topic Re: App-O-Rama adive? in Credit Cards

App-O-Rama adive?

Anonymous — Sat, 21 Jun 2008 20:16:00 GMT

I've been reading these forum for some time now and it has helped me alot in understanding credit better. I want to do a "app-o-rama" but want to make sure i'm doing it right. At the end of this month will be 7 months from my last new account. I paid off balances so my utilz. is under 10% Here is my history. 18,M income around 60-70k annual. Boa Visa - 0/5000cl - 11 mo. Chase Visa - 900/6500cl - 8 mo. Citi Divend- 0/3000cl - 8 mo. Cap1 Auto - 10200/19500- 7 mo. Discover AU- 0/13000cl 11 yrs. Fico- TU-738 EX-749 EQ-742 I have about 8 inq in last year and none in last 6 months. I will apply next week. My plan is too apply for about 3-5 personal and 3-5 business accounts. All on same day. I will also try to use company s that pull different credit bureau reports. After this I will let them age for a good year or two before i apply again. Also I would like to add that I would like to get 0% Apr's and transfer money to savings to earn interest. Any Suggestions? Which Cards should i go for? Which give high CL? Any negative to this? WILL POST RESULTS

Re: App-O-Rama adive?

Anonymous — Sat, 21 Jun 2008 20:22:45 GMT

Welcome to the FICO Forums, zachst.

I'm not sure how much good advice you'll get on an app-o-rama around here. Virtually everyone on this board would likely tell you that 6-10 CC apps in one day is excessive. This forum is much more geared toward discussions of building a good credit profile through the responsible use of credit cards over the long term, the effects of credit cards on FICO scores, and credit card company policies and rewards programs.

Re: App-O-Rama adive?

catzcradle — Sat, 21 Jun 2008 21:05:37 GMT

@Anonymous wrote:
Any negative to this?

If I might ask, what's the need for all the new credit if you've already got all those other cards? You said you were 18, correct? I'm just curious if you are trying to start a business or something where you feel like you would need a bunch of additional credit lines.

Re: App-O-Rama adive?

MidnightVoice — Sat, 21 Jun 2008 21:09:13 GMT

And you seem to have CLs totalling about 50% of your income as well. That could be getting to the point where you won't always get big CLs from applications

Re: App-O-Rama adive?

Anonymous — Sat, 21 Jun 2008 21:14:09 GMT

What is the goal of your AOR? If it's using the 0% offers to generate money, I can definitely help out on that one. However, let us know if it's some other reason.

Re: App-O-Rama adive?

Anonymous — Sat, 21 Jun 2008 21:19:08 GMT

Also, check your message inbox, I sent you a few useful things on it.

Re: App-O-Rama adive?

Anonymous — Sat, 21 Jun 2008 21:26:43 GMT

An "app-o-rama" may or may not be a good idea, depending on circumstances.

First, understand you will take a significant FICO hit from all those inquiries. I'd say you're probably looking at around 30 to 50 points of damage. The good news, of course, is that inquiries age off quickly. But if you're planning on applying for a mortgage in the next year, bad idea.

Second, you'll also take a hit, possibly a significant one, in your average age of accounts (AAoA). The size of the hit depends on how many accounts you already have, and how old they are. If you have two or three accounts that are ten years old, and you pile on another six to eight accounts, your AAoA will drop like a stone from ten to 3 or so, and take about 20 to 35 FICO points with it. Unlike the points you lose for the inquiry, those points will take years to come back.

On the other hand, if your AAoA is three years and you have five or six accounts, you'll only be losing a year or two off that stat, and probably only 5 to 15 points.

In the long run (I'm talking three to five years and beyond), your app spree will be helpful. Your FICOs are currently high enough you should be able to get major bankcards with good expansion potential (though in the short run your prospect for CLIs will be poor just because of all the inquiries). Moreover, if your credit history is currently young, you'll build up mass, so that in ten years you'll have an AAoA that's anchored by a good twelve to fifteen accounts, and is therefore insensitive to that mortgage or car loan you get.

Re: App-O-Rama adive?

Anonymous — Sat, 21 Jun 2008 21:28:42 GMT

In addition, after the apporama is done, the OP would likely be able to combine cards from the same issuer back into the oldest account, which would help restore the average age of accounts (presuming it is a good avg age already). Then he's basically working with a credit report with a bunch of inquiries.

Re: App-O-Rama adive?

