@Anonymous wrote:
Four months from today, he must be completely self-sufficient, making good money, and paying his bills on time, every time.
Until he has a valid state issued ID or passport to verify his identity, your banking and credit plans for him are dead in the water. All U.S. banks and credit unions must comply with 31 CFR Part 1010, so none of them will open a credit account for him until June, when he has a state issued ID.
My goal is to establish three credit lines as soon as possible, from A and B level cards -- no C or D. I don't want him to start with low credit lines from Capital One Platinum, Credit One, etc, for $300.00. I believe this hurts you in the long run in a journey of decent limits. I have found that there is a direct correlation between what your existing lines are, and what a new credit grantor will allow. These low credit lines stay with you, cost hard pulls, and never move upwards. I'd like decent starting limits of $5,000.00 or more.
I see you've done your homework discovering the pitfalls of starting with low credit limits. As for the A, B, C, and D level cards, I read that as A = premier tier, B = mid-tier, C = starter cards, D = predatory lender cards. Unless you have an existing relationship with bank or credit union executives and can convince them to help your friend, your friend is going to have to begin with the "starter" credit cards. The quickest route is secured credit cards that graduate in less than 1 year with responsible credit usage. Some secured cards allow deposits of $5,000 (sometimes more), but if that's your criteria, you're limiting your options. For example, Discover has one of the best secured cards around that can graduate to unsecured in as little as 7 months, but the deposit ranges from $200 to $2,500.
He also needs a car loan within these four months to buy a new truck. $45,000.00. Ford preferred.
Unless your friend needs to impress someone very important, I wouldn't advise buying a brand new truck. They lose their value too quickly. I would advise finding a good mechanic who can inspect any used truck your friend wants to buy to ensure it's reliable both now and into the future, and he's not being ripped off. The mechanic may even recommend a good, lightly used, somewhat new truck he knows is for sale. Have your friend watch some Scotty Kilmer Youtube videos (www.youtube.com/c/ScottyKilmerMechanic/videos) on the best trucks to buy. Scotty even has a website (carkiller.com) where you can ask questions for free and get expert responses.
After reading many posts about how to quickly establish credit lines for someone with no previous credit, my first step was to add him as an authorized user on 8 or 9 of my cards.
...
As of today, just a week after I started, TU is reporting 813 Vantage 3, and EX is reporting 800 Fico 8. No data on EQ.
Congrats! That means you've got excellent credit, but most banks and credit unions will ignore the AU accounts and examine your friend's credit history to determine whether they want to extend him credit. With no credit history of his own, he's considered high risk.
So, what's my next step? Here are my thoughts:
1. I can deposit $10,000.00 in three credit union share accounts (Penfed, Nasa, and Alliant). I spoke with reps last night. He can then call in and request SSL on all three accounts. All reps stated that he can pay off the balances aggressively, and leave $50.00 in outstanding "loans." These loans will then season for four years, with no payments due until the final $50.00. (He better remember to pay the final payment!). Any credit unions open accounts with soft pulls only?
This is the SSL Technique. The SSLT won't help after your friend gets his $45K auto loan, unless you're willing to deposit a lot more than $30K into his SS accounts. It's the remaining 8.9% balance of the aggregated loans that gives the 15 to 35 FICO point boost. See these threads for the details:
If you still want to do the SSLT, PenFed has been tested by members of myFICO forums. Paying the SSL down to a low level resulted in the loan being paid off very quickly, not 4 years hence. Alliant stopped issuing SSLs, but allows unsecured loans at a much higher interest rate than SSLs, so Alliant will still work if your friend doesn't mind paying the interest. However, I would recommend Navy Federal Credit Union, if he's eligible. If he's not, have him become a roommate of someone who's already a member, and he can become a member that way. Joining Navy Fed is a soft pull.
Personal experience: I didn't have any installment loans, ever, on my 800 Fico reports. So I took out a car loan, and paid it off after 31 days. My credit scores spiked, then down like 60 points after payoff. About a month later, I was talking with a very nice lady at Penfed. She told me I should have paid off all but $50.00, and let the loan season for at least 18 months. I just took out a $20,000.00 pre-approved personal loan from Penfed, soft pull only. It just reported, so I'll pay it down to $50.00. My credit scores only took a 6 point hit. I'm hoping this will take me to the promised land of 850. Or is 850 simply a a mirage?
