Is my credit building plan sound?

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otter
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Is my credit building plan sound?

Postby otter » Sun Aug 25, 2013 5:52 pm

In the mid 2000's, I had over 13 accounts go into collection and had a car repo. I swore off any sort of credit until a year ago when I decided to check my credit report. After realizing all of my derogatory info had dropped off, I decided it was time for a fresh start. I waited to make sure I did some research and learned as much as I could. I wanted to make sure my initial foray back into the credit world was successful and as painless as possible... I had done the First Premier/Progress One rape cards years ago and I wanted cards which didn't kill me with fees- cash rewards would be nice too(it never occurred to me before that credit cards could be a nice source of income. instead of a money trap). So I now have a stable of four cards. I did apply for a fifth card (AMEX Delta Skymiles), but was declined. Oh well, four out of five isn't bad... I plan on not applying for any cards again for the next six months as I am content with what I have for now; so here are the four cards I have currently:
    (1)Wells Fargo Secured ($300 limit/$25 AF) This was the first card I applied for because I wasn't sure if I could get anything else. Not really all that enthused about it because it has no rewards, plus I've heard WF is notoriously slow about graduating secured cards. WF does have a unique feature where if you pay for your cell phone bill with their card they will replace your phone if damaged. I'm pretty clumsy... so I'll probably pay for my phone bill with the card and that's it.
    (2)BoA Secured($300/$39 AF) This is actually a 1-2-3 cash reward card, and since I manage a truck stop where everything including the restaurant gets reported as being a "gas station", I plan on using this card extensively for the 3% discount on "gas". I've heard BoA does graduate cards with on time payments after a year, so I'm hoping this card can grow.
    (3) Capital One Quicksilver($500/$39AF) I've been approved, but haven't gotten this card in the mail yet, but I had been a "Crap One" customer years ago. It does have a 1.5% reward which I plan to use for "everyday things" I can't get 2 or 3% on. I know Cap One is notoriously bad with CLI's and they don't do PC's without having you apply for a new card, but some of their Prime Cards sound good.
    (4) Barclaycard ($1500/$0 AF) I was surprised when I was approved for this much CL. It does offer 2% rewards on gas/groceries/utilities, so I plan on using it primarily for groceries and utilities. I like the no annual fee, but am a bit alarmed about the 24.99% Interest(although I have no plans of keeping a balance on any of these cards). I really have no experience with Barclaycard, but some of their premium cards are appealing.

So my plan is to use three of these cards extensively, paying the full balance (except maybe 1 or 2%) a few days before the statement comes out. I may have to pay several times a month for the BoA and Cap One cards to stay under the limit (I've heard Barclaycard doesn't like multiple payments, but the CL is high enough that I will be able to get away with one payment right before statement day). In around six months, I will probably be in need of an auto loan and hopefully the six months of flawless history and low utililization can get me up to 750 FICO(I don't have an exact FICO score, but most of my FAKOS are currently in the 690-740 range). After I go through the car loan process(and the inevitable slight drop in score), I plan on looking to enhance my cards. Maybe Chase Freedom or an AMEX card.

A few other questions I have: When the Wells Fargo and BoA secured cards graduate, do they usually give a CLI? Do the AF's go away automatically? I think the Capital One Card is probably a "steps" card, so I think I'll get a CLI in six months on that one. I also know little about Barclaycard... and information from forums has been all over the boards, some very positive, some very negative. are they as stingy with CLI's as some say?

Thanks for any and all help any of you can provide.
In my Wallet:
  • Amex PRG NPSL[3-14, bd 91]
  • Sallie Mae MC $8000[1-14]
  • Chase Freedom $4700[1-14]
  • Discover It $2750[8-13]
  • BoA UCF Alumni Cash Rewards $5000 [3-15]
Sometimes in my Wallet:
  • GM BuyPower WEMC $5000[9-14]
  • Wells Fargo Propel 365 Amex $7000[4-14]
  • Barclaycard Arrival WEMC $7000[3-14]
  • BoA Better Balance $3000[2-15]
In my sockdrawer: Amex BCE $1000[10-13, bd 91], OCCU Duck $10000 [11-13], The Sportsman's Guide Visa $8000[8-14], Chase Slate $4000 [9-14]Delta Gold Amex $2000 [2-15 bd 91], Diners Club MC $20000 [10-14] Commerce Bank Visa $2000 [3-15] Citi Double Cash $1000 [3-15]
Total CL: $90450


SClay
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Postby SClay » Sun Aug 25, 2013 6:49 pm

Hey there!

