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New Member
Funktionull
Posts: 9
Registered: ‎10-16-2012
0

Blank slate. Where to start?

[ Edited ]

I am finally in a position where I feel comfortable and secure enough to work on fixing the fact that I have no credit profile whatsoever. Have been strictly cash and carry for over a decade. If I needed or wanted something and didn't have cash I simply went without and avoided any form of debt like it was infected with ebola.

 

Everything I ever did wrong has aged off and all 3 reports are showing absolutely nothing ( except for a "paid as agrees" personal loan that was paid on time and in full from 2001 which is older than all the negative stuff that has aged off, have no idea why it's still showing ).

 

I have done a great deal of research and it seems that a pair of secured cards would be the most efficient way to get this started.

 

I was thinking something like $500 on each ( total of $1000 ) which I would use essentially as cash for all the things I am currently paying for with my debit card and then pay them both in full before the due date each month and continue doing this until they allow me to graduate to unsecured.

 

Then start the process of edging up until I can realistically get other accounts opened without wasting a hard pull on a guaranteed decline.

 

Am I on the right track?

 

Past the above I am really sort of lost still.

 

How much would I want to utilize those two cards, 10%? 50%?. Would I want to keep them roughly the same? Is there some method of maximizing your gains by keeping utilization at X while doing Y? Are there diminishing returns (in that subsequent cards reporting wont help much) on a 2nd or 3rd secured card?

 

Having a file that is the thinnest of the thin, I know I can't get approved for any form of unsecured debt so secured would really be the only option for now, correct?

 

And then of course, Where should I look for good starter secured cards? I assume I would want them to be different providers so the reporting didn't overlap?

 

Any kind of help or reassurance would be so greatly appreciated. Excited to get this ball rolling.

 

 

Edit : Friend from work mentioned that getting some form of loan via a co-signer would expedite the process but the only people who have better credit than I do who would agree to do it, are people I wouldn't want getting hamstrung by my responsibility if I were to get ran over at work or choke on a hot wing.

 

Edit : And what happens if I get declined for a secured card? Is that even a possibility with a clean yet thin file or would someone need negatives in order to worry about being declined?

 

 

Moderator Emeritus
llecs
Posts: 32,880
Registered: ‎08-04-2007
0

Re: Blank slate. Where to start?

[ Edited ]

Welcome to the forums!

I'd suggest reading the following:

Common Abbreviations

Credit Scoring 101 - great for knowing what is in your credit score and to see how your score is impacted.

What Steps Do I Take - great for learning the repair process.

and Example letters - PFDs, GWs, DVs, etc.

 

You wouldn't want that old loan to delete. The history helps.

 

You're on the right track. Secured CCs are a great way to start. The CLs don't matter per FICO scoring. It's how you use them that counts. For max effect on your FICO, let all but one report $0 and let the other report a balance of under 9% of the CL. You can certainly use 50% or more, just pay it down before the statement cuts.

 

Right. Law of diminishing returns comes into play. I added my first CC and saw a large gain. Added the second and the gain was less. And added the third and it was also low. When I added CCs 4-25 (or wherever it is at now), I lost an average of 20-25 pts off FICO due to the new credit, AAoA impact, etc.

 

I'd aim for secured on the first couple. Let it age for a year or so and you'll find it is easier to get an unsecured CC at a much higher limit.

 

Yes, it's possible to get turned down for a secured CC. Aim for your local bank or CU and it'll be easier. Avoid the big banks like BofA, US Bank, etc., when starting.

 

ETA...you can skip the cosigner for the loan. There are secured loans out there. IMO, skip loans all together. It doesn't weigh into your mix like CCs do. You can easily hit into the 800s without one. 

 

 

Moderator
Shogun
Posts: 12,952
Registered: ‎04-15-2011
0

Re: Blank slate. Where to start?

+1   Start with secured cards.   Like llecs said, if you belong to a CU or local bank, I would check there first.  When you get your secured card, treat it like a bill,  put $25 or more, whatever you can afford into the card each payday to build your CL.  This will help you get better CLs in the future.  And just use it carefully and garden it.  Good Luck!


