Thread: The New Guy, His Mediocre Credit, and Your Advice

Mediocre credit. I'm looking for what I can do better, or what else I can do that I might be overlooking. So I'm looking for your advice.

• FICO (myFICO): 668
• Experian PLUS score: 645
• Credit Karma: 599

History...Unemployment in 2007-2008 resulted in:

• 3 @ Past Due 60+ (last 2+ yrs ago)
• 4 @ derogs (CO, collections, settle)

Current:

• Oldest account: 11+ years (closed Discover that still reports open and pays as agreed)
• Average age: 4 years
• Utilization: < 10% (intentionally)
  
• 4 cards; Never carry a balance.
  
• One car note @ $25K balance (~6 months old -- subprime, booooo).

To work on rebuilding...

1. Got an Orchard Bank unsecured at $500. About 9 months old. Due for CLI in Dec (dunno how much).
   
2. Got a Capital One Platinum (mediocre). Limit $500. Due CLI next month as part of their credit steps.
   
3. Got a Discover More at $1000. About 6 months old. Requested CLI of just $500, which was granted so $1500 limit now.
   
4. So...doin' ok so far. Decided to apply for a Chase rewards...denied. Called and asked for a recon and they were like no, pfft. They were one of my previous charge-offs, so that makes sense. Since I had the hard inquiry, applied for a couple more mediocre cards (this and the car shopping give me 7 hard inquiries)...denied, except for...
   
5. HSBC. Dunno how much the limit is -- still not here yet.
   
6. AMEX Gold PR. That was on a whim and didn't expect it to actually be approved (and find it weird since so many mediocre cards are declined). I plan for sure to keep this account long-term, I think I can work this and the Discover to make the rewards worthwhile. My salary is under $50K annually, so I don't do much in the way of disposable spending.

I plan to keep my utilization relatively low (at least under 20%) and pay off balances each month. The AMEX and Discover will get the most use. I'm tentatively planning to run cell, utilities, car payment, and other recurring bills like insurance through the AMEX. And swap back and forth between AMEX and Discover for some spending (gas, groceries, etc.). A part of me also thinks the benefits that come with a credit card are preferable to just continuing to always use my debit.

The other cards...well, they're mediocre. I don't necessarily desire to keep them, save for keeping the total credit number up and help keep utilization down. Plus I figure I should have at least one Mastercard, for acceptance.

So...what can I do to better my credit situation? I'd like to improve it to the point where I don't have to settle for mediocre cards in the future, where I can get good rates on loans, and when I reach the point in my life where I'm ready to buy a house I can get a decent rate on that too. I know it won't be quick, but I'd hate to spend 5 years runnin' down the wrong path.

well first of all do you live home with your parents or do you have your own condo, rent an apartment? you mentioned you closed your Discover card 11 years ago, but you have a Discover and American express, both cards you will alternate. 1500 limit on your Discover. this is where i'm confused. do you have a Discover or is it closed it out?

If you do have it I would recommend spending 100 to 200 a month and pay your bills in full. since you're under 50,000 a year, no reason to charge 500 a month keep your bills down.

I see you have a capital1 platinum wuth500 limit. this card should be used for small purchases a good monthly statement would be 50 bucks to 100.

the only thing I can suggest is to pay your bills in full. since you have 4 cards alternating is good.
when you think the time is right cancel the cards that you call mediocre, don't apply for any other cards for a couple of years. you will then have better credit, higher credit limits on your other cards. then if you want 2 better cards, that's up to you.

Originally Posted by Money card

well first of all do you live home with your parents or do you have your own condo, rent an apartment?

I rent. Rent itself is about 36% of my monthly (after tax) income, so I plan to find a cheaper place (at about 25%) to save a few bucks. Among other things.

Originally Posted by Money card

you mentioned you closed your Discover card 11 years ago, but you have a Discover and American express, both cards you will alternate. 1500 limit on your Discover. this is where i'm confused. do you have a Discover or is it closed it out?

I had a Discover card about 11 years ago and closed that. I have a (different) Discover card now. If only they backdated.

Originally Posted by Money card

If you do have it I would recommend spending 100 to 200 a month and pay your bills in full. since you're under 50,000 a year, no reason to charge 500 a month keep your bills down.

I see you have a capital1 platinum wuth500 limit. this card should be used for small purchases a good monthly statement would be 50 bucks to 100.

That's about where I keep the spending now. For the smaller limit cards it's trickier since even a tank of gas puts those above 10% utilization. lol

Originally Posted by Money card

the only thing I can suggest is to pay your bills in full. since you have 4 cards alternating is good.
when you think the time is right cancel the cards that you call mediocre, don't apply for any other cards for a couple of years. you will then have better credit, higher credit limits on your other cards. then if you want 2 better cards, that's up to you.

I'll continue to pay in full. I have no need or desire to carry a balance. And I'll try to resist the urge to apply for cards for awhile (though I do plan to try to refi my car note in about 9 months, to hopefully something less sub-prime).

Presently the only benefit the other two really carry is that they're Mastercard's, and thus accepted more places than AMEX and Discover seem to be. So in time, the hope is to replace those two with a single Mastercard that has a better limit, no annual fees, and potentially carries some benefit of use (prob just cash back -- my needs are simple lol).

Originally Posted by Pete838

You're probably pushing the limit now on having too many inquiries. Cool off with the new applications for at least a few months. For someone with several charge-offs and late pays you are lucky to have what you've already got.

Yes, I do plan to stop with the new apps and I do think I lucked out on getting some of the cards I have. I'm not sure how relevant it is, but I did eventually pay off all debts owed (one settled, the rest in full). Part of the arrangement I had in each of those situations is they'd report pays as agreed...which of course most didn't because I didn't get it in writing.

Originally Posted by Pete838

I would focus on cultivating the cards you already have by paying on time and keeping low balances, then next year try to get your car note out of sub-p and under <10%. $25K @ 10% APR will cost you over $2,500 per year in interest, and sub-p is often >20%, so I would definitely push to increase your FICO and refi the car. That will be much more valuable to you in the long run than adding more plastic to your wallet.

Certainly my desire is to get a better rate on the car. Right now it's at 14.23%. I'm not sure how much I can reasonably expect to see the FICO improve over the next year though with my current low-balance/pay-in-full plan.

I agree with Pete.

Having too many inquiries for credit cards makes you seem desperate for credit.

Put extra payments towards that car note and refi when you can.

Originally Posted by DavidNY

I agree with Pete. Having four cards with small credit lines is worse than one or two credit lines. It makes you seem desperate for credit.

Put extra payments towards that car note and/or refi if you can.

Right now I pay a little extra toward the car, and am trying to see if I can continue to cut living costs and double-down on payments.

At the point I'll have had the car for a year, the more recent inquiries will be about 7 months old. Do you think that'll be so recent as to make it harder to refi? If so, might I improve those chances by holding off on the refi until the inquiries are a year old?

I just went back through my old records and realized I increased my score by about 140 points from this time last year, so it's nice to see the progress. ^.^

For a bit of good news, I emailed an exec from a CC company last night, about the $6K charge-off on a previous card with them asking for a goodwill removal. I lucked-out, and they called today to let me know they were gonna get it removed. So glad...