My 21 year old son wants to get a credit card, he’s been turned down because he doesn’t have a credit history. I’ve been thinking about making him a co-signer on one of my credit cards, however I have very bad credit (a bankruptcy & a foreclosure) will my bad credit follow him afterwards?
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Credit scoring is not limited to banks. Other organizations, such as mobile phone companies, insurance companies, landlords, and government departments employ the same techniques. Digital finance companies such as online lenders also use alternative data sources to calculate the creditworthiness of borrowers. Credit scoring also has much overlap with data mining, which uses many similar techniques. These techniques combine thousands of factors but are similar or identical.
If your FICO score is not as high as you would like it to be, there are things you can do to improve it. First of all, be sure to keep all of your bills current and in good standing. Always pay your bills when they come due, never make any payments late, and pay more than the minimum balance on your credit cards or pay them off completely if you can. The longer you have a good payment history, the higher your credit score will be.
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There are different methods of calculating credit scores. FICO scores, the most widely used type of credit score, is a credit score developed by FICO, previously known as Fair Isaac Corporation. As of 2018, there are currently 29 different versions of FICO scores in use in the United States. Some of these versions are “industry specific” scores, that is, scores produced for particular market segments, including automotive lending and bankcard (credit card) lending. Industry-specific FICO scores produced for automotive lending are formulated differently than FICO scores produced for bankcard lending. Nearly every consumer will have different FICO scores depending upon which type of FICO score is ordered by a lender; for example, a consumer with several paid-in-full car loans but no reported credit card payment history will generally score better on a FICO automotive-enhanced score than on a FICO bankcard-enhanced score. FICO also produces several “general purpose” scores which are not tailored to any particular industry. Industry-specific FICO scores range from 250 to 900, whereas general purpose scores range from 300 to 850.
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While the FICO score calculation doesn’t directly consider age, 15% of the score comes from the length of your credit history—putting younger people at a natural disadvantage. Likewise, 10% of the score is based on the mix of debt you have; it’s better to have a diverse mix—from a mortgage to student debt to car loans—than a single credit card. (And younger consumers are less likely to have a mortgage; the median age of first-time home buyers is 32, a report last year found.)
You forgot one simple thing in your practice. each new credit account splits your credit age average. So taking on that many accounts at once is what hurts your score. But good news is more account less of a split and the faster year lenght of credit goes up. Most people don’t realize there is several factors to a heathy credit report. Also having to many types of the same line of credits will hurt you in the lenders eyes. Good example 1 visa,1 master card, 2 store cards, 1 personal loan. 1 morgage. If all your credits are loans it shows you got less borrowing potential, if all is revolving credit it shows you can max every thing out to fast. just few things to consider for a healthy porfolio
The problem here is buying everything on cash. Cas has no money trail, and therefor leaves you with no credit history. It would be wise to get a small credit card, and use under 30% of your limit, paying it off monthly with your cash. This leaves a money trail, eg., your credit history.
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Some banks have reduced their reliance on FICO scoring. For example, Golden West Financial (which merged with Wachovia Bank in 2006) abandoned FICO scores for a more costly analysis of a potential borrower’s assets and employment before giving a loan.
You had to short sell your house due to losing your six figure income? So you hadn’t considered what could happen if you lost your six figure income? You assumed that job and income would always be there for you? You didn’t have any backup saved up for X amount of months backup salary?
Greg – We explain in this article that there are many different scoring models. The two we show are scores used by lenders, not estimations. Also, are both pulling from the same bureau? (Ours is Experian.) 3 Reasons Why Your Free Credit Score Looks Wrong
Use your card to build credit. The most important aspect of using a card that requires fair or average credit is that you can build your credit with it, which will grant you access to better lending products.
630 to 640 is fair and not that bad. But it is the banks and lenders who are pushing what THEY consider good and bad credit. So even if it appears that someone has pretty fair or decent credit scoring, the banks control how the scores are determined and whether or not they want to lend based on those scores. It is often arbitrarily changed from bank to bank, lender to lender. In my opinion we shouldn’t allow banks to control the credit scoring and terms of what is good and bad. Because as it stands now they are the ones in control of the scoring and the system. The middle class and poor do get slammed and the whole thing is rigged plain and simple. There is nothing fair about what big banks do in this regard.
