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Just getting started.... need help

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Just getting started.... need help

Hi, I am just getting started on my credit building journey and am basically starting from scratch. Heres what I have on my credit profile so far :

- Authorized user on dads Amex card (1.5yrs, $13k limit, 93% utilization)

- RentReporters reporting $1,350 monthly rent payment (4 months so far)

- SelfLender CD loan $150 per month (first payment on Sept. 20)

- Just added 2 revolving credit lines which got posted today, $5k each, $10k total (MyJewelers and New Coast Direct)

 

Here is what I am in the process of adding :

- CreditPop reporting $13,500 monthly rent payment (started on Sept. 1st.... for one of my businesses)

- Getting added as an authorized user on my moms Capital One card (20yrs, $20k limit, >30% utilization)

 

Here is what I need help with : 

- More ways to boost my credit as much and as quickly as possible

- Guidance on my next steps to build my credit... I applied for the DCU secured card and got preapproved for a $1000 limit, but was denied membership with DCU. I am pulling the ChexSystems report to see if it offers any clues as to why I was denied... Also, I just submitted a pre-approval request on Discovers website and they said they do not have any product offerings for me right now because of "Recently Opened Bank Revolving Trades". Discover also noted these negatives about my credit profile : Lack of recent revolving account information, Too few accounts currently paid as agreed, Too many inquires in last 12 months, Length of time accounts have been established. My current average age of credit is 6 months, average utilization is 53%, payment history is in good standing, although I do have 3 or more hard inquires for 2019, and I have 3 new accounts with not a lot of payment history. Also, I currently do not show much income (less than 5k per year) on my last few years of tax returns although I can possibly change this by showing a large net profit in my business for 2018 as I havent filed taxes yet and can reduce some of my deductions... but I will have to pay taxes on that money, which is fine if it helps me with my credit pursuits. Also I just turned 19 in May... so I'm young.

 

What should I do? Should I apply for the Discover/Capital one secured card? Should I apply for any unsecured cards? Should I open another Credit Builder loan? Please help me... 

 

I really need credit desperately for my business and investing pursuits.

Message 1 of 19
18 REPLIES 18
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Valued Contributor

Re: Just getting started.... need help

Welcome to the myFICO forums!

 

Ultimately, what a person needs to improve their FICO scores and build credit are three open credit cards (secured or unsecured) in good standing and one open installment loan in good standing such as a car, home, student, personal, share secured, or credit building loan. This combination is what the myFICO score theorists here have determined is what you need for optimal credit building and FICO score. You can have more CCs and more installment loans, however, this will not increase your FICO scores.

Next, (this is only important if you are attempting to purchase a large ticket item like a home or car) is paying in full all of the credit card balances each month, before the posting date, except one. This is called the All Zero Except One (AZEO) method. The one credit card you allow to post a balance needs to be less than 8.9% of the credit limit of the card. So using one card each month to buy lunch, letting it report and then paying in full will maximize FICO scoring. Keeping your utilization of your cards below 28.9% both individually and collectively will prevent you from incurring a FICO scoring penalty.

An installment loan will have its greatest impact on your FICO score when the amount owed is at 8.9% or less of the original amount owed which is usually in the final months before the loan is paid in full. If you don't have an installment loan you can check into Self Lender or a Share Secured Loan at a Credit Union.

Keep in mind, building credit is a marathon, not a sprint. It involves demonstrating to a potential creditor that you can handle credit responsibly. If you have open, active credit accounts that are being paid on time and pay all of your bills on time every time, apply for credit only when you actually need it and use credit cards sparingly maintaining low credit utilization, then you’re going to earn and maintain great credit scores. It would be impossible for you not to do so. This is the fastest way you can build good, solid credit.

















Your FICO credit scores are not just numbers, it’s a skill.

Message 2 of 19
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Re: Just getting started.... need help


@Medic981 wrote:

Welcome to the myFICO forums!

 

Ultimately, what a person needs to improve their FICO scores and build credit are three open credit cards (secured or unsecured) in good standing and one open installment loan in good standing such as a car, home, student, personal, share secured, or credit building loan. This combination is what the myFICO score theorists here have determined is what you need for optimal credit building and FICO score. You can have more CCs and more installment loans, however, this will not increase your FICO scores.

Next, (this is only important if you are attempting to purchase a large ticket item like a home or car) is paying in full all of the credit card balances each month, before the posting date, except one. This is called the All Zero Except One (AZEO) method. The one credit card you allow to post a balance needs to be less than 8.9% of the credit limit of the card. So using one card each month to buy lunch, letting it report and then paying in full will maximize FICO scoring. Keeping your utilization of your cards below 28.9% both individually and collectively will prevent you from incurring a FICO scoring penalty.

An installment loan will have its greatest impact on your FICO score when the amount owed is at 8.9% or less of the original amount owed which is usually in the final months before the loan is paid in full. If you don't have an installment loan you can check into Self Lender or a Share Secured Loan at a Credit Union.

