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My FICO 8 score is 721 and my VantageScore 3.0 is 735. I have opened 2 accounts in the past 2 years:

  • An AMEX Gold card in October 2022
  • $30k loan in May 2022 to purchase a vehicle

I also have a 30 year mortgage that I am 3 years into. I have an additional AMEX Platinum card I opened in 2019 this was my first credit card. Before then I had a auto loan that I started in 2018 and paid off early in 2021. The only other money I have ever borrowed was a personal loan in 2013 that I paid off in 2018.

I have never missed or had a late payment ever. I use the credit cards for gas and grocery and dining to earn points and pay them off as soon as the transactions are no longer in a "pending" status. How do I raise my credit score to 800?

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will
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    Why do you want an "800" score? What difference will it make to you (I bet less than you think). – D Stanley Apr 24 '23 at 15:25
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    When you check your credit reports, are any utilization showing up for the credit cards? Rather than paying charges immediately, you might wait until the statement is released (as long as no interest is charged) and see if that changes the scores. (not sure about this so not answering). – mkennedy Apr 24 '23 at 15:27
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    "How do I raise my credit score from 720 to 800?" Slowly. You sound (relatively) young, given the age of your credit, so probably don't have a robust credit history. Keep plodding away at a disciplined life, and eventually your score will rise. – RonJohn Apr 24 '23 at 15:50
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    https://money.stackexchange.com/questions/114696/what-can-i-actually-do-with-a-high-credit-score – Freiheit Apr 24 '23 at 16:48
  • Related: How much does credit score matter? – Ben Miller Apr 24 '23 at 17:15
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    Wherever you got those scores from, also included a list of "factors most affecting your score". What is on that list? – Ben Voigt Apr 25 '23 at 00:32
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    My score is over 800 and it happened pretty much unintentionally by acquiring like a dozen different credit cards over the course of a decade playing the cashback game. All these credit cards have no annual fee and I make sure I pay them off every month, so having an excellent score doesn't necessarily have to cost anything. However, I would not recommend obsessing over perfecting your credit score. A 720 score is already really good, and getting it over 800 will not get you ahead in any significant way. –  Apr 25 '23 at 12:20
  • If I remember right, Experians website will break down the different areas that affect your score, and rate each area individually. It also had suggestions on how to improve it. I had followed the advice and hit 850, but since then it has fluctuated between 800 and 850 for no particular reason. I wouldn't put too much thought into it though, better to not borrow if you can in the long run. – rtaft Apr 25 '23 at 13:52
  • Remember, the credit score is primarily to measure how much money the bank can make off of you. You could raise it by donating lots of money to banks. But why would you? – user253751 Apr 25 '23 at 14:00
  • @user253751 I don't think that's particularly accurate, banks lend money to lower-score/higher-risk individuals at a higher rate than higher-score/lower-risk individuals, so the profit-per-customer should be fairly constant. Credit score is a measure of how likely you are to default on the loan. A low score doesn't mean the bank thinks it can make more money off you - it means you're likely to default, so the bank charges you more interest to cover the possibility that you don't pay at all. – Nuclear Hoagie Apr 25 '23 at 17:21
  • @BenVoigt here is that list: 2 opened accounts within the last 2 years (both in 2022; 1 AMEX, 1 Credit Union loan for vehicle), 3 inquiries over the last 2 years, it says my length of credit history is only 4 years but I think thats because I closed out the other 2 accounts that were originally opened in 2013 personal loan and 2018 auto loan because I paid them off. Then it says $0 available credit but I think that's because AMEX does not give me what my credit limit is. – will Apr 25 '23 at 18:47
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    @will: No, not the contents of your report. The list of "factors affecting your score". – Ben Voigt Apr 25 '23 at 18:51
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    @BenVoigt I believe these are the factors they list: Balances, Payments, Credit Accounts (total), Open Accounts, Closed Accounts, Delinquent Accounts, Inquiries (2 years), Derogatory, and Public Records. – will Apr 25 '23 at 19:04
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    That's the general list of everything that goes into a score. Every score I've ever seen (including the free one from Experian and the free ones I get from banks) comes with a personalized analysis of your factors. Mine is "Key factors affecting your score: What's helping? No missed payments. Revolving utilization is low." Since your score is lower than 800, that list ought to have entries on what's hurting your score. – Ben Voigt Apr 25 '23 at 19:24
  • @NuclearHoagie then why is utilization relevant? – user253751 Apr 25 '23 at 21:45
  • @user253751 Because it is an indicator of default likelihood, just like every other element of a credit score. People with very high credit utilization rates tend to be more likely to default, so they get lower credit scores and charged higher interest rates. A high-score individual gives the lender a high probability of low profit, while a low-score individual gives a low probability of high profit, but I expect the average profit per score bucket is fairly constant. – Nuclear Hoagie Apr 26 '23 at 13:09
  • @NuclearHoagie we are talking about low utilization causing a low score – user253751 Apr 26 '23 at 14:38
  • @user253751 A too-low utilization means you don't regularly borrow much money, meaning you don't have a regular history of repaying large debts, which is also associated with an increased risk of default. A moderate utilization rate shows a history of using and repaying debt responsibly, making you lower risk and giving you a higher credit score. The only thing a credit score is intended to measure is risk of default, not "profitability" of a customer. – Nuclear Hoagie Apr 26 '23 at 14:52
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    @BenVoigt the FICO score says "Key Factors affecting your person FICO Score.... 1) Lack of recent revolving account information and 2) Length of time accounts have been established. Not sure what #1 means since I have 2 credit cards one that is almost 4 years old. I can understand that 3 of my 4 open accounts are less than 3 years old with 2 being less than a year old. I THINK.....SINCE IT IS FICO 8 my AMEX cards are NOT BEING TREATED LIKE REVOLVING CREDIT because they are CHARGE CARDS not TRUE CREDIT CARDS. – will Apr 26 '23 at 16:19
