Would I be risking AA with Barclay's in this scenario?

[Mrm-na]

I very much would like to get the Sallie Mae 5% rewards Mastercard (5% on groceries, gas, bookstores).  I know it has low spending limits for those rewards, but the limits are adequate for me.

I'm currently in a window of opportunity where I think I can get approved for it.  My scores are good and utilization is low right now.  However, I'm self employed and low income, and my credit report will change significantly over the next few months.  When my reports change, I do not want Barclay to get spooked and cancel the account.  So I'm trying to decide whether I should apply for it now, or wait until next year.

recent credit scores:

mid-September Merrick pulled FICO 08 Bankcard 784 from TransUnion.

9/29 Discover pulled FICO 777 from Equifax.

negatives:

No "baddies", but my application will show that I'm self employed and income is low. Credit is good but "ability to pay" algorithms might doubt me.

Inquiries: 1 very recently, and 1 about 10mo ago.

In 1 week, after my balances get updated, this is what my credit report will look like:

Capital One Platinum - $0 balance / 500 limit,  account age 5y+?m

Merrick Visa - $32/ 2300 limit, ~10mo

 Avg age of accounts 3y2m

I've been approved for a Discover It, but from what I've read, it won't report to the bureaus until something like 2 months have passed.  So if I apply to Barclay, they will not see it yet.

I will be using the Discover's 0 APR promo to finance a business purchase of inventory.  So when it does hit my report, it's going to look heavily utilized.  This is what I'm worried about.

So let's assume I get approved for the Barclay/Sallie Mae 5% card.  This is a plausible worst case of what my report might look like in January 2014:

Capital One - $0 / 500

Merrick - $0 / 2300

Discover - $1500 / 2500 - (60% UTL) new credit line which will suddenly appear, wasn't there when they approved me

Barclay - $250 / 1000 (or whatever limit they give me)

Avg age of accounts ~1y7m

The Discover debt will be repaid at about $150-$200/month.

Ideally I won't carry a balance on Barclay, but going through Christmas season, it will probably happen.  Judging from older credit scores when I had more utilization, I'm guessing that with the above scenario, my scores may be in the 670-690 range.

My worry is that being self employed and low income, Barclay might have an especially nervous attitude towards me in the first several months.  When my scores drop, and the new Discover account appears and shows 60% utilization, they may get scared and hit me with adverse action (possibly closing the account altogether).  I really don't want that to happen.  Long term I want it to become my primary card for personal spending.

Looking at this from another direction, I also don't want a new credit line with Barclay to scare Discover.  I want to have both cards for the long haul.

The Discover debt is a necessary investment which will return a profit in the long term. It is higher priority than Barclay at this moment.

Should I hold off on the Barclay app until after the Discover debt is paid off?  Or is it safe to get the card now?  Judging from all that I've seen posted on forums, it seems Barclay has a skittish reputation, and my self employment status may aggravate that. Not sure if Discover gets skittish or not, but I don't want to agitate them either.

[Crashem]

Short answer is yes.  Barclay's is sensitive to new accounts right before and soon after getting Barclay's card.  My opinion is that one new card (Discover) wouldn't normally be enough to cause an issue with them.  But if the FICO score drops as much as you guess, then it is possible there will be issue.

However, you should apply anyway.  Basically what's the real harm?  If you are really sensitive to them AR you, then don't use the new card except lightly (ie not much or paying frequently)  If you do so, I think you will be okay.  If you use it heavily (ie keep a large balance) as you would like to in your scenario, then you are much higher risk.  Your other option is to not apply at all.  To my mind, applying now groups your inquiries better so they fall off together.  You are likely to be approved now.  Why not just apply and not use for next few months vs not applying?  But better yet, just use lightly as I recommend and definitely don't keep balance going as you are just asking for problems as you are basically running up another new card (ie Discover) and now running up your new Barclay's which would make any lender nervous.

