topic Re: Building credit from scratch; my plan & progress in General Credit Topics

Building credit from scratch; my plan & progress

Anonymous — Wed, 01 Nov 2017 18:20:58 GMT

As the title suggests, I'm starting with an entirely blank credit report. I've made a post here on MyFico for a few reasons: (Tldr: these forums are awesome). #1 I've been reading the threads here since late last year, and this site is a gold mine! Thanks very much to those of you who've helped educate me! #2 I've built a plan around a set of objectives and would love some feedback. #3 I must admit I became a credit hobbiest overnight. I know it's not economically worth spending too much figuring out what cards to get, but I do find it fun.

Objectives:
#1 To use credit cards to build a solid credit profile allowing me to qualify for other types of credit and ultimately qualify for ideal rates on a mortgage in 5-10 years
#2 To maximize Credit Card rewards in the process

Aug 2017 Scores (Amex BCE added):
Fico8: 720-770
Vantage3: 710-740

Nov 2017 Scores (Auto Loan Added):
Fico8: 710-715
Vantage3: 675

Accounts:
Discover it Chrome secured - General Purchases - early 2017
Amex Blue Cash Every Day - Groceries - mid 2017
Auto Loan - mid 2017
*credit report is overwise empty, apart from inquires from landlord and internet provider.

Previous Plan (now executed):
•Garden until I receive deposit back from discover, and ask for CLI 1 cycle later (if the CLI with the deposit return isn't high) - 11/1 Update: graduated, auto x2.5 CLI, but additional CLI declined (now requesting cli after each statement)
•Ask for x3 CLI from Amex once I'm eligible (I'm considering only asking for x2) - 11/1 Update: x3 CLI approved

Future Plan:
•Early 2018: Chase Freedom Unlimited (general purchases), Chase Amazon Rewards (Amazon), Convert Discover Chrome to it (bonus categories)
•Late 2018: Capital One Permier Dining (dining) - 11/1 Update: Card renamed to Savor

Notes:
#1 As may be obvious, I'm much more focused on my score 5-10 years from now than my score right now. With that outlook, I don't mind the dips inquiries will be causing (and, in fact, with such a light file, those dips shouldn't last very long with rapid increase in AAoA)
#2 I've decided to stick to a handful of premium CC issuers. I selected them using JD Power's rankings over the last two years and reviews on credit karma and nerd wallet. The Citi Double Cash and Costco Anywhere cards, as well as Barclay’s Uber Card, would have better rewards for my spending profile, but I've read enough complaints about the issuers practices to be cautious (obviously, you can find complaints about every issuer, but the difference in rewards seems pretty small vs the risk of having an account issue that ultimately impacts credit scores)
#3 with my spending profile, BCP, CSP, CSR and similar cards' premium rewards just don't justify the fees. I've triple checked. The only reason to get them would be to get the sign bonus and then cancel, and I'm not interested in that.

Changelog:
Aug 2017 - initial post
Nov 2017 - added car loan, updated scores, described CC CLI activity, removed asked and answered questions

Re: I'm Brand New to Credit; this is my plan & progress

Anonymous — Thu, 03 Aug 2017 18:09:16 GMT

I'm in a very similar situation to yours and am taking a slightly different approach. I'm also looking to buy a house in 10 years and am trying to optimize rewards now. I decided to app for all the cards I want in a short period of time so they all age together and it'll help my AAoA in the long run. At first I was going to do what you're planning and space everything out, but if I do that, I'll just keep lowering my AAoA everytime I do so. By getting all the cards I want in a short amount of time, my AAoA will grow over the years instead dropping with new apps. Whether this part of my plan is better than your plan, I don't know. I think it is, but as always everyone is different. I'm still going to apply for the Capital One Dining in a few months. I'm just making sure I can meet the minimum spend bonus on all my cards.

