Credit score question

[MyGoofy26]

The authorized user trick is a very popular trick over on creditboards. OP if you know someone who has a flawless, older account just ask and see if they'll let you be an authorized user. They don't have to actually GIVE you the extra card that's sent and give you access to the account. . . you just want to "borrow" their history.

Or you can go ahead and apply for a card or two. New accounts typically bring your score down at first, but after about a year it starts to rebound. . . so if you're going to go that route, try to apply soon so you have time to rebound from the hit that a new account gives you.

For the car loan, if you can get a good interest rate try and do at least a year or two loan even if you have the cash just for the history. You can always pay extra each month to the principal to pay it off quicker. . . and by making sure all the extra money goes towards the principal, less interest. Even if it means getting a joint loan with someone who has great credit and can qualify for better rates. Obviously, for this and the authorized user thing it has to be someone who really trusts you since if you messed up you'd be hurting their credit . . . but it sound like you are pretty responsible and hopefully you have someone close to you who trusts that.

 

[natenapril]

Agreed! A zero percent car loan would be a GREAT way to develop credit without paying a dime of interest. The problem is that they usually will only give those zero percent loans to the most qualified buyers, which means a credit score of 720 and above.

Anne

My credit score is not above 720 and I was able to get 0% on a GMC. At the time my credit score was around 660.

 

[ducklite]

My credit score is not above 720 and I was able to get 0% on a GMC. At the time my credit score was around 660.

It's very possible that you had a score above 720 from one of the three bureaus. Car dealers don't look at FICO, they look at the score that the three credit bureaus assign. Often one will be significantly higher (or lower) than the others and if the finance manager wants to make the deal, he'll use that number to justify it. Not all will do this.

Anne

 

[MyGoofy26]

It's very possible that you had a score above 720 from one of the three bureaus. Car dealers don't look at FICO, they look at the score that the three credit bureaus assign. Often one will be significantly higher (or lower) than the others and if the finance manager wants to make the deal, he'll use that number to justify it. Not all will do this.

Anne

Something else to consider is that there are different versions of FICO. For this type, it'd be the "auto enhanced" FICO score. They weigh different types of tradelines differently depending on what type of loan/account/etc someone's applying for. . . so even if the FICO someone buys on their own doesn't say 720, if they have the right combination of certain types of accounts then the auto enhanced score just may be at or around 720.

 

[treboats]

There is a difference. In time the issuer will decide that it cost them too much to give you a free charge card and cancel you even though you have been prompt with your payments. They are in business to make money off of the interest they charge, not providing you a freebie.

Well that's not true they still make money on everything you charge from the merchant. At work we pay as much as 3% on some transactions.

 

[ksloane]

I went in and talked to my local bank not too long ago. My credit is awful. I had some bad piled upon top of bad situations the last few years and got behind and further behind and my credit got shot to he**.

I had worked out a schedule for repaying my current loan slowly and steadily (should have it done in 18 months, 24 tops), but my banker suggested that I open a savings account there at the bank. Then my grandmother co-signed (so that it would be approve and to keep the interest rate as low as possible) and we took out a loan (relatively small - $2500). As soon as we got the check we put it in my savings account and set up the loan so that it auto deducts out of that account. This is great for me as the loan is actually paying itself off (it'll cost me 20 dollars in the end which I've already deposited in the account) with the savings account so my budget for paying off my bills is not effected, but I'm making regular, on time payments to show some positive on the piles of bad.

So getting a small loan and then just putting the money in an account to auto pay the loan might be an option for you.

 

[natenapril]

It's very possible that you had a score above 720 from one of the three bureaus. Car dealers don't look at FICO, they look at the score that the three credit bureaus assign. Often one will be significantly higher (or lower) than the others and if the finance manager wants to make the deal, he'll use that number to justify it. Not all will do this.

Anne

Nope I checked all three scores before we bought our truck. I just don't remember the exact numbers but the highest was 660's.

 

[MyGoofy26]

Nope I checked all three scores before we bought our truck. I just don't remember the exact numbers but the highest was 660's.

I think she was referring to the score from the bureaus, not the FICO. Each bureau (and a number of different companies) has their own scoring model (called FAKOs on creditboards and other credit sites) where the number can be very very different. . . it's not unusual for a FICO and FAKO to have 100+ point differences.

