Re-establishing My Credit After Going Thru Debt Disaster

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Wildcats18AA
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Re-establishing My Credit After Going Thru Debt Disaster

Postby Wildcats18AA » Sat Dec 07, 2013 11:52 am

Hi guys, I am new here and am looking for a few suggestions. To give my back story, I am 36 and am just now coming out of debt hell.

Five years ago, I was $45,000 in debt (on 3 different cards) that was basically destroying my life and had my credit score in the low 600's. I have a yearly salary of 40,000 so I had no wiggle room. I signed up for credit counseling with Incharge, became very disciplined and just paid the last payment in September.

My credit score is now around 740 but I had no open credit because the cards were closed. I only use cash to pay for things now but understand that to purchase a home in 12-18 months I know I need to re-establish credit. The only credit I was able to get (or tried to get) during the process was a car loan for $7500 at 11% interest 2.5 years ago which I just refinanced through my credit union at 2.99%.

In the last two months I have applied for and gotten 3 credit cards...
Credit Union card - $2000 limit
Chase Freedom - $3000 limit
Discover It - $6500 limit

I use my Chase Freedom to pay for gas and budgeted items up to $500 each month and pay off in full. I use my credit union card to pay cell phone each month and pay in full. My question is about my discover card....should I be using that a little bit as well?

I was thinking about paying a couple of other bills with the Discover and then paying off in full each month as well. Would it hurt me to not use it at all? Thinking they would lower my limit if I do not use it. This is not a case of getting myself back into debt, like I said, I only buy what I have money for and am very disciplined about it but want to build up credit limit and open credit available.

Thanks in advance


MemberSince99
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Postby MemberSince99 » Sun Dec 08, 2013 8:13 pm

Use the cards or don't use them as you please. Some of them may close accounts that don't get use for a while (say 6 months or a year) so it's best to get a pack or gum or something every few months or put a small recurring charge on the card.

samhradh
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Postby samhradh » Sun Dec 08, 2013 8:36 pm

Figure out the rewards calendar for the Freedom and Discover, put the relevant spending on each card, and earn your 5% cash back! They both have rewards malls, too. I recently saved over $20 by using Shop Discover to purchase from Backcountry.

I recommended using all of your cards. It's really not hard to balance more than one card: set up e-alerts, pay your balance online before it's due, and then go about your day. In time both Chase and Discover will come to value you as a cardmember and will approve CLI and your AAoA will go up.
Citi Forward ($10.1K), AmEx Blue Cash Everyday ($30K), Chase Freedom ($12.4K), Discover it ($5.5K), Barclaycard Arrival ($12.5K), L.L. Bean Visa ($5K). FICO 806 (TU), 812 (EQ), 806 (EX).

Wildcats18AA
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Postby Wildcats18AA » Sun Dec 08, 2013 9:04 pm

Thanks for the replies, I think I will take that advice and create a use for each card. It has been a long haul to get back to this spot and want to do it right



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