topic (8mo update +210pt) Building from 550 - My progress thread in Rebuilding Your Credit

(8mo update +210pt) Building from 550 - My progress thread

morethan20yaks — Sat, 09 Oct 2021 15:30:05 GMT

Greetings, all. This will be my first post, and I intend to update it as I reach milestones on my way to 700+

A quick bio: I'm 34, single, income 43K, with no assets, no debts, and weak credit. I've paid cash for every car, never owned a home, and never had a credit card. My CU offered me an unsecured $500 loan which I didn't need, but took, just to build payment history. My score rose to 600 during that time, and then dropped to 550 in 12/2020 when the loan was paid off. This puts my average (only) account age at 10 months.

I have three medical collections from 01/2020, totalling $3000.

Besides that, I'm a blank slate. Last week, I applied for three secured cards, back to back. Approved for Capital One ($200 for $99) and Discover ($300); and FNBO denied. I'm pretty happy - no, STOKED, - with 2/3!! I'm waiting for the cards in the mail.

My current scores, including those 6 inquiries:

EQ: 532

TU: 562

EX: 556

[Average 550]

Next steps: Opening a NFCU account and switching over my direct deposit, then applying for the largest SSL I can scrape together (10-12K), using 3K to pay off my medical collections (hopefully for a delete), then paying the principal down and letting it ride. Depending how my credit is looking during that timeframe (Cap1 and Disco should be reporting by then), I'll likely apply for a NFCU secured card.

If all goes well, in three months time I'll be due for a 15-20% raise at work, sitting on 3 decent cards, a 10K+ SSL @ <9%, and no baddies. A good spot to secure some CLIs and an auto loan, me hopes.

The collective knowledge on this forum is mindblowing. I've spent a dozen hours or more this week, researching, developing, and redeveloping this plan. And I'm still such a dummy! Just a slightly less-ignorant dum dum than I was before I'm open to any critique or advice, if you're willing.

Thank you all, most kindly. I hope my tiny contibution here will prove helpful to somebody, some day. Cheers.

Re: Building from 532

Horseshoez — Wed, 17 Mar 2021 18:16:49 GMT

@morethan20yaks wrote:

Next steps: Opening a NFCU account and switching over my direct deposit, then applying for the largest SSL I can scrape together (10-12K)...

Question for both @morethan20yaks and anybody else seeing this thread, "Is there any evidence a Secured loan above say $3,000 helps accelerate growth in credit scores?

I ask because I'm curious why you wouldn't just open a lower limit SSL and then invest the rest of the money elsewhere?

Re: Building from 532

morethan20yaks — Wed, 17 Mar 2021 18:32:43 GMT

Good questions. I don't know whether having a 3K vs 10K loan makes a difference on my report for the next 60 months (and 10 years after that) but I suspect the bigger denominator will only help, as I have large purchases in my 3-5 year plan. Curious to see what others have to say.

As for the second part, most of that cash is earmarked for other projects this summer. It seems to me that directly paying the CA with 3K cash == paying CA with 3K SSL == paying CA with 10K SSL then paying the principal down to $800 (thus returning my entire cash deposit, less eight percent) and riding it out. They're functionally equal, the only difference being interest, which is nominal, for my purposes.

Re: Building from 532 - My progress thread

gdale6 — Wed, 17 Mar 2021 19:10:32 GMT

Hi there OP and welcome to the board

I updated your title to say its your progress thread this way it wont be locked by the mods after 1 year which is current policy sans certain threads.

Re: Building from 550 - My progress thread (8 month update +210 points)

morethan20yaks — Sat, 09 Oct 2021 13:55:02 GMT

Greetings, all! Here's a recap of the last 8 months, up to current standing

March 2021 :

$300 Discover CC (secured)
$200 Capital One CC (secured)

June 2021 :

$12K NFCU SSL (secured)
$2K Signature Loan (unsecured)
$2K Visa CC (unsecured)
$1150 nRewards CC (secured)

That's 6 new accounts between March and June. In that time, I used my emergency savings to PFD all 3 baddies, yielding a clean scorecard.

