What to expect and what to apply for

[Anonymous]

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@Anonymous wrote:

I would also suggest doing something similar on a personal loan.  Drop $10k into savings and take a secured loan against it.  When they issue the loan check, drop that back into savings so that you are earning as much interest on savings as the loan is costing you. 

Pay a substantial portion of the loan off in the first month (like 80%) then continue to make payments for about 12 months.

You will now have a successful auto loan and personal loan and an active credit card with a substantial CL.  While FICO doesn't care about the CL, other creditors do and most will not issue you a CL much more than what you have all ready been issued.

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EDIT: Removed questions txjohn answered in the linked thread - If you haven't read this, you should: http://ficoforums.myfico.com/fico/board/message?board.id=generalcredit&message.id=129266#M129266

txjohn,

Thanks for all the great advice.  Your posts help a lot!  Also thanks to illtakecreditforthat. I've got a few questions for you:

Do I need to give them a reason for what the loan is for? If I were to borrow 8k at 3.5% (3% above the .5% I would earn in savings), then would I owe the 3.5% on the principle, or 3.5% on the balance each month? More simply, am I paying  280$ no matter what, or does that become cheaper once I pay the 6400 (80%) right off the bat in the first month?

Sorry for all the questions - I just want to make sure I do this right!

Message Edited by austintex on 06-02-2009 07:17 PM

[Anonymous]

   2 open 2 years each, one closed 10 plus years

[Anonymous]

austintex,

Good questions.  You should only pay interest on the outstanding balance owed.  I would take the time to visit a local credit union or bank, explain your situation, and seek their assistance.  It is perfectly acceptable to tell them your objective is to establish credit.  I would assume they've helped others in your situation.  In fact,its in their best interest to help people establish good credit habits, thus creating a potential long-term, profitable relationship.

[Anonymous]

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@Anonymous wrote:

austintex,

Good questions.  You should only pay interest on the outstanding balance owed.  I would take the time to visit a local credit union or bank, explain your situation, and seek their assistance.  It is perfectly acceptable to tell them your objective is to establish credit.  I would assume they've helped others in your situation.  In fact,its in their best interest to help people establish good credit habits, thus creating a potential long-term, profitable relationship.

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Yes, and they'll be earning interest on it anyway.  Okay, so If I pay off 80% of it right off the bat, then I will only pay 3% interest on the remaining 20% of the loan?  That doesn't seem right to me.

Message Edited by austintex on 06-02-2009 08:31 PM

[Anonymous]

austintex,

I would talk to local CU about structiure of secured loan/card. I'm not familiar with policies regarding secured cards/loans.  I would search this Forum for discussions of secured debt.  Hopefully, a member who has more information will post their thoughts.

[Anonymous]

Found what I was looking for on a calculator at bankrate.com - super nifty tool:

http://www.bankrate.com/calculators/mortgages/loan-calculator.aspx

One last question:

Supposing that I paid off 80% immediately (of an 8k loan), I would only lose out on $27 total in interest payments. Not sure if Once you pay a large chunk if you can pay a smaller monthly payment...I would think that as long as you've paid back X by Y date, you'd be good. Nobody would get upset if the 2nd month I paid a small monthly payment, since the month before I paid down 80% of it.

Message Edited by austintex on 06-03-2009 08:47 AM

[ocheosa]

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@Anonymous wrote:

After reading on this forum for several months I feel compelled to apply for something!  It seems the grand prize for someone like me would be an Alliant online approval?

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IMHO you are a prime candidate for US Bank and Citibank. Depending on where you live, US Bank usually pulls TU and Citi EX. Alliant pulls EQ. Its a nice mix to start and not a major hit on any one credit report. US Bank operates like a credit union but they are a major (although somewhat unknown) bank. The positive aspect about all three is after applying you can always call in and speak to a credit analyst/loan officer and explain your credit history.

A year ago, I would have said AMEX....wait, was amex one of the accounts you closed 10 years ago? If so, you could reapply and recoup your history. They will adjust the account open date to your old account open date.There are many threads on the forum about it. Not many are happy with amex right now so you will have to look back about 5 months to find anything positive.

Good luck!

[FocusOnFICO]

Ocheosa's points are well taken.  My Amex Blue Cash, opened in Feb 2009 has my original Amex open date (1989!).  I recently applied and was approved with US Bank and they do indeed act as a CU.  I did the app in person and they were great.  Conservative, yet gave me my highest CL by 50%!  Two great suggestions by Ocheosa.

[Anonymous]

   Sounds like a plan, would my TU score of 707 be good enough for US bank? I could get the score up I believe in 30 days but most likely only 20-30 points. My Experian is 763 is that good enough for Citi bank? Thanks for the advice on the pulls. Strategy comes into play when you try and go for the best long term plans!

[Anonymous]

Yes AMEX was one of the closed cards, opened around 1978 closed around 1985. How would I reopen such an old account and what agency do they pull from? Would the score be good enough to reopen account? Thanks for the insight in so many directions.

TU 707   EX  763 EQ 806  5-29 EQ is true FICO