One or two credit cards for rebuilding?

Anonymous · ‎01-13-2010

Hi, I am new to the whole credit rebuild process. I currently have no credit cards. I can get an Orchard Bank and a First Premier Bank card. Should I get just one or should I go ahead and get both. I am finally at a point in my life where I make good money, so I will not have any late payments. Looking to buy a house in 2 years. I have student loans and some collections that I am working to remove. I have a few old accounts but they will hopefully all drop off in the next 18 months. Thank you.

Anonymous · ‎01-13-2010

I am sure this will be a much debated thread as each has his own opinions. Just remember while reading my suggestion this is how it worked for me.

I started rebuilding also and first got a Credit One Bank card. I saw a score increase when it posted. I had no open credit card accounts at the time just two old charge offs. I then added a householdbank mastercard and when it hit I saw a score increase. I decided to get a third as I wanted a Best Buy Reward Zone Mastercard. When it posted to the bureaus I lost a few points I think it was 8 points off the top of my head.

So for me for the instant boost two was the magic number. I am not worried about instant boost I am focusing on 1.5-2 years out so I wanted a few all reporting good tradelines so it will look good in two years.

I even then added a Kays Jeweler card and a Jared card. They havent posted to my reports yet but I am sure I will take a hit. So for me in two years when all 5 cards are reporting 2 years of good payment history I am sure it will look good. But adding 5 points I did take a hit in the initial part and added alot of inquiries.

Based on that I would say 2 cards is a good way to go. Better than just 1 anyway.

And if I may offer some personal advice avoid First Premier. Consider checking out household bank or credit one bank. The household bank card is better if you can qualify but credit one is definately better than first premier. They dont charge all of the fees first premier does but they do currently charge to pay by phone although when the new credit card act takes effect I dont think they will be allowed to charge for standard phone payments.

The household bank application is a soft inquiry so it doesnt affect your score. You put in all your information and they pre-qualify you for cards. If they give you any offers you want you then hit apply for card and they do the hard inquiry which shows on your credit bureau. They are the same company that owns Orchard Bank and some people say you can only have 1 card by them however I have two by them no problem and both were instant online approvals. The link to that is https://www.hsbcapply.com/start/householdbank?media=D5IM102MAX0909000988HPHHB&WT.ac=CRS_IM000988&sku....

So I would say two cards and consider household and credit one bank before apping for first premier.

Anonymous · ‎01-13-2010

Both of the cards you mention are reasonable options.

IMO, Orchard is better than FP because is has lower fees and APR, plus it will over time provide a higher CL than will FP or Credit One.

ALTERNATE CONSIDERION: You mentioned you "make good money now." That's great. And you can use that to turbo charge your rebuild of credit. I HIGHLY suggest you open an account with a good Credit Union that offers secured credit cards, personal loans and even "credit builder loans."

While Orchard and others are a CC, they have a very limited use that will plateau in about 2 to 3 years. They will continue to charge an AF and will not increase your CL. It is very rare for Orchard accounts to go above $1000 CL even after credit is rebuilt and pristine, and the other builders tend to stay much lower.

On the other hand, a Credit Union will grow with you and eventually "graduate" the secured card. Plus you can get a higher initial CL by depositing more savings. After your credit is established with the CC, the Credit Union is very likely to consider you for auto loans, mortgages, LOC, etc. You will have a solid "financial relationship" with a full service institution that wants you to succeed, not just take advantage of your current predicament.

You can do all of the above as well. Go with Orchard and possible another builder card, plus go with a secured Credit Union CC.

That's my opinion on the subject. Good luck.

Anonymous · ‎01-13-2010

I'm with okstatefan on the First Premiere - would definitely avoid them like the plague.

I really liked my Orchard card for rebuilding. It started at $500 and grew to $700. When it was less than a year old, I received a pre-approval from Juniper for a no Annual Fee card ($1200 CL), which I app'd for and received. I closed Orchard at that point, before being hit with a second AF from them. (Orchard did waive half of that second annual fee, though, so it wouldn't have been awful to keep open).

The whole Orchard HSBC allowable number of cards is confusing. Having my Orchard open, HSBC refused to give me a second card because they wanted 18 months between new cards. However, I believe if you open HSBC first, you can add an Orchard. There's a few posts on this in the past.

For FICO scoring purposes, they are definitely looking for at least one bank/national cc revolving account. So, the Orchard or HSBC cards qualify for that. And, as I frequently post, DH had an 804 with only one card (his Orchard at $500 CL) reporting. In the past year since he opened Orchard, he's opened several additional cards with some pretty healthy CL's, so his Orchard is now closed. It did its work as a rebuilder.

