Should I close my loan shark credit cards for a major bank secured credit card?

[money_talks]

lhcole77:

Which one should be at 0 balance? Also, isn't it better from the creditor's perspective that I have a low UTL % rather than a 0 balance? Isn't that showing that I can manage using that credit responsibly? I'm thinking that at a 0 balance they can think I don't use it and just let it sit there.

Also, if my statement closes on the 15th, when should that new information appear on my Credit report? WIll the new info appear on all 3 bureaus at the same time?

[lhcole77]

Either one can be at a zero balance. Anytime you use your card it shows activity. And all of your payments are recorded on your credit report. When applying for new credit this is seen.

Always a good idea to have low utilization when applying for new credit.

Usually takes a few days for credit card companies to report their information to the credit reporting agencies. Sometimes it's instantaneous. From my experience EX reports first, followed by EQ and then TU.

If you subscribe to Credit Karma and credit Sesame you can see when these are getting reported.

[JonStur]

I have 2 FP ( $6 fee ) and Credit One no fee card. I have all prime cards now but keep these strictly to boost my account age, especially considering my recent app spree. Sometimes when rebuilding you have to bite the bullet for a while. 

[Pilotdude]

AAoA is important.  It might be worth the annual fee to keep at least the Credit one card open.  I have an unnatural hatred of FP (because I actually read all their small print lol ).

Can you get into NFCU?  If so...there is a great path for you.   If not perhaps take the secured WF card because its a major bank.  By keeping the Credit One open your AAoA will hit the threshold needed to go unsecured with a major card issuer pretty quickly.

Like another said though, make sure you have the balance on whatever you do close at 0 before you actually shut it down.  Closed accounts do show for several years.

[lhcole77]

+1 Jon and +1 Pilot

Rebuilding credit is an investment. And well worth it.

[money_talks]

Pilotdude wrote: By keeping the Credit One open your AAoA will hit the threshold needed to go unsecured with a major card issuer pretty quickly.

What is this threshold required?

In the thread "Credit Scoring 101" it says 15% of your credit score affects Established History. Is this the same as AAoA? Out of this 15%, how much is based on your oldest account and how much is it based on your AAoA?

Oldest account: 5 years and 1 month (This account was charged off though)

AAoA: 3 years and 5 month

Is my oldest account that is charged off being used in calculating my AAoA? Or does the credit score only take into account AAoA of open and active accounts?

Thanks all!

[tld409]

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@money_talks wrote:

lhcole77:

I am not in school. With an APR of 23.9% and $99 annual fee, what do you suggest to do with the Credit One card with a $650 limit?

Thanks for everyone's replies!

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By chance have you tried CapOne?  I started with them last year (02/12) when I began rebuilding and now I have more than enough prime cards. I began receiving offers from AMEX and Discover about  6 months after opening CapOne.  I would check on CapOne site to see if you pre-qualify. 

[money_talks]

I understand rebuilding credit is an investment, especially at the beginning stage. However, since I am being offered a secured card from a major bank, and looking at the scenario below, should I close both cards? The only drawback I can see in closing both is the credit limit I would lose on the Credit One card of $650.

For example, let's say I keep both my shark cards open for 5 years.

First Premier=$6.50 monthly fee x 60 months = $390 PLUS $45 annual fee x 5 years = $225, total=$615

Credit One=$8.25 monthly fee x 60 months = $495

Total in fees over 5 years = $1,110

Using the example above, is it worth paying +$1,000 in fees in 5 years? If 15% of your credit score is established history, would it have that big of an impact? If I was to close both shark cards today and open a Wells Fargo secured card, I would only lose somewhere between 1-2 years in established history. Thoughts?

I also have this question below if someone can try to answer it, thanks!

Pilotdude wrote: By keeping the Credit One open your AAoA will hit the threshold needed to go unsecured with a major card issuer pretty quickly.

What is this threshold required?

In the thread "Credit Scoring 101" it says 15% of your credit score affects Established History. Is this the same as AAoA? Out of this 15%, how much is based on your oldest account and how much is it based on your AAoA?

Oldest account: 5 years and 1 month (This account was charged off though)

AAoA: 3 years and 5 month

Is my oldest account that is charged off being used in calculating my AAoA? Or does the credit score only take into account AAoA of open and active accounts?

[lhcole77]

Once I qualified for better cards I closed my shark card.

Your AAoA will not take an immediate hit because closed accounts will still report on your CR (up to 10 years).

If you are concerned about established relationship you may want to consider closing the FP now, getting the WF and the closing the Credit One in a year.

That way you will have some time built up on the Credit One if you apply for more credit in a year and your WF card will have built up a solid year as well.

IMHO it will not suit you well in the long run to keep FP and CO open for 5 years with fees like that.

Here is how it worked for me. I got WF in 12/2011, FP in 04/12. By 06/2013 I was able to get AMEX and Citi. So in 07/2013 I closed FP and am keeping WF.

My bet is that you will in 12-18 mos be in good shape to apply for better cards too.

[money_talks]

Apparently some users on this forum have reported that the WF secured card account shows as "Secured" on the credit reports. If I was too close both shark cards (First Premier=secured, Credit One=unsecured), I would only have a secured credit card. Would this affect my credit score? Would future lenders look at this and be less willing to extend me credit? 

EDIT: Found some useful answers to my question above at the thread below. No further answers are requested for the question above. This thread helps.

http://ficoforums.myfico.com/t5/Credit-Cards/WellsFargo-Secured-Card-reports-different/td-p/1495470

lhcole77 wrote: Your AAoA will not take an immediate hit because closed accounts will still report on your CR (up to 10 years).

Does the term "closed accounts" also include charged off acounts? If yes, does this mean even though charged off accounts are baddies on my credit report, they are technically helping my AAoA temporarily until they fall off my credit report? (since the charged off account is the oldest)

After reading on this forum some experiences of other people with the WF secured card, it seems the graduation process evaluation is unknown. People have had good usage of the card but remain ungraduated for up to 4 years. Others report WF advises them to apply for an unsecured card instead of graduating them, which results in a hard inquiry not knowing if they will be approved.

So, now I'm reconsidering even opening the WF secured card. It looks like I should "bite the bullet" as JonStur posted until I get an unsecured card from another major bank with no fees. If I don't open a WF secured card, should I still close my FP card?