And We Are Off !!! - Help Us Get Around The Bend

[Anonymous]

Helping my wife get her credit profile cleaned up after decades of issues.  She had no credit (horrible credit has fell off reports) only an AU on one of my cards and we didn't know it (never gave any SSN info and she has a different last name than mine) until her credit union pulled a report for opening a checking account. Her credit score was 627 with Equifax. What a surprise we thought it would be around 300. We were told they could not show us or give us a copy of the report so we didn't actually see it.

With that info we got busy trying to get three CC's issued  and establish a good payment history. She applied for Discover It Secured and was approved with a $200 deposit. Also applied for USAA rewards (unsecured) and was countered with a USAA platinum unsecured for $500. The last card she applied for was BOFA 99/500 and was approved.  I think that these three cards are okay if managed well.  I am a member of NFCU and Pentagon but will not try to get her in with them until these initial cards have aged.

One issue that was mentioned by USAA was that  there were no loans or auto loans.  She has the opportunity to apply for a share secured loan with her credit union.  We are wondering if we should go ahead and do this to help jump start her rebuild?

Also I have several CC's with large limits so should we add her as AU's on a couple of those to help her rebuild?

The ultimate goal is to learn to manage the cards responsibly and get the Discover to unsecure as well as get the BOFA partial secured unsecured in time.  Then maybe we can get the limits increased.  I am trying to prepare her in case something happens to me.  She will need good credit and usable CC's in case of an emergency in her name.

Anyone have any comments on whether the above is a good mix and strategy?  Should she get the share loan?  3 cards and a loan might improve the credit score over time after she has taken the hit for the apps and new card penalties.  She only applied for the 3 cards (no other inquiries) and was issued the three she applied for.  We know the score will take a hit but should recover over time.

Any advice/suggestions would be greatly appreciated.  Thanks

[Anonymous]

Sounds like you're on track with a great plan.  Now all you need is some time for the accounts to age and the secured card to unsecure.

A secured loan will give her a score bump of approximately 40 points on each credit bureau; the key though is to pay it down to below 8.9 percent balance immediately so that the loan payoff reports in the same month as the loan was opened.

[Anonymous]

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@Anonymous wrote:

Sounds like you're on track with a great plan.  Now all you need is some time for the accounts to age and the secured card to unsecure.

A secured loan will give her a score bump of approximately 40 points on each credit bureau; the key though is to pay it down to below 8.9 percent balance immediately so that the loan payoff reports in the same month as the loan was opened.

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Thanks, so she wants to get a $500 share secured loan within the next two weeks.  Then should she pay back around $460 dollars immediately? Will the CU frown on the immediate payment?

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

Sounds like you're on track with a great plan.  Now all you need is some time for the accounts to age and the secured card to unsecure.

A secured loan will give her a score bump of approximately 40 points on each credit bureau; the key though is to pay it down to below 8.9 percent balance immediately so that the loan payoff reports in the same month as the loan was opened.

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Thanks, so she wants to get a $500 share secured loan within the next two weeks.  Then should she pay back around $460 dollars immediately? Will the CU frown on the immediate payment?

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Correct.  The temptation is to use the loan for other purposes but if you pay it down to below 8.9% remaining balance you will get an immediate pop in your scores on all three bureaus.  Also, its important to find out from the credit union if paying down the loan will push the next payment due date out in to the future.  If it does, you can pay it down to $40 balance and get the FICO benefit from paying off most of an installment loan.  Then hopefully the next payment is in the distant future so you can reap the score benefit for the entire duration of the loan.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

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@Anonymous wrote:

Sounds like you're on track with a great plan.  Now all you need is some time for the accounts to age and the secured card to unsecure.

A secured loan will give her a score bump of approximately 40 points on each credit bureau; the key though is to pay it down to below 8.9 percent balance immediately so that the loan payoff reports in the same month as the loan was opened.

---

Thanks, so she wants to get a $500 share secured loan within the next two weeks.  Then should she pay back around $460 dollars immediately? Will the CU frown on the immediate payment?

---

Correct.  The temptation is to use the loan for other purposes but if you pay it down to below 8.9% remaining balance you will get an immediate pop in your scores on all three bureaus.  Also, its important to find out from the credit union if paying down the loan will push the next payment due date out in to the future.  If it does, you can pay it down to $40 balance and get the FICO benefit from paying off most of an installment loan.  Then hopefully the next payment is in the distant future so you can reap the score benefit for the entire duration of the loan.

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You are so kind. Thank you for this info. It is what I needed to move forward with her profile.

[Revelate]

I would consider adding her to NFCU or Penfed immediately, and do the share secured loan through them.

