Solid credit, but it's reducing with each deal

12 Replies

I started out with a credit score of 790 when I bought my first rental. In 3 years, I've acquired 4 more, and my credit has dipped with each loan, and is now at 710. I have no debt except for these loans, and no credit card balance except for what what is used and paid off each month. Does anyone have any tips or strategies for how to boost and maintain my credit score in order to get me to 10 rentals? I could pay them down, but I'd rather keep the loans as I don't think I'll be able to get money that cheaply in the future.

If you pay your CC in full each month, your score really should be better than 710. There has to be a different reason

I've been paying it in full each month for the last 10 years. I think the main problem is these loans have all been created fairly recently, and reduced the overall age of my open accounts. I think this is partially due to me being averse to getting into debt when I was younger, so I don't have to many old accounts.

That does not sounds right... your credit score would have dipped a few points each time you obtained a loan application but if you are paying off CC and mortgages (major trade line) there should be no reason for an 80 point drop. Have you obtained a recent credit report to compare with the report when your score was 790 to identify if there are any errors or new items outside of the mortgages?

I have pulled my score from all 3, and I think I found my mistake. WithTrans Union , my score is significantly lower, but an average of all 3 is around 745. It still isn't great to watch it decline. Any tips on keeping it up?

@Luke M.

This happens for a couple of reasons. First and foremost, your debt to income ratio becomes less and less favorable each time you take on additional debt. Second, just the process of obtaining credit (number of credit checks, for example) alone negatively impacts the score, as does the increasing number of actual credit accounts. The best and surefire way to counteract this is to increase your income....

@Luke M. - That seems weird. In 2.5 years we have bought enough property to take out over $800k in mortgages. And our scores have only gone up. One thing I do about 6 weeks before I plan on buying and through the entire loan process is pay off my credit cards before the statement hits. This way they always report a $0 balance which improves my DTI and credit utilization.

@Andrew S. My income has certainly been going up, but it does consist of multiple streams, so it's probably hard to track. I'm not sure how a credit score can actually monitor income, but if it is, mine would be hard to follow.

@Brianna Schmidt Thanks for the tip! I tend to spend a lot on my credit cards, so even though I pay them off each month, if the score updates before a payment is made, there could potentially be 4-6K in revolving debt reported.

@Luke M. - We do the same. We use our CC for everything so I pay a few thousand per month and found then when I pay in full the day before the statement date my credit goes up. You just got to make sure to keep doing it through the loan process. Usually they pull when you apply and then again the day before closing. Any substantial change will affect your DTI and score.

Having several new loans (mortgage or cc) in a short period will hurt you some, because your average age of accounts is reduced.

Don't open any new trade lines for now and let your credit "age", that will help.

You want to pay off all credit cards before the statement hits, except one, have that one at less than 10% of the credit line,,,it seems strange but one cc having a balance is actually better than all reporting a $0 balance.

Watch inquiries, your getting hit with a lot for mortgages,,on TU there is a way to have them disappear,,on EX they will never disappear, and on EQ all except your mortgage inquires can disappear.

Never, ever open a store account to save the 10% or whatever on the first purchase, you get hit with an inquiry and have a new account reporting (reducing your average age of accounts).

You also want a good mix of credit, you have mortgages, you have cc, but also you want an installment account (car note, etc),,it seems funny but they like you having a good mix of types of credit.

The mix of credit counts as 10% of your FICO score, however the majority of your score, 35%, comes from payment history, then the balance on revolving will account for 30%, length of credit history 15%, etc,,

What I have found working in the banking industry is inquiries and new accounts less than 12 months old ding your credit more at the beginning but are quicker to get seasoned because inquiries have the most impact within 12 months and disappear after 24 months. The algorithms that are used to make your credit score are confusing bit I find going to www.creditkarma.com gives you grades on the different categories the algorithms use. I think it only uses transunion. Check it out, it is free.

We found the same things. We have bought 5 houses in 2.5 years and my husbands credit has taken an unfortunate hit! Credit Karma has been a great help. Nothing to add except my experience it's based on how much "debt" and credit inquiries.

Thanks guys! I've been using Creditkarma for a few years, and it helps. Trans Union's score is lower than the other two, so that was initially why I had this concern. I do have a lot of credit inquiries from shopping around for loans a bit too much, and the idiots over at quicken loans made two hard inquiries in the same day when I talked to two different "agents".

@Andy Collins Thanks, I'll try and see how to get Trans Union to take off some of the inquiries.

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