Good Morning, myFico members! After lurking on these boards since last August, I thought I’d pen my first post to the community. I’ve been absolutely astounded by the wealth of knowledge contained herein, along with the continued willingness of members to help one another as we all try to navigate the often confusing – and terrifying – worlds of credit and FICO score management. Apologies in advance to the moderators on this site, as this post could just as easily be at home in other forums:
My hope is that my post will serve as my way to give back just a bit, containing a few relevant Data Points that others can consider before applying for various products or employing other strategies during their rebuild. But first, a little of my backstory . . . .
Mine is a tale as old as time: Lonely bachelor finds love late in life, marries spouse after two years of dating, and sponsors said spouse for US citizenship. Spouse abandons the marriage at Month Four, two weeks after our USCIS interview and subsequent Green Card approval. Spouse drains mutual accounts and maxes out shared credit cards prior to disappearing. Major depression ensues, a 25-year-old job is lost, and a CH7 bankruptcy is filed in January 2017, which was ultimately discharged in April 2017 without incident. Thirty-two years of pristine credit destroyed, with relationships with such creditors as American Express, Bank of America and JP Morgan Chase likely forever ruined. Needless to say, this was one of the worst betrayals I’ve ever experienced. It might be naive to admit, but I honestly didn't see this coming. I was left feeling heartbroken, humiliated, and like an utter financial failure.
Anyway, after the BK7 discharge, I had not yet found this forum, and it would never have occurred to me to start my “rebuild” so soon. In fact, I thought that if I applied for credit several weeks, or even months, after my discharge, that that would signal to creditors that I hadn’t learned my lesson and didn’t fully appreciate the seriousness of a bankruptcy filing. I thought I’d simply “lie low” for a while, use only my debit card, and consider only those offers that were extended to me by creditors after an acceptable “cooling off” period, say two years or so. But to my surprise, companies like Discover and Capital One began pursuing me aggressively just days after my discharge. (That might not have been entirely nonsensical since I had not included either in my bankruptcy filing and had had two very positive experiences with their products in the past: I’d accepted an offer for a Discover personal loan years ago -- $25K, 48-month term @ 5.99%, repaid and closed in eight months; and an ING Direct line of credit for $25K, of which $15K was used at one point and repaid within four months. ING Direct was acquired by Capital One shortly thereafter.) I spoke to my attorney, and he actually encouraged me to pursue these offers. So, only three months after my BK7 discharge, I accepted Discover's offer for a Secured Card and funded it for the maximum amount, $2,500; and I accepted Capital One’s offer of an unsecured Quicksilver card with a $2,500 limit. I applied for both on consecutive days and was immediately approved for both. I was absolutely gobsmacked . . . and grateful. Even though I still had yet to discover the myFico forums, I thought about adding an installment loan to my new credit profile, as I understood the importance of “credit mix” in FICO scoring. Since I’ve never owned a car (I live in a city where a vehicle is wholly unnecessary), and since I no longer had a mortgage (it was reaffirmed in Bankruptcy, and upon discharge, I sold my home and paid the loan off), the idea of a credit-building installment loan like Self Lender appealed to me. I quickly signed up for the maximum loan amount, $2,200 (thinking “bigger" might be "better” in this context) and immediately paid about 25% of the loan off right away before it began reporting to the bureaus.
I was content to let my portfolio remain just like that for a year or so – or “garden,” as you call it here. But then before I even knew about the “Shopping Cart Trick,” I was seduced by Comenity Bank twice to accept “soft pull” offers while checking out on websites for stores whose credit cards their bank underwrites: Williams Sonoma ($1,000) and Restoration Hardware ($5,000). I couldn’t believe the luck! So between July and August 2017, I’d opened two bank cards, two retail cards, and an installment loan. And once the dust settled, I saw my FICO 8 scores on TU/EX/EQ rise from their post-discharge depths of 518, 560, and 590, respectively, to 624, 650, and 661.
I did experience one harsh “slap of reality” during all this: Still riding the contact high from this recent spate of approvals, I thought I might have had a shot at beginning to repair my relationship with Bank of America, the holder of my old mortgage and largest “burned” creditor. I applied for their secured card for the maximum allowable amount and was immediately denied. (Huh? How does a person get denied for a secured credit card? "I'm fronting you the money, for goodness sake! Where's your risk?") I made telephone calls, and I even went into my branch to try to appeal to the decision, but the bank would not budge. But I learned a valuable lesson during that process: Although my recent credit wins – and rising score – had lulled me into the false sense that I now had “good credit,” the harsh reality was that I absolutely did not. I was not even six months out of bankruptcy, and despite what one’s FICO scores look like, a bankruptcy that is still reporting to the bureaus – even if one is 1-2 years removed from the event, and even if one has a solid repayment history during that time – will likely keep most creditors from wanting to do business with you, regardless of how contrite you are, regardless of whether you’ve had a reversal of fortune since your discharge, and regardless of whether the creditors themselves were included in your filing. Once I finally understood and accepted that, off "to the garden” I went, content to stay there until late-2019.
