From no credit to perfect score in 1 year

[Anonymous]

Hi

I'm not really in need of credit, I used debit cards all my life, but this country just doesn't accept people like me - anywhere you go they check for your credit history, and if you have none - they treat you as a junk.

So, I'm currently struggling with a problem of maximizing the credit score within a reasonable period of time from the state of having no credit history at all.

I've already opened one secured credit card just to start with, in the meanwhile I'm trying to understand how else can I improve my credit history in the long term.

For example, I don't mind opening ten more secured credit cards now (which will drop my score down to the abyss), if in a year I have a boost for my score due to higher average credit account age.

I'm planning to use my secure credit card daily in a way that I'll pay the balance as soon as every transaction gets settled (practically every day) to keep the utilization ratio below 10%. As far as I understand this should help a lot.

Can someone suggest how else can I speed up the establishment of the credit history with perfect score? Should I take a lease for a car? Apply for more credit cards? Take a loan? All of it?

Thank you,

Alex

[Anonymous]

Hi and welcome to the forum.  There's nothing you can do to "speed up" the establishment of credit history.  It's impossible to get a "perfect" score in 1 year.  In fact, it's almost impossible to get it in 10 years.  There was a thread on here about a year ago asking if anyone under the age of 30 had a perfect score and if anyone replied yes they were extreme outliers.

There's no need to have 10 credit cards.  3 is the magic number that will allow you to achieve optimal utilization points.  What you want to do is allow 2 of the 3 cards to report a $0 balance while allowing a small balance to report on the final card.  There's no need to make a ton of payments per month, as utilization only matters at the time your balance is reported.  Your FICO score doesn't "see" your utilization from day to day; You can have a $500 balance on a $500 limit card and as long as you pay it down to say $5-$10 in time for that low balance to report, your score will be maximized with respect to utilization.

No need to apply for a lease or a loan if you don't need it.  What you can do is employ the SSL technique (search for Share Secure Loan) which will add maybe 25-30 points to your score instantly and help for about 5 years. 

The above is all you have to do for now.  Then, TIME is the only factor which you obviously can't speed up or change.

If you do the above and always make on time payments, keep your utilization low and don't apply for any new credit (after getting your 3 cards) within 1 year you can have FICO scores in the 740-760 range.  Within another year it's possible to be near 800.  After that, it's really just a waiting game as your AAoA will be around 2 years and you're looking for 8+ years AAoA in order to maximize "age of accounts" and you want your oldest account to be 10+ years old.  Obviously, there's nothing you can do about those factors aside wait it out.

[Anonymous]

Here's two videos I found that are really good. The first one is how to help your score short term, the second is long term. 

https://youtu.be/Z1ZIXS88V0o

https://youtu.be/-nrIxCtoZd0

[Anonymous]

I went from 0 - 700+ in 6 months with nothing but the Disco secured.

[SouthJamaica]

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@Anonymous wrote:

Hi

I'm not really in need of credit, I used debit cards all my life, but this country just doesn't accept people like me - anywhere you go they check for your credit history, and if you have none - they treat you as a junk.

So, I'm currently struggling with a problem of maximizing the credit score within a reasonable period of time from the state of having no credit history at all.

I've already opened one secured credit card just to start with, in the meanwhile I'm trying to understand how else can I improve my credit history in the long term.

For example, I don't mind opening ten more secured credit cards now (which will drop my score down to the abyss), if in a year I have a boost for my score due to higher average credit account age.

I'm planning to use my secure credit card daily in a way that I'll pay the balance as soon as every transaction gets settled (practically every day) to keep the utilization ratio below 10%. As far as I understand this should help a lot.

Can someone suggest how else can I speed up the establishment of the credit history with perfect score? Should I take a lease for a car? Apply for more credit cards? Take a loan? All of it?

Thank you,

Alex

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The short answer is... you can't. Because some of the components of the score are age-related. FICO likes the passage of time.

It rewards age of accounts and penalizes new accounts, and recent inquiries.

The best things you can do towards getting a perfect score, which will probably take you 3 years or so if all goes well, are the following:

1. For now do nothing with credit cards except keep paying your card down to zero, and increasing the limit with an additional deposit.

2  Join Alliant Credit Union, take out a $500+ savings account, take out a $500 share secured loan secured by the savings account with a 48 or 60 month term, decline

or cancel autopay, transfer $477 from the savings account towards the loan balance bringing the balance down to $23. Pay that off slowly over the balance of the

term.

3. Wait until a FICO score appears for you, which should be about 6 months from when you opened the secured card.

4. At that time get 2 unsecured cards, and from that point on maintain your cards as follows: let 1 report a small balance, and the other 2 report a zero balance each month.

Don't apply for anything anywhere. Live your life just like you have been living it.

If nothing else happens you'll be at 850 as fast as you can get there without becoming a debt slave.

[Anonymous]

Is there a reason you say to open $500 secured and then payoff $477? is that some sort of "magic number"? Would I open the card and wait for it to report before paying off the $477? What would monthly payment on $23 be? Isn't there a monthly minimum payment that would ultimately pay it off before 6 months?

[Anonymous]

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@Anonymous wrote:

Is there a reason you say to open $500 secured and then payoff $477? is that some sort of "magic number"? Would I open the card and wait for it to report before paying off the $477? What would monthly payment on $23 be? Isn't there a monthly minimum payment that would ultimately pay it off before 6 months?

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Read the first 2-3 posts of this thread.  It will answer all of your questions about the Share Secure Loan technique:

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secure-technique/m-p/4506756

[Anonymous]

Thanks for Your links, It is exactly what I've been looking for

[Anonymous]

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@Anonymous wrote:

I went from 0 - 700+ in 6 months with nothing but the Disco secured.

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That would be a good score but a very weak and thin file. It's not just the score.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

I went from 0 - 700+ in 6 months with nothing but the Disco secured.

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That would be a good score but a very weak and thin file. It's not just the score.

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That's part of the point I was trying to make