Credit question

[mugs]

Background
I have good credit - last I checked through MyFICO.com I believe my 3 scores were 738, 752 and 778. My wife's credit is not as good, simply because she has never really borrowed money. No student loans, no car loans, barely any credit card usage until recently (we're both 24 btw). We don't know her scores, but I know her credit is not as good as mine because:
1. I have a Citi Dividend Platinum Select, she was rejected initially (they sent her an offer about 6 months later)
2. We signed up for the Charles Schwab Visa at the same time, I got a $15k limit and she got a $2500 limit

Situation
We're buying a car soon to replace her previous car, which was totalled in an accident (not her fault). We could pay cash for the replacement car, but we're considering financing a portion of it to help build her credit. We plan to buy a house in the next couple of years, and we don't want to get a higher rate due to her less than stellar credit. A little money on interest on a car could save a LOT of money on interest on a house.

Questions
1. How important is the amount we (may) finance on the car? i.e. if we financed $10k, would that help our credit more than if we financed $5k? Is the difference substantial?
2. How important is the amount of time the money is borrowed for? If we pay off the loan in a year or 6 months, will that not help her credit as much as if we paid it off over 2 or 3 years?
3. Should we get the loan in her name along, or with me as a co-signor? I assume we'd get a lower rate if I co-sign, but would it help her credit any less since she is not solely responsible for the loan?

The point, of course, is to show some history of on-time payments on an installment loan to help her credit score, but to minimize the cost as much as possible.

Thanks.

 

[SilentZero]

I was told by numerous people (financial planners, etc) that paying off your loan on a month basis thru the entire term of the loan is best for your credit. Not sure about the amount of the loan though.
My wife and I used to take out small loans (3-4k), redeposit the money in a saving account, and have the payments taken from it monthly. That was one of our methods of building credit, and it worked very well. Granted we took out quite a few loans. I would put the loan in her name if your credit is great already, and just focus on hers, and if she needs a co-signor, well then you can step in. Not 100% sure if having a co-signor would have an impact though. Thats the best I can offer.

 

[everman]

I've never believed that taking out loans that you don't need is a smart thing to do, you're just throwing away money. Just make sure you pay any and all bills on time, credit cards in full. Having more loans makes you more leveraged, which is a bad thing.

 

[lykaon78]

Why not call a mortgage broker... tell them your situation and ask their advice. They'll be the ones to know if her score will matter when you have basically stellar credit.

 

[mugs]

Originally posted by: everman
I've never believed that taking out loans that you don't need is a smart thing to do, you're just throwing away money. Just make sure you pay any and all bills on time, credit cards in full. Having more loans makes you more leveraged, which is a bad thing.

I agree for the most part, but if the end result is a lower rate on a mortgage it could save us a ton of money in the long run. It's not like we're going to go out and spend the "extra" money if we finance it, it'll sit in an account somewhere earning interest to offset the cost of the loan.

 

[mugs]

Originally posted by: lykaon78
Why not call a mortgage broker... tell them your situation and ask their advice. They'll be the ones to know if her score will matter when you have basically stellar credit.

Well, I wanted to post this on creditboards.com where a lot of loan officers are active members, but their forums are down at the moment. When they fix their forums I'll post it over there too, but I figured it can't hurt to get ATOT's opinion.

 

[sandmanwake]

If you're sure the only reason her credit scores are so low is because she doesn't have a lengthy credit history and you know she's financially responsible, then probably the best way to get her scores up is to add her as an authorized user on one or two of your older credit card accounts. You better be darn sure she's not the type to spend money you guys don't have though. Don't add her if the only reason you're sure is that she's your wife and you trust her. She screws up with whatever account you add her to, she screws up your score also.

 

[mugs]

Originally posted by: sandmanwake
If you're sure the only reason her credit scores are so low is because she doesn't have a lengthy credit history and you know she's financially responsible, then probably the best way to get her scores up is to add her as an authorized user on one or two of your older credit card accounts. You better be darn sure she's not the type to spend money you guys don't have though. Don't add her if the only reason you're sure is that she's your wife and you trust her. She screws up with whatever account you add her to, she screws up your score also.

Oh I know she's financially responsible, you wouldn't believe how LITTLE money she spends. We have plenty of money saved because neither of us spends money we don't have (or money we don't need to spend). I've been meaning to add her to my accounts actually, I suppose I should get around to doing that sometime.