topic Re: Need advice on my next move (building credit after defaulted student loan) in Credit Cards

Need advice on my next move (building credit after defaulted student loan)

Anonymous — Mon, 01 Jul 2019 02:37:31 GMT

I am in need of advice as to my next move and I am curious what everyone would do in my situation. I just started building credit a year or so ago when I had a federal student loan that I defaulted on mysteriously fall off my credit (it was my only negative, but other than that I had no credit). In that time I have gone from around 460-490 credit score on all 3 bureaus to 740-770 depending on the bureau since last March. I am trying to build up as much credit (limits and score wise) as quickly as possible while getting my utilization down on all my cards to under 30% just in case my student loan reappears on my credit report in the near future.

Currently, I have an AAoA of 10 months and my oldest account is 1 year and 2 months old.

This is a breakdown of my accounts:

Capital One Quicksilver - $0 Balance $500 CL 0%UTI (14 Months)
Fingerhut - $0 Balance $1100 CL 0%UTI (14 Months)

Boscov's Store Card - $0 Balance $11,600 CL 0%UTI (12 Months)
Wayfair Store Card - $435 Balance $11,350 CL 3%UTI (12 Months)
Capital One Quicksilver One - $0 Balance $750 CL 0%UTI (7 Months)
Navy Federal CU CashRewards - $0 Balance $1500CL 0%UTI (7 Months)
Newegg Store Card - $979 Balance $3000 CL 29%UTI (7 Months)
Overstock Store Card - $4,468 Balance $6,900 CL 64%UTI (7 Months)
Victoria Secret Store Card - $0 Balance $250 CL 0%UTI (7 Months)
Kohl's Store Card - $0 Balance $750 CL 0%UTI (7 Months)
Walmart Store Card - $0 Balance $1000 CL 0%UTI (7 Months)

Hard Inquiries: 11 in the last year, 0 in the last 6 months.
0 Missed Payments, 0 Late Payments, 0 Collections in the last 7 years.
Overall Credit Limit: $37,700
Overall Balances: $5,882
Overall Utilization: 15%
Income: $45k/yr

I made the mistake of doing a large 24 month deferred interest purchase on my Overstock card thinking that per card utilization wouldn't affect my chances of getting approved for additional credit, but I have been reading a lot more about this since then and realize now that having 64% Utilization on that one card is potentially a bad thing... but does it mean I am more likely to get denied for additional credit since it's my only card (out of 11) with 30%+ utilization? Would love to hear any thoughts at all on this.

I am wondering what my best plays would be at this point to add as much credit limit as quickly as possible and lower my overall and per card utilization? I am not worried about any temporary lowering of my score in the short term as long as I can build it (as well as credit limits) long term. If all goes as plan I'd like to apply for a home loan in 2 years so I'd like to thicken my file and get as much credit established as possible in the next year or so before I go into garden mode for a year. Any and all input would be greatly appreciated!

Re: Need advice on my next move (building credit after defaulted student loan)

Anonymous — Mon, 01 Jul 2019 02:12:31 GMT

I would check pre-qualification for discover it, amex everyday, and Citi double cash.

Re: Need advice on my next move (building credit after defaulted student loan)

Anonymous — Mon, 01 Jul 2019 02:17:03 GMT

@Anonymous wrote:
I would check pre-qualification for discover it, amex everyday, and Citi double cash.

I have checked ALL the prequalifications and nothing popped up for me on any of them. Oddly enough 7 months ago Discover It secured popped up for me and now it doesn't despite having higher scores and more credit than I did 7 months ago...

I have a feeling it has to do with the fact that I had near 100%UTI on my Navy Federal and Cap One cards until this month when I paid them down to 0%UTI which just recently started showing on my credit reports.

Re: Need advice on my next move (building credit after defaulted student loan)

Remedios — Mon, 01 Jul 2019 02:26:11 GMT

@Anonymous wrote:
I am in need of advice as to my next move and I am curious what everyone would do in my situation. I just started building credit a year or so ago when I had a federal student loan that I defaulted on mysteriously fall off my credit (it was my only negative, but other than that I had no credit). In that time I have gone from around 460-490 credit score on all 3 bureaus to 740-770 depending on the bureau since last March. I am trying to build up as much credit (limits and score wise) as quickly as possible while getting my utilization down on all my cards to under 30% just in case my student loan reappears on my credit report in the near future.

