General Credit Topics

[Fresh101]

Hello Everyone, I am not sure if I am posting in the right place. I have been fixing my credit for about one year and 2 months and got my first secured card of $450 CapOne on February of last year, then 3 months after that I got a second secured card of $300 WellsFargo. I have a car loan for 2 years and 8 months, never late and never missed payment. My score have reached over 110 points within 1 year with secured card and paying car loan on time.

CONCERN: I opened a bank account on Monday and was offered a credit card, and I got tempted to apply as i didn't have any unsecured card. It turned out that I got approved for a $2500 credit line. It feels that it was great news for emergency and etc but i was going to start the process of buying my first home. What do you guys think about my situation?

I was also thinking that when I receive my income tax, to increase my secured cards and payoff my car loan of $6800.

Please inform me of what should I expect and if now because of the new credit card i need to hold on buying a home?

[Fresh101]

Bump

[guiness56]

It is recommended not to apply for new credit within 6 months of applying for a mortgage.   The inquiry and new TL reporting will drop your score.

As for the installment loan, if it is your only one, I would not pay it off because it adds to your credit mix.

Installment loans play a very small factor in your score.  If you paid it off you would not see a very large increase.

[bettercreditguy1]

Added, let the installment loan pay out a while. It will show your payment history over several months/yrs. This history is important as it shows your long term commitment. CC balances can be fudged, ie, min payment here, max next month, etc.

[Fresh101]

Thanks for all your input, everyone.

What do you guys think about increasing my secured cards with more deposit or should I wait a few more months to see if they graduate to unsecured and might be increased? Thanks in advance

[Robertwd82]

I would save your tax return for the down payment on the house.  

Raising your secured card credit limits will probably not do much to raise your scores or chances of getting a loan.  Having a good amount of money in your account will help though.

[Fresh101]

Thanks everyone

[CreditReform]

First off - adding any new credit card will immediately lower your credit. All that hard work to build up your score will take an immediate hit. Could be in the range of 15-20 points.

After you get by that take a nice hard look at the interest rate of that flashy new CC. That interest rate FICO wants you to pay. If you pay off your CC in full it is actually worse than if you leave a balance in their eyes. You ready to pay an interest rate to have your CC report favorable?

I say, save up your money and pay for your toys in full.

[Fresh101]

Hello CreditReform, thanks for the reply.

I don't mind paying the interest rate as the whole purpose is for it to work in a positive way towards my score, maybe like you said not at the beginning but maybe when account start aging with a good history.

Now my question is, because my score will take a dive, when will I be expecting the 15-20 points back that I just lost? Why you recommend pay the toys in full? Don't we need to make use of the CC, in order to increase score and show good history? Thanks in advance

[Fresh101]

Guys I have a new question. I used up 92% of my total CL today, to show some type of activity. I do have the money to pay all of it off but would like to hear whats my best action and how much to pay? Ex. Pay a portion, or what?

CL is $2,000 used $1,843
Thanks again