From the sounds of it you have plenty of shiny new cards to help you start rebuilding credit. However, you need to remember a few things in order to make sure those cards don't work against you. On each of the cards, make sure the utilization is at or below 30%. This is very important. If you have 70% utilization on all your cards, it won't matter that much if you pay it off in full each month because it will signal to lenders that you are higher risk. That being said, your ideal limits on your cards should be:

WF Secured - $85 - $90
BOA Secured - $85 - $90
Capital One Quicksilver - $150
BarclayCard - $450

Try to pay these off in full each month. Carrying a balance isn't going to ruin your credit score as long as you maintain it properly.

I'm almost positive both Wells Fargo and BOA secured cards can get CLI's and/or upgraded to a unsecured card. The Annual Fees will not go away unless the card is upgraded.

Capital One does indeed have a 'Credit Steps' program which is granted by the following:
1) Paying your bill on time for the first 5 billing cycles
2) Using your card for a purchase after activation (not sure on the specific terms for this one)

And I'm pretty sure there is one more term to follow. I would ask a Live Chat operator on Capital One's website for more information to make sure you're enrolled in the program. They will fill you in on the specifics. Keep in note Capital One isn't really generous with CLI's. So once you get your first one it is likely that you won't see another one granted again. Since you have a $500 limit, you will be given a new limit of $750 since the Credit Steps program grants an increase of 50% of the original credit limit. Once granted this increase, your ideal limit you should spend on your Quicksilver card will be $225 or less.

Unfortunately I do not know much about CLI's and Barclays. Sorry.

Hope this helps!
Capital One Secured AU | $1851 | 10/2013
Capital One Journey | $1000 | 03/03/2016
American Express Delta Gold | Denied | 03/13/2016
Citi Bank Double Cash | $1000 | 03/13/2016
Chase Amazon Visa | Pending | 03/13/2016

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otter
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Postby otter » Sun Aug 25, 2013 8:45 pm

Thanks for the quick reply, SClay...

The biggest thing I learned from my previous experiences with credit is that utilization is everything. Well, maybe not everything- technically I guess it's only 30% of the FICO formula, but it is the one aspect of the credit report you can control NOW. Payment history is in the past and it along with AAoA takes time. I wish I knew that twelve years ago when I was buying a brand new car (around $20,000). At the time, I had a handful of "junk cards" with utilization of $1400 on around $1500 available credit. My payment history at that point wasn't bad and I wish someone would have told me:

"Hey, take a thousand of what you plan on paying as your down payment, pay off your cards, come back in a month after all the CC statements hit your reports and you'll save a hundred dollars a month on your car payment and thousands in interest over the lifetime of the loan. You probably won't even need to make a down payment since your credit score will be much higher and you're trading your old car in."

Of course, no one told me that(least of all the car dealership who wanted the sale THAT DAY). As a result, I had a repo as opposed to paying it off early. So I learned the Utilization Lesson the hard way...

Another good thing about the four cards I have now is that the four cards seem to have staggered statement dates. (around the 7th, 14th, 21st, and 28th). That wasn't deliberate on my part, but it works in my favor(especially since I get paid weekly). I'll be able to plan when to use the cards to maximize the rewards(ie. I can get gas BEFORE I make a payment on my BoA card to get it down to a desireable utilization and then again AFTER the statement hits). I'm sure somewhere along the way, I'll miss a few reward points from not being able to use the "right" card during it's "do not use" time, but eventually I'll get it down to a science.
In my Wallet:
  • Amex PRG NPSL[3-14, bd 91]
  • Sallie Mae MC $8000[1-14]
  • Chase Freedom $4700[1-14]
  • Discover It $2750[8-13]
  • BoA UCF Alumni Cash Rewards $5000 [3-15]
Sometimes in my Wallet:
  • GM BuyPower WEMC $5000[9-14]
  • Wells Fargo Propel 365 Amex $7000[4-14]
  • Barclaycard Arrival WEMC $7000[3-14]
  • BoA Better Balance $3000[2-15]
In my sockdrawer: Amex BCE $1000[10-13, bd 91], OCCU Duck $10000 [11-13], The Sportsman's Guide Visa $8000[8-14], Chase Slate $4000 [9-14]Delta Gold Amex $2000 [2-15 bd 91], Diners Club MC $20000 [10-14] Commerce Bank Visa $2000 [3-15] Citi Double Cash $1000 [3-15]
Total CL: $90450

