HELP!: No Credit History / Score...What do think of this Plan??

[Anonymous]

Hi All,
First let me say thanks to you all for such a great board and resource...

I've lived/worked in the US for a little over 5 yrs and never used my SSN for anything other than work. Up until 3 months ago I had no/zero/zilcho credit and history. After being a member of a Credit Union (Navy Federal) for approx 5 yrs, they granted me a 2K Visa (Nov '07) card. It's obvious someone manually reviewed my application and took my banking history into account with them.
This month I tried to sign up for scorewatch, and was rejected because there was no score to watch! I did pull my 3in1 report, and spotted spotted $30 charge from NCO FIN (reported in 2005). Promptly disputed it and 4 days later rec'd letter that it will be deleted. Tho now I think I kinda regret it as even though it was an error, it would've given me a 3 yr history lol.
So I've decided to create and rev up my plan, so that by the time I do have a score (April/May '08?) it'll be decent. I'm aiming for 700+...

The luckiest thing I have in my favor, is that I don't actually need credit lines. I've always been and still remain comfortable with using cash, debit card or checks - "If I don't have the money, I don't buy it". I almost despise credit but realize it is a necessary evil to get by. So I may as well try to build and manipulate it while I can, and hopefully one day when I'm ready to purchase some real estate (not for at least 2 yrs+) I'll have a stellar rating. My rationale is to try to apply for most apps now, so that when the history becomes available the hard inquiries won't hurt as much. Keep utilization to 10-20% (?), and just let the score grow for at least 6 months...

So far I have:
11/1/07 Visa unsecured $2K - 0 balance
1/8/08 Crown Jewellers reports $1500 - $30(?) balance
1/14/08 Approved for $1000 loan from NFCU - 12 mth term
this week will apply to CCCU for Mastercard hope to be approved at $1K (Rep said I would probably be approved for $500 or $1K).

NFCU denied me MC in December, so I was thinking of asking NFCU to reconsider my MC app...don't really need or want it, if CCCU approves...

Questions:
- What happens to Hard Inquiries once a score becomes calculated?
- What should my card util be at? Should I spike it every 6 or 9 months? Maybe go into April with over 50% balance on both cards, then pay them all down to less 10% for the next month in order for point spiking...Or should I keep everything at below 20%?
- At 6 month point, once I actually have a score, besides BofA (I don't want them), what major bank credit card should I be seeking? 1 more card would make a total of 3 - do I need to aim for anymore? - Is the Kay Jeweler trifecta suggested? Now or wait six months? a year? never?
- What, if anything, would you suggest I do once my score becomes available? I'm not so much concerned with quantity as I am with quality...But maybe I have the wrong idea?
- Anything else I should do now? Or in 6 mths? - Anyone care to take a stab at what they think my score will be when it finally appears in April lol?
Thanks all!

Message Edited by Stylin on 01-23-2008 11:07 PM

[andyaycw]

When i was first establishing my credit, my credit scores at the 6 month mark were in the upper 680-699 range. After I was able to get a full year of credit history, my scores were in the 720-740 range. I believe someone reported having a score of as high as 750 with a very short credit history as well.

[Anonymous]

whoa! Just saw how that ques looked and edited it for easier reading - thks for being patient enough to read thru my post. Sry 'bout that!

I would be stoked if my 1st score hits in the 680-699 range!! How many credit cards did you start with, and what were the limits/balances? Any other advice? Thanks!

[andyaycw]

I guess my memory must be pretty bad, because I thought I applied for my second credit card a month after my first, but my credit report says otherwise...

Shortly after I turned 18, I accidentally applied for a Paypal credit card (they have a very misleading application) and I was rejected (fortunately) due to no credit history. So that was one inquiry on me. I then applied for two Citibank student cards and was approved for both. I then tried for the Amex Blue for Students and was denied. So in total I had four inquiries.

My two Citibank student cards started out with limits of $1200 on what used to be my Platinum Select card (before I converted it) and $1000 on my Driver's Edge card.

