Credit Score Problems You May Not Realize

Solution: Make sure you have at least two credit card accounts – one in each spouse’s name – and that you use them both equally. You can still put the other spouse on the account, so it’s OK if one spouse does more of the formal “charging.” This is a good opportunity to think about rewards cards with different perks, so long as you ultimately use both cards roughly equally.

Problem No. 3: Your credit limits aren’t high enough, so your credit utilization score is low.

Even if you pay off your credit card in full every month, you still have an outstanding balance at any given time. That’s because your monthly payment is typically on a one-month billing cycle that ends three to four weeks before your payment due date. So, if you charge a lot every month, even if you pay off your balance in full, your credit utilization score, which makes up 30% of your credit score, can still be low.

Solution: Call every credit card company you have a card with and ask them if they can up your credit limit. If you are paying your bills on time and in full every month, they are likely to say yes. This is especially true if you’re charging a significant percentage of your credit limit every month. Do this on every card, even if it’s not one you use regularly.

An added perk: There's less risk of a long-term ding on your credit score. While you may still end up with a hard inquiry on your credit after requesting a credit limit increase, it typically lowers your score by just a few points for a short period of time. On the other hand, applying for a new card results in a hard inquiry and lowers your length of credit history, which has a longer-term impact on your credit score.6

Problem No. 4: You charge a lot on your credit cards, so your 'debt' looks high and your credit utilization score is low.

Again, even if you pay off your credit card bill in full every month, you still have “debt” on your account. For higher wage earners – especially those that charge almost all of their monthly expenses on a credit card – this can be a significant amount.

Solution: In addition to asking card issuers to up your credit limit, consider making a mid-cycle payment to your credit card – in addition to having a recurring monthly payment set up that automatically debits from your bank account. Do this for at least two months before you want to have a lender pull your credit, although some newer credit scoring models might consider credit utilization data from up to 24 months ago.7

Problem No. 5: You don't have a history of paying off auto loans.

People tend to think their credit score is just one number, but you have several.

For example, auto loan lenders may use a special FICO Auto Score that gives them more detailed information on your past history of auto loan payments.8

So, if you apply for an auto loan after decades of paying cash for cars, your FICO Auto Score might not fall into the "exceptional" range simply because the credit scoring model doesn't have a lot of auto loan history to go on.

Solution: If you're anticipating getting an auto loan — especially after years of paying cash for cars — first ask potential lenders (from the dealers themselves to banks) which credit score they'll be using — and how different scoring ranges will impact your pricing and options.

Then check the specific scores the lenders mention. You'll typically only get one version of your credit score when it comes from your credit card company, but paying for a credit score report from myFICO gives you access to multiple versions, including those used for mortgages, auto loans and credit cards.

Knowing your relevant credit scores — and how the different lenders will adjust your pricing based on them — can help you choose the best lender for your situation. And knowing the best lender beforehand ensures you only need to have a one hard inquiry on your credit report.