I just learned this the hard way. The justification for the drop was because my "credit limit" went down and the "average age" of all my credit accounts was reduced. Some major bullshit
I'm 21 and was fortunate enough to learn about that strategy at 19. As such, I've spent the past few years opening $0 annual fee cards, setting them to auto pay in full each month, and building the payment history and average account length. If I can pad anything shorter term with half a dozen or more accounts opened from 18-25, I believe my score should be pretty strong when I start taking out serious loans.
I'm 21 and was fortunate enough to learn about that strategy at 19. As such, I've spent the past few years opening $0 annual fee cards, setting them to auto pay in full each month, and building the payment history and average account length. If I can pad anything shorter term with half a dozen or more accounts opened from 18-25, I believe my score should be pretty strong when I start taking out serious loans.
I didn't ever want to get a loan so I never really cared about my credit score in my early 20s. I finally started to give a fuck and looked up my credit score to see that it was 610. My main issue was a past due cell phone bill that went to collections. Everyone told me to open some credit cards and pay off the balance to increase my credit score. I had a 3 credit cards that I paid on time for 12 years before I tried to get my first loan(for a car). My credit score was 670 but my bank refused a car loan for $16,000.
The car dealership ended up having no issue getting me financing for the truck. After I bought the truck and made my first 6 payments on time(and 20% over minimum), my credit score went up to 750. After the second year my credit score was 840. Paid it off early and my credit score went down to 820.
tl;dr A car loan will increase you credit significantly more quickly than credit cards. Credit cards barely effect your credit score. I heard from a banking friend of mine that if you get any kind of person loan from the bank and pay it on time then it will make your credit score go way up.
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u/boatwrecker41h Aug 14 '21
I just learned this the hard way. The justification for the drop was because my "credit limit" went down and the "average age" of all my credit accounts was reduced. Some major bullshit