Credit score

Forum|Forum|5 years ago
April 18, 2020
1 reply
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I use plastic almost exclusively for purchases. The bills are paid in full each month, regardless of the amount. I paid cash for both current houses, as well as the several vehicles. Despite this, credit score rarely exceeds 815, but dips significantly if I’ve had a heavy month (like daughter’s wedding). I was turned down recently by an insurance company as a poor credit risk because there was no mortgage history in my file, nor no payments. What gives?

Not A Product Question

Opus 17

It’s very hard to get and keep a credit score above 800. If you make all your payments on time and aren’t applying for lots of new credit cards, then the only thing that can really affect your score is the percentage of utilization. The closer you get to your limits on your credit cards lower your score will be for that month, even though you may pay it in full the next month.

It sounds like the insurance company was looking for something particular besides just a credit score, if they turned you down because you did not have a mortgage. That would seem to be some thing unique to them and I would not think it is a common business practice.

Droberts1Author

That’s probably the most sophomoric and useless answer I’ve ever read. Your advice to try to pay my credit card bills in full next month is sound; it patterns my practice for at least the past two decades. Depending on monthly expenses, reducing debt to credit line much below 5% is not as easy as it might seem. My question was what other factors, other that never incurring interest charges and having no debt other than monthly expenses will limit credit scores.

Opus 17

I thought your question was about why the insurance company turned you down. Look, I am 53 years old, have a 30+ year credit history, I’ve never had a late payment, and my revolving utilization is around 2%, plus a mortgage. My credit score is only 801-816, depending on which credit bureau is queried, and can easily drop 10 points if I make a big credit card purchase in one month, even though I pay it off in full the next month and my score bounces back.

Scores higher than 800 are almost impossible to get and small differences at that point are meaningless. One person told me the only way to get a higher score was to get old, so that my length of clean history is longer.

Your credit score is supposed to predict for a lender how risky you are when you want to borrow the next loan, and whether your score is 798 or 802 or 815, you are an excellent risk. I frankly don’t think there is anything you can do deliberately at this point to raise your score. For example, if you opened new lines of credit and didn’t use them, so that your utilization percentage would be lower, you would also be shortening your average length of credit by having new accounts, which lowers your score, and opening new accounts temporarily lowers your score as well.