Smart, Not Perfect

My husband and I recently applied to refinance our mortgage.  We didn’t end up going through with it, because the estimated closing costs were too much for the deal to make sense.  As a result of the application, however, we received a letter from the lender (Navy Federal Credit Union) that listed our credit scores and the reasons that the scores were less than “perfect.”

Now, I was not unhappy with the scores.  The scores were fine.  It was the comments that got me wondering.  I hadn’t pulled our credit reports in a while, so I went ahead and did that so that I could see the actual information available and compare it to the comments.

First, there was “Time since most recent account opening is too short.”  Let’s see…newest account is the car loan we got last April, 15 months before the report was printed.  Hmmm….so the score is impacted if you get any new credit at all.

Second, we have “no recent revolving balances.” Really, that is a negative?  I’m not even sure how to improve this, unless I were to start carrying a balance on a credit card, and I’m not really interested in doing that.

Third, “too many accounts with balances.”  I looked over the credit report with a fine-toothed comb and discovered exactly two accounts with balances, one mortgage on each house that we own.  I guess that is too much in the eyes of the credit bureau, even though it seems perfectly reasonable to me.  We could pay off one of the mortgages, but it would take our entire emergency fund and again, I’m not interested in doing that.

And lastly, the one that really threw me, “length of time accounts have been established.”  My husband’s oldest account is 22 years old credit card account that was opened when he was still in college. Were we supposed to get credit cards when we were six?  Seriously?

So, we’ve got four things that we hypothetically could improve, two of which are out of our control and two of which wouldn’t make financial sense. Basically, there is no way to improve our credit scores.  I guess time will help a bit, because the newest account will be older, and the oldest account will be older, as well.  Besides that, we’ve got no control over it.

There are plenty of things that an individual can do to improve their credit scores, such as making all payments on time and lowering your balances.  However, there clearly reaches a point at which you have to balance making smart financial decisions with trying to reach that elusive perfect credit score.  As for me, I’ll stick to smart and not perfect.

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • affordanything

    Haha, I’ve also gotten notice that my credit score is negatively impacted because of “no recent revolving balances.” I assumed they meant that I have open credit cards with nothing charged to them (even charges that I would pay in full at the end of the month). I’ve heard that they like to see you have SOME activity on your account.

    Then again, they also told you that you had “too many accounts with balances.” So who knows what they’re thinking??

  • Kara

    I used to work for a loan company. When sending a denial letter, we had to pick a reason for the denial. We were told to choose everything that even remotely applied. I wouldn’t worry about it.

  • Emma

    I have just moved to the US so I have a brand new ssn, and ZERO credit history here. I can’t get diddly squat! I had excellent credit ratings in the UK but there is no way to transfer it over! Ideas? Bank won’t give me a credit card, not even capital one. I need something to allow be to build a score in the first place.

    • Greg Tobias

      Why do you want a “I’m in debt score”? Just become a member of a Credit Union get a Visa debit card and save yourself the hassle of the big Mega banks jacking up the rate on your credit card. Save your monry and pay cash for what you want. Check out Dave to see how to live debt free.