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@icyhot wrote:
A little backstory. My mom used to be TERRIBLE with credit. so many delinquent and collection accounts. She was in the low 400s. We started cleaning up her reports and got her approved for 2 $300 limit Cap One cards and a $300 limit Kohls card. She was an AU on my CSP, Venture (that I've closed) and Macy's (that I closed) but since the accounts are closed an I downgraded the CSP she's not on. She's an AU on my AAdvantage account which she spends on and pays on. She was 60 days late on her 3 personal cards and finally paid the balances to zero when she got her taxes. She plans on using the C1 cards responsibly and paying them off as a debit card so she can get a limit increase. She also wants her own Macy's card. My first thought was to transfer the credit line from my BofA cash to a BBR and transfer the AAdvantage balance and close it, but I figure why close out a perfectly good almost year old account JUST to get rid of the balance. She's the one that'll be paying the interest and annual fee, not me. Once she pays it off, I'll figure out what to do with it. Yes I know I shouldn't let an AU run up my UTL but this is why I'm diligent about not overspending or running up balances on my end so I have some cushion. Her scores are in the low 500s and should go up after the C1 cards report the payoff. The other things dragging her scores are some collections that she's just gonna let fall off. My question is about how long until she could get an increase on her Cap 1 cards after she uses them correctly. She obviously never got her credit steps. And what are her chances for a Macy's, if any?
Used to be terrible? Sounds like she still is (not trying to be rude, but she was 60 days late on $300 limit cards...).
She should sock drawer the C1 accounts for a few months and build up some cash reserves.
IMO your mom should avoid CC's.. You are a good son letting her use yours, just keep a close eye on them as by your own admission she doesn't appear to be very financial savoy on her finances and would hate for you to get hit with her bad habits that seem to continue from what you stated.
Your mom does not sound like someone who needs to be using credit, tbh.
It sounds like she's made some progress but still has a ways to go before she's consistently exercising good financial habits. To be honest at this point I don't think access to more credit is in her best interest. I think she should use and manage the $300 Cap 1 cards for a good bit longer, get the hang of consistently not missing payments or maxing them out, then if she wants/needs to maybe apply for something else, but not right away. I'd say give it 12-18 months to let good financial habits sink in with these lower limit cards.
I also agree that building up a cash reserve is crucial for her.
I'd personally suggest trying to get her to establish a really fixed system of managing and paying her cards on time, with plenty of wiggle room and fail safes built into it. Maybe fixed days to make payments that are weeks ahead of her due dates, daily logins to track balances, perhaps a special checking account earmarked only for paying credit card bills with at least the full credit limit in reserve that she pays back as soon as she makes a payment, that type of thing.
Short answer though, now that she's paid off her cards I think what's next should be keeping them paid off and using them responsibly for a good long time before going any further.
Anyway best of luck!