Setting Realistic Expectations

[MasonK]

I see a ton of people who started rebuilding with one secured card and now have lines over $50k. So here's my question- what is a realistic expectation for growing my credit? I understand that YMMV and there are a ton of factors and variables, but what are your experiences?

I see people talking about SP CLIs every month, but I've never hit the button. Is that really the best route? I'm not worried about overspending on high limits because I have developed discipline of budgets. Should I use the cards for everything? Should I use the only a little and pay cash for the rest? 

Here's my current (and probably poorly conceived strategy):

Use my Cap One ($2k) and Discover IT ($1.8k) for everything. Pay them at the ~$300-$350 range when I get there, and always pay it off before the statement cuts; minor purchases can carry on the statement, but not more than 10% of the limit. Is this a good strategy to rebuild on? 

[iheartwings]

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@MasonK wrote:

I see a ton of people who started rebuilding with one secured card and now have lines over $50k. So here's my question- what is a realistic expectation for growing my credit? I understand that YMMV and there are a ton of factors and variables, but what are your experiences?

I see people talking about SP CLIs every month, but I've never hit the button. Is that really the best route? I'm not worried about overspending on high limits because I have developed discipline of budgets. Should I use the cards for everything? Should I use the only a little and pay cash for the rest? 

Here's my current (and probably poorly conceived strategy):

Use my Cap One ($2k) and Discover IT ($1.8k) for everything. Pay them at the ~$300-$350 range when I get there, and always pay it off before the statement cuts; minor purchases can carry on the statement, but not more than 10% of the limit. Is this a good strategy to rebuild on? 

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Welcome, MasonK!

There is a wealth of information here, and as you recognize, everything is YMMV. Also, there isn't necesarily one right path to rebuilding. Many folks (including me!) will have opinions regarding your questions.

For me, I found these forums relatively late in my rebuilding (really becoming more active in the forums about 7 years after I filed for BK7). 

What I would first recommend is that you think about what your credit goals are. They don't have to be specific, but they shouldn't be so broad as to leave you without a general framework to rebuild your credit. Many folks here want better credit to buy a house, refinance debt, etc., etc., etc. For me, I wanted to rebuild to eventually buy a house, but my goals have changed in that I chose to refinance my student loan debt in order to pay it off faster, rather than assume additional debt with a mortgage. My credit is at a point where I can usually get approved with mostly favorable terms. Now, my goal is to try to continue to improve my scores.

When you think about rebuilding, think about the factors that go into credit scoring. Paying your bills on time is the big one. AAoA is another, as is having a healthy credit mix. As for CLIs, that will help your utilization. 

Keeping those in mind, your current strategy involves two credit cards. If you have other credit obligations, you should so also let us know what they are.  You may have seen in the forums that a good mix of credit would involve 3 CC (with 1 reporting a small balance, resulting in total utilzation of less than 9%) and an installment loan (search for Share Secure Loan). 

As for CLIs, you can request CLIs on both your C1 and Discover cards without incurring HPs. That will help pad your utilization. Just remember, utilization has no memory.

I would also recommend that you check out the Rebuilding Your Credit and Understanding FICO Scoring forums.

Hope that helps.

[MasonK]

Thank you for the information! 

My goal is a house as soon as possible on favorable terms. I will not go down the road I took at the top of the bubble in 2006. That took me to foreclosure in 2014 and contributed to my financial ruin.

I have 2 small student loans open @ $1800 on 2.65% ($80 total interest life of loan) and $5500 @ 3.86% ($1k total interest life of loan). I have no other outstanding debt. I've looked at the tables for the larger student loan and I don't see the utility in paying $3k in extra payments to recoup $500 in interest over the shortened term. Plus, I'm thinking that the more on-time payments I log the better my report will look rather than paying it off faster. If that is not a smart strategy, I am well positioned to pay off faster, but I am a big believer in the time-value of money and $3k now is better than $500 later unless there is credit scoring at stake.

[yfan]

Your credit limits are a result of a few factors: your credit history, your income, and a particular lenders' risk exposure policies, for starters. This means that some lenders are more sensitive than others to your applications for credit from other lenders, some lenders are more generous with credit lines, while others may be more favorable on rates and rewards. So what you can grow to is really not up to anyone else to say.

