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Credit History: where to start. My story.

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Anonymous
Not applicable

Credit History: where to start. My story.

Hi and thanks to everybody!!! I've read many interested threads on this forum and just started to post messages myself)) Though my first thread was blocked by moderator) Anyway, thanks to everybody who gives advices and shares their experience here! This is a great forum and I would like to contribute too)). This thread is to help people who are new to the world of credit to start building a solid credit history. Please, post any comments and advices!!!    My way: If you don't have any credit history the best thing for the start would be to ask someone (parents or friends) to add you as an authorized user to one of their accounts (a good one with no baddies, decent credit line and good age). This should give you a revolving line, age of the history and 700+ FICO. Make sure it is reported to all the bureaus. Now you are ready to apply for your own card. REMEMBER: an AU gives you the score but any underwriter who reviews your application manually will see that it you are not the prime holder. I would suggest to apply for a Best Buy STORE card (not MC). They give an instant decision based on your score and will most likely approve you for at least 2000 instantly. Other cards I would suggest will be Key bank student card (will start you with 500, but they are Citi cards and give generous CLI every 6 months), Wells Fargo Student Card (will start with 500-1000) and maybe your local bank or CU. Make sure not to apply too much, cause inq will heart you really bad at this point. Now you have a nice limit store card, and 2 good cards with big banks. You can also get the card from your CU or something that is easy to get : Cap 1, Target etc, but I would't suggest those if you are approved for the cards mentioned above. Now stop applying at all. Even knowing they approved you till this point you probably will heart your credit more if you will try to get all you can at this point. 4 personal lines + 1 AU is enough. You will start receiving offers. Next time I would apply in about 6 months since your last inquiry. Now you are ready to go! You can apply for good prime cards like US Bank, BoA, Citi. For me it was the fastest way to develop good history within 6 months! Do not forget to call Key Bank and ask for a CLI. Yes, and the thing about US Bank. It seems like they are trying to match the limit they are giving to you with the limits you already have. So I would raise your existing highest CL before applying. By the way, when you receive your BB card you can request a CLI in most cases they will give you at least another 800. Good Luck!!! 

Message 1 of 18
17 REPLIES 17
tempusfugit123
Frequent Contributor

Re: Credit History: where to start. My story.

Unfortunately authorized user accounts no longer contribute to fico scoring. I received my first credit card with chase just for banking with them. Thats always a good way to start.
Message 2 of 18
Anonymous
Not applicable

Re: Credit History: where to start. My story.

They still do) Not as much as they used to though. The thing is that the line gives you a chance to start a credit file and have excellent score as soon as it gets reported. Best Buy does not look at your account, they approve you online based on your score. Yes, Chase is a good starter too.)
Message 3 of 18
upperleft
Valued Member

Re: Credit History: where to start. My story.

The analysis above reminds me of an important rule - "The plural of anecdote is not data." The OP's path is anecdotal, but YMMV - too many variables to come up with any recipe that's universal.

 

However - the OP's right about AUs. I have one on two of my best cards - he had NO credit whatsoever in March, and now has really good scores. FICO08 was originally going to do away with the AU benefit, but now it sounds like it'll just be tightened to prevent fraud ("selling" one's score, in effect). I'm a little concerned, as my AU's a relative as well as temporarily somewhat financially dependent on me, and the sooner he establishes strong credit on his own, the more independent he'll be. I don't want FICO08 to mess with that, but it sounds like if I change my address on those cards to his address, which we can do easily and legitimately, it'll help prove a relationship between us, and the AU benefit should remain intact.

 

My own credit story went from the yucky realm of the 400s to considerably better than that, but it was via a substantially different path than the OPs, and also not necessarily one that's a good "recipe" for anyone else. There's many roads to those big numbers, though - lots of ways to get there!

02/09 - TU 787 * EQ - 795 * EX-791
Message 4 of 18
jmbfl
Valued Contributor

Re: Credit History: where to start. My story.

1) FICO08 has very liitle penetration. Almost no one uses it.

 

2) AU's still count as TL's for FICO scoring purposes, and if the score is not FICO08 based (see 1) above) they count just the same as they always did.

Message 5 of 18
bamagirl1
Established Contributor

Re: Credit History: where to start. My story.

upperleft

how did u get there ? if you dont mind me asking

~01/2008 Ficos TU 571-EX 647-EQ 652~
~3/21/2009 Ficos TU 705 EX 702 EQ 692~
~9/9/09 Ficos TU 718 EQ 693 EX???
~06/25/12 Ficos TU 719 EQ 677 EX??
Message 6 of 18
upperleft
Valued Member

Re: Credit History: where to start. My story.

