Rebuilding Post Ch 7....where do I go from here?

[Anonymous]

Hi,

I am rebuilding after a Ch 7 that was discharged in July 2009.  My post credit file and plan of action is as follows:

Orchard Bank, limit 500, balance owed is 0, opened Sept. 2009 (unsecured), only plan to use for gas purchases ONCE a month for about $35-40 to keep rotating the utilization at or below 8%. Will pay as soon as statement is received.

Chadwicks, limit $580, balance owed is $36, opened 2005, no lates. Plan to use every 3-4 months to keep acct open with less than 8% utilization on each purchase that will be paid off once statement is received. 

Student loan, orig bal was $6949, current bal is $6867, opened in 2006, was in deferment until last month when I started paying $85/mth. Even though account was in deferment, shows on time reporting and no lates for the past two plus years.

Dress Barn, limit $1130, bal is 0, opened in 2001 (only an authorized user on this acct), no lates. Does this account even matter since I am an authorized user. I was thinking of having my husband close it since I havent used it in 6 months or so. Or, if it does make a difference, I will use periodically to keep open. Let me know.

Mortgage, orig bal was $170,000, current bal is $166,250, opened in 2007, was 90 days late April to July, 2009 but have been current and no lates on payments since July 2009.

Applied for a Citibank secured card. They said to send in the check and signed app, but I am NOT getting my hopes up because I have read on the board of instances where Citi will tell you to send the money and then deny you. So, will see what happens.

In the meantime, how do I make the accounts that I currently have above in bold work to my advantage.

Thanks for any input in advance.

[MarineVietVet]

I'll give an opinion on a few things.

Concerning the Orchard and Chadwicks account. I'd pay in full one of these before the statement posts so that it shows a balance of zero each month. The other I would pay in full after the statements posts and before the due date to avoid any interest charges. That way you only have half of your open revolving accounts showing a balance each month. Also try and keep your utilization that does report to less than 9%. For your Orchard card that would be less than $45 and for the Chadwicks account less than about $52.

I would not close the Dress Barn account. It can help you IF the account is older than any of yours (which you said it is), IF the payment history is long and clean, IF the utilization is very low, and IF it will report to the CRA's. Not all cards will do this. You inherit the entire history of this account. One caveat however; if this account starts to go south your credit will be affected as well. Keep that in mind. Find out if you are shown on the Dress Barn account by the CRA's. You can do this by pulling each credit report for free from  www.annualcreditreport.com. If you are listed as an AU I would also use this card from time to time and PIF before the statement posts.

I would not apply for any new credit for awhile. Let everything age.

(myfico)
7/09 TU-742 EQ- 779
8/09 TU-765 EQ- 783
9/09 EX pulled by lender 802

CC interest free as of 8/09
Time can heal all wounds and a low FICO.
"Hello my name is Sandy and I'm a recovering crediholic".

[Uncle_Money]

Marine has made some good recommendations.

The formula is very simple:

1) Pay your accounts IN FULL before the statement hits each and every month.

2) Do not apply for any new credit for at least 1 year after you get the secured card.

3) Never, ever, ever pay late on any account.

[Anonymous]

@ marinevietvet

Thank you for responding. I am trying to understand how the utilization applies. I get to keep it under 9%, but if I PIF before the statement post, how does the CRA's know that I have been using the card and paying it responsibly? Do the balance due post immediately to the CRA once you use the account?

Also, yes, the DB account is showing on all 3 CRA's so I am good there.

Again, thanks!!!!

[haulingthescoreup]

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Missy_Bell wrote:

@ marinevietvet

Thank you for responding. I am trying to understand how the utilization applies. I get to keep it under 9%, but if I PIF before the statement post, how does the CRA's know that I have been using the card and paying it responsibly? Do the balance due post immediately to the CRA once you use the account?

Also, yes, the DB account is showing on all 3 CRA's so I am good there.

Again, thanks!!!!

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We don't see it on the reports that we get, but when the CCC updates every month, they indicate whether the card has been used during the previous month, regardless of the balance that they're reporting. They report the highest interim balance that you hit, and if it's higher than earlier ones, you'll see the new figure post.

I found this out when I had a $10K charge for new flooring hit my USAA AmEx. I paid it off before the statement date, but I dampened my drawers when I saw the balance on the next month's CR. But when I looked more closely, I saw that it was under "high balance" and current balance was $0.

Also, I got an alert from my Equifax Credit Watch Gold a few weeks ago stating that I had new activity on an unused account, which was my HSBC Best Buy store card. I was pretty mad, because I had paid it to $0 well before it was due to report, and I thought that they had reported a balance anyway. When I pulled my report, I saw that it was reporting $0, but HSBC had reported that I had used the card, which triggered the alert.

This is how the scoring formula knows whether a card is truly dormant, versus just being a piffer.

I pay all my cards but one before they report, but I get credit for actively using them, while having somewhere around 0.017% util or something nuts like that.

[smallfry]

Hauling my Walmart card closed on the 28th with a 0 balance. I charged 80 bucks. Equifax picked up that amount as my last payment so obviously they know I had used the card even though the statement closed with a 0 balance.

[MarineVietVet]

Missy_Bell wrote:

@ marinevietvet

Thank you for responding. I am trying to understand how the utilization applies. I get to keep it under 9%, but if I PIF before the statement post, how does the CRA's know that I have been using the card and paying it responsibly? Do the balance due post immediately to the CRA once you use the account?

Also, yes, the DB account is showing on all 3 CRA's so I am good there.

Again, thanks!!!!

Oh they know. BELIEVE ME they know!!!! 

[Anonymous]

I see from the tone of your post that you have been scared straight.....LOL!!!!!!

[MarineVietVet]

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@Anonymous wrote:
I see from the tone of your post that you have been scared straight.....LOL!!!!!!

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Just like Santa they know when you've been bad or good.