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@Anonymous wrote:#2 of your plan doesn't make sense to me. Its quite possible to spend up to 100% of your credit limit in any given month, then pay down the balance by reporting date so the lender only reports a small (< 8.9%) balance.
Yes, I am aware, primarily due to posts from people like yourself on these forums!
I don't need the extra spending limit from these credit cards at all really. What I do need is a way to prove that I am fiscally responsible and always pay my bills on time. At $68,000 salary, saving for a down payment on a house, I couldn't even put that much on credit cards anyway.
I don't intend to rain on your parade but I doubt you will move to Excellent (defined as a FICO score > 800) on all three CRAs in one year. FICO scores are essentially logarithmic so it becomes more difficult to increase scores rapidly once you're above a 700 score. Not to mention you have a loan that will be reported as paid, and two new credit accounts. All three events will negatively affect your score and with a thin profile the effects are magnified. The loss of the loan affects your credit mix (10% of FICO score), and the two new accounts will temporarily decrease your score because they initially represent increased risk.
I don't believe it either! I highly doubt it will work, but I do believe sticking to the plan will only have positive impact. I'll have 2 years of perfect payment history by the time I apply for a new auto loan, assuming I even apply for one next year. (My current car is paid off, and each month I keep it means another $400 I put into my Vanguard index fund.)
@Anonymous wrote:
I don't need the extra spending limit from these credit cards at all really. What I do need is a way to prove that I am fiscally responsible and always pay my bills on time. At $68,000 salary, saving for a down payment on a house, I couldn't even put that much on credit cards anyway.
I don't believe it either! I highly doubt it will work, but I do believe sticking to the plan will only have positive impact. I'll have 2 years of perfect payment history by the time I apply for a new auto loan, assuming I even apply for one next year. (My current car is paid off, and each month I keep it means another $400 I put into my Vanguard index fund.)
Understood; but perhaps this is an opportunity to put all your normal spending on credit cards in order to get rewards like cashback or points.
It wasn't my intention to be critical so if I came across as such I apologize; I'm simply attempting to temper expectations. The people you tend to see with rapid increases in their FICO scores generally have had delinquencies/derogatories removed from their credit reports. Your scores could easily fall to 720 or less when the closed loan and the 2 new credit accounts hit your credit report. Then you'll be fighting uphill all year to hit 800 since one can only reasonably expect to see a 4-7 point increase in scores each month. Perhaps one option is to get another credit builder/share secured loan and immediately pay it down to <8.9%; that would certainly offset the loss of the first loan. The trick would be to find a lender that will allow the term of the loan to continue even if its paid down immediately.
@Anonymous wrote:
Understood; but perhaps this is an opportunity to put all your normal spending on credit cards in order to get rewards like cashback or points.
That's exactly how I plan to use these 2 cards - for non-discretionary expenses first. Minus my rent, which I can't pay by credit card, I still couldn't put enough on there to make a huge difference. It would be something like $18,000 a year with a 1%/2%/4% cash back mix. I could maybe see $500 rewards back if I did that.
It wasn't my intention to be critical so if I came across as such I apologize; I'm simply attempting to temper expectations.
Oh no, I didn't take it that way at all! The only expectation I have from this little experiment is that my FICO 8 score will recover from the upcoming negatives to at least as good as the highest it has ever been - when utilization dropped from 17% to 8.47% on that secured loan.
But, maybe....just maybe....I might win that lottery (hypothesis).
The people you tend to see with rapid increases in their FICO scores generally have had delinquencies/derogatories removed from their credit reports.
You have now just seen someone with no derogatories - ever, not even if credit reports went back to elementary school - and a clean credit report with not even one HP or account on it, achieve a +62 point gain on their FICO 8 score. I had no clue it was going to happen like that from a secured loan. I was bracing myself for denial when I walked into my credit union to apply for my first credit card.
Your scores could easily fall to 720 or less when the closed loan and the 2 new credit accounts hit your credit report. Then you'll be fighting uphill all year to hit 800 since one can only reasonably expect to see a 4-7 point increase in scores each month.
I'll be updating this thread with the scores as I see them drop. My Experian 748 already dropped 19 points to 729 from the 2 HP's over the last week. I'm anxious to see the drop from the paid off secured loan, which should happen by next Friday at the latest. Until those 2 new cards start reporting, I'm going to have zero open accounts and 2 new HP's, so that score should be sufficiently frightening to see for a while.
OP congrats on your new cards.
I would suggest you may be over thinking the next few months
It is an interesting experiment but of course Utilization has no memory so all that effort each month won’t necessarily help with the score in December 2019. What will help is always paying on time
Where are your scores coming from? You mention a CK alert about the INQ. Are your updated scores from CK?
