Should I apply for my first CC & drop my AAoA and add a new inquiry?

[diane11]

GOOD UPDATE! Thanks, all! I read all of the advice here as well as a lot of info on this page. I applied for the Cap One Platinum and was APPROVED instantly for $3k. Pretty happy about that!! Thanks for the advice. 

I will start a new thread, but if anyone wants to share tips about whether I should sit on this for a bit, get the CL increase at 5 months and then apply for another card OR if I should apply for another card right away, I'd love that advice, too.

Thanks again!

[Anonymous]

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@diane11 wrote:

GOOD UPDATE! Thanks, all! I read all of the advice here as well as a lot of info on this page. I applied for the Cap One Platinum and was APPROVED instantly for $3k. Pretty happy about that!! Thanks for the advice. 

I will start a new thread, but if anyone wants to share tips about whether I should sit on this for a bit, get the CL increase at 5 months and then apply for another card OR if I should apply for another card right away, I'd love that advice, too.

Thanks again!

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Wow that is great news and congrats!  Let us know how your score does when your new account hits.

[HeavenOhio]

@diane11, congratulations on the approval.

I'd sit on this card for six months and apply for another card at that point. Then at month 13, go for card #3.

After three or four months, request a limit increase on the card. Doing so won't affect your Steps increase. However, when you receive your Steps increase, you won't be eligible to request a CLI (credit limit increase) for another six months.

Also, starting at three months, call in each month to see if you have offers to upgrade to a Quicksilver. (Don't "upgrade" to a QuicksilverOne with its fee. Those cards are too hard to product-change to a no-fee card.)

Note that you'll likely see score increases for the addition of your first card and probably your second card. That's because the mere presence of the card will offset the ding for the inquiry, the ding for the drop in AoYA (age of youngest account), and the possible ding for the drop in AAoA (average age of accounts). Starting possibly with card #3 — and definitely with card #4, you'll see the aforementioned dings.

Many people will see score increases after acquiring their first couple of cards. Then they decide to spree on three or four cards and wonder why they're seeing a significant score drop. You want to avoid that trap. If you wait six months between adding new cards, any dings will be minor, and you'll recover quickly. But more importantly, you'll avoid denials due to too many recently added accounts.

I'd try to time the auto loan so you're doing it anytime after card #2 hits your report. The loan shouldn't affect your ability to acquire a third card in month 13. Credit card underwriting cares much more about new cards than the addition of a loan.

When a mortgage application is in sight, you'll want to garden (not apply for any new credit) for a year. You'll get a nice score bump for your AoYA becoming a year old, and inquiries on your report will have become unscorable.

[Anonymous]

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@HeavenOhio wrote:

When a mortgage application is in sight, you'll want to garden (not apply for any new credit) for a year. You'll get a nice score bump for your AoYA becoming a year old, and inquiries on your report will have become unscorable.

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This last piece of advice should drive everything, because the mortgage should drive everything.  So first do your best to decide when you want to begin shopping for a home.  Then back up 12 months with no applications before that.  Then get any cards before that.

Once you have at least one card in your name that has been reporting a small balance (e.g. $20) for a couple months, you should set to work on attempting to get your late payments removed from your reports.  This is by no means certain but you have a chance of success here.  It will likely require 6-12 months of persistent work.

I glanced through the thread thus far and didn't see you mention what the credit limits and balances are on your AU accounts.  (Sorry if I missed that.)  That turns out to be very important.  Can you tell us what that they are?  E.g....

AU Card 1.  Balance = ____    Limit = ____

AU Card 2.  Balance = ____    Limit = ____

AU Card 3.  Balance = ____    Limit = ____

etc.

When you say they are in good standing, do you mean that they have never had a late payment on them -- ever?

[diane11]

@creditguyindixie

1. I am 99% certain I cannot get the student loan lates removed. I'll put some effort in, but success looks unlikely. They are nelnet (which apparently is bad), government backed, and I thought i was in forbearance, but have zero paperwork to prove it. They were Nov 2015 - March 2016 ... I know it takes 7 years to go away, but will the impact diminish before then?

2. The credit cards I am an AU on have one 30 day late in 2012 and one 30 day late in 2014. Otherwise, all on time payments. I'm going to try to get those lates remove.

3. 

AU Card 1.  Balance = 776    Limit = 800 (I am going to pay this off this month, then will put a $10 recurring Netflix bill on it, and pay this in full monthly)

AU Card 2.  Balance = 970    Limit = 1400 (This is my husband's actively used card, I will try to get him to keep this at only 50%)

AU Card 3.  Balance = 0    Limit = 9000 (Note that this is NOT appearinng on Experian. It is my father's card that I didn't even realize I was on. Hasn't been used in years and will likely be closed soon.)

[Anonymous]

Definitely work on getting the derogs removed.  Before you begin working on that, I suggest that you get all AU cards reporting < 8% ($0 is even better).  BTW, it is entirely possible for your husband to use his card heavily and still have a small or zero reported balance.  50% is way too high.

As far as getting derogs on your husband's cards removed -- you can't.  You can write all the letters and manage the derog removal campaign, but he will need to sign the letters.  I suggest you work closely with the people in the Rebuilding Forum as you do this.

Derogs do not diminsh in impact over time when we are talking about the older mortgage models.

Once the card that is in your name appears on your reports, and after your AU cards are paid to very small balances, I would suggest running some tests to determine whether FICO 8 is counting any of those AU cards in your score.  It may be or it might not be.  The tests are not hard to execute.

[Anonymous]

The OP stated early on that a mortgage app was likely going to happen in about a year.  That being the case, the advice given by others to wait 6 months or 12 months to apply for another/additional credit cards is not good.  As was stated by CGID above, one shouldn't apply for credit in the year leading up to a mortgage app.  1 CC of your own is fine.  I had only 1 CC on my CR for about 5-6 years before applying for my first mortgage and my scores were all near 800. 

[diane11]

@creditguyindixie "I suggest that you get all AU cards reporting < 8% ($0 is even better). BTW, it is entirely possible for your husband to use his card heavily and still have a small or zero reported balance. 50% is way too high."

I'm very new to this....how do I get heavily used cards to report a small or zero balance?

Re the AU lates, I would be getting them removed on my husband's behalf (letters and calls would come from him).

[Anonymous]

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@diane11 wrote:

I'm very new to this....how do I get heavily used cards to report a small or zero balance?

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Do two things to start with:

(1) Add the credit cards to the billpay feature of your checking account.  Also add your checking account to each card (in that card's online page -- e.g. if its is a Chase Freedom, log on to Chase.com and add your checking account to the Freedom).  Now you have two ways to make payments: you can pull money from the checking account (by logging on to the card) or you can push money into the card from your checking account (by logging onto your checking account).

(2) Locate the statements for each card for the last six months.  Look at what the statement date is for each card (again, looking back six months).  That will give you an idea of when the statement prints for each card.  E.g. for card X the statement might print between the 7th and the 11th of each month.

The big idea is that your card will report its balance to the three credit bureaus on the date that the statement prints.  If you want that amount to be $0, make sure the balance is zero (by paying it down) before the statement prints.  If you want the card to report a small positive balance, pay the balance down to $6 before the statement prints.  Etc.

Note that if the balance is negative it will report as zero.  So that's a very easy way to get it to report zero.

Suppose your husband has a card with a 1k limit, and he'd like to spend an average of 2k per month on it, and you'd like the balance to always report zero.  Set up a weekly push of $500 from your checking account.  Then, as you approach the date that the statement will print, if you see the balance is still positive, then push some extra cash to pay it to a negative amount.