You may remember that as of October 2013 I was a Credit Ghost. Catch up on the saga here, (hilariously edited by Behind Bars.) Last Friday I applied for a home mortgage, was prequalified, and with good results. Let’s find out how to get your credit score over 700 in 7 months.
Step 1: Start with no credit. Not bad credit. I’m talking no credit. Blank slate. If you have bad credit people will loan you money at a high rate, at least occasionally. If you have no credit they won’t give you jack. For example, they do a credit check if you sign up for a contract smartphone. Because I had no credit, I had to put down a $400 deposit + cost of the phone + first month’s bill… $600 some dollars later. Maybe not the Walletest decision I’ve ever made.
Step 2: Get a credit card. This will most likely be a bit of a trick. To get a card that’s super useful, has useful perks, excellent cashback, etc. you need to have credit. You don’t have credit. So what’s your option?
Step 1: get a student credit card. I got a CapitalOne Student Credit card with $300 credit line. If that fails you can get a secured credit card. What is a secured credit card?? I hadn’t heard of one until six months ago. Here’s the direct verbage:
1. What is a secured credit card?
A secured card requires a cash collateral deposit that becomes the credit line for that account. For example, if you put $500 in the account, you can charge up to $500. You may be able to add to the deposit to add more credit, or sometimes a bank will reward you for good payment and add to your credit line without requesting additional deposits (1)
Step 2: Use your credit card. Purchasing something each month. Pay off the entirety of the balance each and every month. Never carry a balance.
Step 3: Use less than 30% of your maximum credit line. The ratio of credit used to your maximum credit, on all credit cards, is called your credit utilization ratio. It’s important to keep this below 30%. Some people say 30-40-50%, but my loan officer recommended 30%.
Step 4: Call your credit card company after a few months and ask for a higher credit line. This is a good thing. My credit limit is now $1800. And mine was upped automagically after about 5 months.
*DRUMROLL* The results after holding my CapitalOne student card for 7 months:
My credit scores are as follows:
- 697 (Facta Beacon 5.0),
- 709 (Fair Isaac Model II),
- 737 (FICO Classic 04).
- 730 (Transunion via CapitalOne Credit Tracker)