  • A charge card looks exactly like a credit card but does not have revolving terms. The card does not have a published credit limit and any balance must be paid in full by the due date. Most of these cards have annual fees to help make up for the lack of interest income. - From quick online search. – will Apr 26 '23 at 16:23
  • @will: That's exactly the important information, and also the reason your score is lower than it needs to be. You "lack revolving account information" because you keep paying off your balance before the date (usually once per month, often but not always the statement date) that the bank reports to the credit bureaus. The balance is always zero, which to the credit score looks like a card that you are not using. Try to pay between the statement date and the due date. – Ben Voigt Apr 26 '23 at 16:23
  • And it's also correct that if you have AmEx charge card accounts instead of credit card accounts, that's part of the problem. The Gold card is always a charge card; it can be only that or it can have a "pay over time" feature added which makes it also a credit card. It would be good to get a nice card with rotating 5% cashback categories and no annual fee, like Discover. Your average age of accounts is already so low you can't really hurt that. The inquiry for opening the new account will only affect your score for a few months. And you'll get cashback. – Ben Voigt Apr 26 '23 at 16:25
  • @BenVoigt As a military member I get my AMEX Platinum and Gold cards fee free via the Service Members Civil Relief Act. I try to use these cards for everything because the points are worth a lot and help offset my vacation travel costs. I will consider an additional card but right now I do not feel the need to go with it especially since everyone here says there is not much of a benefit to raising my score that much. I will try and pay between statement date and due date on the charge cards to see if that helps over the next few months! – will Apr 26 '23 at 16:35
  • Word to the wise - do not have all credit cards from one organization. You have 2 AMEX cards already - don't open another. Get a Visa, Mastercard, Discover, whatever. Personally, I'd drop the lesser and redundant card from AMEX and get one from a different company. A problem with one of your AMEX cards might become a bigger problem unexpectedly... such as freezing all of your cards because your account as a whole is not in good standing etc. – SnakeDoc Apr 26 '23 at 17:02
  • @will I think you will find if you use a credit card with rewards (whatever kind) as your daily driver (instead of a debit card or cash), the annual fee basically doesn't matter. People sometimes spread their purchases out across several cards, trying to maximize points/rewards but then end up paying annual fees, wiping out any actual gains. Your mil benefits are great, just speaking generally. – SnakeDoc Apr 26 '23 at 17:11
  • You don't need to get your score all the way to "over 800", but 720 is lower than it should be and will give you less favorable terms when you do want credit for something, and increasing your score is always something better tackled long before you need it. – Ben Voigt Apr 26 '23 at 17:12
  • @SnakeDoc: The cards with the best cashback mostly don't have any annual fees. Fees are more associated with other benefits, like lounge access. – Ben Voigt Apr 26 '23 at 17:14
  • @BenVoigt It depends on the card and it's "intended purpose". Travel-oriented cards often reward better perks for travel-related expenses (such as flight bookings, hotels, rental cars, restaurants, etc) but often have higher fees ($100-300 annual). Cashback is usually the worst performing "benefit/reward" and therefore has the lowest (or no) fees. If you want to maximize rewards and play the game, cashback is usually not a great choice. – SnakeDoc Apr 26 '23 at 17:16
  • @SnakeDoc I agree with you guys. Another card might help but I again I get all the benefits of the AMEX cards without the annual fees. I guess with all this newfound knowledge from this thread that I will just be patient and start to change my payoff habits on the cards I have. I have the Platinum card for travel points multipliers and traven insurance, free hotel Gold status, lounge access etc. The Gold card is for multipliers for restaurants and grocery shopping. AMEX customer server is great I do not forsee my account being locked long term. I have a debit card too. – will Apr 26 '23 at 17:46
  • @will it's about risk management. say one card has a payment fail for some unexpected reason, so they lock your accounts until you restore good standing. Now regular auto-pay bills decline, etc, making a bigger problem out of something normally innocuous. During the peak of the 2008 recession, AMEX (and others) did some very unsavory things to people, including cutting available credit, closing accounts, etc - it was hard times for everyone and they did what they had to do to survive. The point is, an entire class of problems cannot possibly exist if you diversify your credit accounts. – SnakeDoc Apr 26 '23 at 17:56
  • also, your mil benefits are not limited to AMEX i believe. you may not have zero annual fee, but you likely have reduced interest rates or other benefits from the other credit card companies. worth looking into. the annual fee may be something you can simply ignore if you extract more benefits from the card than the fee costs per year. also - splitting purchases like you are (one card for this, one card for that) is going to make rewards points slower to accrue, and might change the math on how you use them. everyone is different, but i personally like picking one card to use for everything. – SnakeDoc Apr 26 '23 at 17:59
  • @SnakeDoc: There may be a lot of premium benefits (like lounge access, hotel status, etc) which are not directly linked to purchases. But those "premium" cards aren't giving benefits on purchases better than 5% cashback on a no annual fee card. – Ben Voigt Apr 26 '23 at 18:31
  • Yeah I totally understand @SnakeDoc you make a good point on trying to minimize risk by not having a "single point of failure" and having some redundancy. Similar to when I show up to place and they do not accept AMEX. So then I have to use my debit card and there is no reward for that. And yes Ben Voigt I do get more savings/benefits than the annual fee. But again I have no annual fee because its is waived by AMEX in accordance with the law (see SCRA). So for me its worth it. But not for everyone. As far as my score goes...back to the original post...I will pay balances after statement – will Apr 26 '23 at 18:36
  • Continued from previous....which will allow me to hopefully have better reporting without having to actually sign up for a credit card. But additionally, I still make my boat loan payment monthly and my mortgage payment monthly which are two other accounts that as they age should help raise the numbers. Even though my long term goal is to be like Dave Ramsey and pay cash for everything and remain debt free. – will Apr 26 '23 at 18:38

