When to apply? How do they decide if you get approved or denied?

[ccubedzx3]

Good morning all,

   Hoping you can help me out.   In December in 2011, our situation was a mess.   We had $275,000 in debt, including our house, and had a few accounts that were past due.  At the time we had the following accounts open and reporting to credit agencies, along with the current status at the time-

1. Mortgage- $143,000- $1375/mnth (60 Days Late)
2. 2nd Mortgage - $3272 - $125/mnth (30 Days Late)
3. Secured Loan - $482 - $40/mnth (Current)
4. Car Payment - $5700 - $215/mnth (Current)
5. Car Payment - $14,450 - $415/mnth (Current)
6. Student Loan - $35,000 - $127/mnth (120 Days Late)
7. Capital One Credit Card - $4669.95 (120 Days late)
8. Wells Fargo Credit Card - $2967  (30 Days Late)
9. Credit Union Loan - $1225 (Current)
10.  Juniper Credit Card - $3842.29 (120 Days Late)
11.  Gap Credit Card - $126.00 (Current)
12.  Home Depot Credit Card- $2906.75 (90 Days Late)
13.  GE Money Credit Card - $2100 (60 Days Late)
14.  IRS - $10,760 (Current)
15.  Condo Association - $3500 (Current)
16.  Loan - $1225 (Current)

So all in all, we had (2) Mortgages, (2) Car Payments, (3) Loans, (6) Credit Cards, (1) Student Loan, (1) Debt to the IRS, (1) Debt to a Condo Association

Fast Forward to today, and we have the following status-

1. Mortgage- $0 (Sold in December 2012, Living with family currently)
2. 2nd Mortgage - $0 (Paid off in January 2012-CLOSED)
3. Secured Loan - $0 (Paid off in January 2012-CLOSED)
4. Car Payment - $7200 - $215/mnth (Current)
5. Car Payment - $8500 - $415/mnth (Current)
6. Student Loan - $30000- $127/mnth (Current)
7. Capital One Credit Card - $$0 (Paid off in January 2012-CLOSED)
8. Wells Fargo Credit Card - $2600 (Current)
9. Credit Union Loan - $0 (Paid off in January 2012-CLOSED)
10.  Juniper Credit Card - $0 (Paid off in January 2012-CLOSED)
11.  Gap Credit Card - $90 (Current)
12.  Home Depot Credit Card- $0 (Paid off in January 2012-CLOSED)
13.  GE Money Credit Card - $0 (Paid off in January 2012-CLOSED)
14.  IRS - $2500 (Current)
15.  Condo Association - $0 (Paid off in December 2012-CLOSED) 
16.  Loan - $0 (Paid off in January 2012-CLOSED)

Right now we have $50890 in total debt (A Reduction of $224,110 in debt in 2011!) , Everything that has a balance has been current since January 2012, (0) Mortgages, (2) Car Payments, (0) Loans, (2) Credit Cards, (1) Student Loan, and (1) Debt to the IRS

My question to you guys is, when should we be safe to apply for more credit?  We are in the process of buying a house, and we wanted to put things on a credit card, or various credit cards.  The only problem is, we are afraid to apply and get denied.   We are buying a $300,000 house, we make $150K a year, and our DTI with our House payment included would be approximately 22%.

Should we be nervous?  We want to get a Lowe's card, and a major credit card (Chase, Capital One, Etc.).   We fear rejection......Would we be able to get approved for anything considering back in 2011, we had late payments?

My Mid score is 658, and my wife's is 680

I apologize for the long question, and all the info, but I figured the more info I share, the easier it would to get an answer!!

Thanks is advance!

[dodfire]

Ummm....do you honestly think that MORE credit is the best choice?? 

[ccubedzx3]

The BEST choice? Absolutely not....The BEST choice would be to pay for things cash, I know this.  However, from that dreadful time of our life in December 2011 until now, we have maintained a budget, and have some cushion for paying back any new credit we could acquire. 

I am quite proud of the fact that we paid off so much of our debt, and now we want to dip our toes in the water and acquire more credit (no more than $15,000 total) and responsibly pay it back, on time....

[enharu]

i do not recommend that you apply for any card right now, only because it might affect your mortage rates.

if you have already been approved of a mortage, grats!

most banks however are very skeptical of extending further credit immediately following a big purchase (house/car) for fear that you might already be over-extended to the extent where you're juggling debt between different banks. so even if you do get approved, you're gonna get a high APR which is totally not worth it.

