Credit Score/Advice

[auron]

So, I have been thinking about my goals for the next 5 years and two stand out to me.

Goal #1) I want my student loans to be gone in the next 2.5 years and I am on track to make that happen. Started repayment in December and have repaid just under $12K back, $35K to go.

Goal #2) $50K liquid assets ($40k for house DP, $10K to add to current $10K EF)

Due to this home ownership goal, I want to be building my credit score to minimize my eventual mortgage interest rate.

Some background:
I'm 25, income ~$3700/mo, expenses ~$3200/mo (includes $1137/mo going to SL & $285/mo to roth IRA to get company match). I currently have no car payment and it is still running strong. I have one CC with $500 limit @ 7.75% and have never carried a balance.

With that info in mind, I was thinking about upping the limit on this card or getting a new card with higher a limit with the intent of raising my credit score. How much could I expect this to help given a 5 year time horizon and are there other/better options for the same effect?

[JoshuaHeckathorn]

How much of your $500 credit limit are you using each month? Since that's your only credit card and it has a fairly low limit, I'm going to assume your credit utilization ratio is high, which is driving down your FICO scores.

Adding a new credit card to the mix and increasing your credit limit on this card should definitely have a positive effect on your FICO scores. Shoot for obtaining a CU ratio of around 10% or less. Of course, you want Continue paying your student loans and credit cards on time, while keeping your credit utilization ratio low, and I suspect your FICO scores should be in a good place by the time you're ready to apply for a mortgage. 5 years is plenty of time to improve your credit.