Starting Score: 504

July 2013 score: EQ FICO 819, TU08 778, EX "806 lender pull 07/26/2013
Goal Score: All Scores 760+, Newest goal 800+

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Current scores after adding $81K in CLs and 2 new cars since July 2013
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Contributor
rkb84
Posts: 80
Registered: ‎09-28-2012
0

Re: Blank slate. Where to start?

I am doing similar with a secured card to build up to better cards, about how long of perfect patment history until they actually give me my money back and unsecure it? It is the Capital One Mastercard.

Established Contributor
jamie123
Posts: 782
Registered: ‎03-22-2012
0

Re: Blank slate. Where to start?

There are currently only 2 secured credit cards available that have a good track record of graduating to an unsecured card. They are Bank of America and Wells Fargo. Capital One is also a good source used by many on this forum for secured cards but they NEVER graduate to unsecured.

 

If you truly don't have any negatives on your report I would apply for the BoA card first. They are best at graduating cards after you demonstrate 1 year of good credit behavior. At that point you will have an unsecured credit card with a prime bank that will grow with you for life. BoA is terrible with approval communication on these cards. Watch your checking account for them to withdraw your deposit 3 to 4 days after you apply, that means you have been approved. Also an important thing to keep in mind, every time you increase your deposit/credit limit it will be another HP.

 

Then do the same for Wells Fargo. Wells Fargo doesn't have a great record at unsecuring their card. For some people they unsecure after a year, others take considerably longer. (2 years or more) Wells Fargo is another prime bank.

 

After those 2 cards are 3 months old, apply for a Walmart card. They are backed by GE and they are really good with CLIs. You will also get a free TU08 FICO score for free every month after signing up for electronic bill pay.

 

After these three cards are 1 year old you will be golden. Don't apply for any more store cards except fot the Walmart. Apply for cards from these prime banks:

 

AMEX

CitiBank

Chase

Bank of America

Wells Fargo

Discover

 

Always pay in full and pay on time.

 

Good luck!



Starting Score: EQ 658 6/18/12
Current Score: EQ 683 8/24/14 - EX 687 7/21/14 - TU 682 7/21/14
Goal Score: EQ 720+
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New Member
Funktionull
Posts: 9
Registered: ‎10-16-2012
0

Re: Blank slate. Where to start?

Well I applied for the BofA Card this evening. Will be a few days before I know anything. Going to wait on WF till I know how BofA worked out. Baby steps.

 

If I were to be declined, what would the next logical step be? Try another secured? Who? Just trying to get all the ducks in a row and I am eternally pessimistic so plan Bs usually end up being my plan As anyway.

 

I wanted to take a second to derail my own thread and ask a little about what a new car loan would look like for me in say...8 to 12 months from now If I do everything right. What I have right now is paid for and runs so I don't have to get anything else. I just would like to for once have something I can drive anywhere without fear of having to walk back.

 

I really don't want anything at above 5%. Any higher and I'll just keep driving my deathtrap to and fro. What would two cards ( assuming I get either or both ) start showing when they are old enough to calculate a score?

 

Friend at work ( same one, former finance manager for Toyota Southeast ) said I would need to be around 625 to be able to walk in and reasonably expect to get approved at all even with a rate north of 10%. Also said I wouldn't start closing in on sub 5% rates until 680 and above. Dunno. Sounds about right i guess.

 

I just want to establish obtainable and realistic goals so I can keep myself from getting discouraged.

 

By say next year at this time I'll have been at my job longer, have a 20% + down payment saved up and will have ( yet to be confirmed ) two CC's that have begun calculating scores and such. I do better at achieving things when I can take a mental snapshot and know that I can do that if I do what i am suppose to do.

 

 

Thanks so far for all the help. Love this place already.

Moderator
Shogun
Posts: 12,952
Registered: ‎04-15-2011
0

Re: Blank slate. Where to start?

Good luck on the BOA card.  Sounds like you're on the right track.  Once you get it, and maybe one more.  Garden them for a year, get an unsecured GECRB card that will grow and you will be generating a decent score.


