Posted on Jan 5, 2018
SGT Joseph Gunderson
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I have a year or so until I graduate with my BA and begin my dream job. That being said, I would like to begin planning to buy my first house after I find where I will be working. In the mean time, I need to begin working to improve my credit. Like many young enlisted Soldiers, I made numerous bad decisions that led to my credit taking many hits. What kinds of things can I do at this point in order to improve my credit now in the hopes of being approved for my VA Home loan in a little over a year? If it takes a little longer, then that is fine. Just looking for information.
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CWO3 Us Marine
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Edited 7 y ago
Lots of free info on the net, but at a bare minimum pay early and extra on any credit card(s) you may have. A 6 month to 1 year period of that on every account will help your credit. Get a free credit report and you will then know what you are dealing with. Some find things on their report that are erroneous, so check that and correct any that apply. It's good to understand the things that determine your FICO score and work them to maximize the effect. If you have many accounts, consider combining them so you only have one credit payment to focus on. You can do that by finding a new card that has zero fees to transfer balances to, a good % rate, and no annual fee. Then transfer all totals to the new card. You can use an existing card but unless it has free transfer you will have a lot of fees. Credit utilization factors into FICO, so you don't want to exceed the 30% threshold to help your score (example - $300 balance on a $1000 credit limit). The number of accounts you have is also a factor of FICO score so look before you leap to a new card. How long you have had your accounts also factor into FICO, so don't close accounts without looking at the impact first. Start by understanding FICO and go from there. After that, a year of steady and timely payments can make a lot of difference. I know a young professional that went from FICO of mid 500 range to mid 700s in approx. 1.5 years by doing these things. There are more factors but the main ones are age of accounts, utilization rate, number of accounts, and payment history. See bottom link. Good luck.


https://www.myfico.com/
https://www.creditcards.com/top-credit-cards.php
https://www.creditcards.com/credit-card-news/help/5-parts-components-fico-credit-score-6000.php
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SSG Squad Leader
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Edited 7 y ago
Pay your bills on time. Don't apply for a bunch of different credit all at once that you don't need. Have a credit card that is paid off every month if used. Don't get more credit then you can't manage. Save for a good down payment and have extra cash flow that you put into savings before you think about buying a house. Make sure that you keep some money away that you can get to if you need it.
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Sgt Field Radio Operator
Sgt (Join to see)
7 y
SSG (Join to see) Excellent advice.
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Lt Col Jim Coe
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Record every dollar you spend for at least 1 month
Decide where you might be spending money on things you don't need or receive any benefit from
Develop a budget allowing for necessary expenses (food, clothing, shelter, transportation, taxes), savings, charitable giving, paying off credit cards and other unsecured debt, and a little fun
Follow the budget as closely as possible
Get at least 3 months of necessary expenses in savings, more if you can
Pay off the credit cards and close the accounts

If you're married, include your spouse in every step listed above. This has to be a team effort or it won't work. If you are cohabitating, try the team approach; however, keep finances separate so you keep control of your credit score.

Good personal accounting software helps a lot. Makes things like balancing a checkbook easy. I recommend Quicken, but there are other products on the market that work as well.
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LTC Eugene Chu
LTC Eugene Chu
7 y
Sir, paying off credit cards helps, but closing accounts does not. One needs active accounts to show credit history. After pay-off, do not destroy, but put in difficult to access spot (e.g. safe deposit box) for sporadic spending in order to show responsible activity.
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