Fico Score

[southernmom]

What is a good site to use to get a true FICO score. We are trying to build our credit score so we can buy a house. I think we don't have enough credit. We have one CC and one car loan. We are getting ready to buy another car and will finance it. I am thinking about taking the down payment money for that car and putting it into a savings account and using it to get a secured loan. Then using that secured loan for the down payment. That would give us two more accounts. Is this good to do or not to do

[HHM]

I am thinking about taking the down payment money for that car and putting it into a savings account and using it to get a secured loan. Then using that secured loan for the down payment. That would give us two more accounts.

Don't do that. A colossal waste of money.

The only place to get a true FICO is www.myfico.com

Even people with questionable credit can get pretty good rates on car loans, so don't worry about it.

[IBroke]

What is a good site to use to get a true FICO score.

myfico.com That's basically the only place where you can get true FICOs from TU und EQ.

We are trying to build our credit score so we can buy a house. I think we don't have enough credit. We have one CC and one car loan. We are getting ready to buy another car and will finance it. I am thinking about taking the down payment money for that car and putting it into a savings account and using it to get a secured loan. Then using that secured loan for the down payment. That would give us two more accounts. Is this good to do or not to do

That is a good idea because it also gets you a good "credit-mix". Just make sure not to add too many new accounts at once - at least not if you're planning on buying a house within 12 months.

[IBroke]

Don't do that. A colossal waste of money.

That totally depends on the APR you are getting. I obtained a secured loan from my local CU and the interest-rate is very low. My last secured loan ($1000 over 12 months) cost me less than the fees of a sub-prime CC.

[HHM]

That totally depends on the APR you are getting. I obtained a secured loan from my local CU and the interest-rate is very low. My last secured loan ($1000 over 12 months) cost me less than the fees of a sub-prime CC.

You don't take out pointless loans just to raise your credit score. She is talking about taking out a secured loan to use as a down payment on a car, and getting a car payment, so that is two loan payments just to get a car. Bad idea, all the way around.

She should be able to get another CC if she really wants.

Debt is still debt. Secured loans against CASH are just stupid, sorry. That is just the way it is.

[IBroke]

You don't take out pointless loans just to raise your credit score. She is talking about taking out a secured loan to use as a down payment on a car, and getting a car payment, so that is two loan payments just to get a car. Bad idea, all the way around.

She should be able to get another CC if she really wants.

Debt is still debt. Secured loans against CASH are just stupid, sorry. That is just the way it is.

That's your opinion - but not a fact.

Maybe I read her post wrong, but as far as I understand, her long term goal is a MORTGAGE, not just the car-loan.
Sure, she could also obtain a second CC - but I have my doubts that such a TL would be any cheaper. So taking on another "pointless CC" doesn't make more sense..

And the way my secured loan works doesn't "add" another monthly expense to my bill because after I have made a payment, the funds (minus interest) are available again the next business day which can be directly applied towards the auto-loan payment.

Unless the CC is without a fee, obtaining a second CC isn't any smarter.

[HHM]

No matter what justification you have, you are still PAYING the bank to hold your money...in no universe does that make sense. Let's not give in to credit score hysteria, let's still apply some common sense.

And honestly, looking at your scores, it is really not helping you that much...your scores would be where they are at even if you didn't have that secured line. In fact, I wonder if it is hurting you, your scores are a tad low (if you are a little over 1 year out from BK (not sure how up to date your "Now" scores are in your signature.)

I am not saying secured cards are inherently bad, they are tool for rebuilding credit and can be less costly than the unsecured alternative depending on the amount of security required relative to the authorized available balance, but in the fact scenario presented...
Getting a secured loan against cash in savings...
Using the proceeds as down payment for car....
THAT IS BAD

It will blow-up the open balance / used balance ratio and actually end up hurting her credit.

[IBroke]

No matter what justification you have, you are still PAYING the bank to hold your money...in no universe does that make sense. Let's not give in to credit score hysteria, let's still apply some common sense.

And if you are obtaining an additional CC that has an annual fee (even many secured CCs have that), you are carrying around an additional, useless card and are paying the bank for a card you don't need.

"Common Sense" is nice in theory - but it doesn't apply to the lending-industry and especially not to credit-scoring. I know that and you know that as well. I would even claim that the most financial responsibility would be demonstrated by an individual who doesn't have any debt at all. THAT'S common sense but it is THAT individual who isn't "credit-worthy" according to our system. Does that make any sense? No. But that's how it is.

And honestly, looking at your scores, it is really not helping you that much...your scores would be where they are at even if you didn't have that secured line. In fact, I wonder if it is hurting you, your scores are a tad low (if you are a little over 1 year out from BK (not sure how up to date your "Now" scores are in your signature.