Both appear to do the payment ahead trick as we ideally want in terms of score optimization; other CU's I thought typically would but apparently recent data in the quest to replace Alliant for all things SSL suggests it isn't the case.

Out of curiosity which CU?  Having an SSL on there at all will help, having a 5 year term or whatever at some small fraction of the original balance (like mine is sitting at $18/500, anything non-zero under 8.9% or whatever will work) helps a lot more when talking FICO 8.

Big kudos for picking 3 excellent choices for initial credit cards as well, and it's exactly the build I'd do: 3 credit cards, 1 installment loan, and call it good while things age.

[Anonymous]

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@Revelate wrote:

I would consider adding her to NFCU or Penfed immediately, and do the share secured loan through them.

Both appear to do the payment ahead trick as we ideally want in terms of score optimization; other CU's I thought typically would but apparently recent data in the quest to replace Alliant for all things SSL suggests it isn't the case.

Out of curiosity which CU?  Having an SSL on there at all will help, having a 5 year term or whatever at some small fraction of the original balance (like mine is sitting at $18/500, anything non-zero under 8.9% or whatever will work) helps a lot more when talking FICO 8.

Big kudos for picking 3 excellent choices for initial credit cards as well, and it's exactly the build I'd do: 3 credit cards, 1 installment loan, and call it good while things age.

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Local CU Pelican State in LA.  To get her an account with either NFCU or PenFed would she take additional hits for opening an account (hard inquiries)? Should she app for the share secured loan immediately after acceptance as a member so as to utilize one pull? NFCU pulls for everything it seems.

[Anonymous]

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@Anonymous wrote:

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@Revelate wrote:

I would consider adding her to NFCU or Penfed immediately, and do the share secured loan through them.

Both appear to do the payment ahead trick as we ideally want in terms of score optimization; other CU's I thought typically would but apparently recent data in the quest to replace Alliant for all things SSL suggests it isn't the case.

Out of curiosity which CU?  Having an SSL on there at all will help, having a 5 year term or whatever at some small fraction of the original balance (like mine is sitting at $18/500, anything non-zero under 8.9% or whatever will work) helps a lot more when talking FICO 8.

Big kudos for picking 3 excellent choices for initial credit cards as well, and it's exactly the build I'd do: 3 credit cards, 1 installment loan, and call it good while things age.

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Local CU Pelican State in LA.  To get her an account with either NFCU or PenFed would she take additional hits for opening an account (hard inquiries)? Should she app for the share secured loan immediately after acceptance as a member so as to utilize one pull? NFCU pulls for everything it seems.

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You should expect two TransUnion pulls from NFCU; one for membership and another for the loan.  Some people like me were able to obtain membership without a hard pull but they seem to pull for most people.

PenFed will pull Equifax only once, and their pull is valid for at least 30 days so she could obtain both membership and the loan with a single pull.

[Anonymous]

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@Anonymous wrote:

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@Revelate wrote:

I would consider adding her to NFCU or Penfed immediately, and do the share secured loan through them.

Both appear to do the payment ahead trick as we ideally want in terms of score optimization; other CU's I thought typically would but apparently recent data in the quest to replace Alliant for all things SSL suggests it isn't the case.

Out of curiosity which CU?  Having an SSL on there at all will help, having a 5 year term or whatever at some small fraction of the original balance (like mine is sitting at $18/500, anything non-zero under 8.9% or whatever will work) helps a lot more when talking FICO 8.

Big kudos for picking 3 excellent choices for initial credit cards as well, and it's exactly the build I'd do: 3 credit cards, 1 installment loan, and call it good while things age.

---

Local CU Pelican State in LA.  To get her an account with either NFCU or PenFed would she take additional hits for opening an account (hard inquiries)? Should she app for the share secured loan immediately after acceptance as a member so as to utilize one pull? NFCU pulls for everything it seems.

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She joined PenFed and asked about the share secured loan. The CSR said they do not check credit so it is pretty automatic if you apply.  He further stated it has to be a minimum of $500 and the money used to secure the loan must have been in your account thirty days prior to applying (strange).  She also asked about a CC and he said my income (which is all the income) cannot be used, she must have income herself even for the secured CC (bummer).  Must be a CU thing as that's the second time I was told that by different CU's. BOFA, Discover and USAA had no problem using our income to open her accounts. The 30 day thing might prevent the one pull benefit. Thanks for your suggestions and advice.

[Revelate]

Inquiries are irrelevant when you're establishing credit: you have to take them to do so and it's utterly expected by every UW in the world.

Don't sweat them.