It seems like such a simple topic, but I'm having a very difficult time getting straight answers. My wife and I are trying to buy our first house. Our biggest problem is not enough credit. Our scores were higher last year, but since then we have closed two large credit accounts (paid off her student loan and satisfied a margin account) and our credit took a hit.
Not only were those our only two credit lines, they are now closed, so banks don't like us. I have a few questions about it, but would like to hear any diatribes you might have
- obviously, opening some lines of credit are going to help in the long run, but how long will it be before those new credit lines go from a bad mark to a good one?
- how do we use those credit lines? Do we just leave them alone, or do we charge a little on them and pay right away? Does the amount of money satisfied affect the rating, or do they just report that it has been satisfied even if the balance is zero?
- the margin account we had was a credit line based on securities values. Those securities have now been re-allocated and the account is at zero balance (with zero credit). I would like to close the account, but will that be a bad thing or a good thing?
- we have tried to get one line of credit and we were denied (which was a shock given our high 600's/low 700's rating). We're not happy about being denied obviously, but what are some good ways to get credit? Are there certain types of cards or credit lines that are more of a "sure thing?" Someone suggested that pre-paid credit cards show up as a credit line. Is that true?
- part of this process is for me to get a new job since I was "downsized." Most of the positions for which I apply (legal arena) require a background check which the contracts say might include a credit check. Will this type of inquiry have a negative impact on my credit?
- would a credit counseling agency be a way to get advice/action quickly? Any drawbacks to those services?
We've always been so careful and now its frustrating because we don't have ENOUGH credit even though we have NO debt. With the exception of having a margin account (which we didn't use) and her student loans, (which is now paid off) we have never borrowed money. We had the occasional credit card in college (because free Tshirts are cool), but never really used them, and that was 10 years ago.