What's my play here. Get a new card? Hold and keep paying?

[Anonymous]

So while I was in school I messed up my credit badly. I had three cards: a discover, a capital one, and something else. Ran out of student loan money so I ran up the balances and didn't pay. All three card issuers cancelled the cards. One I just paid outright and it was closed (~$800). The discover I opted for a zero interest payment plan to pay the full balance ($2500). The cap one they just let me keep making payments despite the account being "closed" (they said it would close at zero balance).  

I just finished up making like 2.5 years of on-time payments on the discover and that is now paid off. The capital one balance is down to about $200 because I paid a lump sum and have been making the minimum payments + ~25% in an effort to strengthen the credit history (all capital one payments are being reported to the credit agencies and the account is still displaying my original CL of $2000 with no mention of closure) and keep from hitting a zero balance to avoid the card closing automatically. 

So out of those three cards, two have been paid off, lots of on-time payments for the discover/cap one, and the cap one is still open with a nominal balance. 

In Nov 2010 I got a starter unsecured card from Orchard bank w/ a CL of $300. Put a small balance on it (coffee, etc.) and pay on time every month. In December 2010 Cap One gave me a second card w/ a CL of $1000, which bumped to $1500 after 6 months of on-time payments (no further bumps). In probably July 2011 GM preapproved me for $2500 CL so I took it. 

So now I have four cards: the original cap one I cannot use w/ a low balance (10% utilization) and the other three that have about 1/4 to 1/3 utilization. 

What's my play here? I'd like to buy a house in the next couple years so I've been working on strengthening my credit. I haven't applied for anything so I have no hard pulls. Should I apply for something to add to my total CL? Should I just stay the course and keep building a good history? Orchard has made it clear that my CL would never go up. Cap One said they would review occasionally. 

I think my biggest issue is a charge off from verizon for a modem they said I didn't return like 6 years ago (which is my only charge off type thing), but the credit reports say that is scheduled to drop off this summer so I'm assuming that dropping off will really help. 

[boomhower]

Were all the cards paid in full?  Are there any late payments showing?  If the only derog you have is the verizon thing you should be fine.  Pull your EQ score here and see where you stand.  We really can't give any recommendations without knowing where your score stands.  But yes, you do need some tradelines. 

[Crashem]

First off, play the 0 balance on all cards but one at 1-9% util thing. Remember this is reported util which means you can use cards but you need them to report to credit bureaus what you want them to. If you can't afford to do so or when you have done the above, get us a fico score. Also you might want to ask your creditors for good will deletions or removals of negative comments. Once we have your fico, we will have better advice for you

[Anonymous]

Okay, thanks for the suggestion. I pulled my EQ score from this site and it is 672, which is really surprising to me as I thought it would be much lower.

Paid the cards in full (with the exception of the Cap One) and the only late payments showing are from late 08 early 09. Otherwise everything more recent is on time and above minimum. 

[Crashem]

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@Anonymous wrote:

Okay, thanks for the suggestion. I pulled my EQ score from this site and it is 672, which is really surprising to me as I thought it would be much lower.

Paid the cards in full (with the exception of the Cap One) and the only late payments showing are from late 08 early 09. Otherwise everything more recent is on time and above minimum. 

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Make sure you understand about utilization. Get that going. And when ideal, get that fico. My guess is that you will be close 700. If you wait for that co to fall off and keep at those goodwills until those negatives are gone, you are golden. You definitely need to upgrade your cards. The util thing should move you to new set of cards. If you wait till Gw work and co falls off, you can get almost any card, but it will take a few months. Of course any new cards will quickly lower your aaoa and take inquiries which will lower your score. So personal choice of get less optimal cards in near future or more optimal cards in 3-6 months. Btw, any of the Amex charge cards fit your lifestyle? Love the backdating on them to help with future credit management.

[Anonymous]

Okay I'll do some reading up on utilization. Looks like that co drops off in August 2012, so a few more months away. 

When you say to keep up those goodwills, do you mean keep paying on time until the negatives fall off the end of my report? 

