New Member Seeking Advice - Full Profile Included

[Anonymous]

Greetings, all.

I found this site a few months ago after doing a Google search about credit. And, boy, I am so glad I did. The info I have learned from these forums is invaluable, as well as mind-blowing. Credit really is a subject unto itself with the most counter-intuitive rules of anything I have ever come across. I am now of the opinion that one of the silliest things a person can do is avoid credit or ignore building it. 

Anyway, on to my inquiry.

Last year my parents helped me buy a modest, 1000 sq. ft. starter home, which we purchased for 15,000 through the Dept. of Housing and Urban Development, with the task of fixing it up and updating it being on me. I began finiancing renovation work by using my credit card, and when I was reaching my limit I tried to increase it. I was denied, of course, and on the denial letter I saw that my credit score had fallen greatly since I opened the card. Since that opportunity was tapped out, I opened a second card to continue doing some work while also investigating how credit works.

Fast forward to now, and since learning about how credit works I know that getting a personal loan is a MUCH better way for me to go about doing this. Not only will it prevent my credit score from suffering from high revolving util, it may even help boost my score by increasing the tradeline mix. I suspended rennovation work while paying down my cards. I am now at the pont where I have a 700+ FICO score with all three beruas again.

What I'd like is advice on my current chances of being apporved for the loan I want. I know that people on here often ask for advice without giving any details, so I've tried to provide all the details I can.

PROFILE

Tradelines:

* Federal Student Loan   4 years open   7,500 limit    6,500 bal

* BOA CashAmeriCard   2 years open   3,000 limt    2,000 bal

* Discover IT card           6 mo. open      2,000 limit    0 bal

Scores:

* EX   701

* EQ   708

* TU   708

Recent INQ:

* EX   1

* EQ   2

* TU   3

Detriments:

* None - all accounts in good standing, no lates

Yearly Income:

* 20,000

Possible Loan Lenders:

* USAA (Ialready use them for car and home insurance)

* Discover

* Prosper

* Lending Club

* One of the local credit unions

Possible Collateral for Secured Loans:

* House: tax val is 15,000, but it's in the middle of renovation, so it's currently worth less. I REALLY don't want to put up my house anyway.

* 2005 Ford Focus: It's paid in full, but it already has over 100,000 miles on it, so I don't know if it's worth anything

Loan being seeked:

* 10,000, repayed over no less than 5 years


Any and all advice is much appreciated.

Thanks

[CreditDunce]

I am sure you can find a personal loan but the question is at what interest rate.

Have you tried Prosper/Lending clubs pre-qual yet?  Out of curiosity, I tried one of them via CreditKarma a few months ago.  It was just a SP for the pre-approval.  It should give you an idea of what they would be willing to lend to you.  If you aren't happy with their rates, you can try USAA or a local CU like you said.   You will not know what they are willing to give you until you apply.  A HP or two will not hurt that much.

By the way, if you are using Home Depot or Lowes, I would think about applying for one of their credit cards /installment loan.  Lowes offers 5% off or special financing (generally 0% over X months).  Home Depot also offers special financing on their credit card.  I believe they also offer 84 month (Home Project) installment loans at ~8%.  I don't know what their qualifications are.  But the CC's aren't known to be that difficult to get and give decent limits.  Read the terms very carefully, I am fairly sure all of the special financing offers are deferred interest if not paid in full by end of offer.

You could also think about applying for the Chase Freedom assuming the rotating category for the 2nd quarter is Home Improvement next year (this year it was Lowes).  Of course, you already have the Discover IT which normally gives 5% off for all home improvement stores in the 2nd quarter.  Or you can get 10% off at home depot this quarter by ordering online via DiscoverDeals.  Hopefully, you are still in the 0% intro rate.  I know it doesn't help if you are hiring contractors.

Good luck with your home project

[NRB525]

Congratulations on getting started with a house!

Regarding seeking another loan, is this just to consolidate what you already have on the two cards?

At $20k annual income, that seems a stretch to go for 50% loan to income on a new personal loan. I'd suggest talking with a local CU. The interest rates on personal loans with your income level are going to be scary.

Also, maybe slow down the renovations? Get the house to a stable, livable state and then slowly work toward improvements? Since these costs are going into the house itself, you might be best advised to go with some sort of home equity loan from the CU. I'm not sure how that works on such a low amount, but at least with the house as security you will get a lower interest rate.

Good luck!

Edit: Also, what is your expectation for house value after making these renovations? How much of the renovation money is levered to increase the house value more than the cost of those renovations? Very important to set a realistic expectation given the low starting value of the house.

[Berk]

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@NRB525 wrote:

Congratulations on getting started with a house!

Regarding seeking another loan, is this just to consolidate what you already have on the two cards?

At $20k annual income, that seems a stretch to go for 50% loan to income on a new personal loan. I'd suggest talking with a local CU. The interest rates on personal loans with your income level are going to be scary.

Also, maybe slow down the renovations? Get the house to a stable, livable state and then slowly work toward improvements? Since these costs are going into the house itself, you might be best advised to go with some sort of home equity loan from the CU. I'm not sure how that works on such a low amount, but at least with the house as security you will get a lower interest rate.

Good luck!

Edit: Also, what is your expectation for house value after making these renovations? How much of the renovation money is levered to increase the house value more than the cost of those renovations? Very important to set a realistic expectation given the low starting value of the house.

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I completely agree with NRB525 - get your house to a livable condition and then slowly renovate as you have the money. 20K in yearly income just doesn't give you any wiggle room to afford much beyond paying down your debt, insurance, car loan, etc. Also, you would probably have much better luck with a credit union than with Prosper or Lending Club. I have a 36 month prosper loan of 15K. My monthly payments are just under $500.00 with an interest rate of 7% but I make 80K+ a year. That will give you some idea of where you would fall with them. I doubt you would get any investors to fund a 10K loan for you through Prosper or Lending Club.

[Anonymous]

Whaut is the "shopping card trick". I don't even think I can get approved for department store cards.... I have a low 500 that Lexington law is working hard to dispute things from my credit reports which they have already got 6 off so far but the ones they got off didn't do much to my score plus the inquiries that I'm sending letters prepared by Lexington law to send to the companies with the inquiries are asking them to remove them. But does anyone know how what credit card, auto loan, loan and/or service that offer things to jump start increasing my credit faster would be helpful. I've always had a high 700 score up until two years ago due to being in the hospital for medical reasons and the majority of my debit is from my business that I'm a guarantor on. Any help and suggestionsare appreciated. Thanks!

[coldnmn]

Shopping cart trick search the board link below.

http://ficoforums.myfico.com/t5/forums/searchpage/tab/message?location=forum-board%3AApp_Approvals&q...