Re: I'm Brand New to Credit; this is my plan & progress

Anonymous — Thu, 03 Aug 2017 18:21:12 GMT

If you don't mind, I'm interested in how old your credit file was & what scores you had when you apped to chase (for your first one). I checked their pre-qual a couple months ago and nothing came up; that gave me the sense I should wait until my Amex is around 6 months old (I'm also still in my intro period with discover, which means I'm getting at least 2% on every purchase, so it's probably not worth getting the chase card until the discover bonus period runs out)

Re: I'm Brand New to Credit; this is my plan & progress

Anonymous — Fri, 04 Aug 2017 03:05:31 GMT

@Anonymous wrote:
If you don't mind, I'm interested in how old your credit file was & what scores you had when you apped to chase (for your first one). I checked their pre-qual a couple months ago and nothing came up; that gave me the sense I should wait until my Amex is around 6 months old (I'm also still in my intro period with discover, which means I'm getting at least 2% on every purchase, so it's probably not worth getting the chase card until the discover bonus period runs out)

You can read about my approval here and about my application and stats here. I was preapproved on the Chase site for both which is why I applied so confidently. I am also still within the 2% back on all purchases with discover, but I'm just using the freedom for 5% on resturants and I'm just going to make one $500 charge on the freedom unlimited to meet the spending bonus requirement. After that I'll put the freedom unlimited on the back burner until my first year match with Discover is up. Hope this helps. Any more questions?

Re: I'm Brand New to Credit; this is my plan & progress

Anonymous — Fri, 04 Aug 2017 12:22:07 GMT

Thanks very much! I'm going to say my plan is probably on target tbh, as you did have 1 card that was 3 years old at the time of your app. My AAoA is VERY low, so I'd be shocked if chase let me in this early. I'm also planning to hold off on the freedom for 2 years after CFU so I can get the bonus. It's worth more than the addditional cash back I'd earn, as I'm turning my Chrome into regular it when I get my cfu, and the catagories are generally fairly similar. That might mean I put the CF off even longer, if I end up gardening for the car loan. It really depends on how my score is looking and how I decide to time the car purchase (and if my current car makes that decision for me a little too early - possible, as KBB suggests the model is issue prone)

Re: Building credit from scratch; my plan & progress

Anonymous — Thu, 14 Sep 2017 17:20:45 GMT

Update!

I got my Discover graduation & CLI just after my 7th statement cut, as many on this forum have in the past. Now I no longer feel compelled to pay it off what felt like every day (it was really just anytime I made a big charge, as my total monthly spend was about 1.5x my CL, but it felt far more frequent than it was). I'm still planning on asking for a CLI in a few months, so I don't feel compelled to make extra payments to keep util inside a healthy range.

One big wrench got thrown in to this plan: I did end up getting a new car earlier than I'd planned (I wasn't thrilled with the way the old car was driving & didn't want to risk it totaling itself before I decided to replace it). With my limited credit history, I needed to have a family member gauruntee the loan to qualify, which I really wanted to avoid by waiting a couple years, but that's life! My loan interest rate is a manufacturer promo, so it's nearly interest free.

I'm concerned the new loan is going to mean I need to wait a little longer to app for additional credit cards, because my installment util will be nearly 100% for a while, but that's really not a huge deal. Once the loan is even a year old, I imagine my credit will justify apping for the cards I want.

On the plus side, my credit file is going to be much beefier in just a few years than it would have been following my previous plan. By the time the mortgage apps start, I should have a very solid credit profile.

Re: Building credit from scratch; my plan & progress

Anonymous — Thu, 14 Sep 2017 17:26:59 GMT

As an aside, I'd update my scores, but the reports don't yet show the car loan. Once they do, I'll update with my new (far lower) scores.

Re: Building credit from scratch; my plan & progress

BurgeoningHope — Thu, 14 Sep 2017 17:56:44 GMT

Congratulations! And with respect to the car loan, sometimes Life Happens. I agree that your scores will take a hit in the short term, but will be in very good shape when you're ready for that mortgage.

Has the car loan hit your reports yet? If not, and you're otherwise confident of qualifying for the next card/s on your plan, you might consider just going for it now. The effect of any inqs will fall off in a year, and the inq itself in two years, and you'll have the accounts all that time to help out with your profile and to reduce the AAoA inpact for your future accounts.

Your plan is impressive, and you're a bit further along than my son is, who is a college student just getting started with working on his credit. I appreciate and learn from your updates. Thank you!

Re: Building credit from scratch; my plan & progress

Anonymous — Thu, 14 Sep 2017 22:36:27 GMT

Thanks!