Currently, I have an AAoA of 10 months and my oldest account is 1 year and 2 months old.

This is a breakdown of my accounts:
Capital One Quicksilver - $0 Balance $500 CL 0%UTI (14 Months)
Fingerhut - $0 Balance $1100 CL 0%UTI (14 Months)
Boscov's Store Card - $0 Balance $11,600 CL 0%UTI (12 Months)
Wayfair Store Card - $435 Balance $11,350 CL 3%UTI (12 Months)
Capital One Quicksilver One - $0 Balance $750 CL 0%UTI (7 Months)
Navy Federal CU CashRewards - $0 Balance $1500CL 0%UTI (7 Months)
Newegg Store Card - $979 Balance $3000 CL 29%UTI (7 Months)
Overstock Store Card - $4,468 Balance $6,900 CL 64%UTI (7 Months)
Victoria Secret Store Card - $0 Balance $250 CL 0%UTI (7 Months)
Kohl's Store Card - $0 Balance $750 CL 0%UTI (7 Months)

Hard Inquiries: 11 in the last year, 0 in the last 6 months.
0 Missed Payments, 0 Late Payments
Overall Credit Limit: $37,700
Overall Balances: $5,882
Overall Utilization: 15%
Income: $45k/yr

I made the mistake of doing a large 24 month deferred interest purchase on my Overstock card thinking that per card utilization wouldn't affect my chances of getting approved for additional credit, but I have been reading a lot more about this since then and realize now that having 64% Utilization on that one card is potentially a bad thing... but does it mean I am more likely to get denied for additional credit since it's my only card (out of 11) with 30%+ utilization? Would love to hear any thoughts at all on this.

I am wondering what my best plays would be at this point to add as much credit limit as quickly as possible and lower my overall and per card utilization? I am not worried about any temporary lowering of my score in the short term as long as I can build it (as well as credit limits) long term. If all goes as plan I'd like to apply for a home loan in 2 years so I'd like to thicken my file and get as much credit established as possible in the next year or so before I go into garden mode for a year. Any and all input would be greatly appreciated!

Hi and welcome to the forums

You dont need to thicken your profile, you need to stop applying.

Lower utilization by paying it down. If you cant, that means you're getting in financial trouble after only 14 months of using credit cards

Re: Need advice on my next move (building credit after defaulted student loan)

Anonymous — Mon, 01 Jul 2019 02:33:14 GMT

@Remedios wrote:
Hi and welcome to the forums

You dont need to thicken your profile, you need to stop applying.
Lower utilization by paying it down. If you cant, that means you're getting in financial trouble after only 14 months of using credit cards

I definitely agree with what you're saying and realize this is genuinely good advice. However, I have no idea if the defaulted student loan is going to reappear on my credit report so I am trying to establish as much credit and establish relationships with as many creditors as possible before that might happen. I could pay down the balances if needed but they are 24-month deferred interest purchases so I'd like to hold off if it's not going to make a big difference to my approval odds.

Re: Need advice on my next move (building credit after defaulted student loan)

kilroy8 — Mon, 01 Jul 2019 02:46:43 GMT

Why did Student loan disappear?

That is something that they always collect on, so it likely is coming back. If/when it does, you would look at AA coming from just about anyone other than those that you already have (Cap One, etc.).

I would stand pat, you are thick enough.

Re: Need advice on my next move (building credit after defaulted student loan)

Remedios — Mon, 01 Jul 2019 02:49:34 GMT

@Anonymous wrote:
@Remedios wrote:
Hi and welcome to the forums

You dont need to thicken your profile, you need to stop applying.
Lower utilization by paying it down. If you cant, that means you're getting in financial trouble after only 14 months of using credit cards

I definitely agree with what you're saying and realize this is genuinely good advice. However, I have no idea if the defaulted student loan is going to reappear on my credit report so I am trying to establish as much credit and establish relationships with as many creditors as possible before that might happen. I could pay down the balances if needed but they are 24-month deferred interest purchases so I'd like to hold off if it's not going to make a big difference to my approval odds.

