I messed up...

[Anonymous]

I go by another username but my account got locked and I got tired of waiting on fico to fix it.*

I messed up, not big time, but still messed up.

I ended up with a really high fico, 712 to be exact, and took out several credit cards with a CL of around 3,000 dollars.

Well I guess being young and suffering from a bad case of "oh that widget looks cool!" I ended up spending all of that money. 

Not on anything super silly, but I got a new desktop computer, a DSLR camera, paid off some collections, etc.

So then came the bills, 7 of them each month. I got tired of having to track down each account and pay it every month.

My fico dropped to 580 

It's really easy to pay the min due, because something pops up like a car biil, but I started reading my bills in detail.

If you pay the minimum due, it will take you...

EIGHT YEARS to pay the balance, and you will end up paying...

$1,402 in interest!!!

Well, at first... I thought maybe I could just transfer all seven balances onto one credit card, and then get no or low interest for a set time. 

Come to find out, there is no such animal as a "balance transfer only" credit card. Yes, you can get a BT if you have decent credit...

..but it seems really odd their is no product that lets you just transfer a balance and shut the account off, a one time use credit card for BT, per se.

I explored other options, debt consolidation loan....too high of APR...banktruptcy became a really dumb idea, I'm in debt, but not that much in debt, and I'm not late on anything.

I finally turned to a debt management program, and spent some time reading to find one that was safe and well reviewed, I finally settled on a .org called "InCharge".

I realize the implications of a DMP, no using your old credit cards, since they will close, and no new credit cards.

On the bright side, once the program ends, I will come out with a clean slate, no BK, no collections, etc, just closed accounts.

I had every card closed except my $300 CL Discover card, which I run all my bills through and PIF.

Moving forward, once the program ends, I will follow two crucial rules..

1. Only have one credit card.

2. Pay it in full every month.

But to be honest...I always though amex was not accepted at many places, but I'm finding more places that take Amex, but not discover.

So my future card will most likely be amex.

Now, a question for the community...

1. If Discover pulls my credit and sees my other accounts are on a DMP, will they close my account?

2. What will my credit score look like? I will only have 2 open accounts (Discover and a Barclays apple visa I don't use), several closed accounts.

3. What does a DMP do to your credit score once it's over, all debt is paid (this takes 2-3 years)?

*If  you need assistance with your myFICO username, please pm a MOD-Lexie, myFICO Moderator

[Anonymous]

Not sure on the first one.

Your credit score will suffer a little with only two open revolving accounts. You need three for optimization.

In the end your scores will rebound if you have otherwise behaved.

[Anonymous]

How much will it suffer?

I'd love to just have one credit card, maybe a second for backup.

Anyone else finding amex accepted at places that won't take discover?

I know Subway takes Amex but not Discover. So does Ooma telephone service. 

[chwebb1]

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@Anonymous wrote:

How much will it suffer?

I'd love to just have one credit card, maybe a second for backup.

Anyone else finding amex accepted at places that won't take discover?

I know Subway takes Amex but not Discover. So does Ooma telephone service. 

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I think it depends on the area. I have had better luck using my Discover card at more places than my AMEX. I travelled to New Orleans in 2013, and no one took AMEX, but almost everyone took Discover. So it really depends on where you are. I personally like having one card from each network (V/MC/Discover/AMEX) just in case you find a weird place that REALLY likes to be picky about what they'll take.

[jsucool76]

Both Amex and discover are widely accepted down where I live (South florida)

[Anonymous]

I'm sorry about your debt. It's fairly easy to spend spend spend. Being part of this forum is a great place to be. 

I work I'm finance and see many cases likes yours.

But keep ya head up. It will take time but your scores will rise. Lesson learned

[TiggerDat]

Well getting back on track will help you.  The accounts, while still closed, will report and help you report in some ways as long as there are no lates.  What will hurt your score is the utilization.  The history will help, I don't know if the DMP will show up, although they might be able to realize it is going on since most of the cards are closed at the same time!  Or at least they can sorta deduce it.  As long as you keep paying in full on your Discover and keep making your payments on the other cards, I think you will be OK with them.  They might not raise your limit for a while though!  With the huge score drop they might close you cards for that reason or lower your limit.  However, after it is all done and over it will probably be easy to get them to raise the limit again. 

Having too many cards can be difficult to arrange payments on if you are not careful. 

Spending too much can be too easy, I follow one basic rule now.  If I have to have something, I find the lowest price possible on it!  I have become rather thrifty in some ways, but I actually have very many things!  I buy quality items which will last longer and therefor save money that way too.  I used to have horrible credit, now I have pretty good credit.  I have 21 cards now.  I must admit, most of them go unused.  Some were simply part of the rebuilding process and some are for specific rewards categories.  (Another way to save as much as possible.) 

If you come across any extra money for any reason, pay it towards the repayment, so that it will happen faster and you will be happy you did so and got out faster!

[takeshi74]

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@Anonymous wrote:

What will my credit score look like?

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Don't worry abut your scores until you're done with the DMP.  You're not likely to get new credit and it's generally not a good idea while you're going through the process.  We can't tell you what the impact will be in terms of X points.  Some creditors (such as AmEx) will not approve with a DMP noted on your accounts.  Once you get out of the DMP, learn to budget and stick with your budget (it's not really a matter of how many cards you have) you'll be ready to look