Anonymous — Sat, 21 Jun 2008 21:30:21 GMT

Potential risk: current issuers that do the occasional soft pull wouldn't like all the inquiries, new accounts, and what appears to be maxed-out cards. Expect a possibility of CLDs and potential account closures. Especially when dealing with amex, chase, or some of the other easier-to-scare lenders.

Re: App-O-Rama adive?

Anonymous — Sat, 21 Jun 2008 21:48:32 GMT

akhan wrote:
In addition, after the apporama is done, the OP would likely be able to combine cards from the same issuer back into the oldest account, which would help restore the average age of accounts (presuming it is a good avg age already). Then he's basically working with a credit report with a bunch of inquiries.

Combining cards back into the oldest account will not help average age, unless the CCC agrees to remove the newer TL entirely. I doubt they will do that. When you combine accounts, normally the one that is closed just reports as closed.

Message Edited by cheddar on 06-21-2008 02:48 PM

Re: App-O-Rama adive?

Anonymous — Sat, 21 Jun 2008 21:48:16 GMT

akhan wrote:
Potential risk: current issuers that do the occasional soft pull wouldn't like all the inquiries, new accounts, and what appears to be maxed-out cards. Expect a possibility of CLDs and potential account closures. Especially when dealing with amex, chase, or some of the other easier-to-scare lenders.

This risk cannot be understated. In fact, I would venture to say it's not just a "potential risk," but is the likely outcome.

Doing an AOR in the current credit climate just for the sake of making a couple of bucks from 0% offers is a horrible idea, IMO. To me, not having reports littered with closed accounts and evidence of adverse action is worth more than the little bit of interest you could get from doing so. It's not like you can get 5% and 6% anymore, anyway. How much could one really expect to make off of this?

In any case, BT fees will likely run about 3%, which is about what you could expect to get from a decent savings account. So in the end, it's a wash. And for what?

Re: App-O-Rama adive?

Anonymous — Sat, 21 Jun 2008 21:54:48 GMT

Cheddar- I agree 100%. And you're right, I've done it with 6% reward checking, but even then, risks outweigh the rewards. Plus, as a holder of 2 amex cards + 1 AU card, I get softed almost every week, so that's my main deterrent to doing anything!

Perhaps the OP would find it more profitable in a looser credit market combined with higher yields on savings and CDs. Also, I'd recommend reading up on other sources online, things like managing multiple cards become important, because missing a payment can bump you back up to the 10% regular interest rate, which really hurts, especially when the AOR money is locked away in CDs!

For now, it MAY be more beneficial to work on increasing credit lines on existing cards, so when a better time to do this comes, you'll already have high CLs that the new card issuers may match. CLs around $10k will do you no good at all, especially when you end up paying a $75-100 balance transfer fee for each one.

Re: App-O-Rama adive?

marty56 — Sat, 21 Jun 2008 22:04:31 GMT

I wouldn't do a AOR with score in the low to mid 700's since you are not in a rebuiling phase and you have a 10 year + history, At this time you should be working to reduce util and as HTSU says garden your credit.

If you want to get ride of some high interest CC debt then I would consider a card like National City Visa which would probably give you 15 months at 0% and no BT and the best part is they send you the check so it is a free cash advance. You must be able to PIF before the term ends and don't run the cards back up. Also they don't close the old cards (they dont even ask what you did with the money) so you loose no history. You have good scores so protect tthem.

Message Edited by marty56 on 06-21-2008 03:04 PM

Re: App-O-Rama adive?

Lel — Sat, 21 Jun 2008 22:07:14 GMT

Interesting - you're 18 but have been an AU on a Discover card for 11 years. Your parents obviously were thinking ahead and were giving you a leg up on forming a credit history, which is reflected in your scores. In addition to what has already been posted, if and when FICO 08 goes into effect, your average account age will drop further when this AU falls off your credit report.

Re: App-O-Rama adive?

Anonymous — Sat, 21 Jun 2008 22:10:04 GMT

Lel wrote:
Interesting - you're 18 but have been an AU on a Discover card for 11 years. Your parents obviously were thinking ahead and were giving you a leg up on forming a credit history, which is reflected in your scores.

Even if the OP were added to that Discover card just last month, his/her reports would show the entire 11-year history. I don't think you can add a 7-year old as AU, anyway.

Re: App-O-Rama adive?

