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Great forum you all have here! Please help me with CC suggestions:
Current scores: EQ 691 (fico) TU 685 EX 678. I’m planning to pay off some debt and decrease my utilization over next couple months, plus have a $600 medical collections account falling off by then, playing with some simulators I’m expecting to get around 700ish scores by September. I have no late payments on my record and no inquiries in the past year. I have a bankruptcy that is 8 years old, accounts have fallen off but PR still on reports for 2 years.
Current cards limits/bal:
Capone 5000/3700
Capone 1500/125
Chase (transferred from wamu) 2100/0
Hsbc 500/86
Hsbc 300/0
Kohls 700/120
Amzon 900/200
Target 200/0
Goals: I’d like to add 2 new cards, preferably rewards type cards with 1500-5k limit and cashback rewards. Chase freedom will not take me due to BK and prob some others. I know capone has rewards card, not sure if it’s best to try with them but would prefer other if I can qualify. Discover another possibility? Any other suggestions?
Also with hsbc going over to cap1 don’t want too much depending on them. Will prob cancel at least one of the small hsbc’s soon (I’ve read AAoA info), the newer one with the AF. Advisable to cancel both perhaps or keep the older one?
First off, before you apply, you need to maximize your FICO score by managing your reported utilization. How much can you pay down and do you know how to manage your reported utilization? There are some easy points here to gain that will make approvals much easier.
@Crashem wrote:First off, before you apply, you need to maximize your FICO score by managing your reported utilization. How much can you pay down and do you know how to manage your reported utilization? There are some easy points here to gain that will make approvals much easier.
I understand the theory behind it but am not certain what numbers to shoot for. Do you have a link to a calculator or advic for this?
I will likely have anywhere between 2-4k available to use to pay down by july/august.
Generally speaking anytime you can have it in the sub 10% utilization range, you're golden. However, at least keeping it under around 30-35% util is usually around the "minimum." I have a good relationship with a branch manager of Citi, and she says they generally like unde 35% util for card debt. If you can work to put $2k on the cards, I would pay off all of the smaller debts first (roughly $531), and put the remaining amount of ~$1469 on the Cap1. This will likely give you a util in the 14% range which isn't too shabby. This is of course also assuming the baddie drops off your CR. Would be a good start. But, there's no real "standard" util number everyone goes by, but as long as you're keeping it clean of baddies, on-time payments, and keep your util under 30% at minimum you should be okay if your scores are in the low-mid 700's. However, if you can pay the cards off, I would pay everything down then let the balances report at zero for at least one cycle. Then you should be well on your way.
First off you need to understand reported utilization. Your credit card company typically reports to the credit bureaus once a month. Normally done, but not always, around your statement date (the day you billing cycle closes). So you need to pay your bills before they are even billed let alone before payment is due. Pay attention that your accounts are updating. I noticed recently on a friend's credit report that Kohl's hadn't updated their balance for several months on TU and EX. It actually took a dispute to clear that up. Might be best to call your cards up to see when they report or look at your raw credit report to see last reported date to get idea if they follow statement day reporting.
Once you understand how to get your card balances to report the way you want, you then need to understand what you want reported. Ideally, you want one card to report between 1-9% (remember fico rounds numbers) of both the card's limit as well as 1-9% of the total credit limit you have. As to what the ideal percentage between 1-9%, it differs from person to person. You also want the rest of your cards to report 0 balance. If you can't accomplish this, lets figure out what you can pay and what your total outstanding debt is and I can give you an idea. Utilization makes up 30% of FICO score. You get hits for total utilization being too high. Hits for individual cards utilization being too high. Hits for sheer number of cards with any balance even 1 dollar.
Thanks for the help/advice. Anyone have a link to a respected post or article that I can read regarding optimal utilizations?
No one really knows what optimal utilizations are aside from what I have already told you. 1 card reporting between 1-9% of both card and total limit and all the rest of the cards reporting 0 balance. Its that simple. The more complicated part is making sure the cards report the balances that you want which I explain earlier.
The complication is if it is unrealistic to get to that level of utilization. In that case, I recommend you say what you can pay down total and what utilizations are currently (assuming you need to pay before statement date).