My TU/EX/EQ scores continued to rise 664, 676 and 691 (May-18), and I was feeling . . . great! Not even fourteen months after my BK7 discharge, and I was already within spitting distance of the "700 Club" on one bureau! Thanks to this forum, I employed the AZEO method, allowing only one of my bank cards (Quicksilver) to report 1% utilization each month -- everything else was paid in full prior to the statement cut-off dates. My Discover card unsecured after the sixth statement in early Feb-18, and my limit was doubled to $5,000 with two “soft pull” increases. My Quicksilver limit was increased to $3,000 (Credit Steps) in Jan-18; and limits on my Williams Sonoma and Restoration Hardware accounts were increased to $10,000 each through several, spaced out “soft pulls.” I continued lurking on these boards and learned how some credit unions offered products that could be helpful during a rebuild. I was especially interested in another Share Secured Loan, and since the Alliant product seemed to fit the bill perfectly, I joined that credit union. This forum also seemed to have many very satisfied Navy Federal members, so I decided to join them as well. While I opened savings accounts at both institutions, I did not apply for any of their credit-based products after I joined. My plan was not to make a move in that direction until my Self Lender loan expired. That loan was paid and reported as “Closed/Paid as Agreed” during the first week in Jun-18 . . . and that’s when my scores took an unexpectedly big hit.
As a proud rebuilder, imagine the stomach-churning angst I experienced when I awoke to find that my TU/EX/EQ FICO8 scores had plunged to 646 (-18), 655 (-19), and 667 (-24), respectively. You think you’re doing everything right – even paying off a loan slightly early, in fact – and this is the thanks you get! Clearly, having an open installment loan was more important than I realized – and it made no matter that I had several closed installment loans – mortgage, student loans, Discover personal loan, and Self Lender – all reporting has having been in good standing and never late at the time of account closure. I quickly scrambled for a replacement SSL product, but as most of you know, the very product that I joined Alliant Credit Union to take advantage of is no longer being offered. I then decided to test the waters over at Navy Federal . . . . and boy am I glad that I did.
I don’t think that I have ever dealt with an organization where every single interaction with a Customer Service Representative has been a sheer delight. When you’re on the phone talking with a stranger about sensitive, potentially embarrassing life events like bankruptcy and divorce, it’s nice to feel that the person on the other end of the line has some degree of empathy and seems committed to guiding you towards the right solutions. I opened a Share Secured Loan at NFCU for $5,000 with a 60-month term (minimum amount for a 60-month term loan is $3,000), and immediately paid two-thirds of the loan down. I noticed that like the Alliant product, the Next Due Date was consequently pushed out to 2021, so it behaves exactly as I was hoping – and exactly as the NFCU representative said it would. Since I did not incur a TU hard pull upon joining or upon opening this new tradeline, I decided to see what would happen if I applied for one of their credit cards – and I chose the green Cash Rewards card. (I felt a somewhat bit confident doing this because I'd read on these boards that NFCU's underwriting guidelines recommend that applicants wait at least one year post-BK discharge before applying for credit-based products.) Based on what I thought I’d also read in a related thread, I assumed that my EQ report was going to be pulled for that card, my strongest bureau. However, as soon as I completed the application, I received a TU inquiry alert . . . and my heart sank, as I was convinced there’d be no way I’d get approved with a 646 score, 14 months post BK7 discharge. To my surprise and delight, an hour later, I received notification that I was approved for $2,500 – not as high as most here have received right out the gate, but totally understandable given that I have a bankruptcy reporting. I did not recon. (Remember, even my “home bank,” Bank of America will not even consider me for a secured card until I am a minimum of four years post BK7, according to their credit analysts. And the fact that they were also IIB may push that date out even further. So I was very grateful that NFCU was more lenient in that regard.) I then opened a basic checking account, after which, the Navy representative asked me if I’d like to consider a Checking Line of Credit. I wasn’t even going to go there, but given the limited number of inquiries I have, I decided to give it a shot. I applied for $5,000 and was “Conditionally Approved,” which required that I call into a special number to speak to a representative, whereupon I was told that my approval was conditioned on my accepting a counteroffer, $1,000. Humbling to be sure, but again, given my recent credit history, entirely understandable. I accepted the offer without any attempt at reconning. (Incidentally, yesterday, I received the required Credit Disclosure letter from NFCU for my credit card application, which listed my internal NFCU score as 348 on a scale of 450.)
