Catch 22 - A bit confused - Discouraging

[Anonymous]

Just started trying to rebuild about two weeks ago because I was preapproved and approved for a wamu CC;

History: bk in 2000, 565 TU

Recent: Pulled reports, disputed items and applied for and approved for Crown Jewlers 

TU 624  EQ 620  EX 623 (on 30 Score Watch Trial).

Primary Problem: No revolving accounts

Plan/Solution: WaMu and CR will eventually show and reflect positive revolving accounts and payment history therefore scores will increase.

Present Snapshot:

Number of Open Accounts..................0

Number of Closed Accounts................2

Total Accts. in good standing...............1

Accts. Past due.....................................0

Negative act. History...........................1

Inquires in last 12 months....................2 (now plus 2).

Observation: It is unlikely that WaMu and CR alone will be sufficient to raise  Scores to say 680 to 700 unless this happens over a very long time, in the interim, it is becoming increasingly apparent that additional revolving accounts would reflect positively therefore, I have responded and applied to mail offers (Orchard, Advanta) and online to HSBC and BofA and perhaps one or two others to no avail - Denied.

Orchard and BofA offered secure cards, and I understand this is an option. I called Orchard and they did a hard pull and still offered a Secure card. Advanta did a hard pull of the online app. Also.

Catch 22: I need revolving accounts and have substantial income, however, each time I try to use my fair scores to get the ccs I get dinged on the report 5 points (going Backwards here). 

I predict most will say start with secure cards, I did, everyone has to start somewhere etc. And that remains an option.

Question:

1. Should I wait until WaMu and CR report (scores increase) then apply?

2. If I wait for scores to increase will I get offers based on the new scores at the CB?

Note: If I wait, revolving accounts that I may have gotten presently will not be aging or reporting.

3. Where can I find bk friendly revolving accounts?

Note: If I find bk friendly revolving accounts and am approved will those accounts really help my score or will I look desperate for credit to issuers such as WaMu, for example.

The question becomes is it better to be loyal to one or two revolving accounts or shop for accounts in order to have a higher score. The objective of course is to have sufficiently high credit limits to make CC useful. That is, the most flexibility.

Given an Orchard 200 or 300 limit secured or unsecured is practically worthless when a tank of gas can cost nearly a hundred dollars or more. Limits must be sufficiently high in order to maintain a fair utilization.........fair to the consumer as well as the issuer (balance). I'm thinking some respectable cc issuers must know and understand this.

Perhaps someone that's been down this road can understand the confusion and advise. 

Kindest Regards,

Patience.

[Anonymous]

I would say go with the secured cards. If a tank of gas costs $100, buy dinner at McDonalds instead. The credit limit isn't the point for you right now. The point is getting your foot in the door so you can begin to build some good credit history to balance the BK.

Stay under 20% of whatever the credit limit is. If the credit limit is $100, buy something worth $10. Pay at least your minimum on time, every time. As time elapses, you WILL get credit line increases, and your FICO will go up.

Believe it or not, the BK after seven years really isn't hurting your FICO that much. What's hurting you is your lack of GOOD credit history. I was in a situation similar to yours...no BK but four charge-offs. And I was waiting for them to drop off...big mistake. Look at some of my initial posts on this board...I had abandoned my FICO and left it for dead, thinking the charge-offs would never be forgiven. But if you had started around 2002 or so--after the radiation from the bankruptcy nukeout began to die down a little--and gotten a secured card and worked your way back, you probably would be at a 700 or better now, with $5000 credit limits.

Baddies don't have nearly the long-term impact most of us are afraid they do. It's just so many of us--myself included--get whacked with baddies during a rough patch in life, then find our FICO following us around like Cujo. We say the heck with it, pick up our marbles, and sit on the sidelines for years and years.

[Anonymous]

I agree with NWM.  A couple of months ago when I first began taking my credit seriously, I had a similar problem. I didn't have a bankruptcy but I had zero revolving credit and only an installment loan reporting.  My credit file was (and still is) very thin.  My scores ranged from 635-685.  I read all of the forums that said "You can definitely get a prime CC with a 685 score" so I began applying: DENIED, DENIED, DENIED, etc.  and all of those were with my 685 score.  So don't believe everything you hear or read.  Even when your scores increase, your score is not the "end all be all".  There are other factors to consider.  I even got a WaMu pre-approval - applied - DENIED.

At any rate, I dinged up my TU report pretty bad and got only one credit card to show for it.  I did get a CJ account which is now reporting and it does report as a revolving line of credit.  (With regard to CJ, I might add that I read on various forums that it would definitely report a $1500 limit despite what the website says but it doesn't.  It starts out at $500 just like the website says it will until you reach their downpayment threshhold - taking you back to don't believe everything you read.)

If I could go back and do it over, I would have applied for CJ first then done as NWM suggests: obtain a couple of secured cards.  Once my credit had been established for about 6-12 months then I would apply for an unsecured card.  Unfortunately, I made the decision to take bad advice from people who gave generic answers and my score suffered but I learned a very valuable lesson in the process.

[Anonymous]

Responding to: TheNewWorldMan & HouseHunter

Hmmm, very interesting and good points.

I get it. Priorities!

Credit limit vs establishing credit, hence score levels. First, establish credit levels (through revolving accts.( and credit limit will follow). Secondly, waiting to establish credit vs working with what's available.......work with what I have available (secured cards) while waiting or riding out the time for scores to increase then perhaps apply for unsecured etc. Providing however, that I should Not build up my expectations based on the rise of credit scores as it could result in disappointment because credit scores alone are not the only factor being considered by issuers.

Got it.

Confusion cleared. Many Thanks for the advice! Knowledge is power. I now have a clearer direction thanks to you-all.

I remain greatly appreciative and will update as time comes to pass.

[Anonymous]

I totally agree with HouseHunter and TheNewWorldMan.  I won't go on and on about my situation, but if you look at one of my past postings, you will see my story in all it's ugly detail. The point is, my BK was in 2001 and my FICO score are now 699, 700 and 701, and I don't even know how that happened but I guess something could be learned from my story. Hope it helps, and good luck.

Message Edited by KevKaos on 05-11-2007 09:26 AM

Message Edited by KevKaos on 05-11-2007 09:27 AM