I should mention here though that while it is nice to have large lines and rewards on credit cards,  the main purpose of using credit cards responsibly is to reduce the interest you pay on the much bigger loans in life. Mortgages and HELOCs, car loans, student loans (or student loan refinancing), and the like. Build your credit responsibly and patiently and you can save more money on these loans in just a year than even the most generous credit card rewards can give you.

[Anonymous]

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@MasonK wrote:

I see a ton of people who started rebuilding with one secured card and now have lines over $50k. So here's my question- what is a realistic expectation for growing my credit? I understand that YMMV and there are a ton of factors and variables, but what are your experiences?

I see people talking about SP CLIs every month, but I've never hit the button. Is that really the best route? I'm not worried about overspending on high limits because I have developed discipline of budgets. Should I use the cards for everything? Should I use the only a little and pay cash for the rest? 

Here's my current (and probably poorly conceived strategy):

Use my Cap One ($2k) and Discover IT ($1.8k) for everything. Pay them at the ~$300-$350 range when I get there, and always pay it off before the statement cuts; minor purchases can carry on the statement, but not more than 10% of the limit. Is this a good strategy to rebuild on? 

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Don't PIF before the statement. Pay down to 1%. Reporting at 1% is gold. I switch between my two cards as to not put anything on them for the 4-5 days before the statement so I can control this exactly. I started building 8 months ago now (Though the first couple months with my Disco I allowed some ~20% utils to report as I was still learning). Just look at my siggy now though. Part-time income, full-time student.

And if you have the discipline (like I do too with budgets), then why wouldn't you want to earn cash back on everything?

[Kforce]

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@yfan wrote:

Your credit limits are a result of a few factors: your credit history, your income, and a particular lenders' risk exposure policies, for starters. This means that some lenders are more sensitive than others to your applications for credit from other lenders, some lenders are more generous with credit lines, while others may be more favorable on rates and rewards. So what you can grow to is really not up to anyone else to say.

I should mention here though that while it is nice to have large lines and rewards on credit cards,  the main purpose of using credit cards responsibly is to reduce the interest you pay on the much bigger loans in life. Mortgages and HELOCs, car loans, student loans (or student loan refinancing), and the like. Build your credit responsibly and patiently and you can save more money on these loans in just a year than even the most generous credit card rewards can give you.

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 +100 %

You need to pay on time and be patient.

You can't speed up time, and if you could, would just get old sooner.

No need to get a lot of cards or worry about CLi's.

You can control Util at the time you need to take out a loan.

The longer your history of paying, and age of CC the better. (Patience)

[Chris679]

I think your strategy is solid. I use CC for all purchases for a few reasons. Rewards and purchase protection being the big ones. Cash is overrated, can get lost, stolen, can't track the spending, etc.

[Anonymous]

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@MasonK wrote:

I see a ton of people who started rebuilding with one secured card and now have lines over $50k. So here's my question- what is a realistic expectation for growing my credit? I understand that YMMV and there are a ton of factors and variables, but what are your experiences?

I see people talking about SP CLIs every month, but I've never hit the button. Is that really the best route? I'm not worried about overspending on high limits because I have developed discipline of budgets. Should I use the cards for everything? Should I use the only a little and pay cash for the rest? 

Here's my current (and probably poorly conceived strategy):

Use my Cap One ($2k) and Discover IT ($1.8k) for everything. Pay them at the ~$300-$350 range when I get there, and always pay it off before the statement cuts; minor purchases can carry on the statement, but not more than 10% of the limit. Is this a good strategy to rebuild on? 

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PIF is definitely the way to go, but for maximum FICO score growth you will want to allow 1% on a single card to report each month. For a new builder every little bit helps, trust me. 1.5 years ago my scores were mid/high 600's and I had 1 card, 1 LOC for a total of $1k credit. Now scores are mid 700's and I have exponentially more available credit.

[Anonymous]

I wouldn't worry abou tthe total dollar amount at all...Only have as much credit as you are comfortable with. I am rebuilding now (scores all around 660-670) and have 5 cards and have a combined limit of $10,400. This is probably enough for me, for now. But you may feel differently.

[Anonymous]

Which Cap1 card do you have?