Next Best Step....

[Anonymous]

I wish I discovered this forum two years ago when I started rebuilding my credit.  Two years ago, I got a secured BofA card with a CL of $1500.  It has since graduated with a $2000 CL.  After reading these forum pages, I requested a product change for a WorldPoints MC (am in my 3rd week of waiting for the card.)  I have noticed through applying for other cards that the initial limits are set at $2000.  My understanding is that you need to jump over the $5K CL hurdle to get access to better products.

My March 2009 EQ is 689 and I have some lates and COs due to fall off 2011-2012.  I also have a CapOne card with a $1k limit and a Nordstrom's card with a $2k limit.  I have student loan debt that have been paid off to under $5K.

Which of the following courses of action would make the most sense?

(1) Applying for another secured BofA card with a $10000 limit.

(2) Applying for a secured WellsFargo card with a $10000 limit. (Does having a different credit institution on yoru report help?)

(3) Taking out some sort of installment loan to diversify my credit mix.  Will this help me get a $5K+ limit CC in the future?

(4) Do nothing.  Wait and continue to PIF.

Any other ideas to improve my credit would be greatly appreciated.

Thanks for reading.

[YoungEntrepeneur]

You have a good mix of credit. You don't need anymore cards but if you're going to take on a car loan anytime soon, that would be a nice addition to your reports.

[Anonymous]

Great idea....  I just moved from NYC so the next step should be a car!  But do I need to worry about getting a CC with a $5K+ limit?  Will I hit some kind of a credit score ceiling without that level of revolving credit?

[YoungEntrepeneur]

I always believe that large CL's are a luxury rather than a need. A lot of people get confused and think that if they don't have a large CL's, they can't have good credit. If that was the case, then how would HSBC and banks offering secured cards make profit?

Payment history is the most important factor of having good credit. As long as you keep making your payments on-time and keeping your utilization low, you will see your scores increase.

Also, you have a credit card with BOA. BOA is very generous with increases and right now isn't the best time to expect any CLI's from any lender. Make sure that you keep your BOA account in good standing and they will reward you down the road.

I have a credit card with BOA and it was Student Visa about two years ago. I started off with $700, had it upgraded to WorldPoints a year later with a $1k CL, and now I'm at $4,500. I use the card heavily and make my payments on-time while keeping my balance below 50 percent.

Message Edited by YoungEntrepeneur on 04-01-2009 03:07 PM

[Anonymous]

My goal is to achieve ~750 score within the next 2 years or by the time the negatives fall off.  At which time, I intend to purchase a home and I would also like to maximize my available unsecured credit.  I thought it would make sense to use some of my emergency savings (I will still have 12 months of emergency funds after using $10K to secure a card) to help establish my credibility in managing a high credit line.

So back to my original question....   What is the next best step in repairing my credit?

Thanks!

[haulingthescoreup]

(4) Do nothing, and continue to PIF.

In the current credit climate, you're a lot better to just keep on keeping on, and stay under the radar. I don't think that you'd get great products, not quite yet, and there's no point in cluttering up your reports with more inqs and more $1k - $3k cards.

I'd sit back and wait and see what the whole financial and credit climate looks like in a year.

[Anonymous]

Thanks to both of you for your insights.

I suppose my "counter question" is: would it make sense to get a secured $10K card (not $1K) during this economic climate in an effort to actively rebuild during a time when I couldn't get great products based on my record?  Would a $10K card really clutter my credit report?  Wouldn't a record of managing a $10K card well for the next two years do wonders for my report?

Thanks in advance.  I appreciate your time thinking about my situation.

[haulingthescoreup]

Well, if you can get someone to give you a $10K secured card, sure. And I think a few of our members have had them. You'd think that since the bank has your deposit as collateral that they wouldn't be so shy about giving these out, but you just don't see them that often.

At any rate, handling anything cleanly for two years is good. I don't know that the higher CL will make that much of a difference, but it can't hurt (if you get it.) $1K and $10K are score the same, other than the possible help to your util.

By "clutter" I meant that if you have to apply to multiple lenders before you find one that will let you have the higher-limit card, and you wind up with all their $500 offers.

[Anonymous]

It's been almost two years since I wrote that post.  I was a different person then.  I'm happy to share that my credit score is now 761.  The secured credit cards described in my 2009 posts were the stepping stone to my transformed credit.  Through lots of diligence and patience, I'm finally in complete control of my finances. Thanks to all the moderators for their advice and encouragement!   

[Wolf3]

Does that mean you actually got the $10K secured cards?