September 2021 :

Capital One CC CLI to $300 (still secured with $99)

October 2021 :

Discover CC graduated and CLI to $1500

That brings us to today

All Accounts : (6 open, 1 closed)

Income: 51K (+18%)
AAoA: 6 months
AoYA: 4 months
AoOA: 17 months (the only other account besides the 6 I described. A closed $500 personal loan with 6 months good payment history)

Installments : (2 open, 1 closed)

AAoIn: 8 months
AoYIn: 4 months
AoOIn: 17 months
Individual Util: 38% (750/2000 unsecured)
Individual Util: 3% (350/12000 secured)
Aggregate Util: 8% (1100/14000)

Revolvers : (4 open, 0 closed)

AAoR: 5 months
AoYR: 4 months
AoOR: 7 months
Util: AZEO 1% (14/4950) 3800 of which is unsecured - hoping NFCU won't be far behind

Inquiries :

TU: 4/12
EQ: 2/12
EX: 4/12

FICO Scores :

TU8: 752 (+190)
EQ8: 768 (+236)
EX8: 761 (+205)

I believe that 17 month old installment loan is helping me a bit, but this more or less reflects what could be done with a 'blank' slate in the same time period. Maybe even a little quicker, though this was plenty aggressive for my liking.

What I would do differently? Probably not much. I had to roll with a few punches, but I believe my execution was more-or-less flawless. I 'wasted' 3 hard pulls. That's inevitable, I suppose, and really not a big deal. Avoid SDFCU - they will lie to your face like it's... their job. My only other real denial was FNBO secured card application. They quoted a 528 score and baddies, so I'm ni mad nor surprised. Fastforward 8 months, and I just prequalified for their Evergreen 2% cashback card with a SL of $8800. DECENT.

What's next? I'm opening two installment loans - a second NFCU SSL for 4K, becuase I plan on paying off the 12K SSL in 18 months and I want a smaller one already established to keep around full-term; And an 8K signature loan at the local CU for some car repairs and hobby stuff. That will bring my total accounts to 9, then I'm going straight back to the garden for 9 months, allowing for all my FOUR new revolvers to hit 1 year old+. July 2022 AA will be 14 months, YA 9 months, OA 26 months, and youngest revolver 13 months. 1/12 on EQ and 0/12 on TU & EX. Then I'm gonna Chase app, quick! cuz I'll probably never be 4/24 again lol. And w/ so few inquiries.

Will use that quiet time to aggressively pay down the 8K signature loan, open & use checking accounts w/ Chase, Affinity, and AOD, seek SP CLIs, and work on wrapping up my bachelors degree. On we go.

Hope these DPs help somebody I will update in a month or two to establish a new baseline once these upcoming installment accounts are reporting. Cheers, and thanks again. Couldn't have done it without the folks on this board

Re: Building from 550 - My progress thread (8 month update +210 points)

FireMedic1 — Sat, 09 Oct 2021 15:52:58 GMT

@morethan20yaks wrote:
Greetings, all! Here's a recap of the last 8 months, up to current standing

March 2021 :
$300 Discover CC (secured)
$200 Capital One CC (secured)
June 2021 :
$12K NFCU SSL (secured)
$2K Signature Loan (unsecured)
$2K Visa CC (unsecured)
$1150 nRewards CC (secured)
That's 6 new accounts between March and June. In that time, I used my emergency savings to PFD all 3 baddies, yielding a clean scorecard.

September 2021 :
Capital One CC CLI to $300 (still secured with $99)
October 2021 :
Discover CC graduated and CLI to $1500

That brings us to today

All Accounts : (6 open, 1 closed)
Income: 51K (+18%)
AAoA: 6 months
AoYA: 4 months
AoOA: 17 months (the only other account besides the 6 I described. A closed $500 personal loan with 6 months good payment history)

Installments : (2 open, 1 closed)
AAoIn: 8 months
AoYIn: 4 months
AoOIn: 17 months
Individual Util: 38% (750/2000 unsecured)
Individual Util: 3% (350/12000 secured)
Aggregate Util: 8% (1100/14000)

Revolvers : (4 open, 0 closed)
AAoR: 5 months
AoYR: 4 months
AoOR: 7 months
Util: AZEO 1% (14/4950) 3800 of which is unsecured - hoping NFCU won't be far behind

Inquiries :
TU: 4/12
EQ: 2/12
EX: 4/12

FICO Scores :
TU8: 752 (+190)
EQ8: 768 (+236)
EX8: 761 (+205)
I believe that 17 month old installment loan is helping me a bit, but this more or less reflects what could be done with a 'blank' slate in the same time period. Maybe even a little quicker, though this was plenty aggressive for my liking.

