topic Re: 20 Yrs. Old - Needs Some Guidance in General Credit Topics

20 Yrs. Old - Needs Some Guidance

drew11 — Thu, 21 Jun 2012 04:41:18 GMT

Hey everyone, I've been lurking on these forums for awhile now and wanted to give you all much thanks as you have helped me build up my credit. I am hoping on applying for a mortgage in 2 years from now and am trying my best to get my credit score as high as possible for once that day finally arrives. I understand that a "mix of credit" increases one's score and as of right now the only type of credit I have are credit cards. I was hoping someone could offer me some advice on what the best course of action I should take (perhaps opening up a 12 month installment loan)? Below is my credit history and scores:

Credit Cards:

PenFed Platinum Cash Rewards - Open for amost 2 years - $500 CL (my first credit card which meant that I needed to cosign with my mother otherwise no approval)

Chase Freedom - Open for 4 months - $3000 CL (completely mine! )

American Express BCE - Applied 2 weeks ago -> denied

Discover More - Applied 2 weeks ago -> Accepted! - $1500 CL

Credit Scores:

TransUnion - 740 (Received with Discover More acceptance letter) (Credit Karma = 742)

Experian - 723 (Received with American Express rejection) (Credit Sesame = 721)

Equifax - ???

These were the reasons that AMEX said that I was denied (pulled from Experian):

Length of time accounts have been established.
Too many inquiries last 12 months.
Lack of recent installment loan information

So what do you guys think?

Re: 20 Yrs. Old - Needs Some Guidance

marty56 — Thu, 21 Jun 2012 08:34:17 GMT

Welcome to the forum.

You don't need to apply for any more CCs. Just let one of the CCs report a a balance of 9% or less and always PIF. Use each card but don't ever max them out. Plese get toy EQ and TU FICO scores from here so you know what you baseline FICO score is. Time will be your best friend.

Unless you need a car, I would forget the installment loan and on the mortgage you should remember that DTI and work history also plays a role in getting a mortage so take your time.

Re: 20 Yrs. Old - Needs Some Guidance

llecs — Thu, 21 Jun 2012 13:23:07 GMT

I'd also skip the loan. You can easily hit into the 800s without a mortgage or loan; many on here have. Plus the new credit is draining your scores. Adding a loan won't improve that.

Whether a higher FICO is the goal or a mortgage is a goal, not applying for anything over the next couple of years will get your to that goal.

Re: 20 Yrs. Old - Needs Some Guidance

drew11 — Thu, 21 Jun 2012 14:01:56 GMT

Ok so no loan then and I've been keeping my cc util % under 9% already so I'll continue to do so for the next two years. Thanks everybody!

Re: 20 Yrs. Old - Needs Some Guidance

Revelate — Fri, 22 Jun 2012 01:03:25 GMT

@drew11 wrote:
Ok so no loan then and I've been keeping my cc util % under 9% already so I'll continue to do so for the next two years. Thanks everybody!

I'm of a slightly different opinion: yes your scores are depressed from new accounts already, but installment loans do count, it's a bonus to have them, and it's better to take the negative of a new tradeline when you have a bunch of other new tradelines... and then letting the magic of time do it's thing with regards to FICO since a good chuck of the algoritm is predicated on time passing.

Anyway, my thoughts, and as illecs correctly points out, there's no mandatory reason to get an installment loan, but it may help with obtaining a better APR with some of the industry-specific options in addition to the standard Classic FICO we all somewhat measure ourselves by.

Re: 20 Yrs. Old - Needs Some Guidance

drew11 — Sat, 23 Jun 2012 01:29:49 GMT

So what if I took out a relatively small student loan out and paid it off within a year? Would that be considered an installment loan and possibly help in the future to obtain a better mortgage?

Re: 20 Yrs. Old - Needs Some Guidance

marty56 — Sat, 23 Jun 2012 11:20:50 GMT

@drew11 wrote:
So what if I took out a relatively small student loan out and paid it off within a year? Would that be considered an installment loan and possibly help in the future to obtain a better mortgage?

Bad idea.

Re: 20 Yrs. Old - Needs Some Guidance

Repo-ed — Sat, 23 Jun 2012 11:28:08 GMT

The only type of loan I would suggest taking out is a small 1k loan from a CU for between 6-12mo.

