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

[Anonymous]

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@kilroy8 wrote:

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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.

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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. 

[Anonymous]

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. 

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[Anonymous]

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.

[Anonymous]

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@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. 

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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/

[Anonymous]

Awesome advice! Thanks! 

[Anonymous]

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@Anonymous wrote:

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@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. 

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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/

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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. 

[Anonymous]

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? 

[mikesonthemend]

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@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? 

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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.

[Anonymous]

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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.

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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. 

[mikesonthemend]

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.