What I would do differently? Probably not much. I had to roll with a few punches, but I believe my execution was more-or-less flawless. I 'wasted' 3 hard pulls. That's inevitable, I suppose, and really not a big deal. Avoid SDFCU - they will lie to your face like it's... their job. My only other real denial was FNBO secured card application. They quoted a 528 score and baddies, so I'm ni mad nor surprised. Fastforward 8 months, and I just prequalified for their Evergreen 2% cashback card with a SL of $8800. DECENT.

What's next? I'm opening two installment loans - a second NFCU SSL for 4K, becuase I plan on paying off the 12K SSL in 18 months and I want a smaller one already established to keep around full-term; And an 8K signature loan at the local CU for some car repairs and hobby stuff. That will bring my total accounts to 9, then I'm going straight back to the garden for 9 months, allowing for all my FOUR new revolvers to hit 1 year old+. July 2022 AA will be 14 months, YA 9 months, OA 26 months, and youngest revolver 13 months. 1/12 on EQ and 0/12 on TU & EX. Then I'm gonna Chase app, quick! cuz I'll probably never be 4/24 again lol. And w/ so few inquiries.

Will use that quiet time to aggressively pay down the 8K signature loan, open & use checking accounts w/ Chase, Affinity, and AOD, seek SP CLIs, and work on wrapping up my bachelors degree. On we go.

Hope these DPs help somebody I will update in a month or two to establish a new baseline once these upcoming installment accounts are reporting. Cheers, and thanks again. Couldn't have done it without the folks on this board

Nice. No need for another SSL with 18 months left on the first one. And bring your total up to 5 loans afterb the other loan app. You only need 1 installment loan reporting. Save the hits to your AoYA and AAoA's. Whichever loan goes the furthest out with the lowest util. Keep it and close out the others. Then grab your Chase card. Nice work and scores!

Re: Building from 550 - My progress thread (8 month update +210 points)

morethan20yaks — Sat, 09 Oct 2021 16:58:57 GMT

@FireMedic1 wrote:
Nice. No need for another SSL with 18 months left on the first one. And bring your total up to 5 loans afterb the other loan app. You only need 1 installment loan reporting. Save the hits to your AoYA and AAoA's. Whichever loan goes the furthest out with the lowest util. Keep it and close out the others. Then grab your Chase card. Nice work and scores!

Thanks FireMedic,

Hear me out. I'm curious what you think.

1) I may get some long-term benefit by my SSL being 5 figures, but the downside is the hit to my DTI, since it's based on monthly payment, not my 'true' monthly payment of $5. I've already had to explain this debt to a bank manager, so I'm motivated to close it before any major credit applications (mortgage etc) - likely to be 18 months from now~

2) I plan on having the new 8K signature loan paid off in that same 18 months. That would leave me with no open installments, right before a major credit application.

3) By opening a smaller SSL now, in 18 months, I'll be left with the solid history of the previous high-dollar[lol I'M TRYING] installments I just paid off, and still have a 'mature' installment account with 18 months history, only $70/mo to DTI, reporting util <8%. Versus scrambling to open a new SSL 6 months before a mortgage app and taking that 'youngest account' hit for the next year+

Bonus: One more positive tradeline reporting for the next decade, anchoring my AA

Bonus: More account history with NFCU, with no inquiry required

The only downside I foresee is the hit to my AA, which, 18 months from now, equates to 24.2 vs 24.9 months. My youngest account will be the same, since I'm opening the signature loan the same month.

Really appreicate your feedback, and think I understand why that's great advice, generally. But is my logic sound? My goal is to have the strongest profile possible 18-36 months from now. 0-18 months my FICO score is secondary to that goal, and I expect my short-term wins to come from smart budgeting, academic progress, and career mobility.

