topic Re: Thin Credit File - how to intelligently "improve" that? in Rebuilding Your Credit

Thin Credit File - how to intelligently "improve" that?

Anonymous — Sun, 04 Jul 2021 04:34:21 GMT

Good morning, crew!

First of all, Happy 4th of July. Not getting political, but God bless the USA. What an amazing country we live in....I am so grateful.

Now, I have not been the best consumer. I have not played by the rules and I have paid / am paying the price for my decisions. Yes, my decisions. See, I know better! Right? Well, apparently I do not! So, I am changing my approach to this Credit Game.

I would really like to do things the smart way. I mean, let's try something new.

I have zero debt. Thank the good Lord for that. I pay rent and that is it. I do not have a mortgage. I have an old beater for a car, so no car payment (paid off something like five years ago).

I have but two credit cards. Have had both for some time now (18 months or so).

I have two charge-offs (see previous posts regarding them).

I see on various web sites that I have a thin file and, specifically, that I do not have an 'installment loan'. I do not want to buy a home or a car JUST TO 'fix' that issue. That just seems silly to me.

I do not really want to apply for any more credit cards. Not sure that is a good idea. Well, at this point, anyway.

I have read about these so-call "SSL" loans.

Do I seem like a good candidate for this (will only entertain that thought once I educate myself on this topic)?

I do plan on buying a house in about two years (and hopefully will not need to buy a car in the meantime...).

Thank you, crew!

Re: Thin Credit File - how to intelligently "improve" that?

tnhomestead — Sun, 04 Jul 2021 04:57:23 GMT

Stockpile cash, watch your 2 cards slowly boost your scores and then buy a house. You called it right, it's a game to many people. If I AZEO, I can boost my score 3 points then if I do fill in the blank, I can get 5 more. Not saying those ideas won't work, just seems like clean up bad old debts, save money and let scores climb naturally will work too.

Re: Thin Credit File - how to intelligently "improve" that?

Anonymous — Sun, 04 Jul 2021 05:59:43 GMT

@tnhomestead

Unfortunately (for me), the two COs are with companies that will not budge (no expectation for them to do so, as the issue was 100% mine) so waiting for them to fall off my Credit Reports is the only option available (on this point).

I can be VERY patient. I would just like to play by the rules and maximize things to my benefit (for a change, instead of doing "dumb" things).

Thanks, man!

Re: Thin Credit File - how to intelligently "improve" that?

Red1Blue — Sun, 04 Jul 2021 09:38:31 GMT

@Anonymous wrote:
@tnhomestead

Unfortunately (for me), the two COs are with companies that will not budge (no expectation for them to do so, as the issue was 100% mine) so waiting for them to fall off my Credit Reports is the only option available (on this point).

I can be VERY patient. I would just like to play by the rules and maximize things to my benefit (for a change, instead of doing "dumb" things).

Thanks, man!

Paid CO's effect will reduce as the time passes by. Give it some time and your scores will recover.

Re: Thin Credit File - how to intelligently "improve" that?

FireMedic1 — Sun, 04 Jul 2021 10:33:50 GMT

Since you have 2 cards and no loans. You'll need 1 more card and a loan or SSL. If theres a way you can get into NFCU from any family member that served in the military. Thats where you can get the secured savings loan. Deposit over $3000 into a savings account and then get the SSL loan for a few bucks over 3g's. Once it reports. Then pay it down to less than 8% and it will push the date way out. Give Cap1 prequal a try and grab a Platinum card. Then you'll have the 3 revolvers and an installment loan and FICO likes that. I just paid off my SSL with NFCU because I got a new SUV. No need to have 2 loans reporting. Just having no loans until the new car loan hit. I lost 30+ points across the board. So you see theres ways to play the game. If you cant get into NFCU try a credit union. Good Luck!

Re: Thin Credit File - how to intelligently "improve" that?

Anonymous — Sun, 04 Jul 2021 12:01:55 GMT

Thank you! Both are indeed paid off (and, to be clear, paid in full). So time it is.....and I am okay with that. I just wanted to make sure that I am - so to speak - not leaving any money on the table with this (due to ignorance.....). Thank you again!

Re: Thin Credit File - how to intelligently "improve" that?

Anonymous — Sun, 04 Jul 2021 12:15:03 GMT

@FireMedic1 Thank you. I am really trying to play this Credit Game correctly now. I do have numerous family members who proudle served this great country so I do have an in with NFCU. I will contact them sometime this week. On the Credit Card, really wanted to wait until 2022 to get that third card but will jump on that (getting the third CC) this week. Just hope I can get approved! LOL

Two questions - if I might bend your ear a bit (so-to-speak) - regarding the SSL (assume NFCU for these two questions):

1. Open up a Savings account with NFCU and once those funds hit that Savings account then contact NFCU and initiate that SSL. My questions here are - while the SSL is "active" I am assuming that the funds in the Savings account "are locked" (as that is the 'Security Deposit') correct? Or, am I able to pay for the SSL using the funds in that Savings account? Read: that first $2,760 payment that I make can indeed come from that Savings account? Asking for a friend (ha! ha!).

