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I currently recieved a notice that one of my retailers bank card is going bankrupt. I understand that the entirety of balance needs to be paid in full and still abides by the same terms outlined in my contract. The loan is shifted to the bank who holds the loan, not the retailer. That being said, what is the next plan of action I should take on my part to continue to build my credit. Credit is made up of many factors and there's two that concern me; current available credit rations accross all accounts and the age of most recently opened accouts and hard inquires. As this account closes, my current available credit will decrease, and will that impact my credit ratio differently based on the retailer going bankrupt? I'm under the impression, yes. Which leads me to my next concern, I'll need to open a new account to compensate for the recent change in credit ration. Adding new lines of credit will impact age of credit history and add a recently opened account with hard inquires to my credit history. What is the best way to address this recent change, while still building my credit score strategically?
We need a lot more information to be able to help you.
What accounts do you have now, include current balance, credit limit and when it was opened.
Do you have any installment loans?
How many inquiries in the last 12 months?
What are your FICO 8 scores. If you don't know them then you can get them with a $1 trial at Experian.com.
Any baddies on your credit reports?
EQ 659, 666, 698, 691, 688, 664, 692, 700, 694
TU 645, 675, 679, 713, 651, 685, 696, 704, 703
EX 648, 669, 683, 677, 655, 684, 666, 685, 699, 685
5 negative marks, last late payment 3 ½ years ago
Account 1 limit $1,600 utilization 42% opened 3/16
Account 2 limit $1,750 utilization 2% opened 4/16
Account 3 limit $3,000 utilization 85% (card closing, large purchase recently made less than 30 days ago) only installment loan, opened 10/16
Account 4 limit $3,000 utilization 22% opened 12/16
Most recent inquire was 3 months ago for apartment application, last card was opened 2+ years ago.
@Anonymous wrote:EQ 659, 666, 698, 691, 688, 664, 692, 700, 694
TU 645, 675, 679, 713, 651, 685, 696, 704, 703
EX 648, 669, 683, 677, 655, 684, 666, 685, 699, 685
5 negative marks, last late payment 3 ½ years ago
Account 1 limit $1,600 utilization 42% opened 3/16
Account 2 limit $1,750 utilization 2% opened 4/16
Account 3 limit $3,000 utilization 85% (card closing, large purchase recently made less than 30 days ago) only installment loan, opened 10/16
Account 4 limit $3,000 utilization 22% opened 12/16
Most recent inquire was 3 months ago for apartment application, last card was opened 2+ years ago.
Is account 3 a credit card or an installment loan? Have you recieved any communication from lender (often different from the retailer.) about what will happen to this account?
What is your total util?
First thing I would do is get the individual util on all cards below 49.9% then get it below 29.9%. Can't really recommend a new card as you didn't say what cards you currently have.
Account 3 is a credit card, but it reflects as an installment loan due to the type of promotional financing I do.
Total untiliaztion accross all cards is 37.75%
I typically keep all cards under 25%, and ideally under 6%
Account 1 Macy's CC
Account 2 Express Clothing CC
Account 3 ZGallerie CC
Account 4 Credit One
I have recieved communitcation from the retailer, not from the bank who hold the loan (Comenity Bank)
Which Retailer is going bankrupt? It may be possible to call Comenity who issues said CC, and see if they can PC it to something else they offer. Or what their plans are for the card.
If that's not an option, then you should probably just bite the bullet and pay it off before it closes. Plus it will benefit you in the longrun, by not having a high Util when applying for other products. Keeping under 28% on each CC is ideal.
I agree with Janus you chould call comenity and see what they plan to do and if you can pc it to something else.
As far as a new card I would suggest check prequals for both Discover and Cap One and see what they say. If you get a prequal from Discover with a firm APR I would pull the trigger on that as. Keep in mind Cap One likes rebuilders but they are a triple pull.
ZGallerie filed bankruptcy, and Comenity is assuming the loan of their card holders. They may not close their doors entirely, but for now card holders are at a loss.
I took the advice given, and called Comenity, but unfortunately they're unable to roll it into another offer. Best route is to pay the card off by it's expected close date and have them close the account in good standing, and hope for the best on credit impact.
I will need to open a new line of credit and take the impact it does to my scores; hard inquiry, age of credit history, but it ultimately benefit by keeping my line of available credit at a higher ratio.
One step forward, and two steps back. It's not ideal, but it's the reality.
Is there a better card I should choose over another?
Well TBH, I'm not exactly sure which would be best for you over the other. As you're lacking a major issuer ATM, said that you have negatives, and your scores are borderline given your file. Not to mention your high utilization. If those two blances were brought down to the 28% threshold, I think it would improve your odds. If you plan to carry balances going foward I would suggest CC issues who like balance carriers.
I think Discover would probably be your best option right now, and depending on the SL could absorb some of that utilization via 0% BT promo. Plus CLIs are SP.
Not sure if you'd be able to get in with Amex, but they're another CCC that could build CL quicky.
best of luck to you with whichever you decide!
As others have suggested, your strategy should be to pay off all cards. If there is one of those cards you can use for things you truly need, use that one moving forward to make a fairly small purchase each month. (One of the chief problems with retail cards is that there is often nothing you truly need at that store. Food, gas, cell phone bills, etc. can be paid with a major CC, but a Macy's card, for example, can only be used to buy more overpriced polo shirts or whatever.)
Once you have your utilization very low, you should pull your three FICO 8 scores. You may at that point be positioned to open a major credit card (i.e. a card with a VISA, MC, Amex, or Discover logo on it). You can use that card as the one to make a small purchase each month. The store cards can be kept active with one purchase every 11 months.
After all your CC debt is paid off, you should continue to sock money away -- but instead of paying off debt place it into a savings account for major emergencies. Also develop a budget and plan that will enable you to save a big chunk of your paycheck while never carrying CC debt.
Also after the CC debt is paid off you should begin a Goodwill Letter campaign to see if you can get your lates removed from your reports.
The closure of this card will have little effect on your score. It would have been a much bigger deal if it was your only credit card. But you have two others.
Long term goals can include eventually having three major credit cards, but much higher priority is the stuff I mentioned above.