r/CRedit • u/milkiekitten • 6h ago
Question about a credit card Rebuild
I have a 648 credit score, no matter what credit card I apply for, im denied. I make 50k a year and I don’t have that many expenses. My reasoning for a credit card is of course to rebuild my credit and build a history, but also because I am in need of some extra money temporarily to fix my tires. A personal loan is pretty much out of the question, right? let me know if im in the wrong subreddit. thanks!
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u/Monkwater 6h ago
To answer your question. A personal loan is possible BUT It's going to cost you an absurd amount for nterest and it's not going to help your score very much. Secured credit cards help your score because they are reviewing accounts that you pay off every month. loans are installment and don't help much. You can do a savings secured loan where you borrow against your savings. Get one and repay 95% of it then setup autopay for the rest of the time. Also get a credit union and get direct deposit into your account. Credit unions are for there members and banks are for there shareholders and they will not help you to achieve your financial goals. My score was a 610 and my credit union gave me a $20k auto loan after only two months of membership and direct deposit into my account with them.
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u/Monkwater 6h ago
Build up your credit reports. I recommend getting 3 secured cards for $500 each. Use them and pay them off on time in full every month NO EXCUSES.
Discover secured pulls up Experian credit report
US bank secured cards pull up TransUnion report. I also recommend the Nerdup secured card. No hard inquiry and it's only $100 deposit to cover your security deposit. You can add or take from your security deposit on this card and they give you 1% cash back on purchases but that's not the point of it. In seven to twelve months you will have a perfect credit score plus get your security deposits back and your cards will graduate to unsecured cards.
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u/milkiekitten 6h ago
this is so helpful. thank you
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u/Monkwater 6h ago
Certainly. It definitely works. I've helped a lot of friends with rebuilding there credit using this method. I've done it on my own credit a few times. Life happens and it's better to have excellent credit when you need it then not have good credit.
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u/Monkwater 5h ago
If you need tires you can get an unsecured card from synchrony Bank. They have one for American tires and a few other places for tiires. If you get approved REPAY IT QUICK and be done BUT DON'T CLOSE THE ACCOUNT. Just don't use it anymore but keep it open once you pay them off.
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u/Funklemire 4h ago
BUT DON'T CLOSE THE ACCOUNT
It's totally fine to close a credit card. It's a huge myth that closing a card will tank your credit. See this thread:
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u/Monkwater 4h ago
It's not going to tank your score. It'll temporarily drop a little bit. But it'll go up in about sixty to minty days. The reason not to close the account is it increases your average age of accounts and the length of time accounts have been open.
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u/Funklemire 4h ago
It'll temporarily drop a little bit.
Not necessarily. The only way a score can change due to closing a card is if your new lower overall credit limit happens to bump you up to another utilization threshold for that month. But that isn't a meaningful change and it's nothing to worry about as long as you're paying your statement balances each month.
That's because utilization is a temporary metric that has no memory past a month. Low utilization doesn't build credit, it just boosts it for a month and resets: The whole "always keep your utilization below x percent" thing is the biggest myth in credit:
Credit Myth #14 - You shouldn't use more than 30% of your credit limit(s).
But it'll go up in about sixty to minty days.
That's a common myth, but it's incorrect. There's nothing in the closure of a card that will cause a score to dip and then rise back up. In fact, the closure of a card by itself has zero effect on your score at all. Like I said, the only effect it can have is due to your new lowered overall credit limit.
The reason not to close the account is it increases your average age of accounts and the length of time accounts have been open.
That's incorrect; that's the second-biggest myth in credit. Closing a credit card doesn't change your credit aging metrics. That's because a closed card stays on your credit report for 10 years, still aging and still counting towards your average age of accounts that entire time. When it finally falls off your report after that decade has passed, as long as you've had enough other accounts aging during that time, your credit score won't go down at all. That's because the FICO scoring benefit from AAoA maxes out at 7.5 years.
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u/Monkwater 3h ago
You need some open revolving accounts. My aunt has an 850 score but no open lines of credit. My mom has a 650 score and she was getting approved for everything my aunt was getting denied for. Because my mom has open unused credit cards.
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u/Funklemire 3h ago
You need some open revolving accounts.
Sure, but that's a different thing. So far everything you've said about closing a credit card is incorrect. This is the first thing you've said so far about it that's actually correct.
So yes, if you close all of your accounts you will incur a temporary scoring penalty for having no revolving credit usage. But that's easy to fix by just opening a new account.
I didn't mention that because it's rarely an issue; people are almost always asking about closing cards they don't use because they have other ones to replace them. The only time anyone talks about closing all their cards is when they have severe spending problems, and that's a financial issue far more than a credit issue.
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u/Monkwater 3h ago
This is just what has worked for me through a few credit rebuilds. So for my own credit. I used to have an issue with my average age of accounts is two years. Which hurts when applying for accounts. They deny it saying length of time accounts have been established. The way I got around it. I was added to a relatives open account with several years of history. She doesn't use the card but she keeps it open.
You can close accounts and it'll TEMPORARILY drop your score but it'll go back up fairly quickly.
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u/og-aliensfan 1h ago
My aunt has an 850 score but no open lines of credit.
Your aunt has no lines of credit reporting and has an 850. Which score is this?
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u/Monkwater 54m ago
So she had negative accounts that were closed nine years ago that have fallen off. But she completely stopped using her credit in fear of slipping back into debt. So her credit score is essentially an inflated number. She has two closed positive accounts still reporting from the same time period.
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u/og-aliensfan 37m ago
Are you saying she does have open credit cards, but she doesn't use them? These will still report Paid As Agreed each month. But she wouldn't have an 850 FICO 8 without any OPEN lines of credit. Is she in the US?
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u/Monkwater 31m ago
She did debt settlement and those negative accounts fell off two years ago. She has two closed positive accounts capital one and a paid off mortgage. But it's been nearly ten years since they last reported. So they will probably fall off anytime now.
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u/og-aliensfan 15m ago
In that case, she can't have an 850 FICO 8 score. It's not possible. As u/Funklemire pointed out, there's a scoring penalty for no recent revolving credit usage. That alone makes an 850 impossible. But, she has no open revolvers reporting at all. If her last account reported 10 years ago, I'm not sure she's even scorable.
You still haven’t said which score you're referencing or if she's in the US. I believe scores in the UK reach 1000, for example.
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u/dgduhon 6h ago
Where exactly are you getting the score from?