Should I open another credit card to rebuild credit?

[Anonymous]

My current FICO scores range 605-624, this is highest they've ever been. My strengths to my credit file are, the age of credit history (avg 8 yrs 7 mo) and the number of new credit accounts including inquiries. No new account since 1 yr 4 mo ago & zero inquiries. 

Weaknesses of my credit file are too many derogatory marks in the form of medical collections and the other weakness is too few open credit accounts.. However I am graded "good" as to the mix of credit . So, Question..........

Since I have too few open credit accounts, should I accept the Discover It Card that I've been pre'approved for and open to keep low balance on?

My total open accounts are only 6 (3 cc, 2 student loans, personal loan). So a new account will significantly lower avg age of my credit and time since new credit will be zilch. Yet it would give me another revolving account that can remain long-term & increase account numbers and would add additional timely payments each month to factor into the score. Would opening this account offer a benefit greater than the damage it will cause as a new credit knowing it'll lower credit age.. what should I do?   Advice please!  Thanks !

[Anonymous]

IMO go with Discover Secured. Do not do Capital One (3 HP's). If you want to avoid HP's all together then go Open Sky or Green Dot. This might hurt your AAOA in the begining but to me it's a smart move long term given your situation. Discover is more likely to graduate to unsecured with a higher CLI when the time comes. Discover is the best secured IMO. I have all 4 - LOL :-)

[CreditInspired]

Hi OP and welcome to MyFICO

Since you already have 3 revolving accounts, you have the right amount for premium scoring. You do not need to get another credit card for that. Your statement about few credit accounts leads me to believe you got this info from CK. It’s just not true.

Your primary goal should me taking care of the derogs. Either pay them off, see if you can do pay for delete, or get goodwill letters.

You don’t say what your UT is on your cards or if you’re carrying balances. This is very important. So, if you’re carrying balances on every card—stop. Let all cards report 0 except one, and work on letting that one report less than 8.9%.

Are you making your payments on time?

Now, to answer your question. IMHO, do not open another CC. As you noted, it will lower your AAOA, and you don’t want or need that.

GL2U

[spiritcraft1]

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Since I have too few open credit accounts, should I accept the Discover It Card that I've been pre'approved for and open to keep low balance on?

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Yes, that is a great card that will graduate.  If preapproved it is a sure thing and is a card you can basically keep forever.    I see this as a no brainer and a solid long term move.

[HeavenOhio]

Welcome, @Anonymous.

Ignore any advice saying that you don't have enough accounts unless it's a consensus opinion that comes from this board. In your case, you have six open accounts, which is plenty for now.

You might want to replace cards if one or more of them isn't very good. But with your current scores, now might not be the best time.

As mentioned, Discover might be a good fit. What are your current cards, and what are their balances and limits?

[Anonymous]

Thanks for your reply! UT is less than 5% on my Cap One Quicksilver & Credit One Platinum.. UT is 40% on my Cap One Platinum and I'm aggressively working to get it down to 5% as well. I should be there within a month. It was at around 80%.. the reason was because I was denied a credit limit increase for reason "not enough balance utilized" in my denial letter.. then I used it and 6 months later was denied for "balance too high." I literally just got it down to about 57% UT & re-applied for CLI and got approved for $500 just last week which dropped my UT to around 40%. The Quicksilver card at the same time with 5% UT got approved for only $100 CLI, probably for "not enough balance utilized" because that card from everything I've read tends to get higher credit lines than the standard platinum card. All of my credit cards have perfect payment history and have never been maxed out.  I'm sure capital one wants higher use of credit limits but followed by being regularly paid off but I just don't have that kind of cash flow. 2 years of quicksilver and perfect payment history and it has a lower CL than my 1 year old Credit One card.. QS has $600 CL. The way Cap One figures qualifications for CLI is tedious and complex.. I can't understand exactly what they want. 

[Anonymous]

Like already said above, you have enough to rebuild, adding another card now will only lower your AAoA and reset AoYA to 0 month (significant hit here of 15ish points alone) plus the HP hit. Collections are what's holding you back, work on PFD and lowering your UTI should be your focus.

[dynamicvb]

Welcome to the forums.

Cap 1 is funny when it comes to CLI's for most people. That credit one could be replaced with the Discover IT. The Discover will likely grow, but you may want to wait and get your scores up so you get a higher SL. I would say to wait right now, work on getting your utilization down to        < 8.9%, that should give you some points right there. Attack those baddies and see if you can get them to agree to a PFD or at least get them paid and closed so they don't keep dinging you each month.

Then when you get into the mid 600's look to kill off the Credit One and replace it with a better card that has some perks and no annual fees.

[spiritcraft1]

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@Anonymous wrote:

Thanks for your reply! UT is less than 5% on my Cap One Quicksilver & Credit One Platinum.. UT is 40% on my Cap One Platinum and I'm aggressively working to get it down to 5% as well. I should be there within a month. It was at around 80%.. the reason was because I was denied a credit limit increase for reason "not enough balance utilized" in my denial letter.. then I used it and 6 months later was denied for "balance too high." I literally just got it down to about 57% UT & re-applied for CLI and got approved for $500 just last week which dropped my UT to around 40%. The Quicksilver card at the same time with 5% UT got approved for only $100 CLI, probably for "not enough balance utilized" because that card from everything I've read tends to get higher credit lines than the standard platinum card. All of my credit cards have perfect payment history and have never been maxed out.  I'm sure capital one wants higher use of credit limits but followed by being regularly paid off but I just don't have that kind of cash flow. 2 years of quicksilver and perfect payment history and it has a lower CL than my 1 year old Credit One card.. QS has $600 CL. The way Cap One figures qualifications for CLI is tedious and complex.. I can't understand exactly what they want. 

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If you indeed have a pre approval from Discover, I say again get it now.  Better now that 3 months from now.  It will uncecure into a prime card.  Then after 6 months you can kick Credit One to the curb and that will stay positive for 10 years.

[jamesdwi]

Welcome to the new FICO scoring, if all your derogs are medical, they are now considered to have much less impact than in the past. Major lenders will give you prime cards, with multiple medical collections, if all else on your report is good. I have a friend that has 10's of thousands in medical collections, and was approved for Chase Freedom, Freedom Unlimited, and CSP. and Wells Fargo Propell card all with non-toy limits  5k SL or more. 

Get your UTL back under 30% perferably less and you can try for any card you like and stand a decent chance of getting it.