With excellent credit, you already qualify for the best interest rates. Getting even closer to the 850 FICO score isn't going to get you better interest rates.
Back to business:
2. Get the car loan for $45,000.00 from Ford, or otherwise, in the next four months.
3. Get three top level cards with SL at least $5,000.00.
The obvious problem is: I have read much about the fact that AU status doesn't hold water to many credit grantors.
Questions:
1. For various reasons, I cannot start the SSL loans for four months, when he needs to be financially independent. Main reason, he will not have a state ID card until June. Ain't happening, don't ask (thanks).
No need to ask. The "Four months from today, he must be completely self-sufficient, making good money, and paying his bills on time, every time" and "will not have a state ID card until June" gave it away.
Is there any bank or credit union who will open an account online, with SSL benefit, that reports, without ID? I can't find one, but doesn't hurt to ask the experts.
Sorry. There aren't any in the U.S. As I mentioned above, the banks and credit unions who must comply with 31 CFR Part 1010 will need to see his state issued ID or passport first.
2. Should I go straight to banks that will begin with secured cards (Discover, BofA, Chase), deposit $10,000.00 in each to establish the high lines of credit, and let them season? Or do the "real" credit granters see right trough this, just like they see right through the AU status?
Yes, they see right through it, but your friend might still be approved for a secured card, anyway. If he chooses BofA, make sure the money is in his BofA account at least a week or so before applying for the secured card to ensure all the necessary computer systems are updated prior to the application. BofA's max deposit for secured credit cards is $4,900. I don't believe Chase issues secured credit cards.
3. I'm reluctant to apply for cards just yet -- particularly before getting the Fico Forums Community approval. He needs the cards within the next four months.
The timeline starts the day your friend gets his state issued ID or passport. Not a day before, because the banks and credit unions won't touch him until then. With a June start, your friend could easily blow right past your 4 month deadline. If he wants to make the deadline, your friend needs to make it his mission to work every day to accomplish each of these milestones, beginning on the day he gets his state issued ID.
4. Instead of three SSL loans of $10,000.00, should I just do one for $30,000.00, or any combination? Or, same advice if I do three secured cards for $10,000.00 each, or one for $30,000.00. The credit unions stated there is no limit on SSLs, don't know about the secured cards.
I don't recommend the SSLs, because he plans to have an auto loan in the very near future.
A large deposit may delay graduation of the secured credit card. Lenders like to graduate secured cards with a credit limit equal to or higher than the deposit. I wouldn't deposit more than $5K with each lender for the secured credit cards.
5. His biggest issue is the $45,000.00 car loan. Desperately need advice on how, when, where to go for "friendly" finance due to the AU status issues.
The "when" is after your friend gets his state issued ID. If he's going to a car dealership, get pre-approved for an auto loan at a credit union first, where he'll get a better interest rate. Don't let the car dealership check his credit for financing the vehicle. Due to his lack of a credit history, they'll go through their entire list of lenders attempting to get him the best financing. This often results in a dozen or more hard inquiries on the car shopper's credit reports. When it comes time to apply for better credit cards later, your friend will likely be denied due to "too many inquiries."
6. Should I increase his "salary?" I could increase this to $10,000.00 per month, but I didn't want to push it past believable levels. Or is any salary level believable, as long as it's legitimate, but just starting this journey?
I gotta tell you: This sounds highly sketchy to me. But to answer your question, a $60K to $80K annual salary will qualify him for an auto loan and credit cards, as long as his debt-to-income ratio isn't too high for the amount of the monthly auto loan payment and normal credit card payments. Just make sure your company pays your friend this salary and pays his employer income taxes and payroll taxes to the IRS and your state tax board, because lenders may want to see pay stubs, bank statements, etc. Proof of income, you know?
Keep in mind, if your company hasn't hired your friend as an employee, but instead as a Form 1099 contractor, your friend could have difficulty getting financing, because lenders usually want to see the self-employed borrower's previous year's tax return, not just current bank statements. Again, proof of income.
Good luck!
