topic Re: AU tradelines & Building Credit in Rebuilding Your Credit

AU tradelines & Building Credit

Anonymous — Mon, 27 May 2019 08:18:55 GMT

Hi everyone 👋, my credit score is blank blank blank, obviously i want to get approved for some high tier credit cards, a 41k car lease and next year or end of this one a home.

I have had some many conflicting stories about AU tradelines from “experts” some say i need to have 6 months with 1 primary account, some say 2, some say a year with 2, etc.

I just applied and got approved for My Jewlers Club 5k so thats the only thing i will have for now. Can anyone advice me on how many primaries i really need and for how long before i add 2-3 tradelines?

Thanks in advance everyone

Re: AU tradelines & Building Credit

DIYcredit — Mon, 27 May 2019 11:08:15 GMT

To receive a Fico score you need one credit account that open and reported to the credit bureaus for six months,In the long run you should have 2-3 cc's.Maybe consider a cap on cc because they report to the three cb's.If you only qualify for a secured co you should go with that and upgrade later.What's most important is that it sounds like have a brand new credit file and you have no derogatories.You have to establish monthly on time payments and never get any derogatories,keep cc utilization 1-6%,don't app for too many cc's time is on your side and keep your oldest cc open.After you have established a history and if you follow these positive actions your Fico score will improve over time and you will get those high teir cc's,car lease and a home,but everything takes time.GOOD LUCK...

Re: AU tradelines & Building Credit

KJinNC — Mon, 27 May 2019 11:36:50 GMT

Unfortunately, I do not think AUs count toward the six-month clock on FICO scores. I say "unfortunately" because I was in the exact same position as you on Experian and TransUnion. For some reason, I have some old positive accounts on Equifax only, so, I do have an Equifax FICO score. The other two were completely blank.

I think you should expand your timelines a bit, if you want good rates. You will probably also need substantial downpayments for car and mortgage if you aren't already planning for those.

That said, since you have nothing on your file at all, some of the normal advice may not apply. I added seven new accounts in two months and I would suggest that for others with nothing on their files. Not specifically seven, just meaning, there is no need to go slow if you are adding stuff like secured cards. The reason people go slow is that they don't want to have too much "credit-seeking behavior" and they don't want to trigger "adverse actions" by their lenders. But if you're only applying for secured stuff or other builder-type stuff, the ding you get for having new accounts won't matter, and nobody will take an adverse action. The advantage is that in the future as the accounts stop being counted as new, you'll have a thicker credit file. And in the long run, if you add a card, its effect on age of accounts will be more diluted.

Personally, I would get Discover secured if you qualify (check prequalification), Citi secured (make the largest deposit practical, it cannot be increased later), Amazon Store Card if you shop at Amazon, you already have MJC in the works, and I'd add a Self Lender loan. The reason I listed those secured cards is that all of them graduate to the unsecured version and keep the same account age, so they are cards you can have ten years from now. You can also get a Capital One secured card if you like. The good part about it is that they give you more credit limit than your deposit (for example, you might put down $200 and get a $300 limit), but, the card will never graduate so it's not a card you will keep permanently.

If you can't qualify for one of these, most likely Discover, that's ok, get the others and try again once your cards start reporting, and you'll probably qualify then for Discover. If you can't qualify for any of it, which is extremely unlikely, then the next thing to consider would be cards like Open Sky.

To be clear, part of my strategy is to get them almost simultaneously so that they will age together. This would not make sense if you had prior credit or if you were trying to qualify for harder-to-get stuff in the near future, but if you think in terms of 6+ months, really 12+ months, this will create a strong base for the future.

All cards should be used at least a little. One trick a lot of people use is to set up some small recurring monthly fees to go on the new cards and also set up autopay on those cards. As an example, my Hulu bill goes on my Citi card, and my Citi card has autopay set up to pull from my bank account. My Netflix bill goes on a different card, my HBO bill goes on another card. This is to have them all report positive every month.