Any delinquency showing up on your CR after excessive credit seeking with such a young profile as yours can lead to AA

Th excessive apps are the reason you cannot get pre approvals. I know it's been 7 months since last app, but most lenders look at the past two years.

If your plan is to improve odds at future approvals for cards you can actually use, and buy a home, garden.

If that sounds like a bad plan, feel free to share more about your spending habits and i am sure you'll get some suggestions

Re: Need advice on my next move (building credit after defaulted student loan)

Anonymous — Mon, 01 Jul 2019 02:53:10 GMT

@kilroy8 wrote:
Why did Student loan disappear?

Honestly I'm not sure. It was over 7 years since I defaulted on it when it dissapeared. It's been gone for 14-15 months now.

Re: Need advice on my next move (building credit after defaulted student loan)

kilroy8 — Mon, 01 Jul 2019 02:59:22 GMT

@Anonymous wrote:
@kilroy8 wrote:
Why did Student loan disappear?

Honestly I'm not sure. It was over 7 years since I defaulted on it when it dissapeared. It's been gone for 14-15 months now.

Well, they run different reports that go back further for mortgages. If you want one of those, taking care of that would be a good thing to do.

Re: Need advice on my next move (building credit after defaulted student loan)

Anonymous — Mon, 01 Jul 2019 03:02:19 GMT

@Remedios wrote:
@Anonymous wrote:
@Remedios wrote:
Hi and welcome to the forums

You dont need to thicken your profile, you need to stop applying.
Lower utilization by paying it down. If you cant, that means you're getting in financial trouble after only 14 months of using credit cards

I definitely agree with what you're saying and realize this is genuinely good advice. However, I have no idea if the defaulted student loan is going to reappear on my credit report so I am trying to establish as much credit and establish relationships with as many creditors as possible before that might happen. I could pay down the balances if needed but they are 24-month deferred interest purchases so I'd like to hold off if it's not going to make a big difference to my approval odds.
Any delinquency showing up on your CR after excessive credit seeking with such a young profile as yours can lead to AA
Th excessive apps are the reason you cannot get pre approvals. I know it's been 7 months since last app, but most lenders look at the past two years.
If your plan is to improve odds at future approvals for cards you can actually use, and buy a home, garden.

If that sounds like a bad plan, feel free to share more about your spending habits and i am sure you'll get some suggestions

Well, I should have stated it but my ultimate goal besides building as much credit as possible is to establish business credit that is separate from my personal credit so if the student loan delinquency reappears on my personal credit I will be able to continue building credit. The student loan debt is a result of fraudulent activities many years ago by the University of Phoenix charging me for 2 years worth of classes that I never took that I would have to pay a lawyer to fight which I also can't afford.

Re: Need advice on my next move (building credit after defaulted student loan)

Anonymous — Mon, 01 Jul 2019 03:05:29 GMT

@kilroy8 wrote:
Well, they run different reports that go back further for mortgages. If you want one of those, taking care of that would be a good thing to do.

Yeah, I realize that I will eventually have to do this if I plan on getting a mortgage but that's a couple of years down the road so I am focusing on building credit and saving money to pay off or hire a lawyer to fight the student loan when the time comes to apply for a mortgage.

Re: Need advice on my next move (building credit after defaulted student loan)

Anonymous — Mon, 01 Jul 2019 03:15:40 GMT

I'd also like to get some of the better rewards cards... Chase Freedom, Sapphire Reserve, Chase Business Ink, Citi Double Cashback, Amex, etc as we have 5 people in our house (wife, 3 kids, and myself) so our utility, grocery, and household spending is pretty significant.

Re: Need advice on my next move (building credit after defaulted student loan)

Anonymous — Mon, 01 Jul 2019 03:17:53 GMT

You're too good at getting credit which is why you're not getting any pre-app's from anyone. When you look at the Quality of the credit though it's a bit deceiving with all the fluff you've accumulated in the process.