My balances were usually very low and often hovered around 10%. I believe there was one point where my utilization on a single card reached as high as 25%, but never higher than 30% for sure.

When my overall credit history went from 11 months to 12 months, I saw a very nice increase in score. I do not recall exactly how large the increase was, but it was around 15-20 points.

[Anonymous]

Bumping - anyone else care to chime in also...

[haulingthescoreup]

Hi, Stylin --I think you're doing things exactly right. And it's entirely possible that your first scores will be up near 700, as long as everything is remaining clean. (Good work getting the bogus entry off!) My three young adult kids all had scores posting in the 680 - 700 range when they first began, which seems to be the default starting score if you don't have any baddies.

I've never heard of any advantage in "spiking" your card balances. Just remember that you have two separate entities to keep happy: the creditor and the FICO scoring model. The creditor is kept happy when you use your card a lot and pay it off without lates. (They'd like you to pay some finance charges as well, I'm sure, but they actually make money in transaction charges whenever you use the card, so that should keep them content.) Meanwhile, FICO scores are improved when low usage shows on the updates that your creditor makes to the CRA's every month, under 10% being great.

The way you balance this out without going crazy is to use your CC's, but check your online credit card account frequently, at least once a week, and pay down or off the balance at that time, without waiting for your statement to post. That way, the card is getting a lot of action, but your balance never gets high. About 5 days before your statement is due, start paying close attention to your balance and pay down as necessary to get it under 10%. Once it posts (when it shows up on your online account or is mailed to you), it has * probably * been reported to the credit bureaus, so be sure to then go ahead and pay it off, so that you don't incur finance charges.

You might consider shifting from using your debit card and checks to your Visa credit card. CC's actually have a bit more consumer protection, although I don't think that most debit cards are that problematic. (Yikes, here comes the debit vs credit card wars again...) I don't consider it being dependent on credit or being in debt if you're paying off your credit card balances every week or two. To me, that's just a smart way of managing your money and of gaining some credit scoring benefits at the same time.

I would keep the Crown jewelry card reporting a $0 balance most of the time. Once you buy something and it posts, go ahead and pay it off. Store cards can be toughies to use to report usage, because they are often erratic in their reporting. Keep paying the regular payment on your loan --you don't get that much benefit in terms of scores to rush paying off loans. If you do decide to pay it off early, make sure that there is at least 6 months (preferably a year) of steady on-time payments showing first.

And once you get the third card, try to still keep only one card showing a balance on your reports at any given time. That way, only half of your 4 open tradelines (3 CC's plus the loan) will be reporting a balance, and that will get you some points for showing restrained use of your credit.

As for which cards to have in the future, credit union cards are great. They're scored just as highly as those from commercial banks, and certainly their customer service is generally superior. I'm not sure about how Crown Jewelers reports --it seemed like one of the jewelry cards stopped reporting a while back? If so, you might want to replace it one day with a gas card or a store card. For either of these, get one with a for-real bank behind it, as in Citi or Chase, or a card that's handled in-house like Nordquist. There are some real vultures out there that service store cards. And I'm certainly not a big fan of Chase or Citi as well, but they sure as heck beat WFNNB or GEMB.

You're fortunate in a way to have a short history, because that means it's not cluttered up with a bunch of junk from the past that keeps rearing up and confusing matters. You don't have to have a lot of open credit lines --you just need to manage what you have. I think you'll have very competitive scores over time!

[Anonymous]

THANK U SOOOOOO MUCH for your in depth advise - truly appreciated! :-)
Silly me assumed having no credit = EXCELLENT lol. Obviously if I've never owed anyone any money then that means I'll pay you (CC) what I owe too!?! LOL! How wrong I was...

You might consider shifting from using your debit card and checks to your Visa credit card. CC's actually have a bit more consumer protection, although I don't think that most debit cards are that problematic. (Yikes, here comes the debit vs credit card wars again...) I don't consider it being dependent on credit or being in debt if you're paying off your credit card balances every week or two. To me, that's just a smart way of managing your money and of gaining some credit scoring benefits at the same time.