Just my opinion, and, I'm early in the process, so there could be a gotcha I'm missing with the thick-start concept. Good luck!

Re: AU tradelines & Building Credit

DIYcredit — Mon, 27 May 2019 11:59:44 GMT

A thin/young file is if you have less than three credit accounts or at least one account open less than three years.Don't open cc's or credit accounts just to have a certain number, 2-3 cc's in time is enough ,only open the credit accounts the you need to function.It's much more important to manage your accounts properly.

Re: AU tradelines & Building Credit

Anonymous — Mon, 27 May 2019 12:06:40 GMT

You need to satisfy three conditions for the credit bureaus to generate a credit score.

What are the minimum requirements for a FICO score?

In order to receive a valid FICO® Score, the credit report must have:

At least one account opened for six months or more, and
At least one account that has been reported to the credit bureau within the past six months, and
No indication of deceased on the credit report (Please note, if you share an account with another person this may affect you if the other account holder is reported deceased).

All you need is to be added as an authorized user on one credit card. The caveat is that you must be added to a card that backdates its history so that the history becomes yours. American Express cards do not backdate history but most other cards do.

Re: AU tradelines & Building Credit

KJinNC — Mon, 27 May 2019 12:10:44 GMT

@DIYcredit wrote:
A thin/young file is if you have less than three credit accounts or at least one account open less than three years.Don't open cc's or credit accounts just to have a certain number, 2-3 cc's in time is enough ,only open the credit accounts the you need to function.It's much more important to manage your accounts properly.

That is a true statement, but I don't think it is very relevant in our situation. It will be considered a "young" account for a certain length of time no matter what you do. Opening more accounts will not help or hurt that situation.

The concept is that in the future as your accounts age, they all age together, allowing you to better absorb whatever comes up, eg new account, or if you were to make a late payment, there will be a larger volume of positive history.

I would try to get cards that serve a longterm purpose (as I listed), but I would not be above getting a card that "you don't need" if you need it to build credit history. The reality is, I need zero cards, and until this year, I had zero cards for about 20 years.

Note that my advice is specific for this situation only, which is a totally empty credit file paired with a decent income and a focus on building credit. Every situation is different.

Re: AU tradelines & Building Credit

DIYcredit — Mon, 27 May 2019 12:47:05 GMT

As far as payment history the only thing that matters "is their presence or derogatory information or not" and than whats considered if their is, is severity,recency and frequency.You must get current on all credit obligations afterwords because if a derogatory is present your negative events are weighed against your recent on time payments. The higher your Fico score is the more your credit score will drop and then the lower your Fico score the less it will drop.The volume of on time payments before a negative event occurred is not a factor.

Re: AU tradelines & Building Credit

KJinNC — Mon, 27 May 2019 13:39:42 GMT

Again, true for FICO score calculation - NOT true for all situations (think loan officer reviewing files). 7 > 3, simple as that. Do you disagree 7 > 3? If not, what exactly are we debating? The normal reasons to go slow don't matter for a completely empty file because a) you aren't going to qualify for prime rates in a couple of months either way, b) you have no risk of adverse actions on a secured card or equivalent.

Re: AU tradelines & Building Credit

Anonymous — Mon, 27 May 2019 13:13:38 GMT

@KJinNC @DIYcredit

Both of you have made very valid points, but as we always say YMMV. Even in (what seems like) very similar situations, no two profiles are alike, so what works for one may not work for the next.

Re: AU tradelines & Building Credit

DIYcredit — Mon, 27 May 2019 13:36:43 GMT

I agree that this is not the road I wanted to go down,but I wuld like to wish Baelish the best of luck in the credit world.

Re: AU tradelines & Building Credit

MyDataMyChoice — Mon, 27 May 2019 18:08:12 GMT

A 41K Car Lease !! And you'll own NOTHING... and even if you did its a depreciating asset.

Unless its a work vehile.... think again