You're fine with one card. If you'd like two, wait for a good offer on a second card you won't have to pay fees for.

I really liked Orchard. Very easy to work with, easy to pay online, and you can pay more than you owe -- which makes managing very easy, you don't have to wait for something to post before you can pay it off.

Good luck!

NinComPoop · ‎01-13-2010

I have experience with First Premier and Household Bank (same as Orchard). My personal dealings have been fine with both of these companies. Never had any problems with either, but I would not recommend First Premier because they charge lots of fees to do business with them. I knew about the fees going into getting their card, but applied anyway because I thought I did not have any other options.

Household has been very easy to deal with and haven't charged many fees other than a $59 annual. The only thing I don't like about them is the small credit line of $500. It started out as $300 but that's just not enough spending power. I'm going to close the card soon, but haven't had any complaints with their service. There has never been any reason to speak with them other than requesting they increase my credit line.

I agree with txjohn about the credit union card. If you are able to join one that offers a secured option you might as well take it. If you're making good money now open a secured savings account so you can decide how much your credit line will be based on how much you deposit. You'll get the deposit back (usually with interest) and keep the established credit line after 1 year of on-time payments. You may get a credit line increase after the year is up. First Premier's credit line may start at $300, but charge you $250 in fees to open it along with a monthly fee. It's not worth it.

Jazzzy · ‎01-13-2010

@NinComPoop wrote:
I have experience with First Premier and Household Bank (same as Orchard). My personal dealings have been fine with both of these companies. Never had any problems with either, but I would not recommend First Premier because they charge lots of fees to do business with them. I knew about the fees going into getting their card, but applied anyway because I thought I did not have any other options.

Household has been very easy to deal with and haven't charged many fees other than a $59 annual. The only thing I don't like about them is the small credit line of $500. It started out as $300 but that's just not enough spending power. I'm going to close the card soon, but haven't had any complaints with their service. There has never been any reason to speak with them other than requesting they increase my credit line.

I agree with txjohn about the credit union card. If you are able to join one that offers a secured option you might as well take it. If you're making good money now open a secured savings account so you can decide how much your credit line will be based on how much you deposit. You'll get the deposit back (usually with interest) and keep the established credit line after 1 year of on-time payments. You may get a credit line increase after the year is up. First Premier's credit line may start at $300, but charge you $250 in fees to open it along with a monthly fee. It's not worth it.

I also agree with txjohn about trying a credit union first. The nice part is that you can sit down with someone with a copy of your credit report in hand. They will likely be able to tell you if they think you will get the card. They will still pull a hard inquiry if you go ahead, but at least it shouldn't be a wasted one.

Also, if you end up having to apply for one of the high-fee cards (like First Premier), it might be better to wait until the new credit card law goes into effect towards the end of February. There are new rules on the fees they can charge you. They will make this up with a higher interest rate...but interest rate only costs you money if you revolve a balance.

Anonymous · ‎01-13-2010

Also consider local banks. If you do go the CU route (our local CU was slow to give us a CC - very conservative), remember to make sure they report to all 3 CRA's; and make sure you have at least one bank/national CC for FICO scoring purposes - CU's are coded differently and don't carry the FICO weight of a bank.

DH got his first high CL from Alliant CU. But Alliant (and our local CU) only report to EQ and EX.

Also consider Cabela's. They are a bank card! You didn't post your scores - but a little searching will help you know if you may qualify for them. They're one of my favorites - extremely easy to use & we like Cabela's points.

Anonymous · ‎01-13-2010

Thanks for everyone's quick, informed responses! This community is a great place!! My scores are EQ-539 and TU-595. From 11/08 to 1/10, my TU rose from 503 to 595, and i didn't really do anything but pay off collections as they came up (too bad i didn't find this forum before i did that!!!) and ALOT of things fell off my report, which i guess would raise my score some. I think what I will end up doing is getting an Orchard card and keep baying that bad boy off every month. I do have another question. What is a good amount to put on a card to pay off every month to boost my credit? I'm assuming you can't put $5 on there and have that do anything. I was thinking about just using it for gas (approx $80 a month). Then, from reading on here, i want to pay it off before the statement date, correct? Then after maybe 6 months to a year of cleaning up my report more and paying the credit card, I'll see if i can get a better card. Sorry this was so long!!! I really appreciate everyone's help.

Ryan