Re: Building from 550 - My progress thread (8 month update +210 points)

FireMedic1 — Sat, 09 Oct 2021 17:47:19 GMT

Thats cool. Long as you only have 1 loan open for the FICO bonus low util %. And no HP/Accounts for a year before the homeloan. Its all good. Good Luck!

Re: Building from 532

FireMedic1 — Sat, 09 Oct 2021 21:38:46 GMT

@Horseshoez wrote:
@morethan20yaks wrote:

Next steps: Opening a NFCU account and switching over my direct deposit, then applying for the largest SSL I can scrape together (10-12K)...
Question for both @morethan20yaks and anybody else seeing this thread, "Is there any evidence a Secured loan above say $3,000 helps accelerate growth in credit scores?

I ask because I'm curious why you wouldn't just open a lower limit SSL and then invest the rest of the money elsewhere?

@Horseshoez Usually the higher the amount the longer the terms. Especially if its for a SSL. You not going to get 3 yrs on $500. $3000 yes depending on which CU is used. Thats why you see the over $3000 for NFCU. $3050 get you the longer terms. Least when I had mine.

Re: Building from 532

HowDoesThisAllWork — Sun, 10 Oct 2021 10:47:15 GMT

Correct. I just opened up an SSL with NFCU and have these data points for everyone out there....

1. If you get an NFCU SSL for $250 - $500, then the loan terms will be for 6 months to 11 months. You get to pick.

2. If you get an NFCU SSL for $501 - $1,000, then the loan terms will be for 12 months to 17 months (again, you get to pick).

3. If you get an NFCU SSL for $1,001 - $3,000, then the loan terms will be for 18 months to 35 months (again, you get to pick).

4. If you get an NFCU SSL for $3,001 to whatever (I did not ask for details above $3,000 when I did this....)

Mine is for $525 and I picked 15 months.

Now, keep in mind that NFCU is going to tack on and report +1 for the months (loan terms). So, to be clear, NFCU reports my SSL (which just reported to the CRAs) as a $525 Installment Loan for 16 months.

For those interested, here are the Transunion and Equifax screen shots...

Re: Building from 532

Horseshoez — Sun, 10 Oct 2021 13:26:45 GMT

I have a PenFed SSL which I opened for exactly $3,000 with a repayment period of 36 months; if I recall correctly, I had the option to go as long as 60 months, even on a $3,000 SSL, however, even the three years I opted for is overkill; I should have a mortgage and/or a car payment long before then. My way of thinking is, "why opt for a long loan, much longer than any of us can see into the future?" Said another way, if by March of 2024 I need an SSL, I'll simply open another one and then immediatly pay it down to under 9%. The only reason why I took five months to pay this one down to that point was to see if it impacted my scores as I dropped below various thresholds, and FWIW, the only one I noticed was when I went below 9% a few weeks ago; my Experian FICO 8 just bumped from 679 to 688.

Re: Building from 532

HowDoesThisAllWork — Sun, 10 Oct 2021 17:08:39 GMT

@Horseshoez wrote:
I have a PenFed SSL which I opened for exactly $3,000 with a repayment period of 36 months; if I recall correctly, I had the option to go as long as 60 months, even on a $3,000 SSL, however, even the three years I opted for is overkill; I should have a mortgage and/or a car payment long before then. My way of thinking is, "why opt for a long loan, much longer than any of us can see into the future?" Said another way, if by March of 2024 I need an SSL, I'll simply open another one and then immediatly pay it down to under 9%. The only reason why I took five months to pay this one down to that point was to see if it impacted my scores as I dropped below various thresholds, and FWIW, the only one I noticed was when I went below 9% a few weeks ago; my Experian FICO 8 just bumped from 679 to 688.

Agreed. I just love love love the Navy Federal Credit Union way of giving you a choice. I am banking (pun very much intended) on my current car, Bella, to last another year (and am hopeful for 15 - 18 months). I am preparing for that expense now (via budgeting so that I can purchase a car like an adult....). But, that is not the topic here. As I have stated elsewhere, the ex-wife and I finally addressed the marital home in February. There goes that "installment loan". I then paid off my car (yes, the same Bella!!! She is all mine now! LOL) and bam! There went the last installment loan.