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If you find that you have a pretty lengthy history of late and missed payments, then your scores on each scoring model will be negatively impacted by your inability to make payments. When determining your score, each scoring model will take a closer look at how recently you have missed a payment or were late, how many accounts were late, and how many total payments on each account were missing or late.
However, being in debt doesn’t mean that you have bad credit. In fact, it likely means the opposite. You have a good enough credit score to have the debt, and as long as you are actively paying it off (not missing payments, not making payments late), then your score will remain high (and keep growing).
It is very difficult for a consumer to know in advance whether they have a high enough credit score to be accepted for credit with a given lender. This situation is due to the complexity and structure of credit scoring, which differs from one lender to another.
I have built my credit back up from my low score due to delinquencies from my abusive ex. He ruined my credit, and it has taken me about 4 years to fix my credit. My scored was up to 719 in Nov 2016, and I was able to get a loan and buy my first Home. I also was finally able to get a decent credit card. My previous one was a 250 dollar limit First Premier card with monthly and annual fees (those without credit have to pay to start building credit) Currently my score is 675, since I just got a new mortgage, but I applied and got two other major credit cards, and cancelled my First Premier one finally, after 7 years usuing that one. My score will take a little time to get back up past 700, but I don’t need the credit now, having made my home purchase and currently having 5100$ credit limit, which I use responsibly, keeping my limit under 20%, and paying them off every month on time. I am sure my credit will be back up in 3 months.
Excellent advice, and should be the most obvious too many, but often is not! There are some moronic credit forums out there with participants that have delusional state of supremacy about having as many trade lines with the highest possible limits. Morons with a capital “MO”. The FICO forums are on top of the list with “credit gardening fairies”. They are surreal entertainment, but boring after a while. Establish no more trade lines than you truly need, and don’t carry balances. Banks/credit card companies are to make money, there is nothing friendly about them. Never charge a debt you can not satisfactorily service EVER. Keep your friends close, and your enemies closer. Keep the upper hand and do not give it. Debt is indeed a slave. Stay out of debt, and truly live free!
Actually you’re just off the mark in some areas. I have a 8 year history with no loans just 3 credit cards the newest of which is about 4 years old and 1 credit unquiry for a utility recently. My score is is between 780 and 810 (depending upon the credit agency). I would suggest a few things, first get your debt ratio down to about 15% (under 20%) that makes a big difference. Second try not to use all your credit cards, limit the use to one credit card or maybe 2. (this also helps your auto insurance score). Third never let your debit limit per month cross 20% to get top notch scores. I pay off my card mid month if I’ve made some large purchases. With this you should see a good increase in your score in a few months.
The three main credit bureaus are Equifax, Experian, and TransUnion. Each bureau gives you a score, and these three scores combine to create both your 798 FICO Credit Score and your VantageScore. Your score will differ slightly among each bureau for a variety of reasons, including their specific scoring models and how often they access your financial data. Keeping track of all five of these scores on a regular basis is the best way to ensure that your credit score is an accurate reflection of your financial situation.
Credit scores look at your reported credit history to gauge the likelihood that you will repay borrowed money; you can be deep in debt and still have great credit scores if you have paid all your bills on time.
Credit scoring is a way to keep people in debt, in my opinion. To me the entire scoring system is a bunch of malarkey. I pay all my bills on time but can’t get my score above 620, even though I’ve paid off one car and am paying on another. The same explanation keeps occuring, that my ratio to balances are too high even though I’ve paid off one credit card and paid the other two down to less than $100. The entire system is rigged against most low to middle income people. Just my opinion.
Our Credit Trends show you how you compare to other Credit Karma members. See where you stand and compare credit scores by state, age and email domain. While these comparisons are fun, they’re also an interesting way to gauge the overall credit health of Credit Karma members.