The car loan hasn't hit yet, but my report is now full of recent inquiries from the car buying experience (I shopped around to get a good deal). With that in mind, and the fact my AAoA is so low with my discover & Amex cards, I just can't imagine getting approved for the cfu. If I REALLY want that card next year, I'll make some extra payments on my car loan and get the utilization down to a reasonable level.

Re: Building credit from scratch; my plan & progress

EAJuggalo — Thu, 14 Sep 2017 23:23:28 GMT

I'm over halfway through my car loan and still get dinged for installment utilization being too high. If this is the only installment in your credit file you may actually see an increase since you've now got credit mix. I received a Chase Freedom without a score and the only thing on my report being a 14 year old car loan, then added a FU about 8 months later and a CSP 8 months after that. All those inquiries should get lumped into one for score purposes, I believe it's a 30 day window for auto loan inquiries

Re: Building credit from scratch; my plan & progress

Anonymous — Wed, 01 Nov 2017 14:27:48 GMT

It took a while, but the car loan finally reported, so I now have accurate scores!

Nothing has changed (as far as reports go) beyond the car loan reporting.

Fico8: 710-715
Vantage3: 675

I did also hit the CLI button on both Amex and Disc, now that my report is up to date, and got mixed results. Amex, which I use for a couple hundred in groceries/mo gave me the x3 CLI, but Disc, which I use for EVERY dollar I spend outside of Rent, groceries and stores that don’t take Disc, denied. It’s certainly because my previous CLI was recent, but good lord, I pay that card in full every 2 weeks (mostly to keep my reported util low, so I can have a consistent idea of my credit scores). Can’t wait until I can let the card post my actual spending without negatively distorting my credit score.

I’ll update next month when my amex cli reports.

Re: Building credit from scratch; my plan & progress

marty56 — Wed, 01 Nov 2017 14:32:05 GMT

IMHO in the long run #2 there is no such thing unless you can PIF forever.

I recommend that people never ask for a CLI unless you really need it. If the CCC doesn't give you one in a year, look elsewhere. You can build a great credit profile on a few CCs with low CLs.

AAoA/new credit matter since new credit can lead to AA from other CCCs.

Re: Building credit from scratch; my plan & progress

Anonymous — Wed, 01 Nov 2017 14:34:25 GMT

It’s now clear I picked the wrong sub forum for this thread, as it now includes my car loan and my scoring data points. I don’t see a way to move it, but, if a mod stops by, I believe this thread is no longer appropriate here.

Re: Building credit from scratch; my plan & progress

Anonymous — Wed, 01 Nov 2017 14:54:59 GMT

Marty, I have a couple quick Qs based on your post. As aside, I do plan to PIF all my CCs forever. I’m very careful with my finances such that, if I’m about to outspend my income & savings at any point, I’ll know far enough in advance to apply for a personal loan with a significantly lower interest rate. Paying 20%+ on any debt is insane.

1) You mentioned you recommend against the CLI button. Can you explain why? Does it have some negative impact I should know about? I’m aware that at VERY high credit limits, you can have an issue getting a mortgage without closing some CCs, and that if high util accompanies high limits that you’re going to (rightly) set off lots of algorithmic alarms, but I’m not aware of any negative impacts related to my situation (short history, low limits, low reported util, low # of accounts)

2) Also, silly question but what does AA stand for? I’m assuming it’s a synonym for a CLD but I just can’t figure out what words the As stand for.

Re: Building credit from scratch; my plan & progress

ChessChik47 — Wed, 01 Nov 2017 15:49:57 GMT

@Anonymous wrote:
Marty, I have a couple quick Qs based on your post. As aside, I do plan to PIF all my CCs forever. I’m very careful with my finances such that, if I’m about to outspend my income & savings at any point, I’ll know far enough in advance to apply for a personal loan with a significantly lower interest rate. Paying 20%+ on any debt is insane.

1) You mentioned you recommend against the CLI button. Can you explain why? Does it have some negative impact I should know about? I’m aware that at VERY high credit limits, you can have an issue getting a mortgage without closing some CCs, and that if high util accompanies high limits that you’re going to (rightly) set off lots of algorithmic alarms, but I’m not aware of any negative impacts related to my situation (short history, low limits, low reported util, low # of accounts)

2) Also, silly question but what does AA stand for? I’m assuming it’s a synonym for a CLD but I just can’t figure out what words the As stand for.

Adverse Action...you shouldn't have to worry about that given what you've stated.