10 months old credit -- 750

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ishaboi
 
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10 months old credit -- 750

Postby ishaboi » Tue Nov 01, 2016 8:02 pm

Hello guys,

I received my first secured credit card in January of 2016 to start building my credit. (Yes i'm foreign)
At that time i was added on my wife's credit card (AMEX) which we use daily.
After 10 months of on time payments and once a month payments on my secured credit card and other credit card i applied for in may my credit score is now 750.
We have no debts, but are planning to go for a mortgage in 1 year from now.
Should i take out an installment loan to increase my credit score? Or just let it grow?
My wife's credit score is 801.
I'm planning to buy a motorcycle in April. Should i just finance that motorcycle?

Thanks


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kcm7
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Re: 10 months old credit -- 750

Postby kcm7 » Wed Nov 02, 2016 10:49 am

Others may disagree, but I've never been a fan of the advice "take out a loan for the sake of credit-building." But it might make sense in your case. The motorcycle is a planned purchase -- you're not taking out a random personal loan from the bank for the sake of building your credit. Perhaps pay for half with cash and finance the rest? That way the loan stays small and you limit your interest costs.
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Stros05
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Re: 10 months old credit -- 750

Postby Stros05 » Wed Nov 02, 2016 10:52 am

Timely payments on an installment loan will help your credit score. If you decide to buy the morotcycle (or some other vehicle), then taking out an installment loan would be a good idea. Do not buy something just to incur the loan though.

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Re: 10 months old credit -- 750

Postby Tubpbs » Wed Nov 02, 2016 5:40 pm

kcm7 wrote:Others may disagree, but I've never been a fan of the advice "take out a loan for the sake of credit-building." But it might make sense in your case. The motorcycle is a planned purchase -- you're not taking out a random personal loan from the bank for the sake of building your credit. Perhaps pay for half with cash and finance the rest? That way the loan stays small and you limit your interest costs.


Just get a loan with no penalty for early payment (and where you can apply the payments to principle at the end of the loan, not interest) and pay as much as you want after the loan.
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Re: 10 months old credit -- 750

Postby Taalar » Sat Nov 12, 2016 12:22 am

Mortgage lenders usually like to see at least one installment loan with payments for at least 12 months AND 3 revolving accounts with a 2 year history. They do not just look at score. I used to be a mtg broker and although its been a few years, I doubt things have changed that much. I hope that helps.

ishaboi wrote:Hello guys,

I received my first secured credit card in January of 2016 to start building my credit. (Yes i'm foreign)
At that time i was added on my wife's credit card (AMEX) which we use daily.
After 10 months of on time payments and once a month payments on my secured credit card and other credit card i applied for in may my credit score is now 750.
We have no debts, but are planning to go for a mortgage in 1 year from now.
Should i take out an installment loan to increase my credit score? Or just let it grow?
My wife's credit score is 801.
I'm planning to buy a motorcycle in April. Should i just finance that motorcycle?

Thanks
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mountaindewvoltage
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Re: 10 months old credit -- 750

Postby mountaindewvoltage » Sat Nov 12, 2016 5:27 pm

ishaboi wrote:Hello guys,

I received my first secured credit card in January of 2016 to start building my credit. (Yes i'm foreign)
At that time i was added on my wife's credit card (AMEX) which we use daily.
After 10 months of on time payments and once a month payments on my secured credit card and other credit card i applied for in may my credit score is now 750.
We have no debts, but are planning to go for a mortgage in 1 year from now.
Should i take out an installment loan to increase my credit score? Or just let it grow?
My wife's credit score is 801.
I'm planning to buy a motorcycle in April. Should i just finance that motorcycle?

Thanks


Since your file is extremely thin, that 750 won't hold solid with any little movement that could effect it.

Get denied for a loan? Your score will probably drop 15 points. Add a $10,000 loan to your file? Your score will probably drop 40 points. Once your file turns thicker... Much thicker, every credit change will has less of an impact on your score, unless of course you file for bankruptcy.

There's no guarantee you'll get approved for a personal loan just because you have a 750 credit score. Your loan file is 10 months old with a credit card and an authorized user credit card on your file (yes, creditors will know you're only an AU so don't think you can cheat by using that card's history to plead your case).

Chances are without your wife as a co-signer, you'll probably be denied for a mortgage if you apply for one within a year. Why? Your credit profile is thin, you'll also have two credit card inquries, a personal loan inquiry, and a new personal loan on your record which will effect your AAoA even more. I would wait 4-5 years before applying for a mortgage.

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Re: 10 months old credit -- 750

Postby Tubpbs » Sat Nov 12, 2016 6:51 pm

mountaindewvoltage wrote:
ishaboi wrote:Hello guys,

I received my first secured credit card in January of 2016 to start building my credit. (Yes i'm foreign)
At that time i was added on my wife's credit card (AMEX) which we use daily.
After 10 months of on time payments and once a month payments on my secured credit card and other credit card i applied for in may my credit score is now 750.
We have no debts, but are planning to go for a mortgage in 1 year from now.
Should i take out an installment loan to increase my credit score? Or just let it grow?
My wife's credit score is 801.
I'm planning to buy a motorcycle in April. Should i just finance that motorcycle?

Thanks


Since your file is extremely thin, that 750 won't hold solid with any little movement that could effect it.

Get denied for a loan? Your score will probably drop 15 points. Add a $10,000 loan to your file? Your score will probably drop 40 points. Once your file turns thicker... Much thicker, every credit change will has less of an impact on your score, unless of course you file for bankruptcy.

There's no guarantee you'll get approved for a personal loan just because you have a 750 credit score. Your loan file is 10 months old with a credit card and an authorized user credit card on your file (yes, creditors will know you're only an AU so don't think you can cheat by using that card's history to plead your case).

Chances are without your wife as a co-signer, you'll probably be denied for a mortgage if you apply for one within a year. Why? Your credit profile is thin, you'll also have two credit card inquries, a personal loan inquiry, and a new personal loan on your record which will effect your AAoA even more. I would wait 4-5 years before applying for a mortgage.



This post may well be accurate. You may get denied for the mortgage...but based on a 4-5 year waiting time, I don't see the harm in TRYING to get approved. Based off of the idea that you won't be approved for 4 to 5 years (which I'm not sure I agree with), if you apply now (or in a year or in two years) and get denied, the inquiry (or inquiries) from that denial will be gone by the time your 4 to 5 years comes around.

That said, if there is no reasonable chance of approval, it's likely a waste of an inquiry and can interfere with an effective profile building process to get you where you want to be in time to get approved for a mortgage.
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TXviking
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Re: 10 months old credit -- 750

Postby TXviking » Sat Nov 26, 2016 8:59 am

I would definitely finance at least a portion of the motorcycle purchase. I don't believe in taking out random loans to build credit, but with interest rates low and with banks being very fond of seeing a "mix of credit", an installment loan will help you make that thin file thicker in a positive way.

The downside is interest, but rates are low right now and as another poster pointed out, you can put a large cash downpayment on the bike and just finance a smaller amount; that should make the interest next to negligible.

Kudos for building credit so quickly. I'm a foreigner too, but I've been in the US for longer and have had much more time to build my credit.

swipe_masta
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Re: 10 months old credit -- 750

Postby swipe_masta » Sun Jan 15, 2017 2:11 pm

What would be cheaper- taking out a loan or financing thru the dealer?

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Re: 10 months old credit -- 750

Postby Taalar » Sun Jan 15, 2017 4:21 pm

swipe_masta wrote:What would be cheaper- taking out a loan or financing thru the dealer?


get a preapproval outside the dealer, and they will almost always beat it.
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