What card next?

[Anonymous]

Hi everyone, 

TU - 687

EQ - 637

EX - 629

I'm rebuilding with very low income (will likely change in the future but very low for now) of about $2k/month.  I'm worried that my old car might crumble at any time and am applying for jobs, so I'm looking to improve my credit as much as possible in the near term. I've read here that another credit card or two can raise my score (assuming i can keep major balances off them).

I have an old USAA credit card chargeoff from 11/2012 that I just got dropped from TU.  I'm going to try the same with EX the first week of July and will have to wait i hear until October to ask EQ.

I have a recent (April) no-interest until 2020 $2k Cap1 with a balance of $1792

Macy's $500 w $0 balance

Lucky's $500 w $0 balance

An old Discover $4300 w $2900 balance that is closed to me but I'm still paying and it's reporting as current/paid as agreed.
$2k in student loans .

Last 30+ late pay anywhere almost five years ago.

$3,000 in savings.

My plan is to this month pay down the Cap1 to $979 to get it below 49%, and pay down the Discover to $2105 to do the same.  I assume both TU and EX should be between 690 and 705 at that point, but you guys know better.

Question is then what card to apply for to get the best credit bump?

Thanks in advance for your help!

[NRB525]

I would not be so quick to draw from that savings. While it would pay down cards to improve score a bit, you then lose the flexibility ( situational control ) to deal with surprises. It seems nice to get extra credit, but that credit still needs to be paid off.

I would suggest focusing on finding a new job, seeing what can be done that is critical to keeping your car running, and keep making payments on these debts. Pay more than minimum for sure, but look for other longer term changes to improve income first. With improved income and continued payments, your scores will improve and better cards will come along later.

[Anonymous]

No new app will help you with anything short term in my opinion. The only thing that will help is getting balances down and work towards removing as much negatives as you can from your report. And since you re aiming for some sort of loan for a new car showing good income should be important for you debt/income ratio.

New credit lines could help you long term, for short term improvements you should work with what you have.

[Anonymous]

Buying a car is easier than getting a CC.

Ideally before you pull the trigger on a new CC those balances should be under 10%.  Right now you have ~4500 in balances that need to be paid down and a new card.

Just wait until those balances come down to be in the best possible position when you're approved.  It could mean the difference in a $500 limit or a $5K limit.

[44Rebuild2Ball]

Mookie,

I am not an expert, but I have spent countless hours researching credit & rebuilding. Question?

What does “Discover that is closed to me” mean?

Here are some recommendations...

1) Leverage TU score, stay away from another CAP1 Card unless you can afford a hard inquiry on all 3 CR’s. They pull from all 3 bureaus.

2) Where do you live? Go to the credit pulls DB and do a little research. See what lender/card pulls TU in your state/geography.

3) I believe Barclays pulls from TU. But I would join a Credit Union. They have credit products that blow banks away. USAA is a decent bank, but they are actually not a CU.

4) Go here:
https://www.bankcheckingsavings.com/hard-pull-or-soft-pull-for-opening-a-bank-account/

5) Put some of that savings into a Share Secure Loan at a CU. Low amount (most CU’s start at $250-500). A 6-12 month term will boost your score for an auto loan, if that’s what you want. Open a Checking & Savings also...you move to a CU, it will greatly benefit. Make sure the CU is a good one, but they are all better than WF, CITI, Chase, BOA. POI means proof of income, go for cards that have instant approval so you don’t need to share your $2k/mo income. But even $2k with no expenses will get you a 2500-5k SL Card.

6) Make sure you use that Transunion score for a credit card app. It looks much better. Call the credit union to ask what your approval odds might be. Apply in branch, they may be more lenient...and make sure they use TU for credit apps. NFCU - Navy Federal might give you a nice limit, but it is restricted membership now. You must be military or have ex-military to join, they use EQ for membership, but TU for credit. They would give you a great card with a generous limit and great rate.