Starting Score: 504

July 2013 score: EQ FICO 819, TU08 778, EX "806 lender pull 07/26/2013
Goal Score: All Scores 760+, Newest goal 800+

Take the myFICO Fitness Challenge

Current scores after adding $81K in CLs and 2 new cars since July 2013
EQ:809 TU 777 EX 790 Now it's just garden time!
Established Contributor
jamie123
Posts: 782
Registered: ‎03-22-2012
0

Re: Blank slate. Where to start?


Funktionull wrote:

Well I applied for the BofA Card this evening. Will be a few days before I know anything. Going to wait on WF till I know how BofA worked out. You will know if you have been approved for this card if they withdraw the money from your checking account. It will actually take 2 to 3 weeks from your application date before you have this card in hand. I don't know why it is but BoA is really slow at getting these cards out. Baby steps.

 

If I were to be declined, what would the next logical step be?  Try another secured? Who? Capital One would be the next go to card, but I think you have a really good chance at BoA and Wells Fargo. I wouldn't worry too much about it. Just trying to get all the ducks in a row and I am eternally pessimistic so plan Bs usually end up being my plan As anyway.

 

I wanted to take a second to derail my own thread and ask a little about what a new car loan would look like for me in say...8 to 12 months from now If I do everything right. What I have right now is paid for and runs so I don't have to get anything else. I just would like to for once have something I can drive anywhere without fear of having to walk back.

 

I really don't want anything at above 5%. Any higher and I'll just keep driving my deathtrap to and fro. What would two cards ( assuming I get either or both ) start showing when they are old enough to calculate a score? First off, what's all this about 2 cards? You need to get the Walmart card or if not the Walmart card another GE backed card. You need at least 3 credit cards to maximize your scores. Do you shop at Walmart? I'm thinking and this is just SWAG that your scores will start somewhere around 680-700 and after your 3 cards are 1 year old they could be 700-730. You need 720+ to qualify for most of those 0.9% dealer financing offers. Don't get all wound up in the scores however, you will have a very thin file and that also matters.

 

Friend at work ( same one, former finance manager for Toyota Southeast ) said I would need to be around 625 to be able to walk in and reasonably expect to get approved at all even with a rate north of 10%. Also said I wouldn't start closing in on sub 5% rates until 680 and above. Dunno. Sounds about right i guess. I used to sell cars. It does sound about right. Only thing is you don't want dealership financing! You need to join a local credit union NOW. A credit union will give you the best rates for auto loans and mortgages.

 

I just want to establish obtainable and realistic goals so I can keep myself from getting discouraged.

 

By say next year at this time I'll have been at my job longer, have a 20% + down payment saved up and will have ( yet to be confirmed ) two THREE CC's that have begun calculating scores and such. I do better at achieving things when I can take a mental snapshot and know that I can do that if I do what i am suppose to do.

 

 

Thanks so far for all the help. Love this place already.


You know, it would be really great to be able to pull out a crystal ball and tell you your future, but it isn't possible. I can however suggest to you what your next step or two should be with your current circumstances considered.

 

If you handle these THREE new cards correctly, you may be able to get your scores well into the 700s faster than we think. Strategies would then need to change to match what your current circumstances are at the moment.

 

I try to be very conservative in the advice I suggest to people on these forums as most members are. I don't want you to be surprised by denials but want you to be surprised by score advancement.

 

Concentrate on getting and using these 3 cards at the moment. The auto loan and purchasing a car is a whole other issue. We can cross that bridge when we get to it. You do however need to join a local credit union ASAP so when it comes time to buy a car you are ready.

 

Good luck!

 



Starting Score: EQ 658 6/18/12
Current Score: EQ 683 8/24/14 - EX 687 7/21/14 - TU 682 7/21/14
Goal Score: EQ 720+
Take the FICO Fitness Challenge
New Member
Funktionull
Posts: 9
Registered: ‎10-16-2012
0

Re: Blank slate. Where to start?

[ Edited ]

Ended up being approved for the BofA card and I joined the local Credit Union this morning. Going to put a few hundred a week in there until I'm ready to use their services.

 

I do still have a few questions regarding the 2nd and 3rd card.

 

1. Do I wait before I apply with Wells Fargo or should I go ahead and do it now?

2. After I have said 2nd card, how long would they need to report before I could get a GE backed card like Walmart without having the app be subject to decline (don't really want to bombard myself with hards that yield nothing)?