Keep in mind, building credit is a marathon, not a sprint. It involves demonstrating to a potential creditor that you can handle credit responsibly. If you have open, active credit accounts that are being paid on time and pay all of your bills on time every time, apply for credit only when you actually need it and use credit cards sparingly maintaining low credit utilization, then you’re going to earn and maintain great credit scores. It would be impossible for you not to do so. This is the fastest way you can build good, solid credit.



My goal is to be able to use credit to secure loans to invest in cashflowing real estate in the next economic downturn when properties will be available at a discount. Since I'm starting out my credit building journey late in the economic cycle, I am extremely pressed on the time line and can't wait years and years to build credit. I understand that building credit is not a sprint, although as with anything I am sure that there are strategic ways to maximize efficiency while building. With that said, taking into account Everything I outlined in my very detailed intial post, what actions do you recommend I take in order to expedite my credit building process? I outlined quite a bit about my exact situation, what I have access to, and what I am contemplating doing. What are your thoughts?

Message 3 of 19
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New Contributor

Re: Just getting started.... need help

Medic gave you some solid pointers.

 

I would like to add that being on your old man's Amex card with 93% utilization may actually be hurting you more than helping you at this point. Overall utilization across all cards and even per card should be 33% or less for optimal scores.

 

You need a secured credit card and I would recommend removing yourself from your old man's Amex at this point. No more loans! You have one so now you need revolving (credit card) trade lines. I would recommend looking into your local bank or local credit union first to see what they have to offer in terms of a secured card; otherwise, Capital One is always a good option for a secured card. Just please note that the Capital One secured card has a sell-by date: meaning, do not expect it to ever really get better. It is a card to use temporarily until you get better offers from other creditors and then move on. 

Message 4 of 19
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Valued Contributor

Re: Just getting started.... need help


@BillionaireInTheMaking wrote:

@Medic981 wrote:

Welcome to the myFICO forums!

 

Ultimately, what a person needs to improve their FICO scores and build credit are three open credit cards (secured or unsecured) in good standing and one open installment loan in good standing such as a car, home, student, personal, share secured, or credit building loan. This combination is what the myFICO score theorists here have determined is what you need for optimal credit building and FICO score. You can have more CCs and more installment loans, however, this will not increase your FICO scores.

Next, (this is only important if you are attempting to purchase a large ticket item like a home or car) is paying in full all of the credit card balances each month, before the posting date, except one. This is called the All Zero Except One (AZEO) method. The one credit card you allow to post a balance needs to be less than 8.9% of the credit limit of the card. So using one card each month to buy lunch, letting it report and then paying in full will maximize FICO scoring. Keeping your utilization of your cards below 28.9% both individually and collectively will prevent you from incurring a FICO scoring penalty.

An installment loan will have its greatest impact on your FICO score when the amount owed is at 8.9% or less of the original amount owed which is usually in the final months before the loan is paid in full. If you don't have an installment loan you can check into Self Lender or a Share Secured Loan at a Credit Union.

Keep in mind, building credit is a marathon, not a sprint. It involves demonstrating to a potential creditor that you can handle credit responsibly. If you have open, active credit accounts that are being paid on time and pay all of your bills on time every time, apply for credit only when you actually need it and use credit cards sparingly maintaining low credit utilization, then you’re going to earn and maintain great credit scores. It would be impossible for you not to do so. This is the fastest way you can build good, solid credit.



My goal is to be able to use credit to secure loans to invest in cashflowing real estate in the next economic downturn when properties will be available at a discount. Since I'm starting out my credit building journey late in the economic cycle, I am extremely pressed on the time line and can't wait years and years to build credit. I understand that building credit is not a sprint, although as with anything I am sure that there are strategic ways to maximize efficiency while building. With that said, taking into account Everything I outlined in my very detailed intial post, what actions do you recommend I take in order to expedite my credit building process? I outlined quite a bit about my exact situation, what I have access to, and what I am contemplating doing. What are your thoughts?


Well, it is kind of like making a baby. It takes on average 9 months from conception to birth. Mother to be needs to be taking prenatal vitamins, not smoke, abstain from drinking alcohol, and have regular prenatal visits with her obstetrician. It is not wise to rush delivery unless it is emergent. Too soon and the baby will have many problems early in life and could ultimately die. Just like a baby developing in the womb, credit takes time to develop. It takes the time it takes. 

 

It takes time to build credit and there are no real short cuts. As you have acknowledged, building credit is a marathon, not a sprint. I have no sage wisdom to give you to make potential creditors want to lend you money other than what I have already posted. It is what it is. 

 

As Bob Hope once said, "A bank is a place that will lend you money if you can prove that you don't need it."

















Your FICO credit scores are not just numbers, it’s a skill.

Message 5 of 19
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New Contributor

Re: Just getting started.... need help

Deleting my long reply here...Medic has really given you solid advice and he isn't wrong. In the meantime you need to go about this smarter...you need to watch inquiries. Open a secured credit card-the more you can put up for a higher credit line, the better; and please remove yourself from your old man's Amex card. 93% utilization is nearly maxed out and that will hurt you.
Message 6 of 19
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Super Contributor

Re: Just getting started.... need help

No more applying for credit. Save your hard pull inquiries. You've been denied by DCU and Discover. Take that as a sign to stop "credit seeking" behavior.