I use the MyFICO monitoring, the quarterly 3B version and the regular updates and identity theft monitoring goes with it. It will be interesting to see your progress reports.
@NRB525 wrote:OP congrats on your new cards.
I would suggest you may be over thinking the next few months
Thank you. And yes, I am. lol
Where are your scores coming from? You mention a CK alert about the INQ. Are your updated scores from CK?
From a myFICO 1B report, and creditchecktotal.com. (It's listed there in the original post.) I only mentioned the CK alert because it's free and alerts fairly quickly to hard pulls - within minutes as I found out while at my credit union.
I'll still post those Vantage Score 3.0's from there anyway, just to compare to the FICO 8 scores. I've noticed that Vantage Score 3.0 really doesn't like it if you have no revolving accounts, whereas the FICO 8 score went up dramatically with just 1 installment loan at 8.47% utilization. I have a feeling my Vantage score is going to drop below 600 soon, because the new revolving accounts won't show up for quite a while.
For the next few months, I won't even be able to get approval for a CVS card.
I use the MyFICO monitoring, the quarterly 3B version and the regular updates and identity theft monitoring goes with it. It will be interesting to see your progress reports.
I think that's my best option as well. I need the monthly updates from the 3B+ to really make this worthwhile. I think I'll start it next week. It's going to be a while before the new cards start reporting.
[UPDATE] December 31, 2018:
[UPDATE: January 3, 2019]
[This is all Experian data from Experian Creditworks Premium - FICO 8 Scores.]
Starting score with 1 secured loan, 1 HP, no revolving accounts, AoOA 1 year, no derogatories, no public records:
EX 729
All the following changes happened today, January 3, 2019 (new credit alerts from Experian):
I activated my new card only 3 days ago, and already received a statement balance email last night on January 2nd. Also, Experian's credit report shows that this card was opened on December 1st, 2018. I first applied for it on Dec 20 and received it in mail on Dec 31. Made $39.95 charge on it that night. I'm amazed Experian picked up the new card activity so quick!
So contrary to popular opinion that told me I was going to experience nothing but negatives from a loan closure and a new credit card, I have survived the apocalypse and ended up with a 'Good' credit rating.
Experian FICO 8 699 Report:
Payment History: Very Good
Amount of Debt: Very Good
Credit History Length: Poor
Amount of New Credit: Good
Credit Mix: Good
[UPDATE: January 4, 2019]
I'm posting the updated Experian report from this morning, which is now showing 2 cards with a 2% utilization on Card 1, ZERO on Card 2 - combined credit limit $8500. (2000 and 6500 respectively)
AAoA has changed with Card 2 now on report: 5 mos
AoOA: 1 yr 1 mos
EX FICO 8: 699 (Didn't move. CL from $2000 to $8500 across 2 cards now.)
'Amount of New Credit' has changed from Good to Fair, moving from 1 revolving to 2 revolving this morning.
'Credit Mix' changed from Good to Very Good, moving from 1 revolving to 2 revolving this morning.
'Length of Credit History' = POOR. Nothing I can do about this one.
Good updates. Your score is on a roller coaster as these accounts change out.
It will be interesting to see the development of the scores as things stabilize.
What is your apping plans / new account plans for the next few months?
@NRB525 wrote:Good updates. Your score is on a roller coaster as these accounts change out.
It will be interesting to see the development of the scores as things stabilize.
I've been getting updates from Experian, myFICO and Credit Karma today. I'm just waiting until later to collate those changes.
Experian is now stable at 699, and won't change again until February 1st or 2nd, I am guessing. It will show score changes from 6.75% utilization on Card 1 ($135 on card now, old $40 balance paid in full, done with this card until next billing cycle), and 7-8% utilization on Card 2 (Depends on if I can charge exactly $520 to Card 2...probably will come in under 8%.)
I'm most interested in Transunion. My credit union uses TU exclusively for everything. In the future, I will get my auto and home loans through them.
What is your apping plans / new account plans for the next few months?
No plans for the next 12 months. Besides, with these scores and seriously short 5 months average age of accounts (AAoA - for anyone new to the forums), I doubt I'd get approved for anything anyway. And if they did, they need their head examined, because with my income and non-discretionary expenses, plus saving for retirement and a new home, I surely won't be needing any 'frequent flyer miles'. lol
One of the many reasons I am doing this experiment is to see if having only 2 credit cards is 'good enough' for someone with middle class income. I see that question asked a lot on the internet.