I completely agree and have been doing just that. My debit card has been good as NFCU offers transaction dispute, but the Visa wins out because it offers an extended warranty. That is what actually spurred me to apply for it in the 1st place. Since receiving it I put 95% of my purchases on it, and boy do I shop a lot lol!

The way you balance this out without going crazy is to use your CC's, but check your online credit card account frequently, at least once a week, and pay down or off the balance at that time, without waiting for your statement to post. That way, the card is getting a lot of action, but your balance never gets high. About 5 days before your statement is due, start paying close attention to your balance and pay down as necessary to get it under 10%. Once it posts (when it shows up on your online account or is mailed to you), it has * probably * been reported to the credit bureaus, so be sure to then go ahead and pay it off, so that you don't incur finance charges.

This is the area I've taken a few punches with, partially out of ignorance and partially because of receiving conflicting info from NFCU. I've never had a minimum payment due or incurred a finance charge, but I've always made sure that I've carried a balance at statement time. Tho December my reported balance was $700/35%, I had a limit of $2145 reported (EX), making it look like I had gone over my limit when I hadn't 9btw, how does that affect scoring?). Then January, the statement date was on a weekend they told me that whatever posted at the close of Saturday would be my reported balance ($300/15%), so Sunday night I made a $550 payment. Monday my statement shows a balance of -$250 ugh!! (I've been told it'll report as $0). Anyways, finally had a Sr Credit Employee call me and explain what, when and how they really report. For February, I'm going to make sure my balance reports at $180.

I would keep the Crown jewelry card reporting a $0 balance most of the time. Once you buy something and it posts, go ahead and pay it off. Store cards can be toughies to use to report usage, because they are often erratic in their reporting.

Yes, Crown is definitely one of those. My first payment (January) was $25 to get the account started. The balance is $45, so I will pay $25 in Feb, and March $20. They stop reporting after 6 months of inactivity, so I'm trying to stretch it out as much as I can until I have to buy another useless overpriced piece of junk jewelry.

Keep paying the regular payment on your loan --you don't get that much benefit in terms of scores to rush paying off loans. If you do decide to pay it off early, make sure that there is at least 6 months (preferably a year) of steady on-time payments showing first.

I HATE having this loan and really have to fight the urge to just pay all the money back lol, but I purposely fought for the loan b/c I know I need a 12 mth installment loan history on my report. I'm going to end up paying approx $120 for this, but the benefit will be priceless right?


I do not know much about store cards, so will have to start researching - Any suggestions? I was thinking of the Kay/Sterling Trifecta as it will give me 3 tradelines to report, but I don't think they are backed by real-banks. I don't drive, so gas is not an option...It seems I'll have to wait until I actually have a score, as most do not seem "no history" friendly. I'll also apply for a real bank credit card at that time. Just have to figure out which one.

I didn't know about only reporting a balance on half the TL's at any given time - thanks! Do you know the approx point loss when it's not done?

[haulingthescoreup]

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@Anonymous wrote:

. . . .Yes, Crown is definitely one of those. My first payment (January) was $25 to get the account started. The balance is $45, so I will pay $25 in Feb, and March $20. They stop reporting after 6 months of inactivity, so I'm trying to stretch it out as much as I can until I have to buy another useless overpriced piece of junk jewelry. . . .I do not know much about store cards, so will have to start researching - Any suggestions? I was thinking of the Kay/Sterling Trifecta as it will give me 3 tradelines to report, but I don't think they are backed by real-banks. I don't drive, so gas is not an option...It seems I'll have to wait until I actually have a score, as most do not seem "no history" friendly. I'll also apply for a real bank credit card at that time. Just have to figure out which one.

I didn't know about only reporting a balance on half the TL's at any given time - thanks! Do you know the approx point loss when it's not done?