Let your credit age. Pay your bills on time and all the time. You need positive payment history.

Read the Discover denial again and understand what you need to address. Discover is giving you clues.

Practice AZEO All Zero Except One. Your utilization ratio is high. Which will not make your credit report attractive to lenders.

Wait 6 months. In the meantime, feel free to stick around and read the forums. There is treasure trove of knowledge here. You'll learn a lot and put yourself in a better position.

Before applying for credit, take the time to research what you want and why you want it. Don't get a credit card just because it was easy to get. Get one so it benefits you and your spend; sign up bonus, cash back, miles, points, etc.
Message 7 of 19
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Super Contributor

Re: Just getting started.... need help


@BillionaireInTheMaking wrote:

- Authorized user on dads Amex card (1.5yrs, $13k limit, 93% utilization)

- RentReporters reporting $1,350 monthly rent payment (4 months so far)

- SelfLender CD loan $150 per month (first payment on Sept. 20)

 

- Getting added as an authorized user on my moms Capital One card (20yrs, $20k limit, >30% utilization)

 

My current average age of credit is 6 months, average utilization is 53%

 

Also, I currently do not show much income (less than 5k per year) on my last few years of tax returns although I can possibly change this by showing a large net profit in my business for 2018 as I havent filed taxes yet and can reduce some of my deductions...


Getting added as an authorized user is great for obtaining the account age. However, the drawback is the reported utilization. Check into DTI Debt To Income. Do you see a disparity in what I highlighted in bold red?

 

Have  you pulled your own 3 bureau credit report? If not, check into creditchecktotal.com (part of Experian) for $1. Cancel in 7 days or less to avoid the reoccurring monthly charge.

Message 8 of 19
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Community Leader
Senior Contributor

Re: Just getting started.... need help

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.


Rose Gold NPSL | BCP | Delta Gold | Hilton Surpass | Hilton Honors | PenFed PCR | IT Cash | IT Chrome | GHSFCU Visa Plat | Quicksilver | Target | VS | Home Depot | Lowes | Sams MC | Firestone | Overstock | Kohl’s

5/24, 1/24, 76445/24, who cares #HappyWithAmex





TCL $93,100 | Agg. Util under 5%
Message 9 of 19
Highlighted
Valued Contributor

Re: Just getting started.... need help


@BillionaireInTheMaking wrote:

@Medic981 wrote:

Welcome to the myFICO forums!

 

Ultimately, what a person needs to improve their FICO scores and build credit are three open credit cards (secured or unsecured) in good standing and one open installment loan in good standing such as a car, home, student, personal, share secured, or credit building loan. This combination is what the myFICO score theorists here have determined is what you need for optimal credit building and FICO score. You can have more CCs and more installment loans, however, this will not increase your FICO scores.

Next, (this is only important if you are attempting to purchase a large ticket item like a home or car) is paying in full all of the credit card balances each month, before the posting date, except one. This is called the All Zero Except One (AZEO) method. The one credit card you allow to post a balance needs to be less than 8.9% of the credit limit of the card. So using one card each month to buy lunch, letting it report and then paying in full will maximize FICO scoring. Keeping your utilization of your cards below 28.9% both individually and collectively will prevent you from incurring a FICO scoring penalty.

An installment loan will have its greatest impact on your FICO score when the amount owed is at 8.9% or less of the original amount owed which is usually in the final months before the loan is paid in full. If you don't have an installment loan you can check into Self Lender or a Share Secured Loan at a Credit Union.

Keep in mind, building credit is a marathon, not a sprint. It involves demonstrating to a potential creditor that you can handle credit responsibly. If you have open, active credit accounts that are being paid on time and pay all of your bills on time every time, apply for credit only when you actually need it and use credit cards sparingly maintaining low credit utilization, then you’re going to earn and maintain great credit scores. It would be impossible for you not to do so. This is the fastest way you can build good, solid credit.



My goal is to be able to use credit to secure loans to invest in cashflowing real estate in the next economic downturn when properties will be available at a discount. Since I'm starting out my credit building journey late in the economic cycle, I am extremely pressed on the time line and can't wait years and years to build credit. I understand that building credit is not a sprint, although as with anything I am sure that there are strategic ways to maximize efficiency while building. With that said, taking into account Everything I outlined in my very detailed intial post, what actions do you recommend I take in order to expedite my credit building process? I outlined quite a bit about my exact situation, what I have access to, and what I am contemplating doing. What are your thoughts?


 

Pie chart - What makes up your credit score.JPG

 

Here is a graphic that may help illustrate what everyone is trying to explain to you. As an authorized user on your dad's AmEx card, his utilization is killing your score. Rather than helping you, it is hurting you.

















Your FICO credit scores are not just numbers, it’s a skill.

Message 10 of 19
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