So, this SSL from NFCU really fills the void. And doing the 15 months (which is really 16 months because of NFCU adding one extra month) fits my situation perfectly. Well, what I *think* - right now - what "perfectly" might mean to me in the future! Yikes! That can be a scary sentence!

Re: Building from 532

morethan20yaks — Sun, 10 Oct 2021 21:38:44 GMT

Navy SSL is very well documented on this forum. O/T

My reasoning for scraping together the largest loan I could muster? I picture myself, speaking to underwriting in a year or two regarding a loan app I'm marginally qualified for, and they say:

"Yes, you have a 761 score w/ 100% history, but I'm looking here & you've only had two loans... one for $500 and one for $2000. And now you're asking for $18,000?" (I've had this conversation a decade ago and it didn't go so well). Showing responsible payment history on a 'larger' loan would have 100% helped in my negotiations. My CU still does manual underwriting in-house, and the branch manager means business when he looks you in the eye, tells you what's up, and gives you a fist bump.

Likewise in automated decisions, if 'the algorithm' considers large denominators, it'll help. I work in data science... I guarantee most, if not all, proprietary algorithms consider every single data point available to them, including prior loan amounts. You read all the time "most credit card SLs will be in line with your existing CLs", and this is why.

If you only care for the FICO score X point boost, then a $500 SSL will do the job, as far as I can tell.

Re: Building from 532

GrandBay — Sun, 10 Oct 2021 23:00:25 GMT

@morethan20yaks Congrats on the score growth....

Re: Building from 532

HowDoesThisAllWork — Mon, 11 Oct 2021 09:36:47 GMT

@morethan20yaks wrote:
Navy SSL is very well documented on this forum. O/T

My reasoning for scraping together the largest loan I could muster? I picture myself, speaking to underwriting in a year or two regarding a loan app I'm marginally qualified for, and they say:

"Yes, you have a 761 score w/ 100% history, but I'm looking here & you've only had two loans... one for $500 and one for $2000. And now you're asking for $18,000?" (I've had this conversation a decade ago and it didn't go so well). Showing responsible payment history on a 'larger' loan would have 100% helped in my negotiations. My CU still does manual underwriting in-house, and the branch manager means business when he looks you in the eye, tells you what's up, and gives you a fist bump.

Likewise in automated decisions, if 'the algorithm' considers large denominators, it'll help. I work in data science... I guarantee most, if not all, proprietary algorithms consider every single data point available to them, including prior loan amounts. You read all the time "most credit card SLs will be in line with your existing CLs", and this is why.

If you only care for the FICO score X point boost, then a $500 SSL will do the job, as far as I can tell.

@morethan20yaks

Excellent journey. And amazing results. But, expected (that is a strong word...but let's go with it here) as well. I figured that you worked in some sort of "engineering/science" capacity. Your posts are extremely logical and very well laid-out. Even this old man's brain can very nicely follow.

And I really like your reasoning for going for a larger sum Loan. And the analogy that you used is dead-on perfect. We do see that all of the time. "Birds of a feather" and all that jazz!

I wonder who in this forum is the loan expert? I can think of two or three but that is more for a different aspect.

Well done! And great post with excellent (and most pertinent) detail.

Re: Building from 532

morethan20yaks — Sat, 06 Nov 2021 16:22:28 GMT

Approved for the 8K signature loan! They pulled some flavor of EQ, which came back as 773! Highest I've ever seen. That qualified me for the lowest rate 8.99% & 48 month term. Excellent. I set autopay for an 18 month payoff, and may reduce that to 12, depending on how a few budgetary considerations shake out.

Decided I'm not going to pull the trigger on another SSL. I have some other ideas, but I'm going to let them stew a while.

One last DP - I changed my AZEO card, which left me AZ for 2 weeks in the middle of October. My EX8 score went down 13 points as soon as my balance reported zero. When my new AZEO card updated November 1, I went back up 16 points to 764 (a record). I reckon this was the 13~ azeo points, +1 month aging factors, and/or my Disco unsecuring with a $1200 CLI. Good to know I can count on about a dozen points by utilizing the AZEO strategy. (-13 EX8, -12 TU8, -1 EQ9)

Thanks.

