1) Congrats on a great job so far🙌
2) Just to be clear the score Discover sends you monthly is a legitimate FICO score (TU) and you should sign up for their Free product with EP called credit scorecard.com which will give you a Free EP based score per month...That way you're at least getting two real scores per month.
You may want to check to see if you have scores you don't realize you have.
3) I made sure that both my college aged young ppl app'd for @ least 2 revolving accounts, there are a few reasons NOT to wait a year to add #2 ( had to push my 18 y.o. a little more than my 20 y.o.)
She said Dad do I really 'need' another card?
My answer
Yes because 1) It adds thickness and multiple TLs to your growing profile ( along with the MIX given the installment TL by adding the credit builder)
2) The early you add #2 they age together, thus building your profile with data along the way
Example if you WAIT to add card #2 till card #1 is 1 year old , now because #2 is 0 in age the average has now been cut in HALF...Making your Avg age of accounts now 6 months...Because a 12 month old card + a 0 aged card = 12months of history/ 2 accounts
Whereas if the 2nd card is only a few months younger it's much easier to have a THICKER file & a more mature AAoA
Card #1 (14 mo) + Card #2 (10 mo) = 24 months of history/ by 2 cards = AAOA of 12 months = Big difference
3) Having the additional CL of the 2nd account further allows the utilization rate to be pretty, thus appearing lower risk which = higher score
4) Allow TIME to work in your favor, especially during this sorta 'dead' time during college where like my daughter, you aren't looking to actually 'use' credit
IMO that's the BEST time to allow it to GROW in the background
Allow it to simmer in the pot, checking in on it every now and then, to make sure nothing burns, stir a little and let the video game play out
As mentioned, right now you are only out to 'impress' the judges...To be CLEAR, it is NOT about "creditors" per se ...Right now you are stroking the scoring model, the risk calculation made by the FICO model
Forget creditors for now, they run BEHIND what the score says so the scoring model is who needs to be stroked at this point.
And it's just a computer program, once you know what it likes like any program you can manipulate it.
'She' craves
On time payment history (35%)
You're giving it to her with 3 different accounts✓
Low debt ratio/ Utilization (30%)
Give 'some' usage, so the place looks 'lived-in'
Age or Time is the 3rd of the Big 3 (15%)
That's why you want the cards growing 'together'
That's 80% of the model ( New Credit & Inq each being 10% a piece for the balance 20)
Now YOU are in control of the entire scenario.
* Note the On time payment history is built the same with a $10 payment or a $1M payment it's a Yes/No, T/F scenario as far as the scoring model cares
Either the account Paid as Agreed or Not, that's it.
So that $500 loan is scored just the same as a $5000 loan
The utilization ratio is simply based upon the % of CL usage the scoring model 'sees' 9% debt usage as calculation of whatever the numbers are the number of zeros isn't important to the model, just the %
And we all know Time is Time, same for everyone
The point is as long as the score gets stroked UP by the time it's 'time' the apply for something 'real' the score will be HIGH due to the manipulation to have built it high and thick at that point the terms and CLs will shine....
The bottom line is it's just like school ,those that study earlier and plan well, get ahead and generally STAY ahead while everyone has does their best to stay afloat and 'survive' ....
I always say learn to play Chess, while others are given Checkers 💪
Was this a good idea and will it help me with my scores at all? Will this credit builder loan of 500 help my scores? I plan to get another credit card in december when I have a year of ontime payments.
