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New Member
drdarshil16
Posts: 2
Registered: ‎09-27-2010
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Credit score of New Social Security Number

Hello everyone,

 

I have received a very new social security number a week ago, I already applied for student credit card and I also got approval for that.

 

My question was how much time it usually takes to build a good credit score??

 

I already have a student loan for 20000$ with the cosigner before I had a SSN and I affiliated my new SSN with that loan. I am also planning to payout the whole loan next month and get a new loan as I had a very high interest rate.

So paying a loan of 20000 $ and a new credit card affects the score?

 

Please solve my queries,

Thanking you

Moderator Emerita
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Epic Contributor
haulingthescoreup
Posts: 28,098
Registered: ‎04-01-2007
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Re: Credit score of New Social Security Number

Hi, welcome to the forums!

 

If you are starting fresh, as you are, with no negatives, most people find that after a year of having revolving credit and prompt payments, their scores are in the low 700's.

 

The new CC will help your score by adding revolving credit, which is riskier than installment as thus carries more weight. The SL will help your credit mix, as it is installment. I don't think that you'll have much effect on your scores by redoing your loan, and good financial sense is more important than scoring anyway.

 

After your new CC has reported for six months, consider opening a second credit card, and letting that add to your total credit profile.

 

Twelve months of clean credit reporting by one card and the loan, and another 6 months on a second card, should get you into the 700's, maybe the 720 range. That seems to be the experience of most new credit consumers, anyway.

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
New Member
drdarshil16
Posts: 2
Registered: ‎09-27-2010
0

Re: Credit score of New Social Security Number

Thank you Emerita for your quick reply.

 

As I said that my student loan was at very high interest rate, my plan was to repay that whole loan-taking money from my brother and if that helps in building some credit score, I might apply for the new loan with low interest rate. As I will also be able to pay back to my brother and I might end up with good low interest rate- and that might be a good financial planning as you said.

 

My thinking was paying this 20000 $ loan together in one installment will help to boost the credit score, as CC and installments only helps on a longer duration.

Moderator Emerita
Community Leader
Epic Contributor
haulingthescoreup
Posts: 28,098
Registered: ‎04-01-2007
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Re: Credit score of New Social Security Number

A quick repayment won't help that much, because the utilization (amount owed divided by credit limit) on installment loans isn't a big factor in your scores. I would say that deciding to repay and/ or get a new loan should be driven by financial considerations rather than scoring.

 

We think that an open installment loan helps your score more than a closed one (emphasis on "we think"), but having either on your reports does help. I would think that the quick repayment would certainly help you in the future for lender decisions, which is different from score impact.

 

On the other hand, having a series of timely payments, month after month, does help your score. If you only have the CC open, that means that you only have one TL (tradeline) reporting. The CC plus a loan would be two TL's, thus building more history.

 

One thing that many do, if they are able, is to pay off most of the loan early and drag out the final repayments over time, between six and twelve months. This provides the series of timely repayments, but if the loan is simple interest, you won't have to pay nearly as much in interest, as most of your payments will be principal. An alternative to this is to pay off the current loan and then borrow a much smaller amount, at a lower interest rate, and pay that off over 6-12 months. Again, either of these tactics will cost you some money in the form of interest, but they will be advantageous to your scores.

 

But certainly if you can pay off most or all of the high-interest loan, that would be the smart thing to do, whatever you decide to do about the repayment schedule and method.

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Senior Contributor
O6
Posts: 3,626
Registered: ‎10-13-2009
0

Re: Credit score of New Social Security Number


haulingthescoreup wrote:

A quick repayment won't help that much, because the utilization (amount owed divided by credit limit) on installment loans isn't a big factor in your scores. I would say that deciding to repay and/ or get a new loan should be driven by financial considerations rather than scoring.

 

We think that an open installment loan helps your score more than a closed one (emphasis on "we think"), but having either on your reports does help. I would think that the quick repayment would certainly help you in the future for lender decisions, which is different from score impact.

 

On the other hand, having a series of timely payments, month after month, does help your score. If you only have the CC open, that means that you only have one TL (tradeline) reporting. The CC plus a loan would be two TL's, thus building more history.

 

One thing that many do, if they are able, is to pay off most of the loan early and drag out the final repayments over time, between six and twelve months. This provides the series of timely repayments, but if the loan is simple interest, you won't have to pay nearly as much in interest, as most of your payments will be principal. An alternative to this is to pay off the current loan and then borrow a much smaller amount, at a lower interest rate, and pay that off over 6-12 months. Again, either of these tactics will cost you some money in the form of interest, but they will be advantageous to your scores.

 

But certainly if you can pay off most or all of the high-interest loan, that would be the smart thing to do, whatever you decide to do about the repayment schedule and method.


+1

 

Listen to Ms. Emerita! 

IAALBNYL
Senior Contributor
O6
Posts: 3,626
Registered: ‎10-13-2009
0

Re: Credit score of New Social Security Number


drdarshil16 wrote:

Thank you Emerita for your quick reply.

 

As I said that my student loan was at very high interest rate, my plan was to repay that whole loan-taking money from my brother and if that helps in building some credit score, I might apply for the new loan with low interest rate. As I will also be able to pay back to my brother and I might end up with good low interest rate- and that might be a good financial planning as you said.

 

My thinking was paying this 20000 $ loan together in one installment will help to boost the credit score, as CC and installments only helps on a longer duration.


In a few weeks I will let you know if paying off an installment loan adds or subtracts points from your credit score.

IAALBNYL
Moderator Emerita
Community Leader
Epic Contributor
haulingthescoreup
Posts: 28,098
Registered: ‎04-01-2007
0

Re: Credit score of New Social Security Number

 


O6 wrote:

 

Listen to Ms. Emerita! 


 

phlbbbbt :smileytongue:

 

I can't help it. I'm just retired from moderating, that's all! :smileyvery-happy:

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Senior Contributor
O6
Posts: 3,626
Registered: ‎10-13-2009
0

Re: Credit score of New Social Security Number


haulingthescoreup wrote:

 


O6 wrote:

 

Listen to Ms. Emerita! 


 

phlbbbbt :smileytongue:

 

I can't help it. I'm just retired from moderating, that's all! :smileyvery-happy:


By the way, I paid off NFCU a couple of weeks ago.  As soon as they report it, I'll do an after FICO to see what happened.

 

Regards to all the Emerita household!  :smileywink:

IAALBNYL

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