Help me design the Best Possible Plan For My Credit in 2008. Ten years ago I had no cash, and terrible credit. Today I have some cash, and no credit. I want to make some good choices next year, based on a well-considered strategy.
posted by cockwaffle to Work & Money (5 answers total) 9 users marked this as a favorite
I should start by saying that I know this is a very nice problem to have. It's taken a long time to get here and I want to proceed wisely.
Back then: After getting into some minor credit card trouble in college ( lss than $2000), I argued some of the debts, settled the others, and never again looked twice at a credit card. But, I wasn't spotless; I still had hit-or-miss records on my student loans, and the assorted unpaid utility bills and bank overdrafts. There was a lot of robbing Peter to pay Paul back then, so any tiny surplus went to groceries, rent. Any time I could get a bit of a leg up, I'd improve my track record a bit, and by sticking to a cash-only policy, I stayed out of trouble.
Fast forward to today: Recently married; partner had similar hit-or-miss past (sans the student loans), but no major credit stuff. Both happily employed with plenty of surplus, and making enough that we are both paying off debts here, socking away savings and retirement there. The one car is paid off; no mortgage.
So, I've paid off all my old debts and claims, but there's no new good news to take its place. My FICO: TransUnion: 670, Equifax: 660. No Experian, because there's not been enough recent activity. I literally have nothing establishing credit in my name, save my debit cards / bank accounts.
- At some point in 2008, we need a second car; researching, I checked with my bank and they can't offer rates better than whatever dealership we'd go through. We don't care whose name the car is in since legally, it's all the same pile anyway.
- A mortgage won't be on the horizon till this sub-prime thing blows over, as we are in a market that's been hit especially hard; besides, we don't have that down payment saved. Still, I want to be mindful of that on the horizon, say 2009 or 2010.
- I would rather not get a store card (it seems like inviting trouble to create a purchasing tool that requires me to acquire stuff we might not need, in order to establish credit)
- And, a gas card won't be much help either (we don't drive that much)
- I would like a general credit card, that I would pay off every month. It would be for small daily purchases; the big tickets would only be travel, or the odd time where one needs to pay $500 or $1000 for something up front (medical, plumbing emergency, etc.). Bigger purchases might get paid off every two months.
- I have frequent opportunities to make fairly high dollar purchases for my company, which are reimbursed on time. I've refused to float those expenses out of pocket, to date, but it seems like putting them on my credit card could be an easy way to pay off an even higher balance promptly.
I want to proceed practically and with care, and in the order that will create the best effect, fastest.
Should I get the credit card before applying for the car loan? Should I postpone the car until after the credit boost that the (eventual, unplanned) mortgage will give... even if that will harm our quality of life for two or three years? Should I get a store card even if I don't want one? Should I definitely apply for a credit card that my bank offers, before any other lender, since they know me? I really would rather not get a secured credit card if I don't have to; will my FICO require it? Should I try to boost my FICO before I even consider applying for credit?
Tell me what to do, and why you think so. Or tell me of your own experiences and what seemed to work well. Or of websites, books, financial gurus we should check out. Or of glaring considerations I might have missed. I know you might not be an accountant, credit counselor or financial advisor, but we don't intend to hire one of those anyway. Our plan is to inform ourselves as much as possible, and then weigh it all and decide what makes the most sense.>