They can/will put that loan monies into a savings account, and auto-draft the monthly pmt right from the savings account.

Re: 20 Yrs. Old - Needs Some Guidance

Anonymous — Sat, 23 Jun 2012 14:08:02 GMT

@drew11 wrote:
So what if I took out a relatively small student loan out and paid it off within a year? Would that be considered an installment loan and possibly help in the future to obtain a better mortgage?

Here's the thing.

You don't need an installment loan to better secure a mortgage. I've seen it done all the time where people have had just 3 revolving lines and that was good enough.

Heck, my DGF was one of them, she had about 6 CC's and nothing else when she secured her mortgage.

Don't take out a loan for the sake of a score. That's money wasted.

If you were denied for the BCE, eventually try for the Zync or wait for a while and see how these cards benefit your score.

Here's the good news: You're 20.

Re: 20 Yrs. Old - Needs Some Guidance

drew11 — Sat, 23 Jun 2012 16:00:16 GMT

Ok thanks. Should I get my FICO scores now or wait until they reflect the pulls from the two recent inquiries? I don't want to purchase them now and have a false idea of where I'm at when they are possibly going to change.

Re: 20 Yrs. Old - Needs Some Guidance

marty56 — Sat, 23 Jun 2012 18:00:19 GMT

The INQs are already on your CR so unless you are waiting for a CC balance update, it is ok to get them now.

Re: 20 Yrs. Old - Needs Some Guidance

Anonymous — Mon, 25 Jun 2012 00:38:01 GMT

aside from what to do cause theres already great advice posted already, i noticed you were shot down for amex bce. you could app for the zync then hold that for a while and eventually you should be able to land the bce

Re: 20 Yrs. Old - Needs Some Guidance

Anonymous — Mon, 25 Jun 2012 00:39:59 GMT

also dont waste your money on purchasing scores from other sites other than here. i noticed you dont have currrent eq fico posted. most cu's who pull eq use the same model as the one posted here so its a great source to go by

Re: 20 Yrs. Old - Needs Some Guidance

drew11 — Wed, 27 Jun 2012 00:03:00 GMT

So I just signed up for the myFICO Score Watch 10 Day Free trial and I received an Equifax FICO score of 735. It already shows the Amex credit inquiry but doesn't show the Discover.

Does my score reflect these inquiries and, if so, should my score just continue to gradually climb from here (assuming I keep my util % low and pay my bills on time)?

Re: 20 Yrs. Old - Needs Some Guidance

drew11 — Thu, 28 Jun 2012 04:51:58 GMT

I received an Equifax FICO score of 735 (6/25/12). It shows the Amex credit inquiry (6/10/12) but does not show the Discover inquiry (6/10/12).

Will the Discover inquiry eventually show up on my report or is it that because I was approved it does not negatively impact my score?

Does my current score reflect these inquiries and, if so, should my score continue to gradually climb from here (assuming I keep my util % low and pay my bills on time)?

Re: 20 Yrs. Old - Needs Some Guidance

Anonymous — Thu, 28 Jun 2012 21:13:09 GMT

Discover may have pulled TU or EX. If so then it will not show on your score watch as that is monitoring EQ only. I know Discover was a TU pull for me in CA.

Re: 20 Yrs. Old - Needs Some Guidance

drew11 — Thu, 28 Jun 2012 23:58:44 GMT

Does that mean that the TU score that Discover provided with my credit card was the score before they pulled my report or does that score reflect after they pulled and is therefore the score that I am left with now?

Re: 20 Yrs. Old - Needs Some Guidance

Revelate — Fri, 29 Jun 2012 16:02:45 GMT

@drew11 wrote:
Does that mean that the TU score that Discover provided with my credit card was the score before they pulled my report or does that score reflect after they pulled and is therefore the score that I am left with now?

AFAIK the inquiry is assessed after the pull, and as such your score is generated pre-inquiry. It'd be somewhat laughable if that was not the case, and it's the obvious implementation. Also any software issues implementing it backwards would be caught in a manual review and likely much finger-pointing would ensue.

Re: 20 Yrs. Old - Needs Some Guidance

drew11 — Tue, 03 Jul 2012 19:24:51 GMT

If I got denied for the AMEX BCE on June 10 when is the earliest that I can apply for the AMEX Zync?