topic Re: Best way to re-establish credit in Rebuilding Your Credit

Best way to re-establish credit

bichonmom — Wed, 18 May 2011 21:12:04 GMT

I'm trying to determine the best and quickest way for me to re-establish credit. This is what I have:

Old Navy opened 3/11

Cap One opened 3/11

Cap One opened 4/11

In addition there is an old unpaid collection (dispute w/OC) from 2005 that I will probably wait to drop off next year.

My total CL is only $1000. I know the 2 Cap Ones will have an auto CLI in a few months, but from what I've read here, I shouldn't expect more than probably $250 CLI per card, which will bring my total CL to $1500.

What I'd like to know is if I should look at opening more store cards (I'm considering an Amazon/GEMB card)... OR if I should not do anymore store cards (since they are likely to have really low limits and will only lower my AAoA), and instead app for Visa/MC. Or if a combination is better.

The other card I'm considering is a Barclay's B&N card, but am hesitant because I've read mixed reviews here, and am concerned they may close my account if they see an inquiry or something they don't like when they do their monthly soft pulls. And a closed CC will be much worse than not getting it in the first place.

I could also try to negotiate a PFD for a reduced pay-off on the collection, which would probably make me eligible for more/better CCs. I just don't know how willing the CA would be to negotiate down the amount AND delete.

I'd really appreciate your advice based on your experiences. I've waited patiently for a BK to fall off (not realizing that I could have been rebuliding during that time). So, now I'm trying to rebuild asap.(I'm just not feeling very patient since I've already waited SO long.)

Thank you!

Re: Best way to re-establish credit

Shellemilyrose — Thu, 19 May 2011 08:06:32 GMT

Okay, a few things. Number one, congratulations on getting approved for 3 new credit cards. Number two, do NOT give into the temptation of spending a lot on them. The most you should ever use on each of them is 9% of the credit limit... or at least make sure you pay it down quickly to fall back into the 9% or lower of your total CL on each card. Number three, I would kind of recommend against getting a bunch of retail cards. Why? Because the purpose of a store card is to spend money; you know that, i know that, and most importantly, anyone evaluating your creditworthiness knows that. With a store card, you're more than likely not buying appreciable investments, which means you're cutting into your net worth. Also, debt to income ratio is actually a big factor on one's credit report, and ignoring debt to income ratio has a lot to do with what leads people into bankruptcy in the first place. I think the 3 cards you have is a good start for establishing a positive payment history on them. Personally, I would try to stay away from "status trumpeting" items and instead use the cards to pay expenses that you have to pay anyways... like utilities, maybe your car insurance or car repairs, etc. That way, you're insuring that the expenses you put on the card were expenses you would have had anyways... meaning you already possess the money to payback what you just placed on the card. But that's just me. Good luck!

Re: Best way to re-establish credit

fot1 — Fri, 20 May 2011 01:47:28 GMT

Without knowing all the details of you credit history and your goal it's hard to say for sure. General advice I would sit with the 3 cards you have and focus on trying to get the Collection removed9 and any other baddies). Adding to many new cards could scare off offers down the road. I would let those cards sit for 6-12 months, pay on time then look to getting a CC from a CU, if you want a higher CL.