Building a credit score from scratch fast

[Anonymous]

Hi all,

I moved to the states recently. I'm trying to build a credit score (decent at first then hopefully very good as quick as possible. I have a good income, will never be delinquent on loans and can bring over decent assets if I need. I am hoping to buy investment properties in a year or so and given banks want to give away cash at less than 4% I want to jump on this.

Here are the steps taken so far.

Get a secured credit card.
Get the only unsecured card that it seems you can get.
Take out a secured personal installment loan.

I don't need to do anything that makes my credit score better in the very near term. I'm happy to hammer it to make sure that in 9 months to 12 months it's as good as possible. So from what I gather, for credit util it's just at your last balance date so I can just make sure that's at less than 10% the bal date before I apply for the loan. Is that correct? I'm also guessing any credit checks should be out of the system in 6+ months.

What I want to know is what else can I do to make sure that in a year or so I get the best rating possible or at least a rating. I'm willing to effectively 'pay' to get a rating eg. Secured personal loan. Does the size (assuming util is kept to less than 10%) of my credit limit on the secured card matter? Is that the same with the personal loan? Anything else I can do?

[llecs]

Welcome to the forums! And welcome to America!

Right. Ideally you'd want all but one CC reporting $0 and get the remaining to report a balance of under 9% of the CL. FICO has no memory of utilization so it doesn't have to stay that way all the time, but when approaching application-time for something major like a home, you may want to get your utilization to that level.

Do you mean inquiries falling off in 6 months? Inquiries remain for 2 years, but FICO scores them for only the first year.

The CL doesn't matter per FICO scoring. However, under a manual review, you'll tend to get better credit limits if you have higher limits now.

In my experience, loans are a very small part of FICO scoring. I'd make the argument that you'll have a net loss in points by adding it, but in time, the damage of the new credit will fade. In the long run, I'd also argue that it doesn't help much, if at all. For example, I paid off my car and it was my last loan. I took it from 25% of the org. balance down to $0 and one score increased but the other decreased, both by single digits. The original balance doesn't matter per FICO scoring (well, matters very little.....I just added a $500k mortgage and it didn't do much to my score).

Time....just wait it out and let everything age. Maybe after a year from your last app, it might be safe to add another CC. You'd likely see a small score hit for adding it but the damage will fade within a year.

[Anonymous]

Thanks for the reply it was helpful.

I'm still a bit unsure what I should do to maximize my score in 9-12 months. I actually don't care about my score now, so if there are any actions I can take which will be beneficial to my score in a year or so that might knock it down in the short term, I'm very happy to take them. I do not need any credit now, so having a lower score temporarily is not an issue. I figured I should get as much credit as I can now (personal loan, card etc.) because in a year this will be only a good thing, I've had credit and paid it off well. Ut other than the things I've listed aesthete any more ways to ensure I have a good rating in 12 months.

Thank you.

[llecs]

Aside from utilization on your CCs, waiting is the only thing you should do in the short time frame of 9-12 months. Adding anything now could be damaging and the impact would still be felt inside your 9-12 month goal. Now if you could move your goal to 2-3 years, then I'd say it would be safe to add one or two tops (CCs). Adding more and more credit is not a good thing for your score. It impacts your AAoA and the new credit is always a score dinger. ETA....you can easily hit the high 700s with what you have provided you give it time.

[Anonymous]

I've only had credit for 2-3 months, so the AAoA will hardly be affected now but if I add in a year or so it will be. That was my reasoning to add now. I figure in a year I'll start to get offered bigger limits on the cards anyway. If I needed to I can always get am AMEX approved at home and transfer it here. I was hoping for a 700+ so I could borrow at a low rate (with a 30% downpayment) on some investment properties in about a year.

[haulingthescoreup]

Two open and healthy (no lates, etc.) revolving accounts plus an installment loan are all you need. I think that 700+ is perfectly reasonable. It has been done before by those new to credit (young people, people new to the US.) It's very different for those who have messed up their credit in the past, and now they're having to build enough good history to "dilute" the bad history.

You've done the hard part in getting two open CC's. It doesn't even matter how high the CL's are, as long as you learn how to control the reported utilization.

Just sit back and let time do its thing. Possibly one more card wouldn't hurt, but there is no way in which it would help, AFAIK. Also, if you're willing to wait until all your current accounts hit one year, you'll get a much, much better card (higher limits, better rewards, etc.)

Welcome to the US!

[Anonymous]

Thank you very much for the help. I'm looking forward to building good credit so I can blow it on a bunch of investment property loans (which I of course will always pay on time etc.). It's crazy that's it's not possible to bring good credit across to a new country! And with the situation here now, I could offer a 70% downpayment on a property with rental income greater than the total interest + capital repayments by a multiple of 3-4x and still get denied the loan for the 30% (not that I've tried but from speaking to bankers, it's pretty clear without a rating they will not lend on a property investment no matter what).

[haulingthescoreup]

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@Anonymous wrote:
Thank you very much for the help. I'm looking forward to building good credit so I can blow it on a bunch of investment property loans (which I of course will always pay on time etc.). It's crazy that's it's not possible to bring good credit across to a new country! And with the situation here now, I could offer a 70% downpayment on a property with rental income greater than the total interest + capital repayments by a multiple of 3-4x and still get denied the loan for the 30% (not that I've tried but from speaking to bankers, it's pretty clear without a rating they will not lend on a property investment no matter what).

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Yeah, I'm afraid it's like being the new kid on the team. You have to ride the pine (sit on the bench) for a while, and pick splinters out of your rear, before you're considered a full member of the team.

I think you posted earlier about getting an AmEx from your home country and transferring it here --I'm not sure that you can do that. I've read an awful lot of posts by frustrated new residents in the same situation.

[Anonymous]

I'm not sure if AmEx do it as a blanket rule, but it certainly can be done, they have a team that does it. You just need to be a good customer or related to a good customer who will underwrite you.

The annoying thing is you could be the new kid on the team with a 100mph fastball and a .35 batting average and they still make you warm the bench for a season.

FYI http://www.americanexpress.com/globaltransfers/global_card_transfer_en.shtml

[RobertEG]

I would only add to all the helpful comments that being in a rush to grab new accounts, while making sense if you get them, might backfire, as has been suggested.

You need to show effective management of what you have before you are likely to get the better new cards.  Going on an application spree will hurt in the short term by adding a lot of new inquiries, and will remain viewable in your CR for up to two years.  New creditors may look negatively upon granting credit to one who is trying to take on a whole lot of new credit over a short span.  So it may hurt in a manual review of your CR.

I suggest limiting your inquiries to only those new cards that you feel are likely to be approved, and slowly build up to the bank and higher CL cards.  Higher CL is not that important, as has been said, FICO does not score CL itself, but only your % util of what you have.

You have to hurt yourself a bit to get new credit, but it is necessary to take those small and short-term hits.  Just dont overdo it.  For that reason, I really dont think the expectation of doing much of great significance over a 9 month period is very realistic.  The process takes more time than that.