Raising credit and best way to finance furniture

Raising credit and best way to finance furniture
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#1

My credit score is 706. I have a secured credit card that started at $200 but was recently raised up to $500 after 8 months of on-time payments and staying under 30%.

I want to finance some furniture, would that help or hurt my credit? What would the best way to do it, through a furniture company or a loan? Should I be worried about getting rejected with a 706 loan?

One more question…would applying for another credit card help my credit? Any other suggestions to help me raise my score?


#2

Welcome to the NerdWallet community, love_nicola! And congratulations on the work you’ve done to build your credit thus far.

First, whether something helps your credit will depend on whether it’s reported to the credit bureaus. If you choose to finance through a furniture company, it would be smart to be sure the loan is reported AND to check the interest rate vs. what you might pay elsewhere (some have pre-qualification that lets you know your chances of approval without your applying — because actual credit applications can cause a small, temporary dip in your score).

You might get more benefit from applying for a “credit-builder loan”. That would give you an installment loan (one with level payments for a set term) as well as a credit card, and different types of credit can help your score. But the two things that help most are paying on time and using just a small part of your credit limit. (Using less than 10% is even better than staying under 30%.) In general, the lower the better, as long as there is at least some activity on the card.


#3

Thank you. That info is very helpful. Would it benefit me in doing a 6 month loan? I would rather not take one out for 24 months or even a year.

Also, I recently had a large medical bill go to collections. It was 4 bills for a surgery that amounted to almost $4000. I contacted them and I am making payments twice a month. The creditor has not reported the bill yet. They say that if it’s payed off by May, they will not report. They will report the remainder of the bill if it is not payed off in May. If I am making payments every month, can they still report me even if I do not have it paid off by May?

I have been at a stand still with my score and it actually went down 2 points which I have no idea why. I have paid my cc in full every month and stay under 30% and most of the time I am under 10% usage.


#4

Yes, a 6-month loan, paid on time and reported to the credit bureaus should help.

It would be smart to get the agreement to not report the collections in writing if you can. There are some special rules that apply to medical collections; you can read about them here.

And yes, a collections can still be reported even if you are making regular payments.

Credit scores fluctuate, so a couple of points up or down is not a big deal. But trends and general direction are.

Good for you in keeping credit utilization low. It sounds like you’re doing all the right things to boost your score.