My new theory

[SouthJamaica]

Here's my new theory about how to maximize my FICO score without instalment borrowing

1. FICO is all about lenders

2. Lenders don't like to help people who need help, they like to market to people who don't need their help

3. The best thing I can do to make myself attractive to them is to use their cards but pay them down to zero ASAP

4. The next best thing I can do is to never ask them for anything... let them do all the asking

So from now on

1. I'm paying everything down to zero ASAP

2. I'm applying for nothing

I know it's probably impossible to get a perfect score without instalment borrowing. But I'll forego a perfect score.

I think instalment borrowing is a trap, one which lenders like to see, but which is bad for one's health. So I'll

skip that part of my score enhancement. I want to think of any credit I have as temporary; instalment loans are too

permanent.

I know some people will say that it's better to have one account reporting than to have all at zero. I'm skeptical. And

I'm about to find out whether they're right or wrong.

I may have to spend less time in this forum, as much as I enjoy it, since there are too many things going on which

tempt me to apply for things, especially in that dang "credit approvals" section

[Anonymous]

Hey buddy!  Always good to see you on here.

You mention that you see installment borrowing as a trap and bad for one's health.  Does that mean you plan never to have an installment loan?   Most people need one to buy a car or a house, but you may live in a place (e.g. NYC) where people rent apartments and take the subway everywhere.

In general your plan to stop applying for credit and to keep your debt at or very close to $0 seems smart.  But it seems as though you are open to accepting new cards if they are offered to you?  (#4)  If so you will have no shortage of CCCs offering you new cards.  So it may be worth making a mental moratorium on acquiring any new CCs -- full stop -- whether applying for or accepting them.  You certainly don't need them -- it looks like you have 13 or 14.  And it also sounds as though you are self-identifying as a guy vulnerable to being magnetically drawn to them, an inability to stop yourself from wanting/getting new cards.  If your self-assessment is right, it may be smart to cordon yourself off from new ones altogether.

Good luck regardless...

[Grafton88]

I think it just shows that recommendations that are good for one person don't apply to another individual.  You have to do what is in your best interests.

I have a very thin file.  I have one CL, a secure card through NFCU.  I talked to them yesterday when I set up a checking account.  With the money I already have sitting in my shares savings I can get a credit building loan.  My last installment loan was for a car and it was paid off in 1999.

I can take that money from the loan and move it to a separate CU and get another secure credit card.

Then I will have 2 credit cards and one installment loan.  I want to not only build my FICO scores but also build a long term relationship with NFCU.  I am hoping later next year to finance a new car through them.

[Anonymous]

Hi Grafton.  Good luck with your plans.  They sound very sound.  If I heard you right, you plan step by step to get a couple cards, a credit builder installment loan, leading up to a car loan in a year or two.  Sounds like you are, as you say, thinking through what is right for you.

With those four tradelines, plus maybe one more card further down the road, you can achieve a really high score over time.  All about allowing your accounts to age, always paying on time, and keeping CC debt down.

PS.  You said that you had one CL.  I figured out that you meant credit line.  People on this forum are more likely to use that abbreviation to refer to a card's Credit Limit.  Tradeline (TL) or account may be a better word if you don't want to mislead somebody. 

Again, best of luck!

[Revelate]

Why not simply use the silly reindeer game FICO trick that we recently found?  Ain't hard to do, costs virtually nothing, but gets non-trivial benefits to your score.

We spend more than that even pulling a single report here; if we're willing to spend that monitoring our scores, why not spend that do improve them?

[Grafton88]

Thanks CreditGuyinDixie.

Yeah, I am going to have to print out the abreviations and post them on my computer.

From everything that I have read here you have to make the right decisions for your situation and then take it one step at a time.

[skimmie48]

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@Revelate wrote:

Why not simply use the silly reindeer game FICO trick that we recently found?  Ain't hard to do, costs virtually nothing, but gets non-trivial benefits to your score.

We spend more than that even pulling a single report here; if we're willing to spend that monitoring our scores, why not spend that do improve them?

@Revelate - what is that.

[SouthJamaica]

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@Revelate wrote:

Why not simply use the silly reindeer game FICO trick that we recently found?  Ain't hard to do, costs virtually nothing, but gets non-trivial benefits to your score.

We spend more than that even pulling a single report here; if we're willing to spend that monitoring our scores, why not spend that do improve them?

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If by "reindeer game FICO trick" you mean adding instalment loans you don't need in order to build your "credit mix" quotient......

 that is exactly one of the things I will NOT do.

There are a lot of things bank want us to do that are not good for us; like buying things we don't need, spending money in one place rather than another to get "rewards", using our credit cards a lot to show we are "engaged" with them, etc.

Taking out instalment loans is one of them. I'm not going to hurt myself to help my FICO score.

And I have a hunch that the "reindeer games FICO trick" probably doesn't work anyway; I'd be real curious to see the data supporting its viability.

[Anonymous]

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@SouthJamaica wrote:

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@Revelate wrote:

Why not simply use the silly reindeer game FICO trick that we recently found?  Ain't hard to do, costs virtually nothing, but gets non-trivial benefits to your score.

We spend more than that even pulling a single report here; if we're willing to spend that monitoring our scores, why not spend that do improve them?

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If by "reindeer game FICO trick" you mean adding instalment loans you don't need in order to build your "credit mix" quotient......

 that is exactly one of the things I will NOT do.

There are a lot of things bank want us to do that are not good for us; like buying things we don't need, spending money in one place rather than another to get "rewards", using our credit cards a lot to show we are "engaged" with them, etc.

Taking out instalment loans is one of them. I'm not going to hurt myself to help my FICO score.

And I have a hunch that the "reindeer games FICO trick" probably doesn't work anyway; I'd be real curious to see the data supporting its viability.

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Hunch all you like, Fair Isaac has plainly stated that credit mix (revolving+installment+mortgage) is factored into scoring. If you do not have one of those legs then you are leaving points on the table, there simply is no debate there. The only thing that is legitimately up for debate is the NUMBER of points. Is it 5 points, or is it 25 points?

Now considering that these points can be "purchased" with a $500 share secured loan at 3.99% for 36 months - total interest is about $45 minus the interest paid on the security deposit... well, if one is sitting on the cusp of an interest breakpoint for a $300K mortgage, spending that $$45 could in fact save one several thousand dollars in interest payments over the life of that mortgage. I'd hardly call that "hurting yourself to help your FICO score".

[Anonymous]

Hope your plans works!