Most prime cards require a higher score. Store cards are easier to get, but at the same time, it is not worth paying interests, unless they have zero APR introductory offer and you're confident of being able to pay it in full before accruing all kinds of fees and interests.

is the money owed to IRS a lien?

when your previous mortages were sold, was your house sold through short sale or foreclosure?

were the cards completely paid off when you closed them, or did you negotiate with the banks?
how long ago were the late payments?

All these factors come into play. You have a high annual income though so banks like that as well. As for Chase, I am guessing that as long as you have a good banking relationship with them, they'll be a lot more inclined to offer you credit. Easiest way is to start a checking with them and stash your money in there. You can also try to have Wells Fargo raise your CL. If you have checkings/savings with them and can show a healthy average balance amount, they'll probably be a lot easier to work with.

Best of luck!  

[dodfire]

Oh I am not passing judgment on you. That is a very impressive dollar amount to pay back in such a short period of time and to have a savings left over all on a $150k income...very impressive.

My point was only that you still have a LOT of outstanding debt and purchasing a home for $300k. Having first hand knowledge of how fast things can spin out of control. 

[ccubedzx3]

In response to enharu:

i do not recommend that you apply for any card right now, only because it might affect your mortage rates.  I wouldn't apply until after we close, and move in. 

if you have already been approved of a mortage, grats! Thank you!

is the money owed to IRS a lien? This debt will be repaid in full once I send in my tax return this year.  It was money owed from 2009, and was not a lien

when your previous mortages were sold, was your house sold through short sale or foreclosure? It was sold by owner, and sold for exactly what I owed

were the cards completely paid off when you closed them, or did you negotiate with the banks? They were paid in full, not settled or reduced.

how long ago were the late payments? January 2012 was the last late payment

Best of luck!  Thank you!!!

[ccubedzx3]

In response to enharu:

i do not recommend that you apply for any card right now, only because it might affect your mortage rates.  I wouldn't apply until after we close, and move in. 

if you have already been approved of a mortage, grats! Thank you!

is the money owed to IRS a lien? This debt will be repaid in full once I send in my tax return this year.  It was money owed from 2009, and was not a lien

when your previous mortages were sold, was your house sold through short sale or foreclosure? It was sold by owner, and sold for exactly what I owed

were the cards completely paid off when you closed them, or did you negotiate with the banks? They were paid in full, not settled or reduced.

how long ago were the late payments? January 2012 was the last late payment

Best of luck!  Thank you!!!

[ccubedzx3]

dodfire, I don't think you were passing judgement, I appreciate your insight!

I understand I have a lot of debt left, but the majority of it is the student loan that has a small payment per month.....Both cars will be paid for within two years, and the IRS will be paid in full within the next month or two once I do my taxes.  That will leave us with a mortgage (2000/mnth) , and the 2 credit cards (20/mnth, 60/mnth). 

I am not a big proponent of credit as you can see from my past, but I want to keep my cash reserves for a bit, and would prefer to take advantage of 0% on appliances/furniture, and pay them in full before the 0% expires rather than plunk down approximately $7000 in cash on appliances/window treatments.

[ccubedzx3]

All in all, with everything I have posted being considered, would I have a greater chance of getting approved or denied if I were to apply after we move in May?

[dodfire]

In my opinion you have a fair chance at getting a lower limit card. I do not see that you would be able to get a $10k credit card.

Do you have any way to get in with NFCU?

When was your last 30-60-90-120 late payment? 2011? What month? 

EDIT** Sorry I didnt see you already answered about the late payment.

[MovingForward_2012]

What are is your current cash to close situation? Are reserves required to close? I just closed on a home 2/6/13, we spent about $7,000 on things needed for the house but most of it was paid in cash. I put most of it on credit card but I am paying everything off in full this month. Your DTI is pretty good for your income and home price. If you are doing an FHA loan, a lower credit score will most likely not lead to higher interest. Higher interest is more so for conventional loans. But your scores are just hovering above borderline if the min required is 640. So you don't want the new accounts to drop your score below 640 before you close as lenders often do another credit pull right before closing and if your score drops below 640 with that pull, you will be denied if the min required score is 640. So apply after closing and after your loan is funded. I agree with the others that you will most likely get low limits.