don't get more, this may reflect negatively. Always try to increase the limit on your current ones.

Always go over your crdit report and correct any mistakes, get rid of all derrogatory accoutns and make sure everything is 'current' or 'paid as agreed'.

As well if you're looking for a new credit card try to do it within a short amoutn of time. Having constant credit checks negatively effects your credit score.

 

[leroyjenkens]

When you are asking for money, apprearing to be repeatedly looking makes you appear to be a risk. Remember, this only shows numbers, it doesn't go into your life story.

That's a problem with the system. It allows people to make assumptions that you're not credible.
People created the system, so people can change the system. The system is not a natural phenomena we can't change.
But they don't want to change the system. They like it the way it is. Like I said, it's a game.

 

[Office_Shredder]

This makes it sound like they think that the most credible people are the ones waiting until it's due and then paying the minimum.

This is the kind of person that credit card companies love, because they make tons of money on interest.

I don't see how it should be penalized for paying the minimum at any rate: The point of a credit rating is to determine how good you are at keeping to your end of the bargain with repaying the debt. The deal you have with the credit card company is that you have to repay the minimum every month; if you do that you're sticking to the deal and repaying your debt on time - i.e. you're not a credit risk

 

[zomgwtf]

This is the kind of person that credit card companies love, because they make tons of money on interest.

I don't see how it should be penalized for paying the minimum at any rate: The point of a credit rating is to determine how good you are at keeping to your end of the bargain with repaying the debt. The deal you have with the credit card company is that you have to repay the minimum every month; if you do that you're sticking to the deal and repaying your debt on time - i.e. you're not a credit risk

You're not penalized for paying the minimum you're penalized for keeping a high balance owing relative to your full amount of available credit. Paying the minimum means nothing, it just means your payments are on time which means very little. As long as your payments are not over 30 days late it won't show up on your credit report.

Credit card companies are not looking for people who may not pay back their debts and if statistics show that people who make minimum monthly payments every month are more likely to mess up then that gets incorporated into the software that calculates your score. But... it doesn't... only your balance vs credit available is reported.

 

[leroyjenkens]

An old friend of mine told me that he had a excellent credit rating when he was in his twenties. He said that this was supposedly because his father opened a bank account for him when he was born and made regular deposits to it through out his childhood.

It's stuff like this that make me refer to it as a game. Why would his father putting money in his bank account prove that a baby is credible? It doesn't. All that is is a cheat code he figured out for the game.

There's also ways to get your name added to an established credit card, and after a certain period of time, all that credit becomes yours. How does that prove you're credible? It doesn't. It's yet another cheat code for the game. It's such a joke.

 

[zomgwtf]

It's stuff like this that make me refer to it as a game. Why would his father putting money in his bank account prove that a baby is credible? It doesn't. All that is is a cheat code he figured out for the game.

There's also ways to get your name added to an established credit card, and after a certain period of time, all that credit becomes yours. How does that prove you're credible? It doesn't. It's yet another cheat code for the game. It's such a joke.

Dude you don't get credit for having a bank account. When creditors look at your bank account all they want to know is how much money you have on hand at those specific points in time. They also will take your annual earnings into account too. The credit reporting agencies do not. They have nothing to do with bank accounts.

This friend was lying, he does not have excellent credit because his father regularly deposited money into a bank account.

Credit reports are based only on the relationships built by lending of money and things like bankruptcy. Unless you go into overdraft, I believe that may count against your credit if you do not pay it back.

As for the adding an authorized user, I am pretty sure they've changed the rules on this. FICO used to count it as a positive thing when someone with no credit or bad credit was added to a n acount with great credit. It turned into a scam, people with extremely high credit scores were being paid money by people with bad credit in order to improve their credit. So they changed it up. As of right now I am pretty sure that being an authorized user of a credit card does absolutely nothing for your credit score. I am pretty sure it doesn't get reported.

 

[Averagesupernova]

As for the adding an authorized user, I am pretty sure they've changed the rules on this. FICO used to count it as a positive thing when someone with no credit or bad credit was added to a n acount with great credit. It turned into a scam, people with extremely high credit scores were being paid money by people with bad credit in order to improve their credit. So they changed it up. As of right now I am pretty sure that being an authorized user of a credit card does absolutely nothing for your credit score. I am pretty sure it doesn't get reported.

-
Well it just so happens someone I know with poor credit recently asked me to add them to my c/c in order to improve their credit to refianance their house. Of course I said no. The lender told them that was one way to become elgible to refinance. They also were told they could take out a CD for a couple thousand. What basically would happen here is that the bank would lend them the money for a CD, the borrower would make monthly payments (with interest of course) and when the amount was paid off they would allow them to refinance. So someone who is making $1100 a month payments now wants to refinance to get the payment down to about $700 has to cough up more interest ahead of time to prove something to the bank (what I don't know) before they can get the payment lowered. Yes, I HATE banks.
-
Now as far as the credit score itself goes I don't know. Zomgwtf, you may be right in that using a c/c does nothing for your score. But in this case, my friend who chose to not take a chance of c/c abuse by not having a c/c gets screwed even though their payments (utilities, etc.) are always on time.

 

[leroyjenkens]

Dude you don't get credit for having a bank account. When creditors look at your bank account all they want to know is how much money you have on hand at those specific points in time. They also will take your annual earnings into account too. The credit reporting agencies do not. They have nothing to do with bank accounts.

