My plan for repair - suggestions please

[mikemike]

Okay. So I have very limited credit history and 1 60 day past due for a credit card. The card was shut down, and is now paid in full (the debt was ~500). This is the only late payment. Other negative factors include: several hard inquires and lack of a major credit card (Visa, Mastercard, etc.) issued in my name. My FICO is 598, Experian/Transunion/Equifax are 580, 590 and 610 respectively.

Here's my plan.

1. Secured credit card. $500, running it up to $100 each month and paying it down to zero every month.

2. Having myself added as an authorized user for 3 credit cards. 2 have credit limits of over $25,000 and have been active for over 10 years. 1 has a credit limit of $500 and has been active for about 2 years.

That's it as of now.

Any suggestions? I'm considering not getting on as an "authorized user" on the credit card with the $500 limit and active for less than 1 year. Think it would do any good, or should I skip that one and just stick with the authorized user account for the 2 major credit cards and my secured credit car?

One more question - how long does it generally take for these to show up on your credit report and what kind of bump can I expect from the addition of the two credit cards with a lengthy history and large credit limits?

Thanks a lot for your help. I'm in panic mode b/c I have an employer running a credit check on me in a few months (late January) and I think I could be out of a job if my score isn't in mid to high 600s by then.....

[chane]

It's best to have 3-5 revolving accounts, so it's up to you how many you want.

It usually doesn't take longer than a month or so.

[mikemike]

Originally Posted by chane

It's best to have 3-5 revolving accounts, so it's up to you how many you want.

It usually doesn't take longer than a month or so.

Great - thanks Chane.

How much of a score bump do you think I can expect? A wild estimate is fine.

Thanks.

[chane]

There are so many factors that determine your scores. One of the hardest things to explain to people is how difficult and complex the scoring system is. It's completely different for every individual person. For example, you and I might both add 2 of the exact same credit cards to our reports with the same limits and your scores may go up 100 points, mine might go up 5.

Your scores will probably actually go down a little bit at first, but then the longer you have the accounts and the more positive they are the more they will go up.

[mikemike]

Originally Posted by chane

There are so many factors that determine your scores. One of the hardest things to explain to people is how difficult and complex the scoring system is. It's completely different for every individual person. For example, you and I might both add 2 of the exact same credit cards to our reports with the same limits and your scores may go up 100 points, mine might go up 5.

Your scores will probably actually go down a little bit at first, but then the longer you have the accounts and the more positive they are the more they will go up.

Thanks for the response. I have to ask - why would they go down at all? The 2 accounts to be added have very high limits and have been around for a long time with no late payments....

[chane]

They might not. It depends on if there are any inquiries and/or how high the balances are.

[mikemike]

Originally Posted by chane

They might not. It depends on if there are any inquiries and/or how high the balances are.

The balances are low. Less than 15% of the respective credit limits.

I don't see how the presence of hard inquiries on my account would change how much a newly added credit card would boost my credit score - can you explain the relation between the two?

[chane]

If you apply for a credit card and they check your credit, you'll have a hard inquiry.

Each hard inquiry stays on your credit report for 2 years and lowers your scores. They count less and less over the 2 years until they finally fall off, at that time they don't count at all.

[mikemike]

Originally Posted by chane

If you apply for a credit card and they check your credit, you'll have a hard inquiry.

Each hard inquiry stays on your credit report for 2 years and lowers your scores. They count less and less over the 2 years until they finally fall off, at that time they don't count at all.

Yeah I know this.... I was just wondering why you thought inquiries would effect the kind of boost I see from the addition of a new credit account.

[chane]

If it's an authorized user account it won't, because there are no inquiries.

If you apply for a card, the inquiry will temporarily bring your credit score down. It will bring it down even more if you have any other inquiries. But, establishing good history with that account will offset the effects of the inquiry. For example, lets say that an inquiry brings your score down 10 points, well after 3 months of paying on time your scores will go up 15 points and the inquiry is not at new so it only takes 7 points away instead of 10. That would be +8 points. But, like I said, at first it will go down a little bit.

After a year of positive history, the account may raise your scores by 50 points and the inquiry may negatively effect it by 3 points. That would be +47 points.

That's just an example though and honestly FICO doesn't really work like that, but hopefully it helps illustrate my point. Nobody knows exactly how FICO works except for FICO themselves.