Length of Credit History and being able to get a CC

[Anonymous]

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Not_the_Point wrote:

AmyBoo,

When I applied for the cards, I was at about 5% utilization. I thought maybe if I stopped PIF and allowed a balance to carry it would help so that's what I've been doing.

My total credit available is $2900, of which I currently have about $600 on my cards... so somewhere around 20% utilization of my total credit, with 35% on two of my cards and 0% on the third.

I have payed all my bills on time, no lates in my credit history, and I always pay more than the minimum. I used to PIF but I'm trying a different approach to see if it helps my luck with getting my WaMu card with a $1000 deposit Unsecured so I can get that $1000 returned to me.

The reason I'm applying is I to have more open accounts. I only have the two secured cards, one store card and an auto loan for a total of 4 accounts. I read that having about 6 accounts is the ideal, but I'm planning on buying a house in a couple of months so I really only want 1 more account. I don't have a Charge Card so I had wanted to get the AMEX for that reason but I'm kind of scared with how unpredictable they are. Getting the Discover Card was really just to have all the various credit cards... VISA, MC, Discover and AMEX.

Am I being too literal with some of the advice on this forum?

Message Edited by Not_the_Point on 10-05-2008 12:53 PM

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If you miight be getting into a mortgage in a few months - don't open new accounts-

Follw the advice above- allow only 1 card to report a small balance- 

[Anonymous]

If you are going to apply for a mortgage in the next couple of months you probably shouldn't be applying for any other credit right now.

Just my humble opinion of course.

You say your credit score is in the low 700's ...

IF your mortgage approval were based solely on your FICO score you wouldn't have any problem qualifying for a mortgage. Depending on what state you lived in you could reasonably expect to get approved at about a 5.9% interest rate. In order to get a lower rate ( about 5.7%) you would have to raise your FICO score to at least 760.

So... Let's say you tried to improve your credit score by creating a better mix of credit. If you continue to apply for cards that are beyond your reach you are going to get a lot of no's. While the no itself isn't going to hurt you in anyway the inquires will. In addition to that since you already have a short credit history and a low average age of accounts you are going to undo any good that has been done by your current accounts being 14 months old by adding in more new credit.

If you were to cause 100 points worth of damage to your credit score in the next 2 months by trying to get approved for an extra credit card (that you technically don't even need) then your interest rate on your mortgage would be about 9.1 IF you were even approved. With the current credit situation you might not be approved at all!

I would take it easy for a while and just hope that your credit score creeps up a few points on its own between now and when you apply for a mortgage. You don't need the extra points anyway. If there is anything you need to do that can be done quickly to help you qualify for a mortgage the loan officer at the bank will let you know and will help you set it in motion.

[Not_the_Point]

More great info, thanks so much! I actually don't know much about how financing mortgages work... I have enough saved for the 20% down payment on the property and am just working on getting this credit thing sorted out. I was always one of those "don't get into debt, just pay cash" people and have only recently learned the error of my ways

[haulingthescoreup]

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Not_the_Point wrote:

... I was always one of those "don't get into debt, just pay cash" people and have only recently learned the error of my ways

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"Don't get into debt, just pay with a credit card and PIF each month."

Check out the mortgages forum if you haven't already. Lots of great info there! Excellent work already having the 20% down. They should be all over you when the time comes.

[Anonymous]

If you are planning on a buying a house in a couple of months, now is a a good time to peruse lenders and start working with someone. I wouldn't do anything else regarding new accounts/credit history until you do that. You have good scores and a beautiful down payment that will help them overlook some things like a short history. I believe some lenders look for a minimum number of trade lines but usually it's like 3, which you've got already. And even in cases where people don't have enough, they sometimes fill in with things like good electric bill history or cell phone history. (Ok, I tried to find something in the archives about this and couldn't so I might be making this part up.) Anyway, please don't try for anymore credit before looking if you can get approved as is. You can check on the mortgage board too but I believe brokers and loan officers usually have software they can play with, where if you aren't approved, they can try different situations to suggest what you can do to improve your chances. That gives you some time to work on things if you need to.