This friend was lying, he does not have excellent credit because his father regularly deposited money into a bank account.

Credit reports are based only on the relationships built by lending of money and things like bankruptcy. Unless you go into overdraft, I believe that may count against your credit if you do not pay it back.

As for the adding an authorized user, I am pretty sure they've changed the rules on this. FICO used to count it as a positive thing when someone with no credit or bad credit was added to a n acount with great credit. It turned into a scam, people with extremely high credit scores were being paid money by people with bad credit in order to improve their credit. So they changed it up. As of right now I am pretty sure that being an authorized user of a credit card does absolutely nothing for your credit score. I am pretty sure it doesn't get reported.

From the FICO website:

Authorized user of credit card

Every generation of the FICO score formula has included authorized user credit card accounts when calculating a person's score. FICO 8 score continues that policy. This can help people benefit from their shared management of a credit card account. It also helps lenders by providing scores that are based on a full snapshot of the consumer's credit history.

To protect lenders and honest consumers, the FICO 8 formula substantially reduces any benefit of so-called tradeline renting. That's a credit repair practice that entices consumers into being added to a stranger's credit account in order to misrepresent their credit risk to lenders.

 

[Topher925]

I'm 24 and last time I checked my credit score (I think I was 23) it was about 760 depending on which of the three reporters you looked at. So yes, you can have good credit when you're under 30.

 

[Evo]

-
Well it just so happens someone I know with poor credit recently asked me to add them to my c/c in order to improve their credit to refianance their house. Of course I said no. The lender told them that was one way to become elgible to refinance.

Adding someone as an additional card holder does not give them credit or have them reported to a credit bureau. The account would have to be changed to a *joint* account, meaning they would have to pass credit with the card company and become finacially obligated for the card. An additional cardholder is not financially responsible. I found this out when going through a divorce, my ex and I had both types of accounts. My ex was on most of my accounts as an "additional cardholder".

 

[Greg Bernhardt]

I ordered a credit report card. Says I have a low number of accounts at 13 (6 open and 7 closed). The chart says to get a high rating I need 22+ accounts? wtf? Also it says I have three hard credit inquires which is bad. What the heck am I supposed to do about that? Also says my average credit line age is low at 5 years. I have a mortgage, car loan and two credit cards that I use frequently and have always paid in full on time. gives me an average total score, grrrrrr.

 

[S_Happens]

Luckily zomgwtf has straightened most of this thread out.

There is a significant difference between the computation of a FICO score and how creditors view the accompanying credit report(s).

Payment history and credit:debt ratio make up the majority of a FICO score calculation.

As for whether you should pay your card off every month or pay the minimum consistantly.
Paying off your credit cards in full every month will net you the highest FICO score by showing up as "pays on time as agreed" and lowering your credit to debt ratio. On the other hand, paying the minimum shows that you are willing to eat interest and credit lenders like to see this (not a substitute for good FICO score). It is something a lender considers when evaluating a credit report.

Someone asked about letting an account sit inactive. This will affect your FICO score negatively, albeit by a small amount compared to payment history and credit:debt ratio. My suggestion is to use it for something(s) you always pay for (a utility or commodity) and to pay the account off in full every month.

As stated, bank accounts have no impact on FICO scores.

Yes, doing "hard checks" on your credit affect your score negatively. This is a check that you have to authorize, not the same as a "soft check" done routinely by large CC companies that send you offers in the mail.

I may read back through and address anything I missed.

 

[zomgwtf]

Hard checks always negatively effect your credit score, that's why you don't want to authorize many over an extended period of time. For instance one every 3 months is too often, you want to try and keep them all within a small amount of time. The report only keeps the last 3 checks for 5 years.

 

[Pythagorean]

I had a 700+ credit score until I canceled my Alaska Airlines credit card (cause I didn't like paying the annual fee). Bastards.

 

[samoth1]

How do brokerages work here? If I have, e.g., $50k available margin, and am using $50k, does this count as "credit"? Is it reported to the bureaus?

 

[TheStatutoryApe]

This friend was lying, he does not have excellent credit because his father regularly deposited money into a bank account.

Lying is perhaps a bit extreme. At most he did not know what he was talking about. I've heard any number of things that are supposedly good or bad for your credit and at one time or another have heard that those things were a load if crap. As far as I know he did in fact have near "perfect" credit and what he told me was the best explanation he could come up with in the absence of any other reason why it should be so good.

Another interesting thing was something my ex told me. She said that her parents had really good credit and when they decided to take out a small loan to renovate their home they were denied. They had no idea why since their credit was supposed to be impeccable. They were apparently told that the reason they were denied is that they had "too much" credit. The rationale was supposedly that with the number of credit cards they had, and the high limits on them, they could easily slip into massive debt at any time apparently making them a liability. They were told that they should close some of their credit accounts. This seems to go in the face of what you are saying about making sure to increase your credit as much as possible, perhaps there is a nuanced difference though. Thinking about it now it may have had something to do with their credit to income ratio. Her father was the sole income provider and while he made decent money he was only a sheriff (yes I dated the sheriff's daughter) and wasn't exactly making the big bucks.At any rate, I am never sure what to believe on this subject any more. I only throw out things I have heard to see what people say about them so I might get a better idea of what is and isn't true.