I'm hoping to purchase my first home next year, but I'm having trouble deciding on the best way to raise my credit score. Here is a summary of my current situation:
- Credit Score Estimates (via CreditKarma):
- TransUnion: 736
- VantageScore: 770
- Number of Credit Lines:
- 3 credit cards
- Average Age of Credit Lines: 10 months
- Total Credit Card Limits: $6500
- Average Credit Card Utilization: 7%
- Percent of Payments Made On-Time: 100%
I'm young (21 years old) so naturally my credit history is nascent, but I think I've done a decent job so far maintaining my credit score. However, I would like to buy a simple condo next year ($75K-$100K) with about a 50% down payment on a mortgage. I'm hoping the large down payment will get me approved for the mortgage despite my thin credit history -- thus leaving me to focus more on how to bring down the interest rate.
I was thinking about applying for some more credit cards initially, but when my car broke down I realized that a car loan can also raise my credit score. The car I'm considering buying is about $6000, which I can easily afford to buy outright in cash thanks to a decent salary for my age ($50K/year). However, I'm afraid it may end up doing more harm than good given the short period of time before my intended application for a mortgage.
Should I still apply for a car loan, or would the increase in debt do more harm than the benefit of a year history of payments? Should I seek another "installment-type" credit line, or is the time period just too short to make any significant additions that would lower the interest rate of a mortgage?