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FICO scores (versus VantageScore) are used in 90% of credit decisions. FICO is used in mortgages, which is precisely what I care about my credit score for. I’m not marginal for an auto loan.
Most of the time I don’t worry about my credit score. Pay bills on time and for the most part most people will be fine. But credit scores do matter for the big stuff, and when the score is marginal it can make the difference between approval and denial for rewards credit cards.
Since I write about credit cards and credit scores I often feel like I should share with you my own, walk the walk as it were. So here’s what Citibank shows as my FICO® Bankcard Score 8.
However that’s a big change from where it was a month earlier.
I had laid off lots of new credit applications, and putting big spend on monthly bills, for a few months because I was in the mortgage market. I’ve always taken extra care before buying a place (I still own my first condo in Northern Virginia from years ago and keep it as a rental property) or re-financing.
Applying for cards can temporarily depress your credit score. Spending a lot on your cards relative to your available credit card lower your score. When you go for a mortgage having a score of 760 or higher matters. On the other hand having more available credit that you use responsibly can improve your score, and having accounts for long periods of time can too. So contra the advice of Dave Ramsey wannabes credit cards aren’t inherently ‘bad for your score’. They can help it and clearly my score is good despite playing at rewards cards for two decades.
As I say the most important thing for a good credit score is paying your bills on time. And I do that. But balances carried — not just the balances not paid off but your balances reported with your statement — matter too.
Once I finished up the mortgage I pushed a tremendous amount of spending through my cards, a lot of pent up demand for miles on my part. And I didn’t pay off the cards prior to statement close, so I was using a very high percentage of my available credit. That pushed down my score dramatically. But I paid off the cards, and in fact I paid off the balances on those cards prior to statement close the following month. My score recovered quickly.
In my case what’s holding down my score? (If you can call this score somehow held down, though it isn’t perfect.)
I’m pretty sure I will always have ‘too many inquiries in the last 12 months’. But in spite of that I keep a strong score, probably stronger than I should — put another way I’m wasting my good credit score, I should be doing more with it.
CitiBusiness® / AAdvantage® Platinum Select® Mastercard® Earn 65,000 AAdvantage miles.