OK, here's my situation. I've read the FAQ, but my problem isn't so much bad credit as lack of credit. My story: I have one credit card, through my credit union. It's a Visa, $1000 credit limit (currently at $995, but I'll be paying that down to about $600 in about two weeks). I've had it since 11/98. In that time, I've had 4 30 day lates, all but one of which are before 7/00. (The other was in 2001 but I'm not _exactly_ sure when, and my most recent credit report has decided to hide in my stacks of thesis research.) This is, AFAIK, the extent of my credit history; I have a SprintPCS cell phone but they don't seem to report to anyone. I ran a TU report in November, and it put me at a score of 675. I haven't applied for credit of any sort since last May (Apple computer loan for $3000, through MBNA, denied). Other possibly relevant details: I'm graduating from college (honors, from an Ivy) in June, and have good employment prospects in the computer industry. My goal is to buy my own condo as soon as I can, ideally within a year or so of graduation. I have money now for a 10% downpayment, and will be saving more over the course of the year. My questions: * What concrete steps can I take _now_ to build more of a credit history? Are there any student cards I could apply for and get with my current credit, balances and all? I don't have much income to speak of. * When I pay down my credit card in a few weeks, how long will it take for the new, lower balance to show up on my report? * I'm going to be buying a car this summer, probably an inexpensive used one so I can save more towards the aforementioned condo. Although I could easily pay cash for the car, would financing it (for 12 months, say) be worth the few hundred dollars in interest, just for the sake of establishing credit? * Other than credit cards and auto loans, what other options are there for building positive credit (as opposed to erasing negative)? Thanks for your advice, folks -- Dan
Congrats on graduation! I'm working my way there finally after a long break and will graduate in August. I'd start first be getting all three reports from the CRA's. Since you'll be applying for a job in the near future, I think that you can get a free one. However, you might want to pay for the ones that include you FICO score so you have an idea. Once you get them, spend an hour and just make sure that everything is accurate. You can come back here and some of the fine people that post here will be glad to help you analyze your report if you'd like. Secondly, I'd pay down your current credit card balance. It's good to have your utilization around 5-10% of your total credit limit before you buy your condo. If you're six months or less from buying your condo, I'd suggest not applying for another card. Over six months, I may. You might even see if the credit union will give you a credit line increase if they secure it against your savings account or CD...just make sure they report to all the CRA's, and make sure they would not report it as secured... Finally, with you being a recent college graduate, you'll qualify for a college graduate bonus if you buy a new car. Also, if your scores are in the 670-700 range, you can probably qualify for very low or even 0% financing. Ask your credit union for their rates. It is worth the little bit in interest that you'll pay to get the positive tradeline on your report... Just my .02 Good luck!
I agree with everything the previous poster stated. It wouldn't hurt to take a a few extra steps: 1. I would apply for a second card now. It's better to have two revolving accounts than just one. It also wouldn't hurt to get a retail card to round out your mix of credit but use that card sparingly. The new applications may temporarily lower your score but it will improve more in the long run. Just don't apply for anything within 6 months of seeking financing for the condo. 2. Ask your credit union to remove the lates as a goodwill gesture. Point out that you are graduating with honors from an Ivy league school and that you intend to continue your relationship with them. If they make real estate loans and you tell them that you may be interested in financing with them, they may do what you ask. I don't think the lates are hurting your score much since all but one is 3+ years old but why not clean up the report to make it perfect? 3. Definitely pay down the visa. That is probably dinging your score more than anything. Once you've paid it down, ask for a credit line increase to $1500. Most companies update monthly and report balances as of the statement closing date.
You have enough money for 10% downpayment on a condo now but you can only pay your cc down to $600 in 2 weeks? Something doesn't compute. Please pay your cc down to 0 balance in 2 weeks. That way the next time your creditor reports your balance will say 0. That's what you want. Mortgage lenders don't want to see high balances on TL's.
Well, the down payment money is in bonds, which happen to be in a safe deposit box 800 miles away...I'll have the CC paid off long before I have access to them again in June. For pratical reasons, I'm probably not going to be able to buy for at least six months, probably a year.