2. If my goal is to purchase a house in the next two years then I need to ensure that I pay off that SSL *BEFORE* I purchase the house. And, since that whole game is using a different set of FICO Scores (FICO 2,4, and 5) are there different rules to this? I want to say that Home Mortgage Lendors like to see very little to zero activity something like one year before the house purchase? Any insight there?

Thanks, man! And mad props to you for your profession (making an assumption there....).

Re: Thin Credit File - how to intelligently "improve" that?

Horseshoez — Sun, 04 Jul 2021 14:34:32 GMT

@Anonymous, Here's the cool thing about the way SSLs work, you deposit say, $3,000 into a savings account, let it age for 30 days, and then open the SSL; the very next thing which happens is you get a check in the mail for $3,000 to do with what you choose. As you pay the SSL down, at least with the PenFed SSL I'm using, the "Available Balance" of the security savings account rises, so that money can be used by you as well.

Re: Thin Credit File - how to intelligently "improve" that?

FireMedic1 — Sun, 04 Jul 2021 14:45:42 GMT

@Anonymous

I used my grandfathers papers to get in. I went in with all my money from SunTrust. Opened a checking and savings account. Deposited all the money. I asked the CSR if she could use the same HP to join NFCU (which there will be)and applied for the Cash Rewards AMEX. Approved right then in the same visit. I came home and a week later I applied online for the SSL. No calls or anything needed. SSL was opened. It has to be over $3000 for 5 yrs I think it was or 3 I went for. Cant remember. I remember I took a $3100 SSL. But I paid it down to <8% a week later and it pushed the date to 2023? I paid $1 a month to show activity. So that may be a way to get the 3rd card too in 1visit. Keep us updated please. It could help others. Good Luck!!!!!

Re: Thin Credit File - how to intelligently "improve" that?

Horseshoez — Sun, 04 Jul 2021 16:09:43 GMT

@FireMedic1, interesting on the HP to join NFCU, I've seriously considered joining, but so far I've been happy with PenFed (which only hits you with an SP to join; I didn't get an HP until I applied for a PenFed credit card). The reason I'm considering joining NFCU is my son, a Navy veteran, is now banking exclusively with them and my daughter, all but engaged to a Navy veteran, will be moving her banking to NFCU once she gets married. I'm thinking it might just make sense for all of us to have accounts with the same financial institution so pushing money to them (or back to Mom and Dad at some point).

Re: Thin Credit File - how to intelligently "improve" that?

Nikita2008 — Sun, 04 Jul 2021 15:45:07 GMT

Personally, I would try to build out the thin file. One more card and the SSL. It does not mean you have to carry debt so to speak. Use the card/s for routine purchases and PIF every month.

You may not need credit now, but you never know when you will.

Re: Thin Credit File - how to intelligently "improve" that?

chijo — Mon, 05 Jul 2021 08:55:05 GMT

Firstly, I love your post title. Something I am also thinking about since I have a semi thin file. I am of the opinion that most of this score game is just to profit the financial industry more and more. Not necessarily pro consumer by any means. If fattening that file costs you more money than is prudent I wouldn't. I find that those who score such things count every minimum payment of every card you have as if you were charging on each card every month in the DTI area. I decided that in my case it would be better for me to add to credit limits and leave the number of cards where they are for now...three. I want to leave room for a mortgage and vehicle loan soon. Since scores can drop when loans are paid off I didn't want to take that risk with short term personal type loans since my score is where I can't afford to try to time those drops right now. Small as they may be.

Re: Thin Credit File - how to intelligently "improve" that?

Anonymous — Mon, 05 Jul 2021 13:05:04 GMT

@chijo

Excellent point with the score drops. Most people (I think that I can say "most people" here) overlook the fact that once an installment loan is paid off that there is a drop in your credit score. Which - I guess - makes no sense. Not to us humans, anyway. The size of the drop depends on "your" credit file. For someone like me (with a thing, young file) that drop would likely be much larger than for someone with an aged, thick file. All good. Part of the learning curve.

And, good points. Definitely things to consider. Still up in the air about the SSL. Leaning heavily towards it....but I will sleep on it.

Re: Thin Credit File - how to intelligently "improve" that?

