Time to Check Your Credit History Again

If you checked your credit history on AnnualCreditReport.com in January with just one of the three credit reporting agencies, it's time to pick another one and get another free report. Remember why it's important to check your credit history and what to look for in your credit report. (See the January post on Credit Reports)

Another credit resource I've found very helpful is CreditKarma.com. They will give you your credit score free (in exchange for their site being filled with offers) and even give you a report card that can help you focus on what will help improve your score.

Here are some things I learned about my credit score:

* In the first two months (November and December 2009) that I used the service, my credit score went from 757 to 771.
* While my "Open Credit Card Utilization" is rated an A, it is more like an A- as I am one percentage point from being a B
* I thought my one late payment in the last decade would haunt me for seven years, it turns out I'm still an A in On-Time Payments (although an A-)
* My two C's are Total Accounts (not enough accounts) and Average Age of Open Credit Lines

It's funny because it's a catch-22 for my 2 C's. I'd need to open twice as many accounts as I have to get an A in Total Accounts, but then my Average Age of Open Credit Lines would go down to a D. I guess my strategy here would be to slowly acquire accounts (but not use them) so both scores go up slowly. At around 20 Total Accounts, every time I open a new account, it will set back my Average Age of Open Credit Lines by one month. Currently, in about 6 months the Average Age of Open Credit Lines should reach a B-. Then another two years to reach A-. However, to reach a B- on Total Accounts, I need another ten accounts and another twenty to reach an A-. Adding ten accounts would set me back about six months. So probably the best strategy is wait six months to get a B- in Average Age of Open Credit Lines and then over the next six months add about 10 new lines of credit. Both of my C's are MEDIUM weighted in credit score, so they are not really that big a deal.

Looking at the Total Debt distribution is also interesting. The average score for my total debt is 688. It seems there are two extremes. Either have less than $5,000 debt or have more than $150,000 debt. Both those debt ranges score around 700. Between $5,000 and $150,000 of debt, you start going down in credit rating. The people with the lowest scores have between $5,000 and $50,000 of debt.