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What would you do? Looking to maximize my first fico scores

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Anonymous
Not applicable

What would you do? Looking to maximize my first fico scores

I've not used any form of credit in over 10 years which leaves me starting over from scratch. My goal is to get an auto loan in the summer of 2019. I'm looking for advice on how to work with the little credit I have managed to acquire in the past few months to get the best out of my scores.

I have an Capital one secured card with a $200 limit which I opened In Sept of 2018 which I've kept at 1% Uti

Fingerhut fresh start account which also opened in Sept. Approved for $180, currently owe $11

I was approved for a unsecured Disco it card with a SL of $500 last week which hasn't started reporting yet

Should I go ahead and pay off the fresh start account so it has time to convert to a revolving account and start aging a bit or allow it to live out it's life as an installment loan?

As I understand it I will not even generate a Fico score until March and I have no plans to apply for anymore credit until I'm ready for my auto loan.

Any other advice is also welcomed
Message 1 of 6
5 REPLIES 5
Anonymous
Not applicable

Re: What would you do? Looking to maximize my first fico scores

If you have a card with a 1% utilization that has a $200 limit, that means it has a balance of at most $2.  Balances that low can sometimes get reported as $0.  A balance of $5 in contrast is completely safe.

 

I'd pay the Fingerhut to zero whenever you like.  Don't let more than 11 consecutive months go by without charging something on it -- same for your other two cards.

 

40 days before you apply for your auto loan you should make sure one card is reporting a small positive balance with the others at $0.  Between now and then you don't need to worry much about your utilization, though certainly keep it under 29%.

 

If you would like to get a boost of about 30-35 points to your score, I encourage you to look into the Share Secured Loan Technique.  Since you will be getting an auto loan in the summer, you have many options regarding the lender.  (People who think they will not have a "real" loan for 3-5 years, in contrast, have a much smaller range of tested lenders that will work.)

Message 2 of 6
Anonymous
Not applicable

Re: What would you do? Looking to maximize my first fico scores

Thank you so much for the very detailed and helpful reply Creditguyindixie.
I had no idea that a balance that low could report as 0, I'll keep the balance up just a tad.
I'll look into a SSL.
Message 3 of 6
DIYcredit
Frequent Contributor

Re: What would you do? Looking to maximize my first fico scores

I would use the Cap One secured card and Discover card as the back bone of your credit building process.If you get the auto loan maybe cancel the secured card  get another unsecured cc to replace that one down the road.

Message 4 of 6
HeavenOhio
Senior Contributor

Re: What would you do? Looking to maximize my first fico scores

Outside of applying for the SSL, the OP should sit tight until the auto loan is obtained. The SSL will help several scores, but anything else will cause a dip.

 

After that, Fingerhut becomes a candidate for closure at a point where the OP has obtained at least one card to succeed it. There's no rush to close, though, as there aren't any fees or predatory practices to dodge.

 

Captial One may unsecure, but the chances of it growing are small. If the card graduates, it can become a nice card to anchor one's AoOA (age of oldest account) and pad one's history. But it won't be practical for day to day use. Closing would still be an option, though, if the OP considers it to be a pain to keep around.

 

Discover will likely graduate and will probably grow eventually.

 

I see two times where @Anonymous might decide to apply for his next card. One might be once the auto loan is obtained but before it reports. Or he might wait until his oldest card is a year old as Chase could become an option at that point.

Message 5 of 6
SouthJamaica
Mega Contributor

Re: What would you do? Looking to maximize my first fico scores


@Anonymous wrote:
I've not used any form of credit in over 10 years which leaves me starting over from scratch. My goal is to get an auto loan in the summer of 2019. I'm looking for advice on how to work with the little credit I have managed to acquire in the past few months to get the best out of my scores.

I have an Capital one secured card with a $200 limit which I opened In Sept of 2018 which I've kept at 1% Uti

Fingerhut fresh start account which also opened in Sept. Approved for $180, currently owe $11

I was approved for a unsecured Disco it card with a SL of $500 last week which hasn't started reporting yet

Should I go ahead and pay off the fresh start account so it has time to convert to a revolving account and start aging a bit or allow it to live out it's life as an installment loan?

As I understand it I will not even generate a Fico score until March and I have no plans to apply for anymore credit until I'm ready for my auto loan.

Any other advice is also welcomed

1. You should not try to pay off the Fresh Start account any faster than you have to; it is propping up your FICO 8 and FICO 9 scores, and probably your Auto 8 scores which are important to you right now. Pay the minimum; if nothing is due, pay nothing, or $1, each month.

 

2. You will have 2 revolving accounts, Discover and Capital One. Each month pay off Capital One before the statement cut so it reports zero, and each month pay off enough of the Discover card before the statement cut so that it reports a balance of $40 or less, and then pay that off immediately.

 

3. Stick with your plan of making no other credit applications until after the auto loan goes through.

 

4. Pull your FICO Auto 8's before applying for the loan, so you can confidently tell them what your FICO score is.

 

 


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 6 of 6
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