---

Two of the three store cards in my siggy (Kohl's/ Chase and Home Depot/ Citi) get a lot of positive mention here in the forums, both for the cards themselves and their benefits and for their customer service. I'm also thinking of Border's/ Citi. For electronics junkies, Best Buy/ HSBC has lots of fans, and they typically give higher than usual CL's for a store card, since their goodies are so expensive. And then finally Nordstorm seems to have the biggest fan base overall. They have their own bank, and they are generous both on initial acceptance and on future CLI's. The nearest one to me is 300 miles away, so oh well.

If you want a store card for credit mix, it needs to be strictly a store card. If it's co-branded with Visa, MC, Discover, or AmEx, it counts as a major instead. So the orange Home Depot card is a store card; the white Home Depot MasterCard is not. The regular Nordstrom is a store card; the Nordstrom Visa is not. Same with Best Buy, and their MasterCard is a dog, so be sure that you're looking at the store card only.

With a store card, just get one from a store where you actually shop, so that it's worth the hassle, and check into the bank behind it (beware of GEMB and WFNNB!) Store card APR's are generally much higher than bank cards, so unless you can PIF your purchases monthly, or they have a good 0% rate on new purchases like Best Buy does, you'll want to keep your charges to a manageable level.

As for the number of points on how many accounts report, I can only offer what TU did to me over the last 30 days:

3 lines out of 8 reporting, 0 CC's, 0% util: 722
5 lines out of 8 reporting, 2 CC's, 5% util: 688 (dropped 34 points)
4 lines out of 8 reporting, 1 CC, 1% util: 705 (went back up 17 points)

Nothing else changed, other than the util as noted. I didn't mean for TU to show 0 revolving accounts reporting, but TU has been a mess recently about updating, and it's been hard to get things to show the way I want them to.

edit: whoops, hit "submit" too soon. I meant to say that TU is the most neurotic of the scores on this less-than-half thing. But for those with lots of cards, they will probably get dinged by EQ and EX also if they have balances on too many of them. Also, the severity of the scores swings on mine might be due to my credit score "bucket", which lumps me in with others with long-established credit. Since my peers apparently use their cards to take Biff and Muffy to the club for drinks, and hop down to Aruba for the long weekend, low CC usage is expected and higher usage gets a brisk smack-down.

Message Edited by haulingthescoreup on 01-27-2008 02:58 AM

[Anonymous]

Well, this week has been disappointing...After speaking with a credit Rep, I applied to Kay Jewelers and rec'd a card for $400 - I was aiming for at least $1K as they are known for generous limits. The good thing is that once I actually do have a score I can call them up and ask for an increase. I will wait for an increase, and then apply for affiliate cards from Jarods & JB. I'm going to go ahead and purchase something for approx $75, so I can create a 3 month history.
Then I got a call back from CCCU - DENIED!! Prior to applying I had consulted with a Rep, and explained my situation, she had told me that I would probably be approved at $500-$1K unsecured MC. Anyway, she called me and told me that even after going to bat for me, the Lending Suprv was only willing to offer a secured $1K card. I politely declined. I had thought about doing a 'recon' letter, but since the Rep already went to bat I've decided to let it go. I wasn't just applying for a card, but looking to build long term banking relationship, so I'll reward the bank or cu that works with me. Not to be deterred I know there are 9 ways to skin a cat! Just have to rework my plan a little...
I found a good site called http://www.creditcardtuneup.com/ which calculates the best reward card per spending habits. So I plan to research the cards, and go from there. If worse comes to worse, I'll just have to wait until I have an actual score before applying for more tradelines. I'm not so much worried about PIF or carrying an unmanageable balance, as I still make sure I have the cash before making any purchases. The difference is that now I just hold onto the money and pay the card down to 5% before the statement date.
Funniest thing is that since I've started on my journey and actually have reported credit, I keep getting BOGUS collection notices!! and they seem to be from the same company (NCO). Guess I'll be dv'ing a lot for the next while...lol. I swear if they send me anything else I'm gonna start looking into suing them for harassment or something.