New Line of Credit - Should I?

[ADC7943]

I have gotten 5 pre-approved credit card offers from Capital One within the last month.  I am not sure if applying and probably getting a low credit line will be worth the value in a new credit card.  I am hoping to get a home loan this summer.

Pros:

- options to increase credit line in 5 months

- access to FICO score

Cons:

- hard inquiry to credit reports

- lower my average age of accounts?

I only have one credit card currently for $1,000.  I pay it off every week and only keep 20-25% utilization at a time.  

My only other debt is student loans ($14,000).

Credit Karma: 650 score (I applied for a home loan last summer and my score was closer to 600)

- CC Utilization: good

- Payment History: Excellent

- Deraogatory Marks: Poor (two collections

- Total Accounts: good (6 open, 8 closed)

- Age of History: poor (oldest 2 y 10m, newest 1 y 4m)

- Hard Inquiries: Fair (3)

Unsure why I am receiving pre-approval letters from Capital One - this is on my history:

Account Details
Last Reported Mar 06, 2016
Creditor Name CAPITAL ONE
Account Type Credit Card
Account Status Closed - Derogatory
Opened Date Mar 31, 2007
Closed Date Jul 12, 2010
Limit $500
Term --
Monthly Payment $0
Responsibility Individual
Balance $1,922
Highest Balance $1,309
Payment Status Collection/Charge-Off
Worst Payment Status Unknown
Date of Last Payment Jul 07, 2011
Amount Past Due $1,922
Times 30/60/90 Days Late 0/0/0
Remarks Charged off as bad debt
Dispute resolved; reported by grantor

[gdale6]

Its pretty much a no no to obtain new credit of any kind within 6 months of a mortgage pull

[RonM21]

I agree, I'm not sure I'd get a new line if credit that close either. The potential of a score drop, or showing the lender added risk would be there.

[Anonymous]

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@gdale6 wrote:

Its pretty much a no no to obtain new credit of any kind within 6 months of a mortgage pull

---

Meh - thats more of a general rule of thumb than anything. The reasoning is simply that new accounts *can* bring your scores down.

In this case, the OP would likely benefit from a second account, and a third would be a good idea as well, in order to peak his scores via UTI% technique.

[Anonymous]

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@ADC7943 wrote:

I have gotten 5 pre-approved credit card offers from Capital One within the last month.  I am not sure if applying and probably getting a low credit line will be worth the value in a new credit card.  I am hoping to get a home loan this summer.

Pros:

- options to increase credit line in 5 months

- access to FICO score Cap One does not give out a FICO score. Its a Vantage score and like Credit Karma's score, its next to useless.

Cons:

- hard inquiry to credit reports The importance of which is vastly overstated by many.

- lower my average age of accounts? The importance of which is vastly overstated by many more.

I only have one credit card currently for $1,000.  I pay it off every week and only keep 20-25% utilization at a time.  People usually see a large score increase just by opening their first account, and another when they open their second.

My only other debt is student loans ($14,000). That takes care of credit mix.

Credit Karma: 650 score (I applied for a home loan last summer and my score was closer to 600) Bite the bullet, spend a little money to get your REAL FICO scores from here. You will see what your Mortgage scores are, which is important if you are wanting to purchase a home. You need to know your starting point.

- CC Utilization: good

- Payment History: Excellent

- Deraogatory Marks: Poor (two collections

- Total Accounts: good (6 open, 8 closed)

- Age of History: poor (oldest 2 y 10m, newest 1 y 4m)

- Hard Inquiries: Fair (3)

Unsure why I am receiving pre-approval letters from Capital One - this is on my history: Capital One generally does not care about a charge off that old. They are quite forgiving in that respect.

Account Details
Last Reported Mar 06, 2016
Creditor Name CAPITAL ONE
Account Type Credit Card
Account Status Closed - Derogatory
Opened Date Mar 31, 2007
Closed Date Jul 12, 2010
Limit $500
Term --
Monthly Payment $0
Responsibility Individual
Balance $1,922
Highest Balance $1,309
Payment Status Collection/Charge-Off
Worst Payment Status Unknown
Date of Last Payment Jul 07, 2011
Amount Past Due $1,922
Times 30/60/90 Days Late 0/0/0
Remarks Charged off as bad debt
Dispute resolved; reported by grantor

---

I would suggest opening two Capital One cards, and let them grow for six months before apping for a home loan. That would put you in the Sept time frame. To peak your scores just before tha mortgage app, you would pay off two of your cards and let the third one carry a small balance of less than 10% of its limit. Do this the month before applying. 

[ADC7943]

Thank you!