02-14-2013 01:46 PM
My husband has a pretty thin file ( 5 accts, Open: 25k Student Loan, one Cap 1 $300 CL. Closed: HSBC/BestBuy with 0 bal (paid off this month), two transferred 0 bal student loans) He also had a BK back in 2005.
Has a 120+ from a year ago on the open student loan acct as well as one of the closed student loan accts from 2008. Also has a 120+ late from last year on the closed HSBC. No missed payments in 3 years on the Cap One acct. His EQ Fico is 586, but the 0 bal on the HSBC isn't posted yet.
I was just approved for a 4k card from West Elm and a $500 card from J Crew using the Comenity Bank/shopping cart preapproval trick. Will adding him as an AU give him a boost? Will this be an effective strategy to get him on track to a new bank card with a better CL than what he has? I plan on GW'ing some of his derogatory marks, but given the fact that the major lates are mostly on Student Loan accts, I don't have much hope. It just seems to me that he needs some more credit to start establishing a good payment history beyond the his starter Cap 1 card. We could take some money we have set aside to get him a new secured card, or we coul use it to pay down my balances. I'm currently at a 692 on EQ.
Also, HSBC (now Cap 1) had teased reinstatement once the acct was paid off, which it now is. Not sure if this will happen as the payment history kind of sucks on that card, but let say they do reinstate: Should we take it? Might it be better to just move on to better, cleaner credit card pastures and work to maybe get the whole HSBC TL deleted? The card is from 2006.
02-15-2013 03:31 AM
02-16-2013 09:46 AM
I believe the normal definition used for a thin credit file in most scoring models is less than 3 trade lines.
The importance is the scoring category, or "bracket," that will be used for the subsequent scoring.
I dont believe that his file is categorized as "thin."
Separate but related is mix of credit. With both revolving and installment, he has a mix. FICO likes to see multiple revolving, as heavier emphasis is placed on showing of effective use of discretionary credit. So one more revolving would, in my opinion, be helpful.
AU accounts can produce a score boost, but if the creditor does a manual review of his credit report, it may rasie doubt as to the significance of his score should they desire to see his risk based only on his own credit history. Often not done for lower CL cards, which often base decisions primarily upon score without the additional time and expense of doing a more thorough manual review, so a good way to rebuild. They have no way to "back out" the history of an AU account to produce a score based only on his own history, which could become a factor for higher credit decision making.
The number of accounts, particularly revolving, has secondary implications in other categories as well. Since FICO also scores such factors as % with balancem with one revolving, he is always at 0% with balance or 100% with balance. Addition of a second would permit 0%, 50%, or 100%. And so one.
But addition of new accounts can also have a short-term offset by addition of inquires and reduction of AAoA. Which rasies questions of how long until the score will actually be used to app for new credit. If a year or more in the future, the new inq impact will be gone.
It gets complicated. Single actions usually have multiple effects.
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