So, in just a matter of days, I went from feeling as if I’d failed all over again by watching my new, hard-earned FICO scores tumble after my installment loan was paid off to feeling ecstatic that I am now a member in good standing at the nation’s largest – and, in my opinion, friendliest – credit union. I’ve got another rewards credit card (with a fantastic Member Mall), a Share Secured Loan (where the next payment isn’t due for years), and a small NavChek Line of Credit, which will add a bit of interest to my credit mix. My next goal is to target Citibank, one of the few “big boy banks” that I did not burn in bankruptcy. I’d like to have the Double Cash Card, but I think the only way to get that is to start first with their secured card. I would like to apply for that in late-2019, once all my inquiries from 2017 have fallen off and my first wave of rebuild accounts have aged to two years. Once the Citibank Secured Card graduates, then I think I’ll be in a better position to apply for a product change to the Double Cash Card.
Thank you for listening to my story. I’m sure I’m guilty of “oversharing” – I’m very verbal and tend to do that – but hopefully there will some Data Points in this post that will answer some questions that other lurkers like me have had about (1) secured credit and why it’s not necessarily guaranteed; (2) how FICO scores can be sensitive to profiles with only one open installment tradeline reporting; (3) how credit unions can be an important part of one’s rebuild strategy.
Welcome to the forums. And kudos to you on all you have accomplished thus far. It's never easy bouncing back from what you have gone through, but look ahead as you are off to a good recovery. Garden those new accounts, let them age at least 6 mos. to a year. And although the odds of getting back in with banks that were part of your BK maybe dim. It's never the end of the world, since there are a lot of other lenders out there who would open their doors for you. Wishing you success on the rest of your financial journey.
@clark_d_shark, thank you much for your kind words. And not to worry -- I have my spade in hand, and off to the garden I go until late 2019! I've got some very nice cash back cards in hand, and the folks I've dealt with it at Discover, NFCU, and even Capital One have been an absolute delight. They all seem to be rooting for me, which certainly feels nice, if that's not too corny to say. Because of the accounts I've just opened, I'm sure it'll take a few months for my scores to stabilize, but I am glad that I was able to find a suitable replacement to the Self Lender loan that I recently paid off -- an alternative with no prepayment penalty and a much, much longer term. It's easy to obsess about scores, but unless you're about to apply for something critical, it can be healthy to step away from the constant monitoring of your scores and enjoy the products that your scores helped you acquire.
I'll ask the question that is probably on many minds. Did you file charges for financial/marriage fraud?
Hi, @MaizeandBlue. While just about anyone looking at this situation from the outside can see that my former spouse entered into this relationship solely to secure a Green Card, proving fraud in a court of law is an entirely different matter -- particularly given the length of our relationship prior to marriage. Many marriages simply do not make it during their first year for very legitimate reasons, and because of this, the USCIS does make allowances for Resident Aliens that some of their marriages may also fail prior to the next required check-in (interview), which occurs two years after the provisional Green Card is awarded. My attorney and I weighed the cost and emotional impact of pursuing this matter further, and I opted not to proceed. I didn't want to turn vengeful, especially since that really wouldn't have made me feel better at the end of the day -- and it likely would not have gotten me the outcome my attorney was after (deportation), certainly not in the near term. And to be honest, I didn't want revenge. I wanted my spouse back. I wanted the life I thought I had back. But that wasn't going to happen. This drama was taking up too much "mental real estate" in my mind, and I just needed to set it aside and move on. As far as financial fraud goes, given that all banking accounts were shared and I approved every Authorized User incidence, that also didn't leave me much room for action. I just felt it best to get angry (privately), mourn, and move on with rebuilding my life . . . . and credit.
Congrats on approvals and recent success
I totally understand your viewpoint. Best of luck as you rebuild your credit.
Thank you again, @MaizeandBlue, for your words of encouragement. I'm learning that with respect to rebuilding credit, one of the most important aspects of the process is simply waiting, curbing the urge to "over app." This is true especially after one receives approval for a credit product after a catastrophic event like a bankruptcy. That approval feels good. It's a high, of sorts -- it validates that you're not a loser and that there is forgiveness to be had out there. And while it's great that small victories like that can help correct the negative, overly distorted perception that many of us bankruptees have of ourselves, there is a risk that we will, as a result, lurch too far in the opposite direction by becoming over-confident and applying for everything in sight. ("See, Discover and NCFU deemed me 'worthy' - you should, too! Approve me now!") Pacing ("gardening") is crucial in this process. In fact, as I look at the relatively modest playing deck of credit cards I now have - all of which I like and serve a purpose - I can't imagine wanting anything more except higher limits on them. And if I'm patient, I'll likely be rewarded with those increases in time, with appropriate use and management of those accounts, of course.
With all that said, a 2% cash back card would be nice . . . . some day.