3 Answers3

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To earn a good credit score, you have to borrow a higher-than-average amount of money and make your monthly payments consistently.

That usually means that you have to pay a lot in interest, unless you can churn through credit cards monthly and pay them off. But things like car loans and home loans will require you to pay interest.

and pay them off as soon as the transactions are no longer in a PENDING status.

This is not helpful from a credit score perspective. The banks do not care that you pay down the balance as quickly as possible, just that you pay the minimum amount by the due date of each statement. You may actually be hurting your credit score by keeping your utilization artificially low.

The bottom line is that if you use credit responsibly (which it sounds like you do), don't overuse credit (which it sounds like you don't) you'll be fine. Don't fret over chasing a credit score that doesn't actually help as much as you may think it would. You'll save a lot more by managing your expenses effectively (e.g. not paying interest) than you'll ever save by improving your credit score.

D Stanley
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  • @D Stanely, thank you for the response. I have never thought about it this way before. Most web searches I conducted only gave results about raising credit score for people with poor credit scores. I agree not paying interest is great but I was hoping that with higher scores you can get better rates (maybe even close to 0%) when you want to borrow. Thanks again! – will Apr 24 '23 at 15:50
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    You won't get a rate approaching 0% unless you are borrowing from someone who doesn't care about risk or income, eg borrowing from a relative -- otherwise they make a better profit by lending that money to someone else. Realistically, there is rarely any difference between 720 and 800 – keshlam Apr 24 '23 at 17:17
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    You do not have to have large outstanding balances, carry them month-to-month, or pay interest. – Ben Voigt Apr 25 '23 at 00:30
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    Credit score is for getting personal credit, which isn't actually something you want to do a whole lot of if your goal is to have financial independence and not pay interest for the rest of your life. Instead of trying to pay interest (credit score), you probably might want to receive interest (investments) instead. Then you effectively end up with better than 0% borrowing because you're not even borrowing anymore, but the money is making you money. – Nelson Apr 25 '23 at 01:07
  • Here's the scenario... let's say you can borrow 30k at 0%. Pretty good right? Wrong. Instead of borrowing at 0%, the 30k makes you money until you need it. THAT's what you're supposed to aim for, not borrowing @ 0%... – Nelson Apr 25 '23 at 01:09
  • @Nelson if you can borrow 30k at 0%, you can sock it in a CD or something else safe and make money literally for nothing. – fectin Apr 25 '23 at 01:19
  • @fectin Right, so saving money and actually not being in debt is the same as "borrowing" at 0%. There's no such thing as borrowing at 0% from any institution that wants to stay in business, and the scenario you described is exactly my point. You want to be thinking of making money, not reducing your borrowing cost. The path to high credit score (making interest payment) is the wrong goal. – Nelson Apr 25 '23 at 01:20
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    @Nelson I had a coworker who did exactly that - some local bank was sending out $10k loans with low (0%?) rates but punitive late payment penalties. He took their mailer in, took out the loan, immediately socked it in a CD. This apparently caused the bank some consternation. – fectin Apr 25 '23 at 01:25
  • @fectin This just shows that the financial literacy of the general population is so bad that a bank can still make money on a near-0% loan... – Nelson Apr 25 '23 at 01:44
  • @Nelson or they’re desperate and willing to gamble the punitive penalties in order for near-term cash flow. – fyrepenguin Apr 25 '23 at 02:55
  • You already have a mortgage and a car loan. Why would you ever need to borrow money again in your life? Pay off your debts, live debt-free, and never worry about this silly number again. – gerrit Apr 25 '23 at 11:55
  • @gerrit: I have found reasons. This year my house went "I want 30k". If it weren't due to the fact I am sitting on cash due to a falling market I would be taking out a loan. – Joshua Apr 25 '23 at 17:40
  • @Nelson thank you! I am a big fan on no debt. Other than my house which I cannot afford to pay cash for (hence the mortgage) and my boat. Which I will likely pay off early but the monthly payment is so affordable and I get my use out of it the total cost including interest was worth it to me for now. – will Apr 25 '23 at 18:50
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The details (like weighting factors) of the credit scoring models are considered proprietary information, but there are general principles that they all use. Some of the factors they take into consideration are:

