Do you guys have any tips to share to QUICKLY build a POSITIVE credit history?
I am a College student and just started with my first two credit cards a month ago. I would like to quickly build a positive credit history.
So far I have been paying off both credit cards leaving a less than 5% debt as I heard that paying 100% of the debt is not always a good thing.
I am now planning to take a 24 Month Secured Personal Loan at my credit union and pay it off within 12 months (overpaying 200%). In this method I am planning, the collateral would be a 12 Month CD account at the same credit union making 4.70% - while the Secured Personal loan would come with a 3.8% APR, hence I would be making 0.9% after all on my money, and still build a credit history.
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SPPPPOOOOONNNNNFFFFEEEEEEEEDDDDD Get a credit card, use it, pay off entire balance every month and on time. That's how you build credit. You don't need to take on debt to build credit. That is a myth. Alternate method, if you do it quickly you can still get in under the old Fico rules. Have someone with a good card (long history, ontime payments) add you as an authorized user (parent?). Their good card will typically show up on your report (depends on the issuer) and you will instantly build a better credit history.
Now before you get flamed, go do some of your own research. Try reading the Finance FAQ or Myth sticky (threads at the top).
intelslacker said:Do you guys have any tips to share to QUICKLY build a POSITIVE credit history?
I am a College student and just started with my first two credit cards a month ago. I would like to quickly build a positive credit history.
So far I have been paying off both credit cards leaving a less than 5% debt as I heard that paying 100% of the debt is not always a good thing.
I am now planning to take a 24 Month Secured Personal Loan at my credit union and pay it off within 12 months (overpaying 200%). In this method I am planning, the collateral would be a 12 Month CD account at the same credit union making 4.70% - while the Secured Personal loan would come with a 3.8% APR, hence I would be making 0.9% after all on my money, and still build a credit history.Building a history takes time. Paying your bills on time and not abusing your existing accounts (running up large balances, missed payments, etc) are the only ways to truly build your history.
Paying your credit card in full is just as good as keeping a balance from month-to-month. You get credit for the 'paid as agreed' notation either way, and no extra points for paying interest.
Getting the secured loan may help some, as installment loans are treated differently than revolving debt. But the interest you'll pay will not be worth it, since the boost will be marginal. This strategy is best for those who, for whatever reason, cannot get approved for any unsecured loans (ie credit cards). Since you've already gotten two, that doesnt seem to apply to you. You were netting 4.7% on the CD, now your only netting .9% - so the loan is still costing you 3.8%. And are you sure it is a straight 3.8% APR on the loan, or is it 3.8% added to a base rate?
For a quick boost to your score, although the benefit is being phased out, is to get added as an authorized user on an older account with a good payment history (like one of your parent's cards). The history of that card will be factored into your score, so if it is a 20-yr-old account, your score will be based on a 20-year history. But that will be changing any time now, so any boost will be temporary.
If you dont want to search for answers to questions that have already been asked and answered 100s of times, atleast post your questions in the Question Thread stickied at the top of the first page.
Something that worked to build credit with Citibank for me was to make a large purchase right before the statement closing date and return it right after. I think this appears similar to a payment, and I was able to go from $2000 total relationship with Citi to $60,000 (including business cards) in two years.
It is highly unlikely that your credit union is offering a secured loan at 3.8% APR. Most likely that is 3.8% ABOVE what they are paying you on the CD. That is, net you have to pay 3.8%. Not worth doing that just to "build credit."
FloorsMat said:Something that worked to build credit with Citibank for me was to make a large purchase right before the statement closing date and return it right after. I think this appears similar to a payment, and I was able to go from $2000 total relationship with Citi to $60,000 (including business cards) in two years. When you do that do you have to pay the large balance and then end up with a credit later on? It seems like your bill that month would show the charge even if you had returned it already before the bill arrived. Then you'd have to pay it all off to avoid finance charges. How did it go down?
intelslacker said:I would like to quickly build a positive credit history. Why? Do you plan to buy a car you can't afford or something equally financially silly?
bozo007 said:intelslacker said:I would like to quickly build a positive credit history. Why? Do you plan to buy a car you can't afford or something equally financially silly?
Want to jump on the AOR bandwagon next year, and I am planning to buy a house in the next 3-4 years. So having a GREAT score by then would really help, that's why I am looking for tips.
ArbolLoco said:I took my wife from 0-750 in a year, but I'm hesitant to post the method I used for fear of abuse. My neighbor did this for his wife but took just a few seconds. All he did was asked her to get on the weighing scale
Auream said:It is highly unlikely that your credit union is offering a secured loan at 3.8% APR. Most likely that is 3.8% ABOVE what they are paying you on the CD. That is, net you have to pay 3.8%. Not worth doing that just to "build credit."
After some research, YOU ARE RIGHT. They charge 2.5% ON TOP of what you earn on the CD.
But then again I haven't double checked with the people at the bank, just read the website. I wonder if the interest you make on the CD is not released until you pay off your debt.
ArbolLoco said:I took my wife from 0-750 in a year, but I'm hesitant to post the method I used for fear of abuse.Abuse? FWers don't know the meaning of the word!
Give us a try, I'm sure someone here has either tried or already thought of it.
Getting a good score? For what? If you apply for credit, it looks at your history as well. Even with something in the 700s, it will still show a very shorty history... So maybe if you can get added as an authorized user on some aged accounts, but I don't even know if that works anymore.
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