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Thin Credit File - how to intelligently "improve" that?

Nikita2008
Contributor

Re: Thin Credit File - how to intelligently "improve" that?

Personally, I would try to build out the thin file. One more card and the SSL. It does not mean you have to carry debt so to speak. Use the card/s for routine purchases and PIF every month.

 

You may not need credit now,  but you never know when you will.

Message 11 of 21
chijo
Established Member

Re: Thin Credit File - how to intelligently "improve" that?

Firstly, I love your post title. Something I am also thinking about since I have a semi thin file. I am of the opinion that most of this score game is just to profit the financial industry more and more. Not necessarily pro consumer by any means. If fattening that file costs you more money than is prudent I wouldn't. I find that those who score such things count every minimum payment of every card you have as if you were charging on each card every month in the DTI area. I decided that in my case it would be better for me to add to credit limits and leave the number of cards where they are for now...three. I want to leave room for a mortgage and vehicle loan soon. Since scores can drop when loans are paid off I didn't want to take that risk with short term personal type loans since my score is where I can't afford to try to time those drops right now. Small as they may be. 


Message 12 of 21
CreditNoviceRightNow
Established Member

Re: Thin Credit File - how to intelligently "improve" that?

@chijo 

 

Excellent point with the score drops.  Most people (I think that I can say "most people" here) overlook the fact that once an installment loan is paid off that there is a drop in your credit score.  Which - I guess - makes no sense.  Not to us humans, anyway.  The size of the drop depends on "your" credit file.  For someone like me (with a thing, young file) that drop would likely be much larger than for someone with an aged, thick file.  All good.  Part of the learning curve.

 

And, good points.  Definitely things to consider.  Still up in the air about the SSL. Leaning heavily towards it....but I will sleep on it.

Message 13 of 21
Horseshoez
Valued Contributor

Re: Thin Credit File - how to intelligently "improve" that?


@chijo wrote:

I am of the opinion that most of this score game is just to profit the financial industry more and more. Not necessarily pro consumer by any means. If fattening that file costs you more money than is prudent I wouldn't. I find that those who score such things count every minimum payment of every card you have as if you were charging on each card every month in the DTI area. 


I'm not sure I understand what you're trying to say, why would "fattening" one's file cost them any money at all?

 

I ask because exactly a year ago today I got my first "Rewards" credit card; in that year I haven't paid even a single penny of interest, however, my spending has earned me a total of $436.36 in cash rewards plus another $300 for sign up bonuses.  To me at least, that seems like the opposite of costing one money to fatten their file.

I categorically refuse to do AZEO!

Message 14 of 21
FireMedic1
Super Contributor

Re: Thin Credit File - how to intelligently "improve" that?


@chijo wrote:

Firstly, I love your post title. Something I am also thinking about since I have a semi thin file. I am of the opinion that most of this score game is just to profit the financial industry more and more. Not necessarily pro consumer by any means. If fattening that file costs you more money than is prudent I wouldn't. I find that those who score such things count every minimum payment of every card you have as if you were charging on each card every month in the DTI area. I decided that in my case it would be better for me to add to credit limits and leave the number of cards where they are for now...three. I want to leave room for a mortgage and vehicle loan soon. Since scores can drop when loans are paid off I didn't want to take that risk with short term personal type loans since my score is where I can't afford to try to time those drops right now. Small as they may be. 


I understand your point though it really in a way it doesnt work like that. FICO likes a min of 3 cards. Why 3? FICO likes less than 50% of cards reporting a balance. So going from 2 to 3 cards help when 1 reports. Name and credit limit doesnt mean a thing. Its how its reported. If you dont have any loans at all reporting. Yes it can cost you an avg 30+/- points. I went thru 2 SSL's one by one. Alliant and NFCU which kept me in the 730-750 range. Once Alliant stopped 35 pts gone. Then NFCU SSL reporting <8 jumped the point right back up. Computers that approve see scores more than anything. So thats why the SSL is a popular thing around these parts. No HP and it can be paid down fast and it pushes the statement date way out there. Then once it comes time to get a car or home. Your scores are much higher with the SSL than without any loan reporting. Thats the real reason.






Homeowner since Sept 2020. My posts are JMHO. My siggy is not to brag. Just sharing my experiences after BK from learning here from rebuild to recovery @ 540's.
Message 15 of 21
chijo
Established Member

Re: Thin Credit File - how to intelligently "improve" that?

I wasn't aware that the drop happened in such circumstances either until I started reading this forum. That's what is so valuable here besides the deep knowledge of the members, the ability to hear so many different people's stories and situations. I would think this arena is far more valuable than any university class on such matters could ever be.


Message 16 of 21
chijo
Established Member

Re: Thin Credit File - how to intelligently "improve" that?

I was referring to the many products slanted towards folks wanting the file fattening "quicker" that end up charging folks fees, etc. There are many of those out there that folks fall for and regret later. We do know that paying off a loan can make your score drop. We can infer that many of these companies count each card you have open as a possible minimum payment you'd be making should you use all of them at once by their actions. Other's mileage may vary, but that's what I am seeing in my reports at the moment and it changes my DTI lenders are looking at. Some folk's scores can handle that and still get them where they need to go, some can't. Especially those barely entering into the good range. I think that may be behind why folks can't get loans closed or additional cards once they have a lot of them open. Many lenders are considering every open card's minimum payment as if you'll be making them each month. 


Message 17 of 21
chijo
Established Member

Re: Thin Credit File - how to intelligently "improve" that?

Yes, and I was not wanting to juggle it like that right now. I can see that some enjoy that game. My scores cannot handle it right now. Perhaps in the future. 


Message 18 of 21
Horseshoez
Valued Contributor

Re: Thin Credit File - how to intelligently "improve" that?


@chijo wrote:

Yes, and I was not wanting to juggle it like that right now. I can see that some enjoy that game. My scores cannot handle it right now. Perhaps in the future. 


I don't enjoy the game even one little bit, however, managing three cards to keep reported balances low (or zero) along with a single SSL is a no-brainer and takes very little juggling; it is also just as beneficial at "fattening" one's file from a score perspective as having lots of cards.  Speaking of the folks with dozens of cards, I agree with you, playing the game from that perspective is waaaay too much work for a couple hundred dollars and a few FICO points of gain.

 

Long story short, get three good "rewards" cards, even if you need to start them out as secured, keep them at low/no utilization, open an SSL and pay it down under 9%, and then hit the garden and watch your scores and history grow.  Simple as that.

I categorically refuse to do AZEO!

Message 19 of 21
morethan20yaks
Established Member

Re: Thin Credit File - how to intelligently "improve" that?

I joined NFCU recently. Soft pull only.

Message 20 of 21
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