Robrus1
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Postby Robrus1 » Mon Aug 26, 2013 9:15 am

12 months of on time payments on the BofA secured card should unsecure it. You can get a CLI at that point, but it'll probably cost you a HP. If you plan on keeping/using that card, perhaps it'd be worth it. If not, save your HP for something else.
Amex Platinum
Amex BCP 21K
Amex SPG 5K
Barclaycard Arrival Plus WEMC 5K
Chase Sapphire Preferred 23.5K
Credit Union 10K
Discover IT 7.75K

SClay
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Location: South USA

Postby SClay » Mon Aug 26, 2013 9:17 am

Those statement dates are awesome! Sounds like your plan is perfect :)
Capital One Secured AU | $1851 | 10/2013
Capital One Journey | $1000 | 03/03/2016
American Express Delta Gold | Denied | 03/13/2016
Citi Bank Double Cash | $1000 | 03/13/2016
Chase Amazon Visa | Pending | 03/13/2016

takeshi
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Postby takeshi » Mon Aug 26, 2013 9:19 am

SClay wrote:If you have 70% utilization on all your cards, it won't matter that much if you pay it off in full each month because it will signal to lenders that you are higher risk. That being said, your ideal limits on your cards should be:

OP indicates that PIF'ing will be done prior to statement date so 0 balances should report. That is, unless one or more of the cards doesn't report on the statement date but IIRC that's not as common.

nitrov
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Postby nitrov » Mon Sep 09, 2013 10:19 pm

Hi Otter,

How long have you had these cards open? I had a Cap1 Platinum I that they gave me at a $500 limit, did the "steps" thing and they gave me $750 after the 6 months. I just asked for an increase and went to the EO and got a $2000 limit after about a year and a half.

How's Barclay? I was thinking about opening one but didn't know if the CL would be worth it for me to do the inquiry. Do you know your score at the time they issued the Barclay?

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otter
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Location: Grand Forks, ND

Postby otter » Tue Sep 10, 2013 7:10 am

nitrov wrote:Hi Otter,

How long have you had these cards open? I had a Cap1 Platinum I that they gave me at a $500 limit, did the "steps" thing and they gave me $750 after the 6 months. I just asked for an increase and went to the EO and got a $2000 limit after about a year and a half.

How's Barclay? I was thinking about opening one but didn't know if the CL would be worth it for me to do the inquiry. Do you know your score at the time they issued the Barclay?


I've opened all my cards in the past month or two. I think I took a calculated risk by opening up so many cards at once, but I figured the two most important components of the FICO score(history & utilization) I could easily control since I have a blank slate. The average age is going to be close to zero right now, anyway whether I have 1, 2, 5 or 100 cards so why not have five instead of one and five years from now I'll have five "oldest" cards rather than just one. The scores shown below are with four or five accounts already showing so I should still see a small decrease in my score in the short term in the next couple of months. but I shouldn't go below 690 as long as I don't miss payments and keep utilization below 20%.

My Barclaycard has the highest limit of all my cards and I hear they are okay with CLI's. The one thing I have heard about Barclay is that they get nervous in the first six months so it's a good idea not to max out the card, apply for too many cards, and avoid calling customer service in the first six months(or do anything which will cause them to think you are acting suspicious.
In my Wallet:
  • Amex PRG NPSL[3-14, bd 91]
  • Sallie Mae MC $8000[1-14]
  • Chase Freedom $4700[1-14]
  • Discover It $2750[8-13]
  • BoA UCF Alumni Cash Rewards $5000 [3-15]
Sometimes in my Wallet:
  • GM BuyPower WEMC $5000[9-14]
  • Wells Fargo Propel 365 Amex $7000[4-14]
  • Barclaycard Arrival WEMC $7000[3-14]
  • BoA Better Balance $3000[2-15]
In my sockdrawer: Amex BCE $1000[10-13, bd 91], OCCU Duck $10000 [11-13], The Sportsman's Guide Visa $8000[8-14], Chase Slate $4000 [9-14]Delta Gold Amex $2000 [2-15 bd 91], Diners Club MC $20000 [10-14] Commerce Bank Visa $2000 [3-15] Citi Double Cash $1000 [3-15]
Total CL: $90450



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