Horseshoez — Mon, 05 Jul 2021 14:15:36 GMT

@chijo wrote:
I am of the opinion that most of this score game is just to profit the financial industry more and more. Not necessarily pro consumer by any means. If fattening that file costs you more money than is prudent I wouldn't. I find that those who score such things count every minimum payment of every card you have as if you were charging on each card every month in the DTI area.

I'm not sure I understand what you're trying to say, why would "fattening" one's file cost them any money at all?

I ask because exactly a year ago today I got my first "Rewards" credit card; in that year I haven't paid even a single penny of interest, however, my spending has earned me a total of $436.36 in cash rewards plus another $300 for sign up bonuses. To me at least, that seems like the opposite of costing one money to fatten their file.

Re: Thin Credit File - how to intelligently "improve" that?

FireMedic1 — Mon, 05 Jul 2021 23:09:35 GMT

@chijo wrote:
Firstly, I love your post title. Something I am also thinking about since I have a semi thin file. I am of the opinion that most of this score game is just to profit the financial industry more and more. Not necessarily pro consumer by any means. If fattening that file costs you more money than is prudent I wouldn't. I find that those who score such things count every minimum payment of every card you have as if you were charging on each card every month in the DTI area. I decided that in my case it would be better for me to add to credit limits and leave the number of cards where they are for now...three. I want to leave room for a mortgage and vehicle loan soon. Since scores can drop when loans are paid off I didn't want to take that risk with short term personal type loans since my score is where I can't afford to try to time those drops right now. Small as they may be.

I understand your point though it really in a way it doesnt work like that. FICO likes a min of 3 cards. Why 3? FICO likes less than 50% of cards reporting a balance. So going from 2 to 3 cards help when 1 reports. Name and credit limit doesnt mean a thing. Its how its reported. If you dont have any loans at all reporting. Yes it can cost you an avg 30+/- points. I went thru 2 SSL's one by one. Alliant and NFCU which kept me in the 730-750 range. Once Alliant stopped 35 pts gone. Then NFCU SSL reporting <8 jumped the point right back up. Computers that approve see scores more than anything. So thats why the SSL is a popular thing around these parts. No HP and it can be paid down fast and it pushes the statement date way out there. Then once it comes time to get a car or home. Your scores are much higher with the SSL than without any loan reporting. Thats the real reason.

Re: Thin Credit File - how to intelligently "improve" that?

chijo — Tue, 06 Jul 2021 02:00:11 GMT

I wasn't aware that the drop happened in such circumstances either until I started reading this forum. That's what is so valuable here besides the deep knowledge of the members, the ability to hear so many different people's stories and situations. I would think this arena is far more valuable than any university class on such matters could ever be.

Re: Thin Credit File - how to intelligently "improve" that?

chijo — Tue, 06 Jul 2021 02:09:41 GMT

I was referring to the many products slanted towards folks wanting the file fattening "quicker" that end up charging folks fees, etc. There are many of those out there that folks fall for and regret later. We do know that paying off a loan can make your score drop. We can infer that many of these companies count each card you have open as a possible minimum payment you'd be making should you use all of them at once by their actions. Other's mileage may vary, but that's what I am seeing in my reports at the moment and it changes my DTI lenders are looking at. Some folk's scores can handle that and still get them where they need to go, some can't. Especially those barely entering into the good range. I think that may be behind why folks can't get loans closed or additional cards once they have a lot of them open. Many lenders are considering every open card's minimum payment as if you'll be making them each month.

Re: Thin Credit File - how to intelligently "improve" that?

chijo — Tue, 06 Jul 2021 02:12:49 GMT

Yes, and I was not wanting to juggle it like that right now. I can see that some enjoy that game. My scores cannot handle it right now. Perhaps in the future.

Re: Thin Credit File - how to intelligently "improve" that?

Horseshoez — Tue, 06 Jul 2021 02:23:16 GMT

@chijo wrote:
Yes, and I was not wanting to juggle it like that right now. I can see that some enjoy that game. My scores cannot handle it right now. Perhaps in the future.

I don't enjoy the game even one little bit, however, managing three cards to keep reported balances low (or zero) along with a single SSL is a no-brainer and takes very little juggling; it is also just as beneficial at "fattening" one's file from a score perspective as having lots of cards. Speaking of the folks with dozens of cards, I agree with you, playing the game from that perspective is waaaay too much work for a couple hundred dollars and a few FICO points of gain.

Long story short, get three good "rewards" cards, even if you need to start them out as secured, keep them at low/no utilization, open an SSL and pay it down under 9%, and then hit the garden and watch your scores and history grow. Simple as that.

Re: Thin Credit File - how to intelligently "improve" that?

morethan20yaks — Tue, 06 Jul 2021 03:56:15 GMT

I joined NFCU recently. Soft pull only.