I'd definitely prefer more optimal cards in 3-6 mos. I use credit cards almost never, just for basic things like car rentals and putting coffee or something on to get a balance. So it's not important to me to have a nice card right this second. 

So, keep making payments, lower utilization, and then when that co drops off in August (hopefully EQ will be 700+ by then?), apply for a better card (like an AMEX, or...?)? That sound about right?

In the meantime I'll look into getting some past negatives removed by calling the cc companies. 

[crunching_numbers]

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@Anonymous wrote:

Okay I'll do some reading up on utilization. Looks like that co drops off in August 2012, so a few more months away. 

When you say to keep up those goodwills, do you mean keep paying on time until the negatives fall off the end of my report? 

I'd definitely prefer more optimal cards in 3-6 mos. I use credit cards almost never, just for basic things like car rentals and putting coffee or something on to get a balance. So it's not important to me to have a nice card right this second. 

So, keep making payments, lower utilization, and then when that co drops off in August (hopefully EQ will be 700+ by then?), apply for a better card (like an AMEX, or...?)? That sound about right?

In the meantime I'll look into getting some past negatives removed by calling the cc companies. 

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Goodwills are where you WRITE to the CC company and nicely explain that you are completely responsible with your credit these days, and you have been oh so good recently and beg them to remove the bad info because it was not typical behavior for you. There are example letters here on the myFICO site.

Don't call, write. If you spend some time lurking in the threads here, you will get how the util% works and how and when to write a GW letter. Also, if the CO falls off in AUG, that is pretty soon. Maybe just hold tight on that for a few months.

[Anonymous]

Will do! I've actually read a bit about GW letters and think I can make a pretty good case for a couple cards. i.e. Fell delinquent because was a student in school w/out a job, but then made 30+ consecutive on-time, over-minimum payments and paid everything off in full without settlement. 

I'll probably just wait on the verizon CO thing as it's just a few months away and they weren't responsive over the years. Really irks me though because I did return the modem, but even as late as this past December when moving into a new place, I got denied for no-deposit electricity because there was a charge-off on my account history. Had to put down a $150 deposit to get electricity hooked up for some minor mistake someone made six years ago. 

[Anonymous]

Okay, called all CC companies (Cap1, HSBC, Orchard) and didn't have any luck with CLIs except Orchard, which only increased me from $300 to $400. Sent out GW letters to my installment account w/ negatives and my closed card with my most recent negative (30 days late, June 2011)/the worst negatives (a couple 30 days late, a couple 60 days late). Installment account replied that I could dispute, so no luck there, but my other closed card allowed me to delete the tradeline. That deletion of tradeline decreased my AAoA a little, but now my most recent negative is early 2010 (30 days late). 

So now waiting for my collection/charge off to drop off in August 2012 and for my credit report to update with the CLI-increased Orchard account and the deletion of my worst tradeline. Also, I'll drop my total utilization to 9% as recommended. I am now in the middle of disputing the negatives on my account from Cap1 (have had luck before. Used to have several 90 and 120 day late negatives and through disputes now I only have 30-day negatives). 

In August/September, I'd like to apply for some other cards so I can move away from cards like Orchard and Cap1. The goal is to be at 700+ (or 720+, ideally) by the end of the year or early 2013 for mortgage purposes. Any suggestions on cards that are known for high limits? I don't really plan on using them, so APRs aren't really a concern. Rewards cards would be nice so I can pay rent on it and get points.

How difficult would it be for me to get a card like the Chase Sapphire?

[Crashem]

You're going to get relatively low limits as new creditors will look at your income but more importantly at what your current credit lines are at. Your next set of cards should be with lender who is good at giving cl or good at auto cli and soft cli. Probably recommend a Amex charge card which should be easy for you to get and util on that card won't hurt you. Put a bunch on that card so you show high balance. Any card you get approved for, you can point to the high balance on Amex as reason to give you higher cl on recon which you should do in every case either for rejection or too low cl.