Joseph asks…
Does being approved for a credit card improve my credit score?
I've got pretty poor credit scoring, due to my own stupidity as a teenager, and this has unfortunately stuck with me.
However, i was informed that there are a few companies out there that may accept someone with poor credit for a credit card, such as Vanquis and Capital One.
So earlier this week i made an application to Vanquis and have been approved for a credit card (all beit for a small amount on the card), i'm just happy i was accepted, but what i would like to know, is by just being accepted, will this have improved my credit score? If so, by how much?
I've discussed with friends the best way to keep my credit score going up, and they've suggested, having the cash to buy stuff and then using the credit card and then paying it off immediatly, according to friends this will make my credit scoring improve tenfold in just a matter of months.
Is anyone else able to advise me as to the best way to keep improving my credit scoring with the use of the credit card?
Many thanks :)
admin answers:
Well once again I see many incorrect answers as to how credit works.
First of all, your score has been lowered a little because of the hard inquiry placed by the credit card company. It will be reported on your credit report for 2 years. It will have less affect as time goes by. (Running of Reporting Period - Section 605 [15 U.S.C. § 1681c]
Too many inquieries can drop your score like a lead baloon.
(see reference)
Next the myth about paying off the balance in full every month is just that, it does not mean your score will increase any faster. Credit card companies report your balance owed at the time the statement was compiled and that you paid on time or not. Your credit report will still show a balance owed. I will quote what FICO has to state regarding this "The amount owed on all accounts. Even if you pay off your credit cards in full every month, your credit report may show a balance on those cards. The total balance on your last statement is generally the amount that will show in your credit report."
Read the resources I have provided to verify my answers. They are directly from FICO.
Thomas asks…
I have 1 clean credit card & 1 with a balance pd. on for 5 yrs. Will tranfer to3rd card improve credit score?
Idea is to tranfer the balance to a 3rd card with no interest for 6 months and get the card paid off in that time frame. I have heard that the more cards you have the lower your credit score. Will this strategy hurt more than it helps? Where can I learn how to improve my credit score?
admin answers:
I dont think it will improve your score. The more account you have open or active even if there is no balance on them reflects if you are a risk for credit or not. If you want to transfer, try to transfer to a credit card that has a 0% interest rate for one year, then call your other credit card companies and tell them you no longer want the credit card to close the account. Then when that year is up with the 0% try to transfer to another 0% for one year and close the previous card that will now carry an interset rate. See this way you can pay off your credit card debt without paying interest.
Maria asks…
What's the best way to improve credit score in less than 4 months if I currently only have one credit card?
I have paid off and closed all of my accounts (student loans, car, credit cards) except one credit card that has a small balance. I am virtually debt free. I do have some bad items on my credit report but they are greater than 2 years old and most are greater than 4-5 years old. My medium score is 714 and I'm trying to raise that to above at LEAST 720 in 4 months, and preferably above 740 so I can get the best interest rate on a new home I'm buying. I've read articles that said I shouldn't have closed all of my accounts - that it's best to have 3 accounts open, all with small balances to show that you know how to manage your debt. My loan officer said I should run out and open up 2 more accounts, but this sounds weird. Won't those inquiries negatively affect my credit? I guess my question is: what's best? Open up 2 more accounts or just pay off my one small remaining balance, keep that card open, and just sit tight?
admin answers:
Listen to your loan officer and pay no attention to the poster who said if you pay your collections they will go away, it doe's not work like that.
Unless you get a pay for delete agreement the only thing that will change is the accounts will show as paid with a $0 balance and you will actually hurt your score because the old accounts will become new as soon as you pay on them.
Lizzie asks…
How can I improve my credit score? ?
I have 656 and don't have any major credit cards open. I have a closed account with less than $3K balance that should be paid by December. Credit site recommended a major credit card. Should I really get one and use it for purchases only to pay off each month? How else can I improve score?
admin answers:
It doesn't make sense, but the more open accounts you have (with no bad payment histories), the better effect it has upon your credit score. Part of the "calculation" includes available credit and the percentages outstanding. For instance, if you have 5 credit cards with $1000 limits, and you don't owe anything on them, you have $5000 available credit, which has a favorable impact on your score. So in short, it's not always the best thing for your credit score to close unused accounts. Leave them open -- just don't use them and get over extended!!
Other ways to improve your score are to always pay on time, and maintain stability in job and residency. Too many short jobs or short term residences have negative effects on the score.
Sharon asks…
Trying to buy a house need to improve credit score?
Please only want professional advice or advice from people who know about the topic...
I have $25,000 saved (I already know this could help fix my credit....that is not question). I have someone who would co-sign for the house (I know if I have bad credit a co-signer doesn't do any good...that is not my question). I am looking at properties for under $50,000 dollars.
Currently my fico score ranges from 530-620 depending on which one you look at (the loan lender looked at the lower one).
I have read in several places that paying off your debt in collections does no good because the mark will remain on your credit report. I read the way to go about fixing your debt is to mail a letter in to whatever collection agencies (supposely this is the best way to deal with them because they might try to slip you up by phone which can renew an old debt to most recent debt) and request they remove the item if you state you will pay in full if they do this (I have tried this and NO reply back). How can I raise my score if this is the case...it doesn't erase and even when I attempt to pay via mail I get nothing...suggestions?
I have done alot of reading on how to fix credit and all I get is how to fix credit in credit card terms. I have never owned a credit card. So it erks me when I want to know how to fix my credit.
Also, if paying you debt on collections does nothing to improve you fico score doesn't it aleast pay down your overall debt on your credit report....and doesn't that help in terms of debt to income/asset ratio. I believe payment history is 30% or so and wouldn't paying debt help in this aspect to help improve my fico score???
Additionally, I only need to raise my credit by about 50-70 pts to reach 600(says the loan officer). Which is about 2 or 3 items on my own credit report.
Please I need good advice
Thanks
admin answers:
There are no shortcuts to fix your credit. Your score is a measure of how you have managed your credit for the past 7-1/2 years. It takes years to establish good credit and only a few months to destroy. Pay all your bills on time every time, never missing a payment. Avoid carrying a balance month-to-month that exceeds 20% of your credit limit on any one card. With time, your score will improve.
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