Just getting started.... need help

[Anonymous]

I just want to also add- yes, file and pay your taxes for the income you earned. The IRS will come after the money. I know it depends on the structure, but if you have pierced the veil, it isn't going to matter what you build your credit file to.

[Anonymous]

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@Anonymous wrote:
I just want to also add- yes, file and pay your taxes for the income you earned. The IRS will come after the money. I know it depends on the structure, but if you have pierced the veil, it isn't going to matter what you build your credit file to.

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All of you guys are awesome! Thank you so much for all of the advice!!

CheeseNCrackers - I'm saying that I have the option of either reporting zero net profit due to depreciation and expense deductions, or I can report a higher than necessary net profit and add that to my personal income but it will cost me 30% on whatever I report my income to be. 

As far as applying for more credit goes, heres my new plan - please tell me all of your opinions.

1) Remove myself from being an authorized user on my dads Amex card 

2) Get added on to my moms CapitalOne card as an authorized user

3) Pause applying for new credit temporarily, at least for a couple months

4) File 2018 business taxes and backdate a w-2 income statement to show 30-50k personal income for 2018 (will have to pay a late penalty and taxes on the paper income)

5) Once my CD loan, rent payments, and 2 revolving credit lines have had 2-3 months to build up payment history, apply for a secured card either through Discover or CapitalOne.

*Side note - During my 2-3 month waiting period while I'm doing items 1-4, I will also be in the forums reading and asking questions to learn.

How does that sound?

[Anonymous]

Also how long does it take to have the hard inquiries fall off or become irrelevant to new lending? I’ve seen a lot of different information ranging from 6 months to 7 years.

Also, as far as pausing my credit application activities, I thought that secured cards were much easier to get approved for? No?

[Medic981]

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@Anonymous wrote:
Also how long does it take to have the hard inquiries fall off or become irrelevant to new lending? I’ve seen a lot of different information ranging from 6 months to 7 years.

Also, as far as pausing my credit application activities, I thought that secured cards were much easier to get approved for? No?

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Hard inquiries fall off your CRs in 24 months. Hard inquiries stop affecting your FICO scores after 12 months. Remember, Hard inquiries or Hard Pulls (HP) is a signal to potential creditors that you are credit-seeking.

As for secured cards, they are easier to get if you have not mucked up your credit previously. Since you are credit building rather than repairing, you should have no problems obtaining decent secured cards. 

IHMO, Discover It Secured is one of the best-secured credit cards for no or limited credit, poor credit, and bad credit applicants — and one of the best gas credit cards you can get with bad credit. Disco offers 2% cash back at restaurants and gas stations (one up to $1,000 in combined purchases each quarter) and 1% cash back on other purchases. You’ll need an up-front security deposit of at least $200 to apply for the Discover It Secured Card.

Capital One Secured Mastercard requires a refundable security deposit of $49, $99 or $200 based on your creditworthiness. Make the minimum required security deposit and you'll get an initial credit line of $200. Plus, deposit more money before your account opens to get a higher credit line. Get access to a higher credit line after making your first 5 monthly payments on time.

The Citi Diamond Secured Mastercard can help you establish, improve or rebuild your credit. Build your credit history by using your card responsibly. Best of all, there's no annual fee. Applicants must meet Citi Bank's credit qualification criteria for this card, which includes a review of your income and your debt. If approved, a minimum of $200 security deposit is required. The security deposit is always equal to your credit limit and will be held for an initial term of up to 18 months. You must not have any bankruptcy history within the last two years.

Bank of America's BankAmericard Secured Credit Card is designed to help establish, strengthen or rebuild credit for an annual fee of $39. A minimum refundable security deposit of $300 is required to open this account. Your maximum credit limit will be determined by the amount of the security deposit you provide, your income and your ability to pay the credit line established. If you provide a deposit that exceeds the calculated maximum amount based on your ability to pay, a will be returned to you for the difference. BoA periodically reviews your account and, based on your overall credit history (including your account with BoA and other credit cards and loans), you may qualify to have your security deposit returned. Not all cardholders will qualify.

[Anonymous]

Wow thanks for all of that info Medic...

