Building credit with NFCU -- feedback requested

[19eighty5]

Hello,

I'm new to NFCU (joined April 2018), currently rebuilding my credit, and would eventually like to have mutiple NFCU products- unsecured CC, CLOC, auto loan, etc. I was denied for an unsecured CC and auto refi in April; then in May, approved for a secured CC. My Navy internal credit score is 265. I was thinking that in addition to having the secured CC, I could open up a share secure loan to help build my internal score over the next few months. Goal is to strengthen my chances of being approved for the aforementioned products (unsecured CC, CLOC, auto loan, and eventually a mortgage).

Can someone from the forums provided feedback on your experience taking this approach or guidance in general? Thanks!

[Anonymous]

Opening a Share Secure Loan with Navy is a great idea.  How much cash can you deposit in your savings account to secure it?  $3000 would be perfect, because then you could get a 5-year loan.  Less initial security involves a shorter loan term.  The cool thing is that, if you follow some guidance we give you, you can get all of that $3000 security money back in a month or so.

[19eighty5]

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@Anonymous wrote:

Opening a Share Secure Loan with Navy is a great idea.  How much cash can you deposit in your savings account to secure it?  $3000 would be perfect, because then you could get a 5-year loan.  Less initial security involves a shorter loan term.  The cool thing is that, if you follow some guidance we give you, you can get all of that $3000 security money back in a month or so.

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Thanks for your response. I can set aside $3,000 for the loan. Assuming that is the case, after following the SSL process, what would be the guidance to get the security back so soon?

[Anonymous]

NFCU will give you $3000 (the amount of the loan).  Use that money to pay off most of the loan balance.  Pay it down to 8% of the original loan amount, which would be $240.  A few days later Navy will unlock most of the money in your savings account (since most of the loan amount is paid off).

This approach is called the Share Secured Loan Technique.  It will result in an installment loan on your reports for which most of the loan has been paid off.  FICO really likes that.  It should raise your FICO 8 scores by about 30 points.

After you pay it down to $240, Navy will push the due date of the next payment to about 4.5 years into the future.  If you have an automatic monthly payment set up, just cancel the autopay.  And then set up a much smaller push payment of $3 per month.

[19eighty5]

Then that's the plan. Hopefully, that tradeline will also reflect positively with NFCU's internal scoring system as well. I don't know if it's possible to accelerate the growth of that relationship with Navy but here's to trying!  **crosses fingers**

[Anonymous]

Does Navy give you a way to find out what its "internal" score is periodically?  Or is the only way to apply for something and then get denied?  That latter approach is not a good one since you are building up a history of inquiries and denials. 

Also, is there a way of turning that internal score into a percentile number or even an ABCDF rating?  I would have no idea what a 265 means.

Finally, if you look at this critically, is there any particular reason you can't take your credit building journey more slowly with Navy?  E.g. no applications for credit (at Navy or anywhere else) for 13 months?  Or do you have a desperate need for a loan earlier than that?

[Anonymous]

PS.  It looks like you have (six!) credit cards now.  That's more than enough.  You can have an 850 score with only three.  Opening more cards beyond three does not help your score (and in fact hurts it a bit, simply by the way it lowers your AAoA and other scoring factors).  Six cards is fine, but it's just important to realize that the additional cards are not helping you.

Are you clear on how you should be using the cards to build your score?

[19eighty5]

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@Anonymous wrote:

PS.  It looks like you have (six!) credit cards now.  That's more than enough.  You can have an 850 score with only three.  Opening more cards beyond three does not help your score (and in fact hurts it a bit, simply by the way it lowers your AAoA and other scoring factors).  Six cards is fine, but it's just important to realize that the additional cards are not helping you.

Are you clear on how you should be using the cards to build your score?

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I think so- i'lll address the cards first. The two AU cards were added to boost AAoA, payment history, and overall utilization. I added the NFCU secured card due to needing a card that didn't charge foreign transaction fees AND I thought it would be good to build credit with NFCU using one of their internal products. I'm applying AZEO to all cards (even AU) so only one is reporting with a balance <8.9%. I don't feel comfortable experimenting with 2 cards reporting a balance- not so much for scoring purposes but because I want to stay on top of paying back what I charge, as to change old credit card habits.

Regarding your other question on taking NFCU credit building slowly, I have no immediate need for more products with NFCU so taking a slow approach is absolutely fine. My goal for asking for advice is to ensure i've done everything I can to prove that i'm serious about showing positive credit behavior and that I can repay what I borrow from creditors. If it takes more than 18 months to do that (as I suspect it will), i'm perfectly fine with that timeline. I anticipate going for a mortgage in 24+ months so no rush there.

[19eighty5]

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@Anonymous wrote:

Does Navy give you a way to find out what its "internal" score is periodically?  Or is the only way to apply for something and then get denied?  That latter approach is not a good one since you are building up a history of inquiries and denials. 

Also, is there a way of turning that internal score into a percentile number or even an ABCDF rating?  I would have no idea what a 265 means.

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Great question! I would need to call Navy and find out if they will proactively offer this number. Up to this point, i've only received it by applying for products. I would think that in order to turn that number into something more usable that could coincide with my FICO score or some other indicator, i'd need a few data points over time. However, I did note my score at the time of application: NFCU- 265 vs. EQ- 565/TU- 565

[Anonymous]

Here are some suggestions:

*  Do not apply for any more accounts for the next few years, with the exception of the 60-month Navy SS loan, a car loan, and a mortgage.  And only apply for the car or home loan if you really need the car or home.

*  Always have at least one card produce a statement with a positive balance, and then always pay the statement balance in full a week after it prints.

*  See if you can always have the two AU cards always report a $0 balance.  Is that a possibility?

*  Of the four cards in your name, I would allow two to report a positive balance and then switch it to the next two the following month.  This is not necessary but some people (e.g. contributor Thomas Thumb and myself) feel like a person like you might get an advantage long term out of creating a clear record that all four of those cards are being used.  The four CC issuers will be able to see that all four cards are occasionally used.  An alternative would be to primarily use one card and then alternate the other three (using one each month for a small purchase).

*  Note that AZEO gives you no help long term in building your scores.  It's a technique that comes into its own in the month before an important credit pull, when you want to get every available extra point.

*  Implement the SSL Technique with Navy.

*  Most importantly, explore whether you can get all of your derogs removed.  The folks in the rebuilding forum can suggest strategies for that.  You may need to wait until you have exhibited 6+ months of perfect behavior before going full throttle with Goodwill Letters.