This is a story about credit scores. But before we get into all of that, you need to understand that I’m a perfectionist.
Obsessing over things is, like, my main hobby. I’m the oldest child, so according to birth order I was destined to be a high achiever from the moment I opened my eyes in the hospital. Growing up, my mom was an elementary school teacher, so getting straight As wasn’t just an academic achievement — it was a way to ensure I would be truly loved forever. I even scored an 800 on the now-defunct writing section of the SAT (I got a 730 on reading and a 670 on math, both of which kept me up at night).
So, naturally, I’m a little crazy when it comes to my credit score.
I don’t remember when I started tracking it — probably around the time that I moved to New York City and realized I had to build up credit in order to get an apartment — but I do know that twice a month emails land in my inbox from Credit Karma and Mint. They cheerfully update me on my status, which is based largely around the sole credit card I got from Bank of America three years ago. I especially like the graphics, like the one that helpfully puts my score in context by sticking it on a red to green spectrum.
Unfortunately, my 749 only gets me to light green on said spectrum. LIGHT GREEN. Clearly something’s up.
Sure, the average score for my age is 652 out of 850, but I don’t want to just beat my peers. I want to annihilate them.
Here is my attempt to do just that.
How Can I Improve My Credit Score?
Before starting Mission: Impossible 850 — Credit Score, I contacted Rod Griffin, the director of public education for credit reporting agency Experian, to brush up on the basics. Griffin patiently explained to me that credit scores and credit reports are two different things that I should not conflate.
“Your score is a tool that’s used to represent the information in the credit report,” he says. “If you take care of your credit report, you’ll have good scores.”
He hit me with a metaphor that spoke directly to my education-loving self: A credit report is like a school paper I’m continuously working on in order to prove that I’m responsible when it comes to repaying debt. Every once in a while, I turn the paper in, and the teacher grades it based on a variety of factors (think on-time bill payments and utilization rates instead of spelling and grammar). Different teachers look for different qualities, so every time I get a grade back it might be a little different.
In order to alter my grade, my score, I need to identify the things I’m doing wrong and correct them.
“If you did a paper in school and the teacher gave you a C and you wanted an A, you wouldn’t say, ‘Change this C to an A,'” Griffin tells me. “The teacher would say, ‘Change the paper, and I’ll regrade it.'”
OK, So What’s Holding Me Back?
The credit emails I’ve been receiving are pretty clear about my issue — “there’s a limited number of accounts on your report.” Sure, I have some bills I pay every month — internet, electricity, etc. But the big thing holding me back is my one lone, relatively young credit card.
Do I really need another? Because being forced to get another credit card in order to increase my credit score seems like a Nigerian prince-level scam (“just send me money and you will get money, I promise this is legit”).
Barry Coleman, the vice president for counseling and education programs at the National Foundation for Credit Counseling, tells me it’s not as counterintuitive as it may seem. He says applying for another card may improve my utilization rate, which is one of those aforementioned factors that can influence my score.
Coleman puts its to me this way: If I have one credit card with a $1,000 limit and I owe $300, my utilization rate is 30%. If I get approved for another card with the same limit, my utilization rate drops to 15% because I’m spreading it over two cards. That lower number makes me seem more responsible, so my score gets a boost.
Problem solved, right? Nope.
Coleman points out that the algorithm also takes into account how long I’ve had my credit lines. “By opening a new card, that actually shortens your average age of credit history,” he tells me. “That could conceivably drop your credit score.”
Fine. What Else I Can Do?
Another option: I could try to game the system by increasing the limit on my current card, which would also result in a lower utilization rate. (Remember the math? If my card limit jumps to $2,000 and I still only owe $300, my utilization drops to 15%.)
Plus, I could probably get a higher limit without too much trouble. A CreditCards.com survey from earlier this year found that 85% of people who asked to raise their credit limit were approved, which is an acceptance rate even I feel optimistic about.
But it turns out — surprise — it’s not that easy. Griffin says that my lender could treat the increase as a new, hard inquiry. And because having too many hard inquiries on a credit report may indicate the borrower is looking for quick money for nefarious reasons and/or front-row tickets to a Nick Jonas concert, that could also temporarily hurt my score.
Griffin recommends I play around with an online credit score simulator that can show me how taking certain actions may influence my number. I do, and I find that upping my credit limit would only give me a paltry five more points. How lame.
Should I Just Chill Out About My Credit Score?
Neither Griffin nor Coleman say this outright, but I sense that they think I’m overreacting. I can begrudgingly see where they’re coming from. I can already access lower interest rates, qualify for apartments and enjoy other perks of having pretty good, light-green shade credit.
Griffin, in trying to make me feel better, points out that even his credit score varies by the company preparing it. “Chasing that perfect score will cause you significant stress — potentially gray hair,” he adds. “Once you are above a lender’s threshold, which is usually around 750, it doesn’t matter if your score is one point higher or 50 points higher.”
Griffin says that instead of overthinking my 749, I should keep paying my bills promptly and begin more closely monitoring my reports (available for free on sites like AnnualCreditReport.com).
And, I guess, age. FICO’s Ethan Dornhelm told the Washington Post earlier this year that “on average, consumers with a FICO score of 850 have over 25 years of spotless credit history.” That’s about how long I’ve been alive, so I’ve got a while to go.
Bottom line: Perfection may be out of reach for now, but I may get there eventually. Scratch that — I will get there eventually. In the meantime, maybe I should devote my time and effort to achieving another magic number… like growing tall enough to reach 5’5.