Hey all.
I just saw in the the news that FICO will be changing their scoring formula. They’re putting more weight on more recent delinquencies. The older ones will carry less weight. They’re also looking at the type of credit and how you use it. Although I believe lenders will have their own criteria for offering terms. Perhaps those of us that have been on the right track for a while are going to get something out of this credit mess. Just FYI.
This brings up a question I have.
Im getting a credit card in about a year. Im very responsible with my money, so not paying my fees off will not be a problem. I just want to know if they’re are any tips on how to get my score high in the quickest way. Any little useful secrets?
Getting a credit card for the first time feels like you got free money. That gets some people in trouble.
I suggest using your new credit card every month and charge up to 50% of its credit limit and pay the card off in full every month. I’m no FICO expert but heard that should help you establish credit and a payment history. Of course don’t use it just to use it – only for items you’d buy either way.
Keep your balance below 30% of the limit. Get several of them if you can.
Also, it depends on how your parents are (mine would never have done it), ask them to add you on to one of their credit card accounts. They don’t even have to give you a card. I’m not talking about the “authorized user” stuff as that doesn’t work anymore, rather actually add you on as a co-borrower basically. They’ll have to fill out with your SSN and all your info and then you’re on their account. When they do this, it should really help your credit history as you will be able to use their good credit.
“add you on as a co-borrower”
This is one of the best ways. Also, don’t pay your card off in full every month, but make more than the minimum payment. Keep a small balance (Must be under 30% of limit or it will negatively affect you) Ideally you will want four different trade lines ie:
1 mortgage
2 CC or store credit
3 secured loan
4 student loan
A fairly easy way to get a secured loan is to go to your existing bank and open a CD, then get a loan secured by the CD. Pay it down then ask for a bigger loan. It takes some time but since you are so young :biggrin in a few years you’ll be set. Thank Carlton for this idea. It worked for me!
If you have some money, try placing it in 3 or 4 6 month CD’s. Place each one in a different local bank. Take out a secured personal loan with each bank, using the CD’s as collateral. Then pay off the loans. The loans are better on your report than revolving debt. Having 1 or 2 max. cards will be good too. Just don’t use more than 30% of the limit and pay them off in full each month.