 

Also, regarding the usage of said cards.

 

Would I HAVE to utilize all of them at least some or could I just leave 2 of them parked in a shoe box and only use one of them?

 

Do they all need to be paid in full as soon as the bills post ( but before the accounts report ) or should I let a 9% utilization on one card report while paying in full ( or never using in the first place ) the other two cards?

 

Touching on the above question, how large is the "window" of time between when the bill becomes payable and when the account reports? This sounds like a super stupid question but I haven't ever dealt with ( correctly ) any accounts that report.

 

Or could I just pay them in full IMMEDIATELY after having used them? Not sure how this works.

 

My armchair financial advisor ( same friend from work :smileytongue: ) said I was overcomplicating it with all the micromanaging. He suggested I just store the cards in a lockbox, take them out once a month to buy a pack of gum with each one, put them back in the box and then pay them all off. Rinse repeat.

 

Dunno. Sounds like it would be horribly inefficient lol.

 

Don't want to seem like I am asking for someone to hold my hand. It's just a lot to take in when you have spent so many years pretending like credit didn't exist.

 

Edit : He also echoed what a lot of other people have said. Which is to avoid the CapOne card unless I absolutely couldn't get anything else.

Valued Contributor
rckstrscott
Posts: 2,659
Registered: ‎04-25-2011
0

Re: Blank slate. Where to start?


Funktionull wrote:

Ended up being approved for the BofA card and I joined the local Credit Union this morning. Going to put a few hundred a week in there until I'm ready to use their services.

 

I do still have a few questions regarding the 2nd and 3rd card.

 

1. Do I wait before I apply with Wells Fargo or should I go ahead and do it now?

2. After I have said 2nd card, how long would they need to report before I could get a GE backed card like Walmart without having the app be subject to decline (don't really want to bombard myself with hards that yield nothing)?

 

Also, regarding the usage of said cards.

 

Would I HAVE to utilize all of them at least some or could I just leave 2 of them parked in a shoe box and only use one of them?

 

Do they all need to be paid in full as soon as the bills post ( but before the accounts report ) or should I let a 9% utilization on one card report while paying in full ( or never using in the first place ) the other two cards?

 

Touching on the above question, how large is the "window" of time between when the bill becomes payable and when the account reports? This sounds like a super stupid question but I haven't ever dealt with ( correctly ) any accounts that report.

 

Or could I just pay them in full IMMEDIATELY after having used them? Not sure how this works.

 

My armchair financial advisor ( same friend from work :smileytongue: ) said I was overcomplicating it with all the micromanaging. He suggested I just store the cards in a lockbox, take them out once a month to buy a pack of gum with each one, put them back in the box and then pay them all off. Rinse repeat.

 

Dunno. Sounds like it would be horribly inefficient lol.

 

Don't want to seem like I am asking for someone to hold my hand. It's just a lot to take in when you have spent so many years pretending like credit didn't exist.

 

Edit : He also echoed what a lot of other people have said. Which is to avoid the CapOne card unless I absolutely couldn't get anything else.


Someone who never has had credit problems, or has a positive credit history doesn't need to micromanage.

 

Someone who has not credit, or is trying to build credit? You need to SEVERELY micromanage.. how you handle your cards will dictate the limits and cards you get in the future.. limits predict future limits, rates ect ect.. you need to be on top of it.. even one day late, while not a credit report sort of impact, can impact your rates, you future limit increases ect ect.. I think you are absolutely doing the right thing asking a bunch of questions..

 

And your credit score will be higher in 2 years than your armchair.. .watch..

 

And Cap1 is fine, was fine, for me. That was my first secured card... they say avoid it because it won't graduate.. that wasn't an issue for me, i just went a got a better card when I could... most people who say Cap1 is a bad choice have other choices.. some people don't..

 

I would USE your credit cards, becuase how can you build proper habits if they sit in a box? 

 

Reporting is simple.. your card reports on the same day every month.. pay it off before the report date and it will show 0 balance the next time it reports.. doesnt matter if its one second after using it or 1 day before it reports..

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