Capital One Quicksilver - $0 Balance $500 CL 0%UTI (14 Months)
~~Fingerhut - $0 Balance $1100 CL 0%UTI (14 Months)~~

~~Boscov's Store Card - $0 Balance $11,600 CL 0%UTI (12 Months)~~
~~Wayfair Store Card - $435 Balance $11,350 CL 3%UTI (12 Months)~~
Capital One Quicksilver One - $0 Balance $750 CL 0%UTI (7 Months)
Navy Federal CU CashRewards - $0 Balance $1500CL 0%UTI (7 Months)
~~Newegg Store Card - $979 Balance $3000 CL 29%UTI (7 Months)~~
~~Overstock Store Card - $4,468 Balance $6,900 CL 64%UTI (7 Months)~~
Victoria Secret Store Card - $0 Balance $250 CL 0%UTI (7 Months)
Kohl's Store Card - $0 Balance $750 CL 0%UTI (7 Months)
Walmart Store Card - $0 Balance $1000 CL 0%UTI (7 Months)

As you can see when you redact the fluff and wasted approvals you're left with 3 cards that can keep your scores high. Though to your detriment like I said earlier is you're too good at getting credit and now you need to sit in the corner in time out until things age a bit before anyone lets you into the sand box to play the app game again w/o hitting a ton of denials and/or AA/closures.

When you do get let back into the sandbox again.... Concentrate on non-retail cards that aren't captive to a particular store unless you'll actually use them. BEWARE of the long 0% store cards as they will sneak up on you if you don't pay them off before the end of the intro period and charge you interest on the purchase back to the date you bought it.

Wtiht he slew of 7 month cards I suspect things won't loosen up again for you until they all hit 12 months. At that point you need to cut 2 for every 1 you add. I.e. App for Amex, cut 2 store cards... App for BOA, cut 2 store cards... the focus is to be on getting the quality lenders that will grow beyond the frivolous cards that inflate your #'s for utilization but have built in traps.... FH is a door opener since it reports but, all of their merch is 50% more than the avg retailer. Kohl's won't grow beyond 3K no matter how good your profile gets. Overstock/Wayfair are helpful w/ a home to furnish but, outside of that they're kind of useless. Newegg is nice to get techy stuff but, there aren't many benefits to having them if you get an Amex w/ ShopRunner for 2-day shipping.

Just my 2 cents here but, we've all done some store cards in the past and the profiles over 800 and TCL's beyond your imagination don't have many or any in them.

Re: Need advice on my next move (building credit after defaulted student loan)

Anonymous — Mon, 01 Jul 2019 03:20:35 GMT

@Anonymous wrote:
I'd also like to get some of the better rewards cards... ~~Chase Freedom, Sapphire Reserve, Chase Business Ink, Citi Double Cashback,~~ Amex, etc as we have 5 people in our house (wife, 3 kids, and myself) so our utility, grocery, and household spending is pretty significant.

That's not going to happen until you're back under 5 cards in 24 months (5/24 rule)

Citi is a 6/6

Amex will open up the coffers w/ some gardening for a couple of months or so... EXperian is their choice pull. Once you're in though it's SP city for additional cards.

https://www.reddit.com/r/churning/comments/67u9q0/guide_antichurning_rules/

Re: Need advice on my next move (building credit after defaulted student loan)

Anonymous — Mon, 01 Jul 2019 03:34:36 GMT

Awesome advice! Thanks!

Re: Need advice on my next move (building credit after defaulted student loan)

Anonymous — Mon, 01 Jul 2019 03:43:21 GMT

@Anonymous wrote:
@Anonymous wrote:
I'd also like to get some of the better rewards cards... ~~Chase Freedom, Sapphire Reserve, Chase Business Ink, Citi Double Cashback,~~ Amex, etc as we have 5 people in our house (wife, 3 kids, and myself) so our utility, grocery, and household spending is pretty significant.

That's not going to happen until you're back under 5 cards in 24 months (5/24 rule)

Citi is a 6/6

Amex will open up the coffers w/ some gardening for a couple of months or so... EXperian is their choice pull. Once you're in though it's SP city for additional cards.

https://www.reddit.com/r/churning/comments/67u9q0/guide_antichurning_rules/

Hmmm, I thought I read that store cards didn't count against 5/24 and 6/6? I certainly could be mistaken though...