[Gunnar419]

My profile is VERY similar to yours. Self employed, low income, score around 770-780 when I apped for Barclays/Sallie Mae. I also had just gotten one new card that wasn't yet reporting.

Two months later, I had an opportunity, but it was one that put me in a position of running one of my cards over 60% while also increasing utilization on other cards (though not to that high a level). My score dropped into the 720-730 range.

No AA from Barclays. In fact, they gave me a nice auto CLI on my six month anniversary.

The only difference I see between your profile and mine is that I ran up the util on my oldest card, not a new one. I can't say whether that would make a difference, but I'm sure Barclays knows all about short term 0% offers.

My guess is that you're pretty safe. Just don't app for anything else for the next six months or a year after you get the Barclays card and you'll be okay. If you must app, keep it to one app and make sure your Discover balance has gone down when you do it.

[Hightechredneck]

I got my NFL card about a year ago, auto increase at about 7 months, a ton of inquiries at 10 months, no bad effects.

[injustifiiable]

Barclays is gonna come and take your house, car and first child. Hahaha. jk

[B335is]

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@injustifiiable wrote:

Barclays is gonna come and take your house, car and first child. Hahaha. jk

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+1 

With Barclays I wouldn't put that past them...

[Themanwhocan]

Worst case scenario, Barclays closes the card. And you're no worse off than you are right now.

I say apply, and always pay it off promptly for the first few months and you should be golden. As long as the Discover balance keeps steadily dropping.

[Mrm-na]

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@Gunnar419 wrote:

My profile is VERY similar to yours. Self employed, low income, score around 770-780 when I apped for Barclays/Sallie Mae. I also had just gotten one new card that wasn't yet reporting.

Two months later, I had an opportunity, but it was one that put me in a position of running one of my cards over 60% while also increasing utilization on other cards (though not to that high a level). My score dropped into the 720-730 range.

No AA from Barclays. In fact, they gave me a nice auto CLI on my six month anniversary.

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That's good to hear.  Yeah, when I was reading this forum over the last few weeks, I noticed the similarity of your profile, and took interest in your posts about this card in some other threads.

low 700s might be a fair estimate of where I'd end up.  I'm just trying to be pessimistic.  When I was in the 670-690 range, that was with high utilization and only the CapOne and Merrick cards available.  With the addition of Discover, my total available credit is higher so my overall % utilization will be lower than it was at that time.

<I ran into some trouble trying to multi-quote, so apologies if this doesn't come out right>

Crashem:

Why not just apply and not use for next few months vs not applying?  But better yet, just use lightly as I recommend and definitely don't keep balance going as you are just asking for problems as you are basically running up another new card (ie Discover) and now running up your new Barclay's which would make any lender nervous.

If I apply for the Barclay's, I'll make a point not to carry a balance on it.  From what you've posted it sounds like they'll be less nervous if the balance is on somebody else, not them.  I don't like to have a balance on personal spending at all, but at Christmas it might end up necessary.  I need to plan that out and decide how it's going to go.

Themanwhocan:

Worst case scenario, Barclays closes the card. And you're no worse off than you are right now.

If they close it though, I don't want them to blacklist me or anything.  I'm interested in the card for the long haul, so if waiting 6 months will avoid any drama, I'm willing to do that.  Otherwise, might as well get it now as long as it isn't going to backfire on me.

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Based on everyone's input, I have 2 goals I want to meet:

1) get the Discover balance down to $1250 or less by December.  This is the earliest that I'm guessing it might show up on my report, and this amount would put it below 50% utilization.  I don't know if that's a significant threshold, but maybe it will minimize any shock-factor to Barclay's when they first see it report.

2) don't carry any personal spending on any other cards through Christmas.

If I decide I can meet those 2 goals, then I'll probably apply.  Otherwise I may wimp out.    Thanks for all the replies.

[youngandcreditwrthy]

Never put all of your eggs in one basket.
I can't wait to see all the CLD posts in early spring!!!