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I thought it would be a good idea to make this its own thread because of the varying information that conflicts with different sources.
The TL;DR is: in addition to credit age, low utilization, and making payments on time (if not paying the entirety borrowed in full), what will help my credit score? And for things like hard inquiries, how long do they negatively affect my score?
Here's my context:
I am 20 years old, and at the age of 18, I got my first credit card with 0% fees because it was a student card, using it as financially responsible as possible: borrowing only that which I knew I could pay back in full (as if it were a debit card), building that credit age, and later I learned keeping a low utilization rate (say under 30%).
For a few months, I became incredibly interested in increasing my credit score, as if the involvement of numbers (credit score) made it some competition by default. At the time, I had a 749 (which is good), but I was motivated to increase it because that's the same score I had since first opening my credit card. I asked my friend at work, and he told me that he had his bank increase his credit limit significantly. At first, his score dropped, but after a couple of months, it increased rapidly after each month to 830. I was impressed.
I later learned the dip was because of the impact of hard inquiry and the rapid climbing to low utilization ratios.
Hearing this at age 19, I asked my bank for a credit limit increase. My low income and debt ratio from student loans that I continue to take (a conversation for another time of my financial plan as I go through medical school) resulted in my $2000 credit limit increased from an initial $1000 being denied. I was determined. I got another student credit card ($0 fee) from a different bank for $1000. Overall, I had lower utilization because of doubling my credit limit, and I saw a slight increase after a few months.
At this point, you may think I am being over-obsessive, considering my age, but I don't necessarily see that as a bad thing. I want to own a rental property sooner rather than later, and higher scores equal better rates, approvals, etc.
I stuck with this $2000 credit until recently, at age 20, when I saw promotional offers to get a $0 credit card with 2 other banks. At this point, I began to sift through tons of info and concluded that having several cards is not necessarily a bad thing, as long as you are 1) mindful of not having too many credit inquiries in too short of a time frame and 2) being financially responsible with each one, with could require a commitment to being organized for each month's full payment.
Long story short(er). I now have a $9000 credit limit (one of the offers was a student offer of $1000, and the other was $5000, not student-related).
Super excited about this, I told my older brother, who is 24 and is committed to a slow-lane lifestyle (also a different conversation for another time). He is seeking to climb his company's corporate ladder (he works at a Toyota dealership), has rental property, and has an income of about $300,000 CAD before tax. The relevant piece is that his position is Director of Finance at his dealership, so he's always dealing with people's credit.
I excitedly told him of my new credit limit increase. Put bluntly, he shit on me, with that tough love that older brothers have, and said that's not how it works at all and I'm not helping my credit.
Here I am, with the current beliefs that:
1) credit age helps (just gotta be patient)
2) make your payments in full by the date mentioned by the bank
3) have low utilization helps (under 30%, but I've also heard below 10%; I do the former)
4) having various lender types helps (credit cards, car loans, mortgages, etc.)
4. b) having a variety of lenders helps (one from a particular bank, another from a different bank, etc.)
5) keep a low amount of hard inquiries in a short time frame (ex. 2 years)
Basically, I'm seeking enlightenment and learning that any of the above is incorrect to correct my future behaviour.
The TL;DR is: in addition to credit age, low utilization, and making payments on time (if not paying the entirety borrowed in full), what will help my credit score? And for things like hard inquiries, how long do they negatively affect my score?
Here's my context:
I am 20 years old, and at the age of 18, I got my first credit card with 0% fees because it was a student card, using it as financially responsible as possible: borrowing only that which I knew I could pay back in full (as if it were a debit card), building that credit age, and later I learned keeping a low utilization rate (say under 30%).
For a few months, I became incredibly interested in increasing my credit score, as if the involvement of numbers (credit score) made it some competition by default. At the time, I had a 749 (which is good), but I was motivated to increase it because that's the same score I had since first opening my credit card. I asked my friend at work, and he told me that he had his bank increase his credit limit significantly. At first, his score dropped, but after a couple of months, it increased rapidly after each month to 830. I was impressed.
I later learned the dip was because of the impact of hard inquiry and the rapid climbing to low utilization ratios.
Hearing this at age 19, I asked my bank for a credit limit increase. My low income and debt ratio from student loans that I continue to take (a conversation for another time of my financial plan as I go through medical school) resulted in my $2000 credit limit increased from an initial $1000 being denied. I was determined. I got another student credit card ($0 fee) from a different bank for $1000. Overall, I had lower utilization because of doubling my credit limit, and I saw a slight increase after a few months.
At this point, you may think I am being over-obsessive, considering my age, but I don't necessarily see that as a bad thing. I want to own a rental property sooner rather than later, and higher scores equal better rates, approvals, etc.
I stuck with this $2000 credit until recently, at age 20, when I saw promotional offers to get a $0 credit card with 2 other banks. At this point, I began to sift through tons of info and concluded that having several cards is not necessarily a bad thing, as long as you are 1) mindful of not having too many credit inquiries in too short of a time frame and 2) being financially responsible with each one, with could require a commitment to being organized for each month's full payment.
Long story short(er). I now have a $9000 credit limit (one of the offers was a student offer of $1000, and the other was $5000, not student-related).
Super excited about this, I told my older brother, who is 24 and is committed to a slow-lane lifestyle (also a different conversation for another time). He is seeking to climb his company's corporate ladder (he works at a Toyota dealership), has rental property, and has an income of about $300,000 CAD before tax. The relevant piece is that his position is Director of Finance at his dealership, so he's always dealing with people's credit.
I excitedly told him of my new credit limit increase. Put bluntly, he shit on me, with that tough love that older brothers have, and said that's not how it works at all and I'm not helping my credit.
Here I am, with the current beliefs that:
1) credit age helps (just gotta be patient)
2) make your payments in full by the date mentioned by the bank
3) have low utilization helps (under 30%, but I've also heard below 10%; I do the former)
4) having various lender types helps (credit cards, car loans, mortgages, etc.)
4. b) having a variety of lenders helps (one from a particular bank, another from a different bank, etc.)
5) keep a low amount of hard inquiries in a short time frame (ex. 2 years)
Basically, I'm seeking enlightenment and learning that any of the above is incorrect to correct my future behaviour.
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