Thread: Building your Credit Score

I moved to the U.S. from Canada (where I was born and raised) about a year ago. My credit score in Canada was excellent, I could get an LOC, no limit credit card, whatever I needed.

When I moved to the U.S. I couldn't even get a shitty US currency credit card with a very low limit.

So I signed up to Equifax to monitor my credit over the year... and I went from a score in the 600's to a score today of 810 on all three bureaus. I hear that it takes people 10-20 years to build that kind of score, so just how did I do it?

Well keep in mind that this isn't going to be something most people can do in a year. I fortunately had a bit of a head start since I have cash and assets, but there are some good points here that many of you can use to get your credit building in the right direction. If you're already way deep in debt with huge credit card debt you better reassess soon.


- I asked HSBC to get me a MasterCard based on my history with them. I had "X" limit on the card, and I noticed whenever the card went higher than 20% of "X" the credit rating would drop. Bottom line, build a relationship with your bank manager and people in the branch so you can just call them and make requests. This takes time, but it's almost always worth it.

- I don't carry *any* credit card debt at all. Anyone who tells you it's "good to keep some debt on your card to build credit" is wrong. Pay your credit card debt off immediately, and do NOT carry a balance at the end of the month.

- It's better to have the card with no balance on it at all, and more available credit.

- I keep the credit card at less than 20% of "X" and the credit started building.

- I only keep three credit cards, my American Express (which I've had forever), my Mastercard (which I got when I moved here) and a new Visa from JP Morgan.

- I do *not* recommend those retail credit cards. Actually - I fucking hate them, stay the heck away! Although the discounts are tempting, the more cards you have the worse your score will get.

- I can manage 3 credit cards, since I really only use one of them for the majority of my purchases and I'm responsible about it. If you're NEW to building credit then only keep ONE card - seriously. Don't try to get a wallet full of plastic..because if you do it right you'll end up with some metal in the end, which is much nicer

- After a few months I took out a tiny mortgage on my house - now I know most people don't have that luxury, but one thing I did notice was when I took the mortgage out I paid 90% of what I took out and left the balance at around 10%. I noticed that when I did that my credit score spiked over 750.

- If you don't have the luxury of having a low/no mortgage then think about buying a cheap car and not financing a new one until you build some equity. Don't finance stupid shit like rims and mods.

- If you're making a decent income, treat yourself to a car, but make sure you keep the payments low and never ever be late with a payment.

- Do NOT give your SSN to anyone, ever, for any reason, unless it's a bank or a place you're applying for credit. Your doctor/dentist/etc do NOT need your SSN even if they ask for it.

- The best kind of debt is no debt - but it's not realistic for 99.9% of all people... so really the best is a mortgage that's manageable. The second best is a big name credit card with NO balance, just available credit. The third best is a car payment that's manageable. The worst is a credit card with a balance or even worse a retail card with a balance.

- Sign up for an Equifax account, it's worth it - even for a month. I've kept mine going for a year, I can view all enquiries, I can "lock" my credit so no one can take out a credit card under my name, etc.

Good post!

Any advice for those rebuilding their score?

Originally Posted by CDWall

Good post!

Any advice for those rebuilding their score?

it all depends on the specific situation.

Excellent post. Bookmarked.

I don't carry balances on cards at all...but you're saying never run them past 20% of the limit on the card? What's the rationale in how that improves FICO? Not being a smart-ass, I'm genuinely interested.

Basic stuff to do. I had my credit score from 600's to 750 in about a year, only using the credit cards lightly and paying on time.

Now I messed up the whole thing... working to get back to excellent status

to rebuild:

You can't erase the past. Negative records such as bankruptcy and collection accounts will remain on your credit report for 7-10 years. But with a little work, you can improve your credit even before these negative records expire. Here are five easy steps you can take to rebuild your credit.
Step 1: Survey the damages

The first step to rebuilding your credit is to look at exactly where you stand. Don't skip this step because you think you already know what is on your credit reports or are scared to see what may be reported. Bite the bullet and order all three of your credit reports and all three of your credit scores. Ordering online is simple, easy, and secure. Plus, contrary to popular rumors, checking your own credit data never damages your credit scores.

Print each report and review it closely. Highlight any negative records or inaccuracies that are damaging your credit score. Are all the accounts listed accurate? Do you understand all the information listed on your credit report?
Step 2: Check the expiration dates

By law, negative records must remain on your credit report for 7-10 years. The exact expiration date varies depending upon the type of record. Paying off an old collection debt or discharging your bankruptcy does not remove these records from your credit reports.