Taking into account the recent HP’s on my profile, and current provable income of basically zero, is it a good or bad idea to try and apply for the Discover it secured card right now. Or should I wait a few months so that I have payments on record for my recent credit lines and CD loan I’ve opened?

[Anonymous]

I think no matter what, you should wait 3-6 months before apping anything. Then go after Disco. Nice thing about them is that around statement #7, they start reviewing your account for graduation, at which time your card unsecures, you get your deposit back, and many people often get an increase as well. Plus you get all the cash back match benefits of the card while it’s secured. It’s a great card, and the stronger your profile is going in, the better your odds of a CLI and graduation coming out (provided you’re responsible while you have it).

[Anonymous]

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@Anonymous wrote:
AllZero is on point. Get off that Amex card today. It helps your credit age factors, but they’re a smaller part of your credit than utilization is. At 93%, that card is over the 88.9% threshold where it’s considered to be maxed out. The usage is hurting you more than its age is helping. And at 18 months old, there’s not very much age that it’s helping with. The CapOne card you mention is still higher than ideal on balance but it’s far better than the Amex - that one is killing you. And the age of the CapOne is fantastic. Get on that one ASAP.

Next, as stated, look at your denial reasons:

Not enough positive payment history
Too many apps
Length of time accounts have been established

They’re telling you to stop applying, maintain the accounts you have, and keep making on-time payments. You are young, your profile is very young and thin, and it can’t sustain continued applications. The fact that your profile is 6 months old, showing over 50% utilization, and only $5k is being reported as annual income, practically screams to be denied by most creditors. You need to show them you can manage what you have for a period of time before attempting to get more.

I know gardening sucks, and you have a plan for buying real estate, but the timetable you’re trying for isn’t feasible. Build your profile correctly and you’ll be far better off later on.

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Amex is unusual in that it does not transfer an account's age to the authorized user; the age of an Authorized User account starts on the date they were added to the "parent" account.  The OP isn't even getting the benefit of "credit age" from the already negligible original account age, but is being dinged for the extremely high utilization.

As for the OP I have no advice to offer.  Unless he/she intends to buy properties for cash outright a lender will want to know where they deposits/downpayments came from.  So leveraging credit cards to buy property wouldn't work in that scenario.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:
AllZero is on point. Get off that Amex card today. It helps your credit age factors, but they’re a smaller part of your credit than utilization is. At 93%, that card is over the 88.9% threshold where it’s considered to be maxed out. The usage is hurting you more than its age is helping. And at 18 months old, there’s not very much age that it’s helping with. The CapOne card you mention is still higher than ideal on balance but it’s far better than the Amex - that one is killing you. And the age of the CapOne is fantastic. Get on that one ASAP.

Next, as stated, look at your denial reasons:

Not enough positive payment history
Too many apps
Length of time accounts have been established

They’re telling you to stop applying, maintain the accounts you have, and keep making on-time payments. You are young, your profile is very young and thin, and it can’t sustain continued applications. The fact that your profile is 6 months old, showing over 50% utilization, and only $5k is being reported as annual income, practically screams to be denied by most creditors. You need to show them you can manage what you have for a period of time before attempting to get more.

I know gardening sucks, and you have a plan for buying real estate, but the timetable you’re trying for isn’t feasible. Build your profile correctly and you’ll be far better off later on.

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Amex is unusual in that it does not transfer an account's age to the authorized user; the age of an Authorized User account starts on the date they were added to the "parent" account.  The OP isn't even getting the benefit of "credit age" from the already negligible original account age, but is being dinged for the extremely high utilization.

As for the OP I have no advice to offer.  Unless he/she intends to buy properties for cash outright a lender will want to know where they deposits/downpayments came from.  So leveraging credit cards to buy property wouldn't work in that scenario.

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As far as property acquisitions, I wouldn't be using credit cards... I would be applying for residential and commercial real estate loans/mortgages. 

[Anonymous]

An underwriter or loan officer will definitely asked where your downpayment(s) originated; and of course if you use cash advances from credit cards it will show up on your credit report.

EDIT:  Never mind, I just re-read your comment and you said you planned to "use credit to secure loans",  not use "credit cards."  Using credit cards is possible because lenders like Bank of America, Chase and Discover allow you to transfer cash via ACH from your credit card to your checking account.  But is definitely not adviseable to do so.