Credit?

Question

Hello people. Do you have any real life experiences or programs that helped you build credit quickly?

Royce J. · Answer

To achieve a high FICO credit score you need the following

1. Never, Never, Never make a late payment.

2.Get 3 to 5 unsecured credit cards

3. Keep your credit card balance ratio at 11% or less. (example: $5,000 limit, $550 balance or less)

4. Home Equity Line Of Credit (HELOC) is like a credit card. Keep the balance ratio under 11%

5. Stay away from store credit credits unless you use them.

6. Try not to run your credit because of inquiries.

7. Every six months call you credit card companies and ask them to increase your limit.  (Script: Tell them you are going to make a large purchase for travel or your are going to renovate your house or rental unit.)

8. Do not close any of your credit card accounts.  This could affect the length of your credit accounts.

Nicholas B. · Answer

Wanna know a trick?

There's another key aspect to this.  You could call it a "trick", if you like.

It's great to have a credit card, but to get the best benefits, you'll need to use it! It's very important to use a portion of your card in order to establish revolving usage history.

The sweet spot for subprime revolving utilization is usually around 20%, maybe less. Since interest rates on these cards are ridiculous, I would not recommend carrying a balance. So here is the "trick":

Each month, the lender reports your balance on your statement date. You have a grace period to pay it off without paying interest. If you have a $500 limit, put $100 on your card. You'll be reported as carrying a 20% utilization. You could just leave this balance and pay it $20 at a time, but you'll pay 20%+ interest. If, however, you pay off the balance, then go spend another $100, you'll consistently report usage, but never pay a penny in interest. Nobody will know the difference and you'll have all that sweet positive credit history and pay $0 interest!

After 6 months, request an increase to your credit limit. Do it again every 6 months after. Little by little, you'll raise your credit limit, lower your utilization ratio and show responsible history. Eventually, you can request your security back and open better cards with less fees and no money up front.

I've helped 7 people (including myself) establish 700+ scores using this method. It works!

Royce J. · Answer

You can also educate yourself at http://www.badcreditisachoice.com/ the podcast have lots of info.

Brie Schmidt · Answer

@Glenn Hines -  Thanks!

I had a family member with 0 credit.  She opened her first secured credit card for $500 (you have to deposit $500 to get it) and then 6 months later applied for a regular credit card, and then a few months later another credit card.  We got her score up to 700 in about 18 months

Marcus Geiser · Answer

I have had some struggles lately the worst was a heart attack at 46. Self-employed, not prepared, unable to work. Truck repossession, Verizon Bill, etc.

Bank of America offers a Secure credit card that is only $300 to open, I got a checking too to make payments easy. That was a few months ago. I have 2 new unsecured cards. The unsecured cards come at a price of $35 to $75 and the yearly fee. I look at as an investment in building credit. I use the cards for bills then pay the cards with the checking account. Never running a balance. A friend of mine told me he got his $100K American Express by using his other cards for business working capital and paying off in full every month. I do not know if it is true but he seems to think AMEX liked that and kept raising his limit.

I am signed up with Trans Union and Equifax for monitoring and they offer tips to help build credit. Such as recommending a second type of credit. I got a car loan. The mix is important it seems. They also provide offers for new lines of credit based on what I click on for my needs.

I recently was offered a $6500 business loan at 34.99% which I thought not legal, maybe I'm mistaken and it was 24.99% which i thought was limit to not be consider a loan shark. Maybe the difference is between business and personal. The term was two years so at 35% I'd repay $6500(principal) + $4550(interest) over 24-36 payments. 24 months $480 month 36 $320 month. This is crazy, BUT if I can make money with the loan I would otherwise miss out on I will look at it as a cost of doing business and a punishment for bad decisions.

The biggest part of building credit is setting yourself up for success. Have a budget. A projected firm budget of monthly expenses Know what your responsibilities are. Keep a record of every other expense you incur. Starbucks @ $5.00 a day is $100 month $150 with a bagel! The incidentals add up and become clear where priorities lie. Monthly expenses of $2500 require an emergency fund start with getting a month ahead, the 2,3. Security lies in knowing no down swing can crush your dream and credit with late pays. Good credit is the result of financial responsibility. Bad credit is evidence of bad decisions. You debt to income ratio is the test of if you can be disciplined and live according your means AND save.

I'll update you as I make the drive to the magical 660 score I need for hard money flip. I am 630, 618, 613 at the three agencies. This is up from 570's. Fast credit building seems to be 12 months lighting fast 24 months realistic.

William Mayfield · Answer

Get yourself a secured credit card... Look up the Top secured credit cards and research how they work, your credit will rise in no time. Also work on paying off what you owe already in small increments. Also you can make settlements with the companies that you owe.

Glenn Hines · Answer

Thank you. Your accomplishments are great!

Brie Schmidt · Answer

@Glenn Hines -  most credit is built over time.  If you have no credit start with a small credit card and charge a little each month and then pay it off, keep going from there!

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