piggybacking a loan and a secured card

[strudel1]

Last week I was added as an authorized user to a family member's  account in great standing with many years of great history and a limit of 20k. We're planning to leave me on as an authorized user for 2-3 years. My question is, after 6-12 months, will i start getting credit card offers with limits of 20k as well?  How does the system decide these things? I'm also paying a small loan through the year and just received my Navy Federal secured credit card with a $500 limit and plan to use it only for my $25 loan each month on auto pay.  Are these  tactics going to raise my score considerably over the next 3-6 months.  Any advice will help, as this is a question google could not completely provide detailed answers for. Thank you all for reading/responding.

current fico score from multiple sites= 423-440

[Harry Seaward]

A score of 423-440 tells me a.) there's more to this story that what you've described here; b.) the 'sites' reporting your score are way off; c.) a little of both a and b.

If you have a bunch of late payments and charged off debt, you can only rehab that so much with the open accounts you've stated.  Also, high utilization (ratio of balance owed-to-available credit) will KILL your score.

Banks don't make $20k credit card offers without years and years of excellent credit and payment history.  Also, some banks won't let you pay one debt with another debt, so you might have to rethink your strategy there.

It feels like you want instant good credit.  That never happens.  You have to build it.  Use your $500 limit card to about $200 every month and then pay off all but a small balance ($~50).  This demonstrates that you know how to responsibly use and repay credit.  Do that for 6 months or so, and then apply for a $1,000 or $2,000 limit card.  Do the same thing with that one for a year or two.  Then apply for a $6,000-$8,000 limit card and do the same thing with that one for a couple years.  Work a car loan in there at some point, but only borrow whatever you can pay off in 3 years (even if they give you 5 or 6 years to pay it, pay 1.5x your payment every month).  In 5 years you'll have 700+ FICO as long as there is no negative credit history on your report.

[strudel1]

Thank you for the quick reply. You're right, I don't know what my fico score is for certain. Every site I went to was within the 420-440 range and a few even said 530. I have no credit card debt. I owe some collections that I'm paying off slowly (only $1700.00 in total) I've never had a credit card of any kind or a car loan. My credit report doesn't now and never has had much activity on it so that may explain the "more to the story statement perhaps". I have the one loan ($850.00), and now the secured card.  So are you saying the scores are way off in the respect that it's potentially  much lower than I'm seeing? Also, are you saying that piggybacking as an authorized user with such a high credit limit (20k) is going to ruin me? Note: the authorized user is holding the card for me and using it as their own for small purchases in my name.  Again, thank you very much for your insight. Clearly you know what you're talking about.

[strudel1]

Also, I'm paying off my collection debt with my paychecks and never would try to use credit to pay another debt.

[Clydesmom]

11 hours ago, strudel1 said:

Last week I was added as an authorized user to a family member's  account in great standing with many years of great history and a limit of 20k. We're planning to leave me on as an authorized user for 2-3 years. My question is, after 6-12 months, will i start getting credit card offers with limits of 20k as well?

No you won't start getting those offers.  Banks caught on to this tactic a few years ago and an AU account no longer helps your credit at all.

8 hours ago, strudel1 said:

Also, are you saying that piggybacking as an authorized user with such a high credit limit (20k) is going to ruin me?

It won't ruin you but it isn't going to offset that you have no positive credit history of your own reporting and have collections.  An AU account just means you have access to someone else's credit it does not mean you personally can manage credit wisely.

[Harry Seaward]

10 hours ago, strudel1 said:

Thank you for the quick reply. You're right, I don't know what my fico score is for certain. Every site I went to was within the 420-440 range and a few even said 530. I have no credit card debt. I owe some collections that I'm paying off slowly (only $1700.00 in total) I've never had a credit card of any kind or a car loan. My credit report doesn't now and never has had much activity on it so that may explain the "more to the story statement perhaps". I have the one loan ($850.00), and now the secured card.  So are you saying the scores are way off in the respect that it's potentially  much lower than I'm seeing? Also, are you saying that piggybacking as an authorized user with such a high credit limit (20k) is going to ruin me? Note: the authorized user is holding the card for me and using it as their own for small purchases in my name.  Again, thank you very much for your insight. Clearly you know what you're talking about.

Generally speaking, people with even a little credit (e,g., your $850 loan) have at least a 600 FICO.  If a person's score is lower than that, it's due to some negative information.  In your case, the "some collections" are what are making your score low. The total dollar amout of collections is not the biggest problem for you; it's the total number of negative accounts.  Paying them off won't help, either.  Not to discourage, you - just letting you know so you don't expect a sudden increase in your credit score when the balances go to $0.  The other problem is those accounts are being updated every month while you're paying them off, so they are constantly being scored as 'recent' negative history.  Once they stop updating, they will have less and less impact as time goes on.  Your best bet is to get them to stop updating as soon as possible.  Like, borrow money to pay them off or find some other way to get them off your report.  The collection agency will almost certainly accept a lesser amount (~50% of what you owe) if you offer to make a lump sum payment.

The $20k limit card will actually help as long as that card doesn't report to the credit reporting agencies (CRAs) with more than about $1,000 (in terms of "utilization", this would be 5%).  Reporting isn't the same thing as using.  In other words, that card can get maxed out every month, but as long as it's paid to $0 before it gets reported to the credit reporting agencies, it will always show a $0 balance owed.  Ideally you want a small balance to report every month to prove you know how to manage your money. (Side note - I think the reason for the small balance is because FICO expects creditors to report balances right after the due date.  Someone that regularly uses their card will start running up a new balance right after they pay their card to $0.   I believe it's this balance that FICO is looking for, and if the creditor reports the day or so after the due date, this balance should be something, but also should be small.)

Here's a couple links that i have found to be really helpful.  The first one explains what FICO is and some general info on how it works:
https://www.myfico.com/Downloads/Files/myFICO_UYFS_Booklet.pdf

This next one is an 'estimator' that you can plug in different scenarios to see how different events effect your score:
http://www.whatsmyscore.org/estimator/index.php

This last one shows graphical data on different scenarios.  It's on another board, but the guy that posted them spent countless hours running different scenarios and plotting them on several graphs, and it really drives home how late payments and utilization affect your score.
https://creditboards.com/forums/index.php?showtopic=527614