From 0 to 800: An experiment in building a credit file from nothing.

[pipeguy]

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@p- wrote:

I have a unique responsibilty acting as a financial advocate for a disabled family member.  This means that I handle all banking, bill payments, and financial planning for her.  She has an income of less than ten thousand per year, and has run intosome credit roadblocks like challenges renting an apartment, etc..  So, I am helping her to bring up her credit score.  

The first thing we discovered upon attempting to pull her file is that she had no credit history at all.  Everything that she had on there from her working years is long since aged off, and nothing else was added.  So the first task is establishing some credit.

She is an eleigible USAA member, and I run all of her banking through USAA, so I figured the easiest place to start was there.  Sure enough, she received instant approval for a USAA Visa card, with a limit of 500 dollars.  Her first actual credit card ever.  Since February she has been running bills like her cell phone and online Amazon shopping through it.  After the first statement cut, her Experian Vantage 3.0 score was 696.  She has limited finances, so we are using that score that is provided free of charge by USAA for now.

After a couple of months of use on the card, her score is now 698.  This is with only that one 500 dollar card on an otherwise empty report, with a statement balance of 0.

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Without getting too personal, is this person working or on disability income such as SSDI or SSI? The reason I ask is that there are a lot of state/federal programs to assist low income disabled persons including free cell phones, rental assistance, Mediciad, SNAP benefits, etc. with a toal income of under $10k, you can help that person a lot by "expanding" her non-taxed income picture to better her well being without "credit" per se. Example would be subsidised housing, including untilities with no credit check needed, just criminal back ground check, income, liquid assets and disability status. You can PM me if you want specifics without posting in public view and I'll walk you though the process if that would help. 

[p-]

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pipeguy wrote:Without getting too personal, is this person working or on disability income such as SSDI or SSI? The reason I ask is that there are a lot of state/federal programs to assist low income disabled persons including free cell phones, rental assistance, Mediciad, SNAP benefits, etc. with a toal income of under $10k, you can help that person a lot by "expanding" her non-taxed income picture to better her well being without "credit" per se. Example would be subsidised housing, including untilities with no credit check needed, just criminal back ground check, income, liquid assets and disability status. You can PM me if you want specifics without posting in public view and I'll walk you though the process if that would help. 

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Thanks, she is SSDI disabled, and has a pretty good handle on the programs you listed.  

[p-]

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@joltdude wrote:

if this person may need a installment loan she still may have problems with not enough experience with that type of loan..... or to rent a place... 

might need to add like a secure share loan from a CU.... yes theres a slight fee involved... but it would make a noticable impact on her score and tl's for having an installment loan...

that credit mix problem...

and she still has a thin file.. that may not hold an installment loan..... you got the score but its is isnt shored up with a thicker file...

Id definitely consider the Alliant trick....

and getting another card... at some point in the not too distant future.. even if its sd'ed or used for a reoccuring sub and autopays

-J

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She's not ever going to need an installment loan, but thanks for the tip.  One card, plus AU on some of my stuff is probably enough to keep her in good shape.  If necessary, I could always add her as a cosigner on one of my cars or something, but that's probably unecessary.

[p-]

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@joltdude wrote:

Also Discover offers a free FICO score for non-cardholders..... monthly...... creditscorecard.com  Something a bit more solid to go by...

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Thanks, but I'm not going to put her in a position to have a bunch of unused cards just for a score.  It might not be a popular opinion here, but the FICO score as a brand only matters if you know for sure that the person you want credit from is using the same one, i.e. a mortgage lender.  She'll never buy a house or a car.  If anything, whe'll use her credit to avoid a large deposit for an anpartment meaning they'll use some rental focused score model.

As a solid rebuilding benchmark, the FICO score is useful, but once all baddies have been removed, it's not as critical.  I already know all of the things that need to happen in order to maximize that score and am doing them.

[pipeguy]

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@p- wrote:

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@joltdude wrote:

Also Discover offers a free FICO score for non-cardholders..... monthly...... creditscorecard.com  Something a bit more solid to go by...

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Thanks, but I'm not going to put her in a position to have a bunch of unused cards just for a score.  It might not be a popular opinion here, but the FICO score as a brand only matters if you know for sure that the person you want credit from is using the same one, i.e. a mortgage lender.  She'll never buy a house or a car.  If anything, whe'll use her credit to avoid a large deposit for an anpartment meaning they'll use some rental focused score model.

As a solid rebuilding benchmark, the FICO score is useful, but once all baddies have been removed, it's not as critical.  I already know all of the things that need to happen in order to maximize that score and am doing them.

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You might want to look into HUD Section 811 assistance, you can select from various housing options, typically decent apartments, without a deposit and no more than 30% of ones income goes to rent. Once approved, there should not be a credit check or a depost. Just an option to look into as someone with very limited income needs all the help they can get and "rent" can quickly get up there. 

[newhis]

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@Anonymous wrote:
It's really wonderful that you're helping out a family member.

I'm hoping that someone with a young adult who has no credit history will try this but without any AU, no outside help to build AAoA, etc. It would be interesting to see how high and fast a score can get starting from zero and low CL (say basically, 3 cards each with $300-$500 available credit line, 1 SS installation loan) and fairly low income (say less than 12k). I wonder what is the shortest time it would take to get to say 760 or more Fico 8 scores.

Still.. kudos on the progress. Nice. Very nice.

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I think you can go from no history to 760 in less than a year, maybe even in 6 months without AU.

I started with 2 cards and after 6 months my first TU FICO score was 730. I didn't know about the secured loan, I guess with it the score could start at 750-760.

As someone said, you can reach 800 starting without history in 2 years. My DW is getting close to 800 in 2.5 years but her open loan is a car loan, still 75% to pay, so not all the points for the loan yet. If instead of that loan she had a secured loan and only 9% to pay, I'm sure she should be over 800. I think she will reach 800 before the 3 year mark.