I'm not sure what my scores have to do with this topic - but FYI, here's where I am. My scores will be quite different in 10 days.

http://www.bkforum.com/showthread.ph...n-my-Refi-Loan

I am not saying secured cards are inherently bad, they are tool for rebuilding credit and can be less costly than the unsecured alternative depending on the amount of security required relative to the authorized available balance, but in the fact scenario presented...
Getting a secured loan against cash in savings...
Using the proceeds as down payment for car....
THAT IS BAD

If the expense of said loan is less than the one of a CC, why is that so? And honestly, it doesn't matter at all for what the proceeds of the loan are USED. That is simply irrelevant. The OP walks into a bank or CU with $xxx in cash and walks out with the same $xxx in cash. The only thing that matters is the expense of the loan. The interest-rate matters, the term of the loan and the loan-amount. Obtaining a second CC over an installment-loan doesn't have any credit-scoring advantage either - or in other words, is less damaging. Both effect the AAoA in the same way.

The OP is looking for an additional TL for her credit. And as I said before: If the annual interest of the secured loan is lower than the annual cost of an additional CC, there is NOTHING wrong with obtaining such a loan instead.

[HHM]

Ibroke, make sure you read the OP post

We are getting ready to buy another car and will finance it. I am thinking about taking the down payment money for that car and putting it into a savings account and using it to get a secured loan.

Basically, that means, putting $5K in the bank, then taking $5K out as a secured personal loan against those funds. In no way is that going to help anything, and it is a BAD use of funds to boot (dump into a sub 1% savings account).

Still, borrowing always costs money, credit recovers over time anyway.

This really isn't a debate about secured vs unsecured credit cards. If she needs a trade line to help credit fine, go find the cheapest alternative, secured or unsecured; but I am advising not to do as the OP intended, don't go dump a few grand in a bank account, take out a personal secured loan for the full amount, and use it as a down payment on a car. Even you must admit that is not a good idea.

[SPalin]

It may show as an additonal open credit line for the secured loan for the downpayment for the car. But, unless you plan on paying your outstanding debt down or paying off that will impact you qualifiying for a mortgage debt to ratio. I wouldn't get a secure loan for the downpayment for the new auto loan. The mortgage company would want to see money in the bank that is not tied to a loan. That's just my take on this.

[IBroke]

Ibroke, make sure you read the OP post

Basically, that means, putting $5K in the bank, then taking $5K out as a secured personal loan against those funds. In no way is that going to help anything, and it is a BAD use of funds to boot (dump into a sub 1% savings account).

Still, borrowing always costs money, credit recovers over time anyway.

Well, if it is indeed $5K (I don't know where that number is coming from since I'm not even sure the OP is aiming at a new car), the calculation is easy: Does the interest-rate of this loan cost the OP more than a second CC? Probably, yes - but not necessarily. I'll get to that in a moment.

Certainly, there are better ways to get a higher ROI - but having the option to spend that invested money as down-payment on a car and still earn any interest on it isn't that bad either..

Now how about taking $1K or $2K from that $5K(?) and use it for the secured loan and compare the expense of the loan to a CC?

Here are a few numbers:

My current secured loan has an interest-rate of 2.6%. If the OP would take $1K from her auto-funds to obtain a $1K-loan over 12 months, her total expense would be $14 (minus interest earned). IMO, not bad for an additional TL. A $2K loan over 2 years would cost about $55 total (minus interest earned). That's less than $27/year (BTW, the annual fee of my Capital One secured card is $29.95). The "worst-case-scenario", a $5K-loan over 5 years, would cost $335 over 5 years - that's $67/year (minus interest earned). I can think of MANY CCs that are far more expensive than that - even if you never pay any interest on them.

It's simply a decision everybody needs to make for him/herself. Some prefer the flexibility of an additional CC while others have an issue with it - especially after BK. Others might prefer the secured loan simply because it's secured.

But when it comes to borrowing, you are totally right. It ALWAYS costs money and the banks ALWAYS win.

[IBroke]

The mortgage company would want to see money in the bank that is not tied to a loan. That's just my take on this.

That's true. However, if the bank considers the secured loan as liability, they also have to consider the savings account that is tied to it as asset. Without the secured loan, neither the liability nor the savings-account with the money in it would exist. That would probably level itself out. Some lenders also tend to have an issue with credit-cards that could potentially be maxed out - so it's hard to tell what's "better".

I don't know the annual income of the OP and the mortgage she is looking for and when she wants to buy - so having an additional liability can either hurt or benefit her. It can benefit her if she has sufficient income but currently an insufficient number of accounts on her file. If a monthly payment of less than $90 on one of her (then) four reporting accounts would already be a problem for the debt/income ratio, I wouldn't recommend getting a mortgage at that point in time in the first place.

[Amy26]

Just be careful with new accounts and trying to get a mortgage. Make sure there is sufficient time between you getting new credit and applying for the mortgage. They do not like to see a lot of inquiries or new accounts on your reports. Subsequently, after you apply for a mortgage its not advisable to try to get any kind of additional credit before the mortgage closes.

I believe the minimum time you want is 6 months but a year would be better. I would like to buy another house in the next 1-2 years and I will not be putting any inquiries or new accounts from now till then.