credit union credit question - new here

[Anonymous]

Hello,

I'm new and have been reading the forums for the past 2 months and this is my first post/question. 

I'm rebuilding my credit with my husband. We have paid all of our credit cards off and are wanting to get our scores / credit high enough to buy a house and new car within 2 years. We have zero debt except for our student loans which are both deferred as we are both in school (work as well).

We have an appt next week with our credit union to get one of the following to help with building credit to get either a secured credit card vs secured personal line of credit. Is there one that is better for us? I called to get the credit card but the loan officer/employee suggested a personal line of credit instead...curious if you can help before we have our meeting. Thanks in advance.

Feb 2010 - EQ 518 / TU 530 / EX ?

Current - EQ 540 / TU 534 /EX 661

Goal - 650 all around by end of year

[Anonymous]

Hi Saver513, and welcome the myFICO Forums!

If you can give more detail about your credit profile our members would be able to give more focused and detailed responses. For example, you mention that you paid off all of your credit cards-- are these accounts open &  in good standing? Or, are these closed accounts in good standing, or charge-offs, etc...? If these accounts are open, and in good standing, I'd ask the reason why you're applying for more/new credit vs. building upon the credit that you already have, in light of your plans for a mortgage in the not too distant future.

[Anonymous]

Hi,

Thank you for your reply!

I neglected to mention my husband's scores are a bit higher than mine - currently EQ is 583 up from 549 last month

The following are my accounts:

HSBC - $300 limit - paid off - good standing

Capital One - $500 - restricted but paid off and showing on my credit report as open and pays as agreed - should I leave this open? I was late on a payment for 3 months because of medical leave and short funds and therefore was restricted and paid a gigantic amount - $1500 to get it to zero

My credit report says my negative factor is payment history - I have zero inquiries, amount of debt is very good, and amount of new credit says good, length of history says good.

My husband has the following accounts:

Capital One - $500 - open and paid down

Capital One - $2000 - paid completely off and restricted and showing up on my report and his as pays as agreed 

HSBC - $750 - paid completely off and closed - not sure if that was good to do

side note - My husband had super excellent credit (people told him they had never seen such a high fico score) and a lot of accounts but lost his job and couldn't afford, so 7 years ago - and before we were married, filed bankruptcy before the new bankruptcy laws took affect.

So, my plan was to pay on time and get good payment history for the next couple of years (and beyond) to get our scores higher. I thought having the secured cc or loc from the local cu would help with this. I was planning on doing $1000.

Thank you so much for the advice.

[Wolf3]

I would assume that a loan officer at the credit union would know how to make your credit report better, especially if you are going to apply for mortgage there.    A mixture of credit types (mortgage, installment, and revolving) gives you the best score.  Having more positives lines in installment and revolving would be good. 

Why not do both.   Deposit the $1k as security for the loan( say 18 months or so).   Take the loan proceeds and use for deposit for secured credit card.   Make the payments on the loan.   In 18 months, you get $1K back on loan. and hopefully $1K back from CC.  $2K toward down payment.   If you could afford more, maybe go bigger.    This could be done individually or jointly.

Something to consider.

[blacklotus]

I just got a Visa from my Credit Union.  When I log onto my account my CL shows as a "loan".

I would go for a CC instead of a consumer loan.  It would be much easier to manage and you wouldn't be paying any interest.  IMHO ONLY

EDIT:  If you decide on a credit card when the LO asks you how much $$$ you need ask for at least 2X what you are thinking.  You said you would be happy with 1K LOC- I'd ask for 4K.  IMHO

[haulingthescoreup]

A secured line of credit * should * report as revolving, rather than installment. With an installment loan, you borrow a certain amount and pay it off with regular payments. A line of credit lets you keep going to the well, borrowing, paying off, borrowing, paying off. That's why it's treated as revolving.

That being said, I would probably go with the CC instead. You can use the CC for only one type of purchase, such as making it your gas card. Just use if for something that you are budgeted for, and that you can easily pay off every month, no matter what. I think it might be easier to establish a good track record with a CC than a line of credit.

Alternatively, you could use the line of credit for something like paying your current rent or utilities, and then turn around and pay it off as well, same as with the CC.

Since you never know exactly how lenders will categorize lines of credit, I think you're safer with a CC, which you know will report as revolving. Just be absolutely sure (as the loan officer) if it will report to all three CRA's. You'll want this good history helping all three of your reports, not just one or two.

[haulingthescoreup]

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@blacklotus wrote:

I just got a Visa from my Credit Union.  When I log onto my account my CL shows as a "loan".

I would go for a CC instead of a consumer loan.  It would be much easier to manage and you wouldn't be paying any interest.  IMHO ONLY

EDIT:  If you decide on a credit card when the LO asks you how much $$$ you need ask for at least 2X what you are thinking.  You said you would be happy with 1K LOC- I'd ask for 4K.  IMHO

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blacklotus, this is when you log on where? Your CU website? It's true, CU's consider CC's as loan products, which they are. But it should be showing on your credit reports as "revolving."

[blacklotus]

I hope everyone is having a NICE WEEKEND!!!

I am wondering how my CU Visa is going to report...  I have 2.5K LOC.  I made a small charge after I activated my card for about $8.  I went to my CU website and saw that it posted and my due date was APR 1.  I paid the entire balance of $8 and charged some gas and snacks.  My new balance is showing but my due date is now MAY 1.  Any thoughts on this as I looked at the MyFico EQ updates and noticed it hasn't started reporting yet- only a hard inquiry update from my CU.

Thanks.

EDIT:  I am wondering if I pay the new charges if my due date will be moved to JUN 1???

[haulingthescoreup]

You'll see the new due date with your next statement. The due dates are linked to the statements.

What's the date of your most recent statement?

Of course, sometimes things are a bit screwy when an account first opens. It might take one billing cycle for everything to settle down and establish a regular pattern.

[blacklotus]

I haven't got my first statement yet and I pay all my bills online.  

But you are right I just activated the card this month- I have become very scrutinizing with due dates and I always pay early. I like to stay ahead of myself.