help please

[Gerald56]

hi all,

my wife started getting approved for credit cards and recieved 6 in last month. her credit score took a huge dive...50 points. would it be a good idea to cancel a few of the new ones she just got? she thought credit cards would help after BK but that many so quick hurt her scores bad. any suggestions????

[Anonymous]

For the love of god don't cancel them... she'll need them to restablish her credit.  The damage to her report with the inquiries and new accounts is already done.

I did the EXACT same thing after my discharge in May... See all the accounts in my sig?  They were all opened from May-December 2013 with the last one ($7k Visa) being the icing on the cake.

I met my goal of setting myself up with a nice rebuild profile in 7 months... now I sit back and coast to higher scores as everything ages...

My scores took a hit too... but they'll rebound.

[Gerald56]

so if she sits still numbers should start climbing back up?

[TheGardner]

yes they will.

[Gerald56]

thank you!!! she is really upset...i'll pass along the info

[SoulMaster]

What are the limits?  If they're all sub $500 then YES, cancel those worthless store cards as fast as you can.  There is such a thing as toy-limit hell, and getting that garbage aging off your report is the right thing to do.

Both of you should sit down and read this thread:

http://ficoforums.myfico.com/t5/Bankruptcy/HOW-TO-From-BK7-discharge-to-700-in-24-months-or-less/td-...

Then work through it together.  No store cards, no secured cards... you don't need 'em.

-SM

[RnJ]

Soulmaster, everyone who has to start rebuilding from scratch usually is in toy-limit-hell, but for the smart ones, it is only temporary.  Those who are in forever toy-limit-hell are those who keep applying and screw their credit moreso for a lengthier time.  If Gerald56's wife cancelled them now, they would still show on her CR's, and would make her less likely to obtain new credit at this point.

Gerald56,  your wife has 6 new accounts now.  Let the dust settle for at least 6 months.  Do not cancel any of them right now!  Depending on what cards they are, and their starting limits, some may allow CLI's within 4-6 months, it just depends on the issuer.

Tell her to use the cards wisely, make small purchases at first (because 6 new cards may be harder to manage for her than say, 3 new cards) - and PIF every single month.  She could allow just one of the six cards to report a 1-5% balance to see if her scores improve month by month (but do not "carry" a balance, since this will accrue interest charges).

Another way is to rotate the cards' use every other month:  Use three cards, PIF, then the following month, use the other three cards, PIF.  Again, it depends on what the cards are, and who the issuer is.  If you'd like to state who the issuers are and the type of cards, someone could help you determine who is more likely to give CLI's and when, in order for her to build them up.

In time, when her scores are good, when her limits are increased, she will be better eligible for prime cards, so at that point (could be 6 months to a year, it depends), if she's approved for a prime card or more, then she could consider cancelling one or two of the "toy" cards, but do not cancel the oldest card(s) since this will affect her AAoA worse.

She has 6 new accounts, and assuming 6 new INQ's - so best to lay low, let the dust settle, manage the cards and let time heal the wounds.  Her scores will recover with appropriate use of the cards, making timely payments, and time. 

[SoulMaster]

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RnJ - We have seriously differing opinons.  There is absolutely nothing wrong with that, and I wanted Gerald56 to get the contrasting opinion.

However, cancelling her cards now absolutely will NOT make it less likely that she obtain new credit in the near (<12mo) or far future.  In fact, it absolutley WILL help when she needs to recon.  Q: "Why did you open and close all this little store accounts?"  A: "Because I jumped the gun on my rebuild and when I realized I had to have patience to rebuild the right way, I cancelled the accounts I should have never opened."

The other thing cancelling those garbage cards will do is remove the temptation to spend on them.  The translation of the 2nd bit of advice you gave was to have her "go to 3 of those stores once a month and make a small purchase without overspending".  There's no need for that.  She got the CapitalOne and can just use that, keeping it under 10% of the limit, letting it report, and slowly rebuilding her credit profile.

I don't know if you've ever filed BK in your life, but the sad truth is that 30% of BK13 filers are BK7's that jumped the gun on thier rebuilds and have to file a BK13 within 8 years of the original 7.  (http://news.uscourts.gov/2012-report-shows-more-repeat-bankruptcy-filers)  This number is climbing and is a HORRIBLE statistic.  The fact is that Gerald's wife doesn't need to "use her cards" wisley, she needs to use her credit wisely.  Also, a BK rebuild is very different than a bad-credit rebuild where there's alot of room for store cards and secured cards.

