Planning my next step, need advice.

[Lucid08]

Hi again all! Let me start by saying this forum has been invaluable over the past 8 months since I began my credit building journey. Many thanks!

Back in Oct. '07 I purchased the Suze Platinum kit and have been waiting patiently to see the effects of my credit building efforts over the past 6 months or so. I finally logged on earlier last night and decided to use the kit to pull my reports and scores from all 3 CB's.

I was able to get scores and reports from EQ and TU, but not from EX(for some reason it says I dont have any accounts aged 6 months - but I do). I decided to use installment loans for the first part of my credit building experience and now have 4 accounts listed with 3 active and one with a zero balance. One is a CU loan for a new motorcycle I bought in Feb and the other two are small personal loan installment accounts. The CU loan was acquired with the help of a friend who co-signed on the loan with me. All accounts are being paid on time and I hope to keep it that way.

My EQ and TU FICO scores are 623 and 620 respective. I am very happy with those scores, but I know that revolving accounts will improve my scores overall. I have read many threads about obtaining CC's, but I am uncertain as to whether I should app for department store cards or actual mainstream CC's(Citi, Chase, Cap1) with my scores being what they currently are.

The reason I havent gotten any revolving accounts thus far is that I simply refuse to obtain what are commonly referred to as 'starter' cards with high APR's, yearly fees, or secured requirements. I prefer to let my good payment history and FICO scores determine my chance of success with the more 'mainstream' cards.

I wish to apply for some revolving accounts(maybe 1 or 2 to begin with), but wanted to seek some advice fom some of the regulars as to whether department store cards would be the best route to go(as far as success in obtaining goes), or whether or not I shold just go ahead and apply for some of the mainstream cards.

Any feedback will be greatly appreciated.

[Anonymous]

Get a Capital one- with No AF

or your credit union-

Everyone has to start some where

[RobertEG]

Chris, store cards are not scored as highly as the "mainstream" cards but......

As the madam once told me on a cold night down in New Orleans,

"It aint what you got, it is how you use it!"

Just make doubly sure that whatever card you secure, that it reports to the CRAs.  If not, it does you no good in establishing credtit history...

If it reports, it helps.  If it does not, it is just a wart.

[Scamp]

Chris, I'm a big fan of starting out with a secured card with your bank or CU (assuming you have a checking and/or savings account somewhere).  Secured cards generally 'graduate' in a year (or less, depending on the issuer and your behavior), often with a CLI for good behavior, and will grow with you.

Some subprime 'starter cards' can and do grow with you but a lot don't, and too many of them start you off with teensy CL's eaten up by insane fees.  Those cards always seemed to me to just be setting up their clients to fail and to have a dreadful record of CS and overall treatment of their customers, up to and including the simple fact that one usually ends up 'weeding out' those starter cards in time - way too much hassle for me; I avoided them like the plague.

My two cents - go the secured card route, as you should be able to give yourself a decent-ish initial CL that way (I managed to start out with $1K taken from my tax refund that year - much better than the $200-$300 so often offered by 'starter cards' - and no over-the-top fees), should convert to unsecured in a year or less and be able to keep that card to grow with you over the long haul - no weeding (and resulting loss of length of credit history) necessary! 

After that, maybe add a store card to your mix - Macy's is a good bet and also will grow with you if you treat it right.

Great job so far and good luck!! 

[Lucid08]

Thanks for the input all.

After some more research I think that I might just wait a few more months until I have at least a years worth of credit history before I app for a CC. My Experian score finally showed up today after checking and it's the lowest of the 3 at 609. Must have something to do with how they use the FICO algorithm- shrug.

With a years worth of credit history on my installment accounts, I think I'll be in a better position to app some of the mainstream card companies with less of a chance of denial than if I app'd right now. At least this is what I gather from my search of old threads in the CC section of the forum.

Thanks for the input and happy credit building!

[smallfry]

I would be tempted to go for a BOA secured card. Having no CC history is still going to hurt you if you intend to wait for 6 months.

