Balancing Credit Goals - Please advise

[Anonymous]

Thanks to all on this forum for the good advice. I have recently gotten serious about restoring my credit. For years I had my head in the sand, and I didn't think it was possible. But working with my Regions banker and setting up secure loans, LOC, and credit card accounts, along with paying off some debts and challenging others, I have improved my FICO from 617 to 745 since August 28th (about 3 months). Now I'm looking for the right stategy to approach my credit goals:

• grow my business
• buy a car
• buy a home
• play the credit card bonus game for travel

Sebastian from Ask Sebby advised me to do some gardening to reach six months with my three new credit cards (now at three months). Then he said to get Chase Ink Cash followed by Chase Ink Unlimited three months later. Good advice since I am now at Chase 3/5. I now have Navy Federal cashRewards ($500), Regions Explore (secured; $750), and OpenSky (secured; $200).  I have six inquiries with Transunion, two with Equifax, and 0 with Experian.

I want to ration my inquiries to three per year. With that tactic I could consider a house loan with my bank next November. But I could still chalk up three inquiries between now and then. So that's what I have to work with. I am not concerned too much about jumping into the credit card bonus game right now, but I would like to have one business CC with travel rewards. The Chase Ink Cash should fit the bill. But when to apply?

Which brings me to my Chase plans. I am thinking of starting an LLC on Jan 1st 2020 to do expanded tech services.  (I currently have a sole proprietorship as a freelance tech writer.) Suppose I put $1000 into a new Chase bank account. If I leave it there for 60 days, plus do a few other transactions, whammo, I get a $250 bonus. At the same time, I am establishing a relationship with Chase. So does it make sense to wait until March or so to go for the Chase Ink Cash? Good plan?

Next question:  Can I let my business buy my new car, with a personal guarantee? I need (want) a new car, and since my credit is good, why not? Right now I am driving a 30-year old Ford van. I am thinking that I could let the LLC buy it. I am driving around all day writing in cafes or rehearsing/performing music (my other business). My personal stops are just visits to the store or the movies. I think I could justify putting a new car under my new business. Would that work?

So the tentative plan:

• Now - Gardening and planning
• Jan 2020
  • Start LLC
  • Open Chase bank account
  • Build business credit
  • New car for business, with PG
  • Work with Regions banker to set up small loans/LOC to build credit for business
• Mar-Apr 2020
  • Chase Ink Cash
• Nov 2020
  • New home
• Jan 2020 Chase Ink Unlimited

I have been studying about building business credit. That will be my next focus. I would appreciate any feedback on this plan. Thanks in advance!

[CreditInspired]

Hi

I can only answer one of your questions. If your goal is to purchase a home, make sure that 12 months prior to applying for a mortgage that you have not applied for credit cards or an auto loan. Most lenders do not want to see credit-seeking behavior. 

[HeavenOhio]

How old is your oldest card? The reason I ask is that most Chase card applications are denied when one's oldest card is less than a year old. Also, your current low limits probably aren't positioning you well for an Ink card.

[Anonymous]

Thanks. My banker said I shouldn't have more than 3 queries in 12 months. For a home loan, now I am thinking I should wait until Jan 2021. I wanted to rush it and try for May or June 2020. But it would help to have another year of good credit. Plus I should make more money in 2020, and that will help my debt to income ratio.

Gardening is one of the hardest things.... Maybe I will hit 800 by then.

[Anonymous]

Good advice on the Chase card. Thanks.

My Regions CC is now at 4 months and my OpenSky and NFCU are at 3 months. The only revolving credit I have that is older is a 1st Premier paid charge off from 6.5 years ago.

You are right. I need to let these credit lines mature. My banker said my secure Regions card will be graduated after 3-6 months if all goes well. Plus I hope for an automatic CLI from NFCU at some point.

Gardening is hard.

[AllZero]

You have to decide which is more important: home ownership or credit building.

You need to get your 3 bureau mortgage sores: EX 2, TU 4, EQ 5. It will give you an idea how to proceed. If your middle mortgage score is questionable, then you don't want to do anything negatively that will reduce it.

[Anonymous]

+1 to @HeavenOhio and @AllZero said.

Agreed, you need some age before you go for Chase cards. And you need no new accounts/inquiries for the preceding 12 months when you go for a mortgage, regardless of what your banker says. UW doesn't wanna see anything new.

[Anonymous]

Well, the good thing is that if I decide to hold out for the mortgage at 12 months as advised, I only have 9 months to go. I can manage on 3 low-limit cards until then. They really do help to even out the cashflow, and a higher limit before increasing my income might be too tempting anyway. And I could probably even use them for business cash flow. Besides, I should get higher limits from Regions and NFCU soon (without a pull, I hope).

So the best advice is to delay the business CC and auto loan to get the mortgage. That is, if my priorities remain the same. Thanks, it's a little clearer now.

Thanks for the feedback.

[AllZero]

Free mortgage scores Get your free mortgage scores. Click the link. Also check out the Mortgage Loans forum to prepare yourself for the application.

You'll be eligible for NFCU CLI at 91 days and 3 statements. However, with your starting limit, best practice would be to wait 6 months. Note: expect it to be a hard pull. I would avoid hard pull inquiries and new accounts if you're prepping for a mortgage application.

[AllZero]

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@Anonymous wrote:
My Regions CC is now at 4 months and my OpenSky and NFCU are at 3 months. The only revolving credit I have that is older is a 1st Premier paid charge off from 6.5 years ago.

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Once the derogatory if off your report, you can expect a nice FICO score boost. It should be removed at the 7 year mark from the 3 bureaus.

Alternatively, you can request EE Early Exclusion:

TU 6 months early.

EX 3 months early.

EQ 1 month early. I would not recommend asking EQ for EE.