Building Credit Score

[Michael Czepil]

Hi guys,

Just looking for some advice on good avenues to raise my credit score. I am a foreigner living in the States and only established credit three years ago when I purchased a new car with financing. In addition to that I have two other lines of credit in the form of credit cards, which are always paid off in time. I have read different theories ranging from taking out small loans to raising the limit on current credit cards, and really just looking to see what has worked for people on BP.

[Kyle J.]

I second what Richard Cahoon said. Don't take out new credit if you don't need it. This can actually backfire and lower your score.

It sounds like your biggest issue might be with just the length of your credit history, and not much can fix that except time.

One easy thing to do would be to request credit limit increases with your current card issuers, since that can lower your overall credit card utilization ratio (which is rated high in factoring your score) without opening new accounts.

Here's some other tips from My Fico: http://www.myfico.com/crediteducation/improveyourscore.aspx

One last idea for you. Check out a website called Credit Karma. Once you sign up (it's all free), they can evaluate your current credit score and they'll give you an overall letter grade AND break down the different categories (i.e. open credit card utilization, average age of open credit lines, total debt, etc) and will give you a letter grade for each category. That can help you determine where you are strong, and where you are weak.

But probably their best tool for your scenario is a "credit simulator" where you can see how various hypothetical changes (i.e. opening a new account, increasing your credit limits, adding a new loan, etc) would affect your overall credit score. It can be pretty helpful.

Best of luck. And if you do nothing else, at least keep making your payments on time (that's a huge factor).