Raising Credit Limits

[swanson719]

We have no debt aside from our mortgage, and haven't since February 2009. We haven't had any late payments for either of us since August 2007. Still, our credit scores are mediocre. Mine is flirting with 700, though I'm not sure which side of 700 it's on. DW's is in the 730-740 neighborhood.

I've never had a credit card in my name. Lately, I've been applying for them and continually get turned down. DW gets credit card offers and signature loan offers for thousands of dollars almost daily. So we have a credit card in DW's name that has no annual fee and we pay it off in full each month. The limit on it is only $500 so we use it for groceries and gas, which gets us to almost the max each month.

We want to get a credit card in my name and raise the limit on DW's. We would like each to have a $2,500 limit.

The only reason I can find that our credit scores are as low as they are is because we don't regularly use credit. We don't really have a need for it, but at the same time it would be nice to have good credit scores on the rare occasions we do use credit. So aside raising our credit limits and getting credit cards that we pay off each month, how do we raise our credit? We don't want the signature loans that come with 7% interest.

[jpg7n16]

I could care less about your credit score. You shouldn't either.

Do what's smart for you financially - just what you've been doing.

[jIM_Ohio]

We have no debt aside from our mortgage, and haven't since February 2009. We haven't had any late payments for either of us since August 2007. Still, our credit scores are mediocre. Mine is flirting with 700, though I'm not sure which side of 700 it's on. DW's is in the 730-740 neighborhood.

I've never had a credit card in my name. Lately, I've been applying for them and continually get turned down. DW gets credit card offers and signature loan offers for thousands of dollars almost daily. So we have a credit card in DW's name that has no annual fee and we pay it off in full each month. The limit on it is only $500 so we use it for groceries and gas, which gets us to almost the max each month.

We want to get a credit card in my name and raise the limit on DW's. We would like each to have a $2,500 limit.

The only reason I can find that our credit scores are as low as they are is because we don't regularly use credit. We don't really have a need for it, but at the same time it would be nice to have good credit scores on the rare occasions we do use credit. So aside raising our credit limits and getting credit cards that we pay off each month, how do we raise our credit? We don't want the signature loans that come with 7% interest.

You have figured out what you need to do... get credit in your name, and keep it active every month.

That credit could be
1) home equity loan
2) car loan
3) credit card

It will be about 18 months before doing any of above (and possibly longer) to see a net effect of making a change. I speak from experience as my wife was in similar position to you about 8 years ago.


Here is what we did:
1) We issued a car loan in my wife's name (I co-signed). I do not think we were married at the time but not sure (might have been 7 years or 9 years ago, so forgive me on being fuzzy here). My credit score at the time approached mid 700s to high 700's. Her score might have been 650 when she took out the car loan.

2) We bought a house (after married) and her credit score was in high 600's by fall of 2005. Both our names were on that mortgage- when I bought the condo we moved from in 2000, she could not be on the mortgage because her credit score of about 550 destroyed the interest rate I would qualify for).

3) the whole time she was paying her student loans
4) She had some credit cards issued in her name in 2006, and we use one of those 6-12 months per year for normal purchases.

so my data points- wife's score was around 550 in 1999-2000 timeframe when we bought condo
it was "up" to about 650 when she did car loan around 2001-2003 timeframe (most of improvement was paying off deliquent accounts and paying regularly on student loans).
In 2005 it was about 675-700 when we purchased our current house
in 2009-2010 credit was pulled for various reasons, and her score is now in mid 700's

Do not focus on the credit limits, focus on obtaining credit in your name. Use whatever you can (if its a card with a $500 limit, then charge gas on it each month, pay it off and the limit will eventually get raised).

[jIM_Ohio]

I could care less about your credit score. You shouldn't either.

Do what's smart for you financially - just what you've been doing.

I agree they have been smart financially, but we don't know if they anticipate getting a new house in 5 years or something like that. If they want to improve their credit score, they can do so without taking much risk.

[jpg7n16]

I agree they have been smart financially, but we don't know if they anticipate getting a new house in 5 years or something like that. If they want to improve their credit score, they can do so without taking much risk.

Ok - well then how to increase your credit score:

1) Borrow lots of money
2) Pay lots of interest
3) Always pay on time (don't be late, don't default)
4) Get approved to borrow more

and/or

5) get a credit card and trick the system by paying off the balance each month before you can get charged interest

But since the OP can't get approved for a credit card, you must resort to #1-4. (or get a card with a ridiculous annual fee - somehow they've gotta make their money off you in this process of raising your score)


I've said it before, and I'll say it again - I believe the credit score is a company's score of how likely the bank/lender is to make money off you as a customer. So pay the banks a bunch of interest and never cost them any money by defaulting - and your score will shoot up.

It's also stupid to do when you don't need the debt.

[swanson719]

We want to adopt in a couple of years, but the adoption tax credit sunsets at the end of the year. A traditional adoption costs tens of thousands of dollars, and in our area it is not uncommon for people to pay $40,000. We don't have the spare change to just pay that. Even saving, it would mean no longer contributing to the Roth.

So we intend pay the first $10,000 and borrow the difference. I've talked to banks and the best they will do is loan us $40,000 and consider the $10,000 a 25% down payment. They still want 8% on the remaining $30,000 on a 10 year note. That's a ridiculous amount of money. We don't have any equity in our house so an equity loan isn't an option.

[jpg7n16]

Well which is more important to you: having enough for retirement, or adopting a child?

You can prioritize - and it's okay to postpone retirement if this is something you both really want. This is a very special situation.

Also, with the tax credit from adoption - have you considered putting all that money towards the loan? The max credit is about $13k - and although it'd be expensive, that would go a long way towards paying down any loan like this. If the 2 of you have been maxing your Roth, the rest of the loan could be gone in 2 years or less. Then start back up Roth contributions. (30k - 13k = 17k + some interest = about 18-20k total)


If this was a loan for a car, I'd say you were crazy to postpone retirement. But this is much different IMO.