[RobertEG]

Chris, you need revolving credit history for any leap of credit score.  Your credit mix is now zero.

Secured and high interest CCs start revolving history, both in age and payment history.  Just pay them off, and the APR is meaningless.  If you know this going in, and have the discipline to PIF, then get a  CC. The oxymoron of all credit scoring is that you have to show mixed credit history to establish your risk for new, credit, and that is what a FICO score is.

[Lucid08]

Robert,

It's just that I hate giving someone else money that I feel they dont deserve. This list includes unneeded insurance that lenders try to hook you into paying for; yearly fee's on CC's, maintenance fees on CC's; secured requirement CC's; processing fees on any loan..ect.

If a creditor cannot make it on the interest they charge, then my way of thinking is they shouldnt be in the lending bussiness. All these fees basically do is put free money into the lenders pockets. Either that or they're somehow recouping monies to cover the losses incurred on 'bad' loans/CC's. I havent ever really established any credit due to my mother and father providing for me for most of my life, but now that they're retired I felt the need to establish a credit history for myself. That is when I found out about medical collections and such...LOL!

I guess you could say that I'm old school credit minded, in that if I pay my bills on time, and the credit report shows this, I should be rewarded based on this when applying for new credit with anyone. I realize and appreciate the importance of the FICO scoring model, and I have faith that my payment history will only improve my score overtime. But I refuse to secure a CC, or pay insane fees because my credit history is limited. If a years worth( or possibly more) of good credit history isnt good enough to secure a decent CC, then I have plenty of patience to wait until I get bucketed or considered for the CC offers by mail. I own my home with the help of my parents and any past credit I've had has long since dropped from my credit history. I managed to get myself a motorcycle in Feb with the help of a friend who cosigned the loan with me through a local CU, and as someone pointed out above I could probably get a CC through them after a year or so of making timely payments on the motorcycle loan. That's why I made that indication in my last post. I made the OP in an attempt to understand the differences between department store cards and actual CC's, and it seems that they are weighted differently in the FICO scoring algorithm as compared to actual branded CC's.

There must be a physcholiogical component involved with determining that making timely payments on a department store card is less 'rewardable' than making timely payments on a mainstream CC or, that making timely payments on a loan obtained from a CFL company is somehow less rewardable than making timely payments on a mainstream personal loan just because the former is 'easier to get'. It just seems that I'm being subjected to some sort of 'social profiling' instead of being rewarded for managing my finances responsibly.

Again, I understand, respect and accept that having a good FICO score is necessary. But as that old brothel lady also told me once: You can agree to anything you want in this world, but you dont have to like it..

[Junejer]

Chris, I always like to add this tidbit of information, just for good measure. I was able to achieve 768 on EQ WITHOUT any active revolving debt. I had an avg age of 6 years and oldest account was 18 years (student loan).

That said, sounds like your avg age is low and credit file is thin overall, so it will take you some time to build that up, but it can be done.

BTW, I agree with you about the AFs on CCs.

[Anonymous]

Chris, look at the secured card this way - if you put down 500, you are losing what maybe 20 bucks max in bank interest or 50 bucks with an average market return? That is if you have to wait a year to graduate. If that money would have been in a CD and you graduate in 6 to 9 months you could be looking at a 10 dollar hit to get a major bank CC that will grow with you.

From that point you should be able to convert a BoA card to a nice rewards card in no time. None of this involves paying any fee or extra interest over the initial deposit. 10 bucks for a card that will allow you to get other prime CC's if you chose to on your terms is nothing and its not a recurring price.

You could still have a respectable score just nursing installment loans if they stay on your reports, but when paid they will eventually drop off. Revolving accounts anchor your age. Taking this route will avoid you being tied to a "starter" card or one with an annual fee, it will allow you to get a rewards card within a year to a year and a half and while not necessary to have a good credit score, it will help you get a great score faster.

Just my humble opinion.