7) You need to keep your CC balances below 8.9%. Take some of your savings and payoff some of those cards. Put your money to work for you. Watch your score go up 40-50 pats just by doing that alone. Find out what date your card statement ends. Pay it down right before the statement cuts. Take out a Share Secure Loan which is secured by cash in your savings account with a CU. They cost like $9 for a short term 250 loan. https://www.towpathcu.com/understanding-share-secured-loans.aspx

You can easily get your scores into the 700’s. Are those FAKO scores from CreditKarma or other free sites? Or are the true FICO8 scores. If you want to know for sure, go to a Experian or use Discover Scorecard. Both will give you your EX FICO8, not free Vantage scores.

Hope this helps. I am working on my first card in 6 years. I got preapproved with Discover for a Secured. They also are great and generous for a bank. They like thinner credit files, low inquiries. Make sure you use prequalifying tools before you apply to see what you can get. If you are in the right state (CreditPulls database will give you a good idea) you can get a big bank credit card if you do go the Credit Union route. Hope this helps...

[44Rebuild2Ball]

Check for credit limit increase (soft pull make sure they do not do a hard pull) on your Discover if it is still open. It is called the “luv button”, which means logging into your Credit Card Account and clicking the Request a Credit Limit Increase, CLI. Most are soft pull, but you can call to make sure. That is a quick way to increase limit and lower your utilization. Any little bit helps. See if you can get increases on the store cards as well. It all goes to the Credit utilization factor, that is 30% off your score. I firmly believe joining a credit union will get you what you need. If those score are true FICOs you can get an auto loan, most go they the TrueCar program. Watch as you see APRs for your CU auto loan come in at 8-14%.

[Anonymous]

My apologies for the very long delay in replying, thank you very much to each of you that replied!  I have some very interesting and good news!

First some back story for setup...regarding my closed Discover account, they shut it off to me for credit access some years ago when i was in financial trouble, but have allowed me to continue paying, almost as if it's just a loan, except.... it shows up on my account as a revolving balance with current payment status but in the closed section.  As I said, its balance continues to be counted along with my current credit card in the revolving calculation, whereas my student loans are only in the installment section (which does not seem to be a big part of the utilization formula...the app tells me paying off my student loans gives me zero score bump).

Also you should know I took out a $6k personal loan at the end of May through LendingClub (at 16%), because I wanted to pay back a personal loan from a friend who ended up losing their job.  

I held off on applying for any new cards until today.  My old USAA chargeoff has now fallen off all three bureaus, so my current FICO 8 scores from Experian Creditworks Premium service (which i'm loving) are EX:697 EQ:692 TU:698.

I'm planning to join DCU, thanks to the advice I've recieved on this thread and on MyFico in general, and I've read that they have an interest rate tier at EQ5 (EQ Fico 5/mortgage) 700 that they use for auto loans.  

And the Experian app tells me that if I open a new credit card with a $3800 limit, my score will go up 20 points (I assume bc it would lower my currenly high utilization of 61%, which would put me at 717 Fico8.

So I did a bunch of reading here and decided it could be worth it to see if Discover has blackballed me for new credit (like USAA has).  I checked online for pre-approval and was happy to see i got pre-approved for Discover It!  Very exciting...

Now I'm currently low income, less than $30k/yr right now, and thanks to that personal loan and my other accounts I have a DTI ratio of about 40% and that Utilization rate of 61%, so I'm expected something between $1k and $2k (and probably deserve nothing), but was still somehow hoping for 3 or 4 to help get my Fico up those 20 points so i can qualify for lower rates.  No chance right?!

Well....... i get the approval and then click on the status to see the limit and don'tcha-know they gave me $7400!!

How bout that!?  

So now, if the Experian service is correct, I'll get a 20-point bump up to 717 Fico 8 in a month,  and hopefully be over 700 for DCU so I can get a car loan at a better rate.

So lessons I've learned recently:

- At least per EX, more CC credit (keeping the same total revolving balance) will at some amount raise your FICO 8 score. I will be able to confirm this in a month or so.
- A closed CC account can still count toward your revolving balance and utilization

- Discover at least will give a $7k+ limit to someone who has low income, high DTI, high utilization, been a problem for them in the past and only decent scores. Maybe it's bc I've been paying them 20+% interest on my balance for several years :0

Now back to trying to get a better job so I can pay everything off more quickly and stop worrying so much about credit!

Thanks again for all the advice, some was spot on no doubt and some of it seems it might not be correct, maybe my case will help add some more understanding here.