No, I don't mind. Just remember - I don't necessarily recommend this to anyone. We all have different paths to follow.

 

I've had cc debt greater than $50K, but never had a CO, no BK, no liens. For many years I lived with a friend as housemate/dogsitter at next to no expense. He had an extra room, and it saved him money in other expenses to have me there, just paying my own expenses, but no rent. Everything I had went toward debt.

 

Next - I incurred more debt. Or rather, I have six figures of student loans. I realized that my best chance of getting out of the pain long-term was to incur more pain in the short run. I still have >$90K of student loan debt, but it's at very low interest, and when I bought my house ~3 years ago, I was told that it was a positive, not a negative, because I'd demonstrated that I could handle it and had higher earning potential. I am making ~$70K more/year than I was in 2000, thanks to the advanced degrees.

 

Otherwise, I live within my needs, not my means. I did not buy the house I could "afford", but one that works for my son and myself. When I took my earned sabbatical from work this past summer, I didn't do what many of my coworkers do - cruises, expensive European or Asian vacations, buying a sports car. Instead, we took buses all over Mexico, staying in little Mexican hotels and eating street food. I don't have a TV, much less cable. We're considering getting a small TV, but only to watch DVDs and downloaded content from hulu, etc..

 

And finally - a relative's death late last year left me with enough to take off the last few dollars of CC debt. It'd have been gone by 2010 otherwise anyway, though. I'm 40; I've had cc debt since I was 16. My AMEX green has been with me since I was 21.

 

As for CCs - I've done whatever I needed to do to always pay at least minimums. I've sold my plasma, sold stuff on eBay, and did odd jobs. I had a Discover card closed on me ~15 years ago, and swore it would never happen again - and it hasn't. AMEX Blue tried once, and I called, begged, pleaded, and borrowed money to make a 5x/minimum payment that day. I've had interest raised, and have called to knock it down at any opportunity. I've been told that the fact that I've clawed through so much of the debt makes me an extremely good risk; if I was ever going to walk away from the debt, I'd have done it when my cc debt itself was way higher than my annual income.

 

I have 6 cards with CLs >$10K, one of which is over $45K. Right now, I'm using almost ALL of them, paying 2-3x/minimum one month, PIF the 2nd month. (Just want to make sure use is showing up on the records.) Other than one CRA (Equifax? Not sure - it's in my .sig), I've not pulled my scores since I bought the house.  The one card I don't use is WaMu - earlier this year they bumped my interest from 7.99% to 29.99%. I called to find out what was up - and the answer finally ended up being something like "because we can". The only changes to my record were all good.

 

I don't think I'd be out of cc debt without picking up the student loan debt. My student loan payoff date is two decades out, but now that the yucky debt is gone, I can hit it a lot harder. However, since I can earn more than its interest with long-term CDs, I'm not really bothered by the student loans. With all the other debt gone, they're mostly just noise.

02/09 - TU 787 * EQ - 795 * EX-791
Message 7 of 18
GFer
Valued Contributor

Re: Credit History: where to start. My story.

upperleft: that's an awesome journey you were on! You found creative ways to do what you had to do!

Kudos to YOU!



EQ 817, EX 815, TU 813 (Updated 1/5/18: TU 843

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Message 8 of 18
grneydangl
Frequent Contributor

Re: Credit History: where to start. My story.

"I don't think I'd be out of cc debt without picking up the student loan debt. My student loan payoff date is two decades out, but now that the yucky debt is gone, I can hit it a lot harder. However, since I can earn more than its interest with long-term CDs, I'm not really bothered by the student loans. With all the other debt gone, they're mostly just noise."

 

That's exactly what I'm going to do.  I racked up $5000 capital one when I was 20 (I'm 25) and just have not ever been able to pay it off (totally all my fault I realize this)  but I'm so tired of giving them my money, I would rather use my student loan to completely pay it off, especially since the interest rate is less than half of what the Capital One is.  Before I started grad school and my undergrad went into deferrment, I paid towards the student loan like crazy!  I actually don't even want to defer those loans and keep paying on them.  It'll be a HUGE relief to pay the Cap One with my student loan and be done with it.  Great job on your credit, it sounds like you have been super responsible!



Message 9 of 18
Anonymous
Not applicable

Re: Credit History: where to start. My story.

I started this thread not to teach people "the only way" to build credit, but to involve people to share their experience and give advice for beginners. This was my experience, if you can suggest a better way, please share it here
Message 10 of 18
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