I picked up most of the retail cards because they are from stores we use regularly and had better rewards than my 1.5% Capital One QS cards or offered 6-12-24 month deferred interest but I have already learned the hard way that the large deferred interest purchases just serve to inflate your utilization.

However, since then my wife has been approved for the Discover It and Chase Freedom with $5k+ limits each so the usefulness of the store cards are already limited to artificially padding my TCL and Utilization. I definitely regret going on the store card apping spree.

Re: Need advice on my next move (building credit after defaulted student loan)

Anonymous — Mon, 01 Jul 2019 03:47:49 GMT

I was also thinking that by adding a bunch of store cards that in the future when I added new cards it would help keep my AAoA from taking a dive. Also, I read that to get an "Excellent" score in the Credit Mix part of the credit score calculation required 21+ different accounts, is this not accurate?

Re: Need advice on my next move (building credit after defaulted student loan)

mikesonthemend — Mon, 01 Jul 2019 04:14:48 GMT

@Anonymous wrote:
I was also thinking that by adding a bunch of store cards that in the future when I added new cards it would help keep my AAoA from taking a dive. Also, I read that to get an "Excellent" score in the Credit Mix part of the credit score calculation required 21+ different accounts, is this not accurate?

A lot of good advice above.

My two cents. Don't even think about new credit right now. Focus on your largest utilization with the goal of getting that card under 48.9%. Then getting it under 28.9%, all the while not adding to the balances of your othre cards. If you do this better offers will come along.

Bottom line, stop borrowing money, and pay down what you owe. If an opportunity comes along to move some debt to a lower interest rate, take it. Do no add to your debt.

If the beginner cards have no annual fee, keep them open but destroy the cards, or at a minimum, freeze them in a block of ice.

It really looks like one, very high interest rate card is your issue. Focus on that. If you are score focused, lower utilization on the top utilization card. If you are cash flow interested, go after the highest interest rates first.

Good luck. You really aren't in that bad of shape for a rebuild.

ps. If you graduated, there are several government plans to forgive/reduce student debt if your income does not support it. Several of my childrens friends fell into this category. I am not sure about the specifics but an internet search may help.

Re: Need advice on my next move (building credit after defaulted student loan)

Anonymous — Mon, 01 Jul 2019 04:55:29 GMT

A lot of good advice above.

My two cents. Don't even think about new credit right now. Focus on your largest utilization with the goal of getting that card under 48.9%. Then getting it under 28.9%, all the while not adding to the balances of your othre cards. If you do this better offers will come along.

Bottom line, stop borrowing money, and pay down what you owe. If an opportunity comes along to move some debt to a lower interest rate, take it. Do no add to your debt.

If the beginner cards have no annual fee, keep them open but destroy the cards, or at a minimum, freeze them in a block of ice.

It really looks like one, very high interest rate card is your issue. Focus on that. If you are score focused, lower utilization on the top utilization card. If you are cash flow interested, go after the highest interest rates first.

Good luck. You really aren't in that bad of shape for a rebuild.

ps. If you graduated, there are several government plans to forgive/reduce student debt if your income does not support it. Several of my childrens friends fell into this category. I am not sure about the specifics but an internet search may help.

Thanks for the comments and advice.

Just to clarify I currently have $0 in balances on cards that have interest. My only balances are on purchases that had 18 or 24 month deferred interest offers and I have been paying them down monthly. I could pay the single card that is over 30% utilization down to under 30% if it meant the difference between qualifying for a higher CL card but really don't see a point in doing so if I am not going to be applying for any new cards in the next 5+ months since it's not going to incur any interest in the meantime.

Re: Need advice on my next move (building credit after defaulted student loan)

mikesonthemend — Mon, 01 Jul 2019 04:58:48 GMT

My apologies. I would still look into the student loan forgiveness. If they are giving it away, you might as well get in line. You are gonna be taxed for all the others, might as well get some of the benefit.