For each of the negative records on your credit report (including judgments, liens, charge-offs, late payments, bankruptcy filings, and collection records), look up the exact date they are set to expire from your credit report. You will likely see a major improvement in your credit score when these records expire.
Step 3: Dispute the errors

If you find inaccurate records, fraudulent accounts, or records that should have expired on you credit reports, you have the right to dispute these errors. You'll need to send a separate dispute letter to each of the credit bureaus to correct your Equifax, Experian, and TransUnion records. Read more about how to dispute inaccuracies on your credit reports. Once your dispute is received, the credit bureaus have 30 days to investigate and determine whether or not to make the change you have requested.

Do not try to dispute accurate or positive information that is listed on your credit report. Accurate information cannot be removed from your credit reports and it is a waste of time to attempt to dispute these records. Disputing positive information may actually harm your credit scores.
Step 4: Start adding positive information

Now that you know when your negative records will disappear from your credit report and you have disputed any inaccuracies, you are ready to start rebuilding your credit. Since there is no way to remove negative information from your credit report, the best way to improve your score is to add new positive information. Open up a new credit card, start with credit cards for bad credit, and use it responsibly each month. Keep your balances low and always pay your bill on time.

Sign up for an online banking service that allows you to keep a close eye on your accounts. By not making any late payments, using credit responsibly, and avoiding unnecessary applications for credit, you are building a new history of good credit behavior on your credit report. Over time, you may want to open additional credit card accounts or obtain a loan to boost your credit score even higher.
Step 5: Monitor your progress

It's easy to keep track of your credit score improvement with the new types of credit monitoring programs available today. Instead of just giving you occasional access to your credit report and email alerts, these credit monitoring programs include unlimited access to your credit reports and credit scores, identity theft insurance, credit score monitoring, daily alerts, and more. Once you have signed up for a credit monitoring service, you will be able to track your credit score progress closely. Your credit score should improve steadily as you continue to use credit responsibly and add new positive information to your credit reports.

Originally Posted by kerryt1

I don't carry balances on cards at all...but you're saying never run them past 20% of the limit on the card? What's the rationale in how that improves FICO? Not being a smart-ass, I'm genuinely interested.

They basically look at your revolving debt, they hate credit card debt -- I suppose the rationale is the more credit card debt % you have, the more likely you are to carry, therefore your score drops. Yes, I am saying no more than 20% of your limit at any specific time. So if your limit is 10k, you should not go past 2k.

I've heard stories that negative information can be removed if you negotiate with the creditor. If you don't accept the settlement amount and agree to pay the balance in full, rumor has it some will remove it completely or at least reflect a more 'favorable status', whatever that is.

I find it unsettling that all you can do is wait for something to drop off. If the creditors have the ability to remove an error they made, what's stopping them from removing something from your report under other circumstances?

At first when i came to Canada i didnt care about building credit because i said to my self its nonsense ! Because in Saudi Arabia we dont have thing like this that makes you crazy so im not used to it !
Anyway after i new what i can do with it i started to build , but here the thing HOW can i do it fast ?

1- im here on a student viza
2- i wasnt able to buy my car through a leasing program because i need a freaking cosigner !
3- do bills like ( phone , insurance , internet , electricity ) count ?

With regard to debt ratio this is unfortunately (stupidly) a big factor. If you have a credit card with $100k limit, that should be a bad thing. That's like having more than enough rope to hang (bankrupt) yourself. Unfortunately, banks and credit raters are not good at math or logic (as evidenced by the global economy, from 2008-present). Instead, they see that $100k limit as proof that someone trusts you with that money, and therefore you must be good for it.

So if you have a $10k limit and you revolve (spend and pay off) $5k a month, they see you as only being trustworthy for $10k and you use half of that. Uh oh, if something happens and you lose your job, you'll fill up your credit in only 2 months. Never mind that you could have $2MM in assets that would float you for years, they just see the credit.

If you have $100k in credit and use $5k a month, you are in an even worse situation (you can dig a much deeper hole) but by their logic, you are a better customer because you are good for all that debt. The moral is basically to push for higher credit limits when you can, because the more credit you have compared to the credit you use, generally the better off you are.


The one part I disagree with is regarding house debt. While yes, debt is bad, you can get a home loan now at 4%. Inflation is like 3%. That's practically free money. And you can put that capital into more productive assets, like investments, businesses, etc. While car debt is generally worse, if you can get 1% or 2% loans on CPO cars because the car companies are desperate to move product, that's another debt where I would rather have that and the cash in hand. The real key is to use debt productively. When you can "buy" money cheaply for products that you need (house, car), do it and use the savings for productive investments.

This won't necessarily help your credit score (although it might) but it helps your general financial situation. It's also important to remember that credit score isn't everything. Someone with a "good enough" score and someone with a great score often both get the same mortgage/loan at the same rate. The score is in many cases a threshold (you just need to be above some level), with little benefit for how far above.