Credit Cards

[rabdelr]

I have a question regarding the impact of revolving account credit limits. I am currently rebuilding my credit and want some advice or direcection regarding how my overall credit limit affects my FICO Score. Here are some details regarding my scenario:-

I have one credit card with a 500.00 limit and 1% utilization.

Should i apply for additional cards and keep them at a zero balance to improve my overall limit or stay where i am at since i haven't applied for any credit in the last 12 months.

[Locksley123]

You definitely want to have more than one card, so go ahead and apply for something that you can get. Perhaps a store card like Macy's or Nordstrom. They are generous with credit limits. Capital One is another choice, but they will pull all 3 reports. You can also do a secured card, but it would come with annual fee. 

[haulingthescoreup]

The scoring formula seems to like seeing 3 - 5 cards, maybe 3 bank cards (have Visa, MC, Discover, Amex) logos and a retail card (a store or gas card with NO bank card logo --no Visa, MC, etc.)

It's also pretty smart to diversify your credit these days.

You just have the one card, then? Any open installment/ mortgage credit, etc.?

I would think about what would help your overall financial picture: rewards cards, etc. Do you drive a lot, and a good gas rewards card would help? Are you remodeling, and a home improvement store card would help? --and so forth. Don't just get a card for the sake of getting a card; make it useful to you.

You might want to make one of the bank cards from a credit union. They seem to be far and away the most sensible and relaxed lenders these days. Make another one from one of the Big Boy banks --BofA, Chase, Citi, etc. If you get a store or gas card, read here first to make sure that it's not really a bank card, and get one from a place where you actually shop, and that will reward you with early-bird sales and so forth. Check the issuer of the card: some great stores have dreadful cards, because of the bank that handles them.

Anyway, if you do get additional cards, I would keep only one reporting a balance, and have the others report $0. Do use them, in order to make the issuers happy, but pay them off online lines several days before the statement is due to post, so that it will show a $0 balance. Not only will this help your scores, but it also reassures all your lenders that you're not suddenly going on a mad credit craze, running up balances for some reason that you might not be able to pay off.

You might want to read the FICO High Achievers thread in my siggy. We've collected the positive and negative comments that people get on their score reports in an attempt to paint a picture of the kind of credit consumer that the scoring formulas like.

[rabdelr]

The purpose is strictly to improve my score. I do not have any plans to buy a home or car in the next 3 years.

My TL's are:

HSBC-Orchard Bank no lates CC-500.00 limit opened 03/01/08

US-Direct Loans-Student: Balance 900.00 Current with a 36 month old 60 late

Car Loan(Credit Union)  8200.00/10600.00 - opened 05/01/08 current no lates

BoA-Charge off sent to Collections - 700.00 usd 11/01/05

Cach LLC(BoA Coll) - Paid in Full 04/01/08

Score 03/01/08- 562

Current 03/16/09- EQ: 665 EX: 669 TU: ???

[haulingthescoreup]

Does the CU that has your auto loan offer credit cards? Since you have good history with them, and your EQ is decent, I would check them out. That could be a good stepping stone. Once you have six months of clean history with them, along with the Orchard card, I would expect that your scores would have moved up nicely.

Don't go apping for a bunch of stuff now. Your scores are decent, but in this economic climate, I'm afraid that you would get denied by the good banks, and/or offered crappy stuff by others. Get some more revolving history going, keep the new good history diluting the old bad history, and you should be ready to move up to the next level in six months.

(I added that second paragraph because I know that you're going to get flooded with posts about getting this, that, and the other card, lol. I think you'll do better to just get stuff that you'll be happy to have in your wallet twenty years from now, and let time do its healing magic on your credit.)

Good luck!

[Imhotrodcrazy]

While I am new to this forum, I have learned a lot in a short time.  I just wanted to pass this info along to you.  I just got a secured cc from CCCU, ( Christian Communities Credit Union), and got a 10.9% FIXED interest and NO annual fee.  I thought this was a great offer.  Good luck to you.