Just about the time we felt we had nailed our credit scores and we’re hovering around the low 700’s, we wondered if there was a way to push past the 720 realm without a mortgage (or without a time machine). Over the past few years, we worked hard to get our credit scores into the 720 area:
- We paid our cards on time making our on-time payment history 100% (high impact on credit score)
- We didn’t have any derogatory marks, meaning we hadn’t defaulted on anything (high impact on credit score)
- We had just the “right” number of credit accounts (based on Credit Karma’s pie chart) (low impact on credit score)
- We had few, if any, credit inquiries (low impact on credit score)
The two areas we were lacking in was the age of our credit (it is still considered too young) and our credit card utilization. I’ll get into the age of our credit in a moment, but what was holding us back from pushing past the 720 mark was our credit card utilization percentage. Though we pay off our statement balances each month, we use our credit cards throughout the month to pay for every-day items. For some reason, when Credit Karma pulls our information, it’s never just after I’ve paid off our credit cards, which is frustrating.
However, because we still fell into the “good” credit band, we had some leverage on our side to remedy the utilization rate, which we wanted to fall below 10% (utilization below 10% is looked at as excellent). Utilization rate is also considered a high impact factor on credit scores, so this change would be the most bang for the buck. Our plan of action: We called our current credit card companies and asked them to increase our credit limit. A total of four companies raised our limits enough to knock our utilization percentage down to 8%. These were also considered “soft” pulls, which means they didn’t count as credit inquiries.
*On a side note, we strategically chose the credit cards that already had decent credit limits and that we used frequently and paid in full each month.
With a 10-minute phone call, we increased our credit scores to the high 700’s for me and the low 800’s for Mr. LH. Would this have been possible without good credit to begin with? Probably not. But this simple strategy pushed us into the “excellent” credit range.
As for the age of our credit, which is considered a moderate impact on credit scores, new accounts bring down the average age of a person’s credit history. Many years ago, when we were building and repairing our credit, we had many old, negative accounts removed, and new ones opened. This brought our average age way down. Now, all we can do is wait for time to pass and our credit age to increase.
Increasing a credit score takes hard work, responsibility, and micro-management to some degree.
Have you recently increased your credit score? What factors helped you increase it?