Hi @b0yinterrupted , and Welcome to The forum!
" I will inherit my current home in the future and one day I asked myself how would I pay to remodel as I plan on keeping it. The place could use a little updating"
Personally, I would look into a HELOC (Home equity line of credit) .. JMHO
I will let the pro's answer the rest of your questions.
Good Luck!
Hi, Welcome to the forums!!
While its not very difficult to generate a high fico score relatively quick. Assuming you are starting from a spotless credit report, you did not specify. Lenders weigh "length of history" quite heavily. To secure a loan like the ones you mention at favorable terms might require more than just 2 years of history. JMHO. Once you own the home and have equity, that may be another matter entirely.
I have a 769 fico 8 score but only 1.4 year in history. I wouldnt qualify.
@b0yinterrupted wrote:I will inherit my current home in the future and one day I asked myself how would I pay to remodel as I plan on keeping it. The place could use a little updating. I live with an older (66 year old) friend who is leaving it to me. Started reading about loans and credit here and on reddit. I've learned a lot so far.
Whoa! Don't put money into a home you don't own, yet. Plans change, people change their minds, and people neglect to change their wills after promising to do so and then die unexpectedly. If you don't own the home when you plan to upgrade it, then don't get a loan and upgrade it until your name is the only name on the deed.
My goals are:
Graduate all cards and keep them forever no matter what
Generate an acceptable FICO score within 2 years
Get a personal loan around $15,000 in the 3rd year to start remodeling. Should be plenty to start and future needs I would get a home equity loan when I actually own it.
What I'd like to know is will these 4 lines of credit with an exceptional 2 year payment history and low utilization doing a rotaing AZEO be enough to get me a loan?
My income varies but it's on the lower end let's say $25,000.
With your level of income, the lender may insist on a longer loan term length to keep the monthly payments manageable, but if so, you'll pay more total interest for the loan amount.
Should I get a secured loan instead to have a mix of credit when I apply for the real loan?
I currently don't drive so an auto loan is not an option right now.
Someone told me not to get a secured loan that I shouldn't have to pay to build credit.
Not all secured loans are created equal. Some lenders (like credit unions) release the amount of each payment a few days after your payment is made, so you have access to your own funds almost immediately after each payment, instead of waiting until the end of the loan to access your secured funds.
For example, I used the Share Secure Loan Technique (see The Quest For an SSL Alternative) to open a shares secured loan at Navy Federal Credit Union, paid it down to 8.9% with most of the loan amount they gave me, and Navy Fed released the hold on my shares 4 days later, so I can now spend the 91.1% of my secured loan money as I please. Two weeks later, when the new loan reported to the CBs, I got a FICO Score 8 boost averaging nearly 30 points across the board for the credit mix category, since I only had 2 credit cards on my CRs before that. I've paid the loan down a little further in the second month, then set it up for a $1 autopay every month. For my trouble, it will cost me an average of about $2 a year in interest for the next 5 years, and I get to keep the FICO score boost the entire time.
Set yourself up for success, whether you need to apply for a HELOC for your inherited house, or you decide to sell the house to buy another home where you need a small mortgage. My advice is to add a secured loan to your credit mix where you get access to your funds equal to the payment you made quickly after you make each payment and where the loan's end date never changes when you pre-pay most of the loan, as in the SSL Technique I described above.
Good luck!
