I think what Samantha was trying to say was that the credit reporting agencies want to see that you can pay on time for a loan or purchase. So even if you went to the bank and say borrowed a small sum and had it draft from an account you put the money in it would costs you the interest but, what they want to see is that track record of paying on time. In no way would I want you to change your habits. Besides with an IRA and other money in the bank if you just get your FICO up a little a lender will take that into account. The only thing is you may have to shop around for rates.
First and most important in my opinion, is to pay all your bills on time, Including your utility bills. Time on job is a big factor. The more loans you have and pay on time seems to raise your FICA score. I have found the the smart people who pay cash, seem to get lower FICA scores. Having a home is a big one. If your renting and moving a lot may lower your score. Just remember you can get much better rates of interest when you pay your bills on time than if you don't. from a 5.6% to a 6% could mean thousands of dollars in savings
There are a lot of good answers on here. I would recommend you establish 3 tradelines. The company card would count as 1 and most likely two other low interest credit cards. Did you have student loans? If you had student loans and they have been paid off, that is great for your credit rating. What you can do is what my husband and I do these days. We have a US Air credit card with a low interest rate and we buy our gas, groceries...all of our monthly expenses on the card to accrue miles. Meanwhile, all of our income every month sits in an interest bearing savings account. At the end of the month, we pay off all of our credit cards AND we made interest all along (granted it's not a lot, but it's better than nothing). We have near 800 credit scores and no debt, plus it's really easy to track our spending on Quicken/Quickbooks. We are establishing credit, tracking our spending, making interest and getting frequent flyer miles! It's just a thought. Don't carry a balance and obstain from opening gas cards, Home Depot cards etc. Those establish credit, but it's not always the "best" credit. Best of luck and keep saving!
Real Estate III/Keller WIlliams First Coast Realty
Bright Vision Mortgage
My only other advice is that closing credit cards that have not been opened for long enough can work against you. So try and stay away from opening accounts just to close them 4-8 months later.
What creditors are really looking for is someone who can keep up with timely and dependable payments. That doesn't mean you can't put things on credit and pay them off right away...it just won't raise your score very quickly doing it that way.
Congratulations to you for being debt free though Martin! Not too many people can tout that anymore =)
Would it "help" if I allocate expenses to 2 cards, such as one for fuel and another for food/utilities? Thanks everyone.
While it is a great policy to be debt free (something I aspire to) it is not a general consensus. So while you are debt free I would suggest opening some kind of credit account. Whether it is a store account or a credit card. Then just to help your score you use it maybe once a month and then immediately payoff the balance. You seem to already have the discpline in place to understand and not treat it as "free money" like so many other first time users do. You must be able to show some sort of "track record" for the credit reporting agencies to be able to measure your performance on. With nothing to measure you againest they cannot rank you high because they do not know. So just have something and use it sparingly but, payoff the balance religiously. This will establish credit for you. After a few months you will start to notice a difference in your score.
Don't be discouraged you are on the right path you just need to establish yourself credit wise and prove that you can pay ontime.
With that said, the best lenders now have implemented "risk based pricing" on all conforming mortgages. What this means is that if your middle credit score (Transunion, Experian, EquiFax) is below 720, there will be an additional price to be paid for the best rates. The lower your middle score, the higher the price. This pricing can add up to a full 2%.
I know this doesn't address your primary question of how to improve your credit score, but it does help you understand the current importance of having a score of at least 720.