Understanding FICO® Scoring

[FAhmad1782]

Two years ago I had over $8000 in credit card. With a low paying job I was hardly able to make minimum payments. I made a decision to work my debt down using a credit counseling company. I am now under $1900 in credit card debt and have learned a very important life lesson. I am only 24 yrs. old, and I am thankful reality struck before I had a wife or any children!

My credit score went from 615 to 693 in that time frame.

I have applied for and received 2 additional store cards recently. Both cards have a balance <$200 and $2500 limit on each.

Recently I tried applying for a Visa card (to begin charging gas only!) by clicking on the "Get a Credit Card" link on this website. Of course I was declined.

I was declined due to being enrolled in a debt management plan.

My question is:

How long do I have to wait after my CC debt is completely paid off before I can receive any new ones?

[ilovepizza]

I would imagine 30-60 days after it reports $0 balance. I would also recommend allowing 1 more month to post to your credit reports showing a second month of $0 balance, and then reapply while you keep it at $0 until you have all the new cards, then you can begin charging again. I get more excepted apps when I have a $0 bal compared to low UTL.

[Tuscani]

Are you still in the DMP?

[masdeocho]

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FAhmad1782 wrote:

I was declined due to being enrolled in a debt management plan.

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This always pisses me off.  You took a positive step to reduce your debt, stuck to the plan, and now you get penalized for it?  I've never understood this.  People say it's because it's a signal to lenders that you couldn't handle your debt.  But most people who get DMPs have already messed up their credit -- the credit counseling agencies won't take you unless you're already delinquent.  So why do you get another scarlet letter? 

[FAhmad1782]

Yes, I am still enrolled in the DMP. No late payments.

[Tuscani]

I would finish your DMP before opening any new CCs.

[3rd325]

Each lender has it's own credit policy. Some will consider the DMP while others will not. Keep in mind the reason given for a denile is not always THE reason. Chances are it was probably the new cards AND the DMP.  As an underwriter looking at an app I'm seeing someone who is not quite done with DMP and applying for multiple new credit cards. If you had not just oppened a couple of new credit cards I would be more willing to extend you credit.

[3rd325]

By the way, store cards are rarely worth the discounts you will receive. Chances are you'll be better off with 1-3 regualr cards with higher limits than with multiple store cards.

[Pants]

I would recommend NOT applying for credit while on a DMP.

Part of your DMP agreement is you shouldn't apply or accept credit card offers.

Depending on which credit cards you have enrolled in the program. Some card companies will randomly check your credit report. If the card company notices you have opened a line of revolving credit, they will drop you from the DMP program. You will be back on Default Interest and a possible higher minimum payment. (I am not 100% sure but secured loans like car and mortgage loans are OK)

I believe some DMP programs will allow you to keep one credit card. If you are allowed one card. I would recommend a small overdraft protection line of credit from your bank. ($300 or less). It is eaiser to pay off a smaller balance.

Message Edited by Pants on 06-12-2007 03:44 AM

[Irvin]

I got 8 derogs on my reports that i paid off last august. I was not planning on applying for more credit because i thought it would be stupid for me to do since i just got myself completely out of debt.

But anyways, i got 4 new credit cards in the past month, less than 10 months after paying off everything that was bad on my reports, except the student loans of course. I will pay them in full if/as soon as, i ever win a lottery.

I am also thankful that i took myself out of debt before trying to get married and stuff.