DTN

My girlfriend has no credit. I have an 800 credit score. We took out a $2500 signature loan to pay for her school which can be repaid within a month.

How can we use this to her credit score's advantage? I understand it should be 90 days before paying off the loan, but if we pay it down to $120 and then pay $40 a month, will that be good for her credit report?

majik

if she has NO credit, she needs any credit at the point.

Length of accounts in good standing always helps.

I would get a credit card from her bank (a major bank preferrably) and just sit on it... don't use it. They're less likely to charge fees or cancel it for inactivity since she has other accounts there. I've had my Bank of America credit card since I was 16, and it shows as a positive due to length of credit history.

I don't think the speed of paying off the loan matters much, nor the balance... it's all about the length of the account. Even after paying it off, they might keep the account open (doubtful) and even a zero balance would be beneficial for the score.

I'm offering opinions and ideas... I'm not an expert at all. Jon_GTR has a much better grasp on all of this than I do.

Edit:
You could also open a credit card together, both names, and use your combined income to get a higher limit. Setting that card aside (or cutting it up), and leaving the address on the account in your mother's address (so she can't get a replacement after you break up) might help. High credit limits that aren't being used are good, because it increases the amount of available credit. One factor in the credit score is the "ratio of credit available" which means that your Credit Available (unused) should be above 80%... if you have a $1,000 limit, don't have more than a $200 balance on the statement. They look at your overall available credit, so having a high limit on one unused card will lower the overall available credit ratio.

DTN

Ok. Thanks. We actually did that and she has a credit card on order now as well, which will not be used. I appreciate it. That was what I needed to know. I did not know it was about the time and not ammount on the account.

BTW.. OT, if anyone has a relative who was in the military, or is prior military themselves, get USAA. They let me cash checks from my iPhone by taking a picture, repay ATM fees, make getting loans hastle free, and their financial assessment tools are great.

majik

^ A coworker has told me the same thing. She loves it

Bullfrog

cash a check by sending a picture?! thats a cool trick senor.

majik

iPhone has that feature.

We have a "Smart ATM" (BofA) at our office where we feed our checks directly into it, it scans it, and asks us to verify the deposit amount while showing the check copy on the screen. No deposit slips or envelopes needed.

DTN

It's more a feature of the bank then the iphone. They also let you scan them from your computer. USAA just has an iphone app.

Stocker

The easiest way to establish a gen-u-wine credit history is to get a prepaid (secured) credit card and use it for usually 6 months & then convert it to a regular card. Use it for whatever, but pay it off regularly.

majik

Prepaid cards show on your credit?

DTN

Ya, some of them do, but I was not able to find any options. I gave her $400 in $1s in a burlap bag for christmas to start a local bank account, open a prepaid card account and buy a few things I put on a list. But the local banks do not report to credit agencies or something. They all said it would not help credit. So we got her USAA and this is option #2.