Only One Line of Credit and I Need to Improve My Score!

[Anonymous]

I am thinking about buying a house. I have only had one line of credit in my liftime, which is a student loan obtained through the US Dept of Education. I am currently paying this loan off. My FICO score is "very good", since I have made all my payments on time, but I understand that I still may have problems obtaining a home loan due to insufficient trade lines.

I think I need to open two credit cards in order to have a minimum of three trade lines. However, I understand that this will temporarily lower my FICO score (for a period of twelve months?). I am unclear of how much of a 'ding' my score will take from doing this.

Does anybody have any advice for me? Should I open two credit cards ASAP, use them and make payments on time for the next twelve months in order to raise my score in the long run?Is there really a "three trade line minimum" to be approved for a home loan?

Message Edited by JaneKathleen on 09-17-2009 10:34 AM

Message Edited by JaneKathleen on 09-17-2009 10:34 AM

[AndySoCal]

I would get a store card and Visa/Mastercard or Discover Card. And use them and pay the balance in full when the bill comes due.

[Jazzzy]

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@Anonymous wrote:

I am thinking about buying a house. I have only had one line of credit in my liftime, which is a student loan obtained through the US Dept of Education. I am currently paying this loan off. My FICO score is "very good", since I have made all my payments on time, but I understand that I still may have problems obtaining a home loan due to insufficient trade lines.

I think I need to open two credit cards in order to have a minimum of three trade lines. However, I understand that this will temporarily lower my FICO score (for a period of twelve months?). I am unclear of how much of a 'ding' my score will take from doing this.

Does anybody have any advice for me? Should I open two credit cards ASAP, use them and make payments on time for the next twelve months in order to raise my score in the long run?Is there really a "three trade line minimum" to be approved for a home loan?

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Hi....I have read here in the forums that people have been told they need 3 trade lines in order to get a mortgage. myFICO has a mortgage forum....ask this question there. They know a lot about qualifying for a mortgage.

It's not a bad idea to apply for a couple of credit cards. Read some on the credit card forum, and you will get a feel for what may be good cards for you to have. Often it is good to have a bank card from one of the big banks, or Discover, AmEx, etc. The cards you qualify for will depend upon your income.

To build up a history, you don't ever need to carry a balance or pay interest to the credit card company. If you get a couple of cards, use them some and then go online and pay them off. You don't need to be making monthly payments on a revolving balance. I believe the requirement to have open tradelines such as credit cards is to show that you can manage credit.

Don't be afraid to ask questions if you think about applying. There are a lot of people here who can give you good advice.

[Lel]

What is your time frame for buying a house?

[Anonymous]

Thanks so much for the replies, folks. All great info...

I checked out the mortgage forum and found confirmation that I need to work on getting a total of three trade lines going. The bad news: I walked into my bank of ten years yesterday, where I have always been in good standing, and was summarily rejected for a credit card. I really don't get why, since I make 45K a year, do not carry a lot of debt, and have FICO scores of 705 (TU) and 739 (Equi). Probably due to the circular reasoning that if I've never had a cc, I'm too big of a risk for a cc company to take on.

Anyways, my plan now is to use the money I have been saving for a home downpayment to open up a secured credit card. The lady at my bank who denied me for the cc told me that a secured card will show up "just like an unsecured card" on my credit. I'll also try to get a store card. On both cards, I will be using them regularly and paying the bill in full every month, before the cc company can make any interest money off me.

As far as my timeline for buying, Lel, I suppose it's 'as soon as I can get a loan and find a place'. I've got a small downpayment, and the market looks really good right now, so in my mind "the sooner, the better!"

Thanks again for all the info, guys. I'm heading out to the mortgage and credit card forums now. Have a great day!

Message Edited by JaneKathleen on 09-18-2009 09:04 AM