Anonymous — Sat, 21 Jun 2008 22:28:16 GMT

@Anonymous wrote:

@Lel wrote:
Interesting - you're 18 but have been an AU on a Discover card for 11 years. Your parents obviously were thinking ahead and were giving you a leg up on forming a credit history, which is reflected in your scores.

Even if the OP were added to that Discover card just last month, his/her reports would show the entire 11-year history. I don't think you can add a 7-year old as AU, anyway.

I thought piggy-backing onto other people's credit history was no longer allowed?

As for the OP....you never answered, why the need for all the credit at 18? I am assuming you just graduated high school so maybe money for college?

Re: App-O-Rama adive?

Anonymous — Sat, 21 Jun 2008 22:38:58 GMT

Jubeyy wrote:

I thought piggy-backing onto other people's credit history was no longer allowed?

As for the OP....you never answered, why the need for all the credit at 18? I am assuming you just graduated high school so maybe money for college?

AU accounts still count for scoring purposes, at least until FICO 08 goes into effect. That has not happened yet.

As far as why the OP needs all that credit, I don't think he/she does. The original post said that OP wanted to use 0% offers to make money on the float.

Re: App-O-Rama adive?

Anonymous — Sun, 22 Jun 2008 22:49:31 GMT

Well the real reason im doing this is to invest it in my family wholesale business where i also work. If i throw in 40-50k in inventory. I could get 50-70% return on my investment in about 6-10months. So even with fees I come out way ahead. I also want to get all the major cards before FICO 08 goes in place and my major AU card falls off. I wont be applying to any major loans for atleast 2 years. So inquires will not affect me. So how many cards would be ideal? Also Can I use the BT check to pay my suppliers or send to my bank? Thnx for the input

Re: App-O-Rama adive?

Anonymous — Mon, 23 Jun 2008 01:02:57 GMT

zachst wrote:
Well the real reason im doing this is to invest it in my family wholesale business where i also work. If i throw in 40-50k in inventory. I could get 50-70% return on my investment in about 6-10months. So even with fees I come out way ahead. I also want to get all the major cards before FICO 08 goes in place and my major AU card falls off. I wont be applying to any major loans for atleast 2 years. So inquires will not affect me. So how many cards would be ideal? Also Can I use the BT check to pay my suppliers or send to my bank? Thnx for the input

I'm no entrepreneur but I think this is a horrible idea. If you put that kind of money on your cards, after getting new credit up the wazoo these companies are going to decrease your lines or close your cards. Of the cards you are not an AU on you haven't had any even a year. You are likely still getting softed every other month and several of these cards will notice and take action. Your beautiful scores right now will tank the the second you push your util up to 50% or greater as well. The Discover isn't even your money really as it is your parent's card, would they be happy with you maxing out their card for your own speculation?

If you have a great business plan you should go to a bank with a business loan proposal. You will pay lower fees than most of these credit cards will charge anyway.

Re: App-O-Rama adive?

Anonymous — Mon, 23 Jun 2008 01:08:44 GMT

zachst wrote:
Well the real reason im doing this is to invest it in my family wholesale business where i also work. If i throw in 40-50k in inventory. I could get 50-70% return on my investment in about 6-10months. So even with fees I come out way ahead. I also want to get all the major cards before FICO 08 goes in place and my major AU card falls off. I wont be applying to any major loans for atleast 2 years. So inquires will not affect me. So how many cards would be ideal? Also Can I use the BT check to pay my suppliers or send to my bank? Thnx for the input

I cannot emphasize enough what a bad idea I think this is.

First, most people who do AORs use credit cards because they need 0% offers in order to make money on the float. If you truly expect a 50-70% return in 6-10 months, you don't need 0% offers. An installment loan would be a much safer way to borrow the money you want to invest. You would still come out way ahead, and it will barely affect your FICO score.

Second, I have been investing long enough to know that there is no such thing as a guaranteed 50-70% return in 6-10 months. I understand this is your family business, but there is no invesment that provides that kind of return without significant risk of loss of principal. What happens if you lose your principal? At least when when people do AORs and lock their money away in CDs, those funds are in an FDIC-insured instrument. It is a terrible idea to put your AOR money at risk in any investment that is not guaranteed against loss of principal.

Finally, please don't take this the wrong way, but the nature of your questions about how the BT checks work, and so on, lead me to believe that you don't have enough experience with credit cards to be able to pull this off. Do you really think you can handle an additional 10 cards on top of the the ones you already have?