The Surprising Results of My Experian Credit Educator Session

Experian State of Credit 2013

I just discovered how I can take my Vantage credit score from 834 to 865. Follow along to see how.

I’m not big on obsessing about one’s credit score. You shouldn’t be either. But if a few small changes can have a significant impact on your score, then I don’t see the harm in taking a stab at making those changes.

After all, I do plan on doing some more real estate investing and credit card bonus churning in the next couple of years. Having a solid score means I get the lowest interest rates and qualify for bigger limits.

The problem is that it’s hard to know exactly what changes you can make that will have the biggest impacts. In the past I’ve instructed you to look to the 5 key factors that make up a credit score to determine what to fix. That’s still solid advice, generally speaking.

Recently, however, I discovered a service from Experian that sheds, in my opinion, significantly more light onto what you can do to improve your score.

Experian Credit Educator Session

Experian Credit Educator
The service is called Experian Credit Educator. It’s been around for a few years, but it was recently improved. It involves a 35 minute phone consultation with a representative with Experian. In this consultation, you review your credit report, Vantage score, and specific things you can do to potentially improve your score. You also run through different scenarios to test the impact on your score. Cool, right?

The service cost $39.95 but I was able to get a free to check it out for a potential review. The results of the session were surprising and that’s why I’m sharing this post with you today.

Here’s what I learned in the consultation:

The Experian Credit Report

I’m already familiar with the credit report format and individual components. You’ve got your personal information, accounts, credit inquiries, and bad items (bankruptcy, etc). But it was nice to review it with someone else just to be sure I understood it all.

I did learn that negative items can stay on your report for 7-10 years, and positive items can remain on your report for 10 years after you close the account. I had one negative item on my report: a 30 day late payment. I also had a few credit inquiries. I learned that these drop off the report after two years.

The Vantage Score

Experian promotes the Vantage score, a scoring model developed by the three credit bureaus. It’s different from your FICO score, and uses a scale from 501 to 990. My score turned out to be 834. I was told this was roughly a B on a grading scale, and higher than 72% of U.S. consumers. Definitely room for improvement.

Key Factors Affecting My Score

This is where the consult starts to get interesting. I was told the exact factors that were affecting my score. They were:

  • The amount paid on my open real estate accounts is too low.
  • The balances on my open accounts are too high in comparison to their credit limits.
  • The available credit on my open revolving credit accounts is too low.
  • I have too many inquiries on my credit report.

My mortgages are affecting my score? I never would have imagined this. We put 20% on both our rental property and our home mortgages. Why is the amount paid too low?

Well, it turns out, Experian looks at the initial loan amount vs the current balance. We would have been better off not putting down 20% and then using that 20% to instantly pay down the mortgage. Bizarro World, right?

So, based on these factors, here are my actions steps: pay down some of my mortgages (around $7,500 on my rental property – see below), ask my credit card issuers for higher limits, and hold off on applying for new credit till one inquiry drops off.

Here’s where the consultation gets really interesting. I was able to then test different scenarios to see how that might potentially affect my score.

  • Scenario 1 – Pay $10,000 towards my debt. The simulator applied $7,629 to my rental property mortgage and the rest to my home loan. This took my score from 834 to 865.
  • Scenario 2 – Pay $20,000 towards my debt. The simulator applied $7,629 to my rental property mortgage and the rest to my home loan. This took my score from 834 to 869. Not much more of a change, and you can see the culprit – our rental property loan.
  • Scenario 3 – Aim for a 900 credit score. To achieve this score I would have to pay over $100k off my loans. Not something practical.

As you can see, the scenarios were helpful in determining the amount of payment that is needed to really move the needle on my score. This gives us just one more reason to start doing some work on paying down our real estate debt.

Have you ever completed a review like this with one of the bureaus? Did you know that your mortgage balances could have such a huge impact on your score?

Image source: Experian

Last Edited: January 8, 2014 @ 12:05 pmThe content of ptmoney.com is for general information purposes only and does not constitute professional advice. Visitors to ptmoney.com should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.
About Philip Taylor

Philip Taylor, aka "PT", is a CPA, financial writer, FinCon CEO, and husband and father of three. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or view the Philip Taylor+ Google profile.

Comments

  1. My question is: Since you already have your mortgage, what does your credit score matter? Aside from possibly needing to move

  2. Re: Making down payment up front to reduce the total loan, or applying down payment to a larger loan, isn’t it a moot point after you have a mortgage?  There are other factors to consider before anyone gets the idea that they are getting a hit to their credit score by responsibly saving for a 20% down payment.  Credit agencies work hard to make sure quick tricks like this don’t work to protect the integrity of their scores, so would you expect that a large one-time payment would make more than a modest improvement to one’s score?  Time since opening the loan/mortgage also plays a factor, along with number of on-time payments, etc.

  3. P.S. My initial question is on behalf of us who aren’t investing in real estate, and have no other borrowing needs.

  4. FrankKriticos says:

    ptmoney vantage score…. 550-990 very misleading