Co worker establishing credit questions

[sjt]

Hi All!

We have a new co-worker, who is awesome, and she told me that she prides herself not ever being in debt. She graduated college without student loans, etc. She now realizes that its begining to bite her in the butt that she never got a credit card while she was in college.

She recently joined a credit union and will be opening up a secured card. Someone suggested to her to get a secured installement loan for $1000 and immediatly pay half of it off. Do you think the installment loan will help?

[llecs]

Does she have a mortgage, car loans, SLs or anything like that? If so, then a secured loan wouldn't help the mix any.

IMO, even if she was 100% loan-free (and that's a great thing), then it's not worth it to add a secured loan. You are essentially paying interest on a loan that has very little positive impact to begin with. Plenty of posters in here have hit into the 800s with no loans reporting whatsoever, mortgages included, with only CCs helping their mix. Unless you are trying to micromanage for an extra couple-few points in the long-term, it's not worth it. Plus she may be paying $$$ to lose points due to the new TL, impact to AAoA (sounds like she doesn't have any credit), etc.

[sjt]

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@llecs wrote:

Does she have a mortgage, car loans, SLs or anything like that? If so, then a secured loan wouldn't help the mix any.

IMO, even if she was 100% loan-free (and that's a great thing), then it's not worth it to add a secured loan. You are essentially paying interest on a loan that has very little positive impact to begin with. Plenty of posters in here have hit into the 800s with no loans reporting whatsoever, mortgages included, with only CCs helping their mix. Unless you are trying to micromanage for an extra couple-few points in the long-term, it's not worth it. Plus she may be paying $$$ to lose points due to the new TL, impact to AAoA (sounds like she doesn't have any credit), etc.

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She has no credit established. The secured card and loan would be her first entry into the credit world.

[09Lexie]

She would be better off opening two cc's and bypassing the installment loan. I'm sure you've discussed the possibility of her ding added onto an account in good standing as an AU ; correct?

[sjt]

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@09Lexie wrote:
She would be better off opening two cc's and bypassing the installment loan. I'm sure you've discussed the possibility of her ding added onto an account in good standing as an AU ; correct?

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We did talk about AU. She confided in me that her parents kept on telling her to get a credit card to establish credit while she was in college and they even offered to get a AU card, but she resisted. She doesnt want to admit to her parents that they were right all along.

I shared all of your feedback and she decided to apply for the CU secured card with a 2K limit and go for a BofA secured card with a $1k limit. In addition, I going to get her a Amex Corporate Card and hopefully when she get her own Amex it will backdate to 2013.