 

[ducklite]

I think she was referring to the score from the bureaus, not the FICO. Each bureau (and a number of different companies) has their own scoring model (called FAKOs on creditboards and other credit sites) where the number can be very very different. . . it's not unusual for a FICO and FAKO to have 100+ point differences.

Exactly!

Anne

 

[Minnie's Mate]

Well that's not true they still make money on everything you charge from the merchant. At work we pay as much as 3% on some transactions.

Well, you are correct. 3% is probably what they consider "the cost" of processing the transaction. Electronically, it doesn't cost much if anything, but it goes toward their over head.

Anyway, 3% is nothing compared to 12%-18% that is compounded monthly. So, they do make the 3% once for the transaction, the amount they make on the outstanding balance of an individual card holder is tremendous in comparison and that is what they want. For the banks, the 3% is small potatoes compared to the revolving credit and that is what they are really after. They can only charge the vendor once. They can charge the customer a multiplicity of times for what seems like a small monthly amount of interest, but you'd be surprised how much that can add up to.

 

[sameyeyam]

It's really amazing what credit scores are doing to the financial habits of people in our country. We have always had excellent credit, but just received a letter from our auto insurance company that our credit score has slipped from excellent to very good, as a result our insurance rates went up slightly.

When I called I was told that although we had 20 years of outstanding credit, we only had 1 credit card and 1 loan (mortgage) currently. They proceeded to tell me that I should have at least 5 open accounts if I want to get back up to an outstanding status! The lady actually told me to go open up 3 or 4 store credit card accounts to get my score back up. Is that crazy or what!!

I guess that's what we get for paying off all of our auto loans and saving money to buy things with cash!!

Well I don't care if my insurance rates go up. It couldn't cost nowhere near the amount I would pay in interest if I open up 3 new accounts!

Think I'll continue to save, pay cash & get my mortgage paid off - then we'll see who's laughing in the next 5 years!

 

[nowellsl]

Well I don't care if my insurance rates go up. It couldn't cost nowhere near the amount I would pay in interest if I open up 3 new accounts!

You won't pay any interest unless you carry a balance. It doesn't cost anything to open them. Pick one that offers a bonus to open - I've made $150 from Charles Schwab, $100 from Chase and $50 from Disney Visa all for opening an account and using the card once. I've never paid any of these a dime of interest. I still use the Chase cards for rewards - just pay in full. I made over $600 in rewards last year - no interest paid. I understand why people don't like credit cards but if you use them the right way you can make money on them. If it helps your credit score in the process, that's just icing on the cake.

 

[Toby'sFriend]

When I called I was told that although we had 20 years of outstanding credit, we only had 1 credit card and 1 loan (mortgage) currently. They proceeded to tell me that I should have at least 5 open accounts if I want to get back up to an outstanding status! The lady actually told me to go open up 3 or 4 store credit card accounts to get my score back up. Is that crazy or what!!

What insurance company?

I would be calling that agent back and telling them to either put you back into the A-1 best rate status or you will be finding another insurance carrier.

 

[tedhowe]

Well I don't care if my insurance rates go up. It couldn't cost nowhere near the amount I would pay in interest if I open up 3 new accounts!

Think I'll continue to save, pay cash & get my mortgage paid off - then we'll see who's laughing in the next 5 years!

It doesn't have to cost you anything in interest. Especially with store cards. No one said you have to carry a balance. Credit scores don't really care much about you using the card and/or carrying a balance.

From the research I've done, if you are in the lower ranges of credit score, based on your other history, not carrying a balance can hurt you by a few points. But, if you are in the high range, not carrying a balance will either not affect you at all, or increase your score by a few points.

The logic on this being that people without enough credit history to build up a higher score may be just opening credit to establish credit, and therefore the zero balance is not a good indicator of behavior. If you have enough credit to have a good credit score, then the zero balance is an indication that you don't really need credit at all for most things (especially day-to-day living).

And you know the old truism that the only people who can get loans are those who don't really need it... it's not really true, but it is true that the only people who can get the lowest rates, are the ones who could afford to pay more in interest.

Ted