I need some advice on building (not rebuilding) credit. My credit file is only 6 months old, and pretty thin.I thought of taking out a small loan and paying it off to improve my credit rating. My goal is to get a nice prime card in 6 months time, since no creditor will give a prime card without a tradeline at least 12 months old. Is this a good Idea? Does anyone know what effect it will have on my FICO? How long should I take the loan for? I currently have 2 secured cards, both of them reporting as unsecured, and was just approved for a target card as well. Thanks, -Roman
Get your credit scores from all three CRAs first. An installment loan will raise your score over time but may initially lower your scores slightly for a few months. I would recommend getting a small installment loan and pay it off over 6 months to a year. CC companies like to see a "balance" in types of accounts, and a good credit history. You may have a problem with some CC companies until your accounts age and you have been in the CRA for awhile. An installment loan, major credit card or two, and a retail card is a good start. Don't apply for credit too much at one time. Inquiries really wreck your score. Keep your revolving balances under 15-20% of your limits. Never ever pay even a day late. A recent 30-day late is worse than a 5 year old BK! It sounds to me like you are on your way.
i disagree. Taking my advice a close friend got a macy's card and secured capital one card. After 8 months, she applied for the citi AAdvantage card and got it instantly, then moved it to the platinum select card. Month 10 got a car loan $30K financed, then month 12 the car loan place (VW) gave her info to mbna for a VW card, they called (!!) her at home and took the info, and sent a mbna platinum plus $5500 limit Vw card. The same week, she applied for a second AAdvantage, and received instant online application. My bro also took the macy's route, then got a parisians about 2 months later, then at month 8 was approved for both amex gold and citi AAdvantage. Both had 0 files before this... It took me about 16 months (from all bad credit) to get 2 AAdvantage citi cards and a bunch of subprimes and a lot of disputing. That sucks...
I am not really sure exactly what you disagree with. Waiting? Your friend waited 8 months before getting a Citi card. You won't get most major prime cards with a short credit history. It is a known fact that an installment loan can help your FICO score after the initial hit. Sure, if he has high scores, he can possibly get a good prime card anyway. That is why I mentioned getting all of his scores first.
Thanks for the advice guys. I checked my score a couple of weeks ago, I have 697 from equifax, which isn't too bad. I have since reduced my debt to limit ratio from 45% (da*n cap1 for not reporting limits) to less than 10%, and got the target card, so it should still be around that figure. I was just afraid that no one was going to look my way before 12 months had passed, so who cares about taking a hit in my score if it would ultimatly raise it down the line. But if Citi doesn't have a strict policy about length of tradeline, I would probably be better off just waiting a couple of months and applying for them. -Roman
with a 697 citi will most likely approve you online instantly, unless you have any major derogs. Thats a very good score. keep your inquiries down, debt ratio down, and when you feel ready, apply for the CITI AAdvantage silver card. If you are approved online, instantly, i suggest applying for the gold card back to back (same day). If not, wait 3-4 months and try again. They really want your business.
I have read that beginning with simple revolving lines of credit (ie a dept store charge such as sears or macys) will give you the best scores. Credit cards that are established later seem to build the best history, making consumers more creditworthy for car loans and mortgages. Car loans and Mortgages are also great score builders. Make sure that your debt to income ratio does not look to high...Sometimes people need to start off with secured loans to build their scores and start some type of credit history . Stacking loans over a year period worked very well in regards to filling up my mailbox with unsolicited CC offers....
Sam, You were right on the money! Approved for both silver and gold citi AA cards. 2500 and 5000 limits. My first non-secured card, and its a beauty! On another thread u mentioned I should ask them to change it to a platinum select and merge. Should I wait until I have the cards first? (I don't know my acount numbers yet). If I merge, will I still have to pay the high annual fees for both? which should i upgrade, the gold or the silver? Thanks, -roman
Wait a few days. Then call them up, and tell them you had a change of heart and want the platinum select product. Congrats! Feels good to have some uber prime cards. Took me about 4 months , the i called the the "R" and got them down to prime+0.99% thats about 8.5% on purchases.
Thats a great APR, hope it will work for me too. Getting these cards has made the secured loan rather unnecessary, as I am closer than ever to having a prime card, just have to lower the rates on these citi cards. I need one clarification, do you mean the platinum select, or the platinum select AAdvantage, they seem to be two different products. Is the AAdvantage worth it? -roman
no switch to citibank platinum select. Plain old. You can have them merge both cards into one, as well. The citi reps are top notch. Also during the switch, make sure to note that you aren't happy with the APR. Should be no higher than like 12.9% on the platinum select.