Finally, if she kills them all now, or at least any of them that have less than a $500cl, then her AAoA won't be effected at all.  If she kills them in the future, she's going to have the problem you mentioned w/ her AAoA running around like a roller coaster.  Also, to have the best scores possible, all of us know that we need to have 3-6 revolvers.  With 6 toy store cards, she's pushing that already and limiting the availible "slots" for other cards in the future.  As an add on to the "kill them now" column; mortgage analysts do NOT count store cards for AAoA, and acutally subtract points for having "too many open tradelines".

Like I said, there's nothing wrong with differing opinions.  Mine just happens to be that killing the store cards will do much more long-run-good than harm.   Leaving them open is the reverse.

-SM

[RnJ]

First, no one knows if they are in fact, "garbage cards".  We don't know who the issuers are, therefore, there is room for improvement, CLI's, eventual product change, etc.  I must have missed prior posts by the OP, and I'm not going to go look for them, I'm simply responding to THIS thread with the info given.  If the 6 cards are the 6 listed in OP's sig, then that's another story, but I never assumed those were the wife's recent apps.

Why would anyone want to waste 6 INQ's, cancel cards, then start applying for others?  Those INQ's will hurt most for the first 6 months to a year of new apps, depending on the lender.  Furthermore, having cancelled all those cards, is like starting over, again from scratch, which will only beget more toy limits - such a method is only going backwards, not forward.  The damage is done.  If wife decides to cancel, perhaps we would be in agreement about obtaining bank or CU secured cards to start off, but again, those prior closed accounts plus the INQs are going to hurt.

OP mentioned wife is trying to improve, post BK.  Rarely do people with no credit history, thin file, bad credit or no open/current revolving tradelines ever get a prime card with high limits.  Again, we have no idea what is on her credit file beyond the cards most recently approved for.

Having the option to tell a new creditor she applied too soon without the knowledge of the hurt (i.e., closing all the cards prior) it caused her profile, does nothing for the lender, and in fact, may make her seem desperate for credit.

No one needs to have more than 3 revolving cards.  It's a personal choice how many cards one wants, based on a variety of factors for the individual and other mixes of credit they may benefit more from.  Where the 3-6 comes in as "necessary" for the best scores, boggles the mind.  Again, we're talking post-BK, so 3 cards to start is sufficient at this point.

I didn't say OP's wife needed to keep the cards forever, and least of all, none of what I said pertained to obtaining a mortgage, which was never mentioned in OP's post.

You're right, differences in opinion are fine, as are different choices and methods for helping others decide what's best for their situation.  Ultimately, it is the OP and his wife's choice to decide what's best for their situation.

[Anonymous]

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@SoulMaster wrote:

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RnJ - We have seriously differing opinons.  There is absolutely nothing wrong with that, and I wanted Gerald56 to get the contrasting opinion.

I don't know if you've ever filed BK in your life, but the sad truth is that 30% of BK13 filers are BK7's that jumped the gun on thier rebuilds and have to file a BK13 within 8 years of the original 7.  (http://news.uscourts.gov/2012-report-shows-more-repeat-bankruptcy-filers)  This number is climbing and is a HORRIBLE statistic.  The fact is that Gerald's wife doesn't need to "use her cards" wisley, she needs to use her credit wisely.  Also, a BK rebuild is very different than a bad-credit rebuild where there's alot of room for store cards and secured cards.

-SM

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Nothing wrong with differing opinions.  I have my own too...

I filed 13 because I lost my job in the great recession.  At the same time I wanted to keep the car I had at the time (2006 Chrysler worth about 8k) and because I have a little pride and wanted to make at least some effort to repay my debts rather than burning my creditors with a Ch 7.

(No offense to you 7 filers of course)

I paid back a little over 50% of my debt.. and I guess my reward for this is the 13 falling off my report in 2016 instead of 2019.

As for store cards, I agree.  They aren't part of my rebuild profile.  I was at the mall tonight in fact clothes shopping... "Would you like to apply for a card?  You'll get 10% off your purchase."

"Ummm.... no thanks."