Re: Building from 532

PicoFico — Sun, 07 Nov 2021 03:00:04 GMT

@Horseshoez wrote:
@morethan20yaks wrote:

Next steps: Opening a NFCU account and switching over my direct deposit, then applying for the largest SSL I can scrape together (10-12K)...
Question for both @morethan20yaks and anybody else seeing this thread, "Is there any evidence a Secured loan above say $3,000 helps accelerate growth in credit scores?

I ask because I'm curious why you wouldn't just open a lower limit SSL and then invest the rest of the money elsewhere?

When you pay down the loan to 8.9% or less with NFCU you get the money back as soon as it posts, and the length of the loan is determined by the original amount (for example the LEAST I could pay for a 60mo SSL was $3,001).

All the while you're getting ✅ every month.

So being that you get all back but 8.9% or so, almost immediately, the real question is how long would like it to report.

In another post you said:

"Said another way, if by March of 2024 I need an SSL, I'll simply open another one and then immediatly pay it down to under 9%."

Seems to me it's easier to take a longer loan and pay it off to closed, as needed, than it is to realize you came up short, need to take another HP and add a new account to your file driving down AoYA and AAoA's.

Re: Building from 532

morethan20yaks — Sun, 07 Nov 2021 03:18:18 GMT

@PicoFico wrote:
@Horseshoez wrote:
@morethan20yaks wrote:

Next steps: Opening a NFCU account and switching over my direct deposit, then applying for the largest SSL I can scrape together (10-12K)...
Question for both @morethan20yaks and anybody else seeing this thread, "Is there any evidence a Secured loan above say $3,000 helps accelerate growth in credit scores?

I ask because I'm curious why you wouldn't just open a lower limit SSL and then invest the rest of the money elsewhere?
When you pay down the loan to 8.9% or less with NFCU you get the money back as soon as it posts

Precisely. Whether the denominator started as $3,000 or $12,000, I have the same $300~ tied up and it's costing me the same 0.55 cents per month in interest. A small price and I'm happy to pay it.

The only downside to a large-SSL that you don't read about much is DTI. Doesn't matter I don't OWE a payment until 2026 - or that my effective payment is only $5/month to get dem ✅✅✅s for the next 55 months - The credit bureaus still report a 'hefty' $212 monthly obligation, which is thus used in DTI calculations. Hasn't affected me yet, and I don't think it will, but it could. No biggie, I'll PIF if that day ever comes.

I'm glad I did it. Now my installment lineup look like:

1) $500 unsecured PIF

2) $2000 unsecured PIF

3) $12000 secured

4) $8000 unsecured

I'll probably pay off 3 & 4 around the same time, leaving me with zero~ DTI and 4 recent & varied installment loans (including one that's 5 digits, driving up the average). A relatively strong position, me hopes.

Cheers.

Re: Building from 532

morethan20yaks — Thu, 05 Jan 2023 18:09:17 GMT

800 ahoy! 22 months strong.

A few thoughts: The large SSL w/ super low utilization & a 'large' monthly payment doesn't count as DTI by most underwriting standards.

Because: 12K SSL reports a $200~ payment. My util is 250/12000, so underwriters consider it to be PIF in 60 days, thus do not include it in my DTI. They don't know it's on $5 autopay, or care.

That was my sole concern. I now see zero reason not to scrape together the largest SSL you can manage. I'm certain it bolstered my credibility, sitting in a bank office asking for 15k cash, listening to the manual underwriter read out loud my otherwise thin-file [approved]. And it's most-likely tasty food for algorithms, too. No regurts.

Happy New Year, all

Re: Building from 532

Horseshoez — Thu, 05 Jan 2023 20:05:57 GMT

@morethan20yaks wrote:

That was my sole concern. I now see zero reason not to scrape together the largest SSL you can manage. I'm certain it bolstered my credibility, sitting in a bank office asking for 15k cash, listening to the manual underwriter read out loud my otherwise thin-file [approved]. And it's most-likely tasty food for algorithms, too. No regurts.

Congratulations on the 800!

I would argue a $500 SSL would have given you the exact same bump as a five-figure SSL. I opted for a $3,000 SSL in 2021 and by early 2022 all of my FICO scores were somewhere between 810 and 850+ (for the scores which can go higher).