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I don't know if this is in the correct forum or not, but I can't find a credit related forum.
I got my first credit card back in August with my bank. I have charged far less than the limit each month, and paid it off in full, on time each month for 10 months.
Is this helping me build credit at all and at this rate, when will I have a credit where I will get a approved for a decent rate? Even if it's FHA?
Would it be good to have another card? I have started to get offers in the mail all the time, but most of them seem "scammy" to me. One even wanted a yearly fee to have the card!
Some people have told me the best way to build credit is a car loan. But I already have a decent car that I own outright and don't want to be stuck with a car payment for 5 years when I would rather spend the money on a house payment.
I also have read various opinions on this online, some saying the complete opposite from others. What scares me is I read people saying they started using credit 5 years ago and can buy a house now. Does it really take 5 years to go from no credit to being able to get a decent mortgage?
Why don't you just have your credit run, so you will know?
You typically need scores north of 640 - although there are lenders going down to 580 again - but a lack of collections and an active account carbonating your score might be sufficient to qualify now.
There is a difference between no credit and bad credit.
Which one are you?
You need to get one of the three free credit report and look at your credit profile. Know what your current score is (some of the free FAKO score) are fine. Just need to know where you are to begin with.
The most important is paying your bill on time and good credit limits based on your income.
You can go to creditkarma.com and see your score. It is a nice free service. I just bought another home, and the credit score listed on the website is pretty accurate.
I was a credit "ghost" as the bank told me when I first applied for my first credit card over 10 years ago. I just took out a 1000 dollar loan from the bank and paid it off over 6 months. Then I took out a 2000 dollar loan and paid it off over 6 months. I understand that I was paying interest and the money from the loan did nothing but sit in my savings until I made payments but it helped me build credit score faster than you would believe. The ammount of money I paid in interest was essientially just me buying myself credit.
I built up enough credit in 10 months with two secured credit cards and a car lease to buy a house. My score was just over 680, enough for the best rate less 0.125%. Of course I was putting down 20% too. Now, a year later my score is 740ish. It doesn't take much or very long to build up your credit score but I suspect a loan of some sort would speed things up.
As suggested above, take out loan secured with your own money, you don't have to spend it, make a few payments then pay it off.
Online credit report services to not provide the same scores that are pulled by lenders. They use different, often far-friendlier algorithms.
You should have your report pulled by a lender - one that you've decided is also responsive, knowledgeable, and well-staffed. And one that can help you by executing swift updates to the bureau, whether adding new accounts or updating existing ones.
You should find a lender that does not have Tradeline Overlays - for instance, I have no trade-line requirement. Just fico score guidelines. Some banks want to see a longer history of accounts. But that is a guideline that they add based upon their investor(s)' requirements.
You can literally go from zero credit to an upper-600 score with one account, and purchase a home, in weeks, if you are working with someone who knows what they are doing and is not constrained by tradeline guidelines.
We called the credit union this week. They said if I put 20% down payment I would need a score of 620 to qualify. However, Thursday I got a random letter from my bank that stated I did not have a credit score because the bureaus did not have enough information to give one. I am wondering if this is because the credit card was still in dispute when they sent this letter, or if there is truly not enough info after only eight CC payments. I'm not sure if the letter was sent because of my mortgage application with them or not.
I learned that checking my credit myself doesn't do any harm to it, so I checked my credit report on the myfico site. They say I do have a credit file and a score of 706. Not sure why the bank says I have no file, but I suspect it had to do with the dispute.
It's a very thin file, my account is only 11 months old, but I think it's a good start.
I guess the next thing to do is try to open some more accounts/lines: credit union and store CCs perhaps?
Getting a loan will give you a more rounded credit profile than just having credit cards.
If you have some money saved up, take $1,000 or $2,000 and put it into a 6 months CD. Use that as collateral with the same bank/Credit Union to borrow the same amount via a personal loan and pay it back within 6 months (or whatever amount you can comfortably repay while the rest is in the CD).
A month or two after that's repaid, it should help your credit score. (Using collateral generally gives you a better loan rate, because there is no risk to the lender.)
Good luck with your ultimate goal of becoming a homeowner
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