  1. Credit history. For how long have you had accounts in good standing? If you have a relatively short history--i.e., you are a new borrower, this is less preferred than someone who has a long and extensive history of responsible borrowing. Metrics used include the average age of credit and the oldest open account.
  2. Total amount of credit. How much have other lenders been willing to lend to you? The more, the better, assuming again, no derogatory marks or late payment history. How many open accounts do you have?
  3. Types of credit. Credit cards, car loans, and home loans are all different. If you can handle more types of credit, the better.
  4. Utilization. If you don't use a lot of credit relative to how much has been extended to you, this looks better. But because utilization can vary from month to month, it also does not have a long-term effect on your score.
  5. Hard inquiries. If you have recently asked for a line of credit, then this counts against you. The impact ranges; typically it's small for a credit card and a bit larger for a home loan. The effect drops off after a few years.
  6. Late payments and delinquencies. This is a huge one. Even a single late payment can torpedo your score. Defaulting on debt is enough to drop your score by hundreds of points.

There are other criteria but these are ones most people know about. In your case, it doesn't sound like you have much of a credit history; you have relatively few open accounts. Early payment of a loan is not necessarily to your favor because the scoring models really like seeing open accounts with regular payments on time. In the absence of any derogatory marks, these would be the main reasons for not having a score in the 800+ range.

Contrary to popular belief, 0% utilization is not a bad thing. Any potential hit to your score for being at 0% instead of, say, 1%, would be tiny. The actual issue is closing out any open accounts by paying off the loan. Another issue is lack of activity on revolving lines of credit: the card issuer has expenses related to keeping your account open, and not using the card means they don't get the merchant fees. So this might be a source for the misconception that 0% utilization is bad: people confuse utilization with inactivity.

In closing, I want to emphasize that whenever we look at credit score, it's just the result of a model that tries to weigh all the information in your credit file. A prospective lender is not going to just approve you solely on the basis of your score: they will look at your file. The score is just a convenient way for them to get a quantitative sense of your creditworthiness relative to other borrowers, and many lenders use the score as a way to make quick decisions--a good score is like a foot in the door. They can still deny you if they see something in your file they don't like. Focusing on optimizing the score is missing the point; the file is what really matters.

heropup
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If getting a prime score is really something you care about, it really only takes two steps:

  1. Acquire more credit. You're not doing badly, but an additional non-Amex card would probably be to your benefit, especially as that auto loan ages out. If you've never run a big purchase through the Amex, you could do that too (and then pay it off, of course), which will increase your "high balance" for as long as that account remains open. The agencies are looking for evidence that you had a chance to get yourself in trouble, and then didn't. Some of the things you have to do to accomplish that are slightly unintuitive. Obviously, be responsible, pay attention to the terms of anything you sign up for, don't buy anything you can't cover, and don't buy anything just to be buying something. But you don't have to carry a balance or subject yourself to lots of interest.

  2. Wait. With moderate utilization, long account lifetime, and no negative reports, your scores will go up with time. The upper 30 points of the FICO 8 score are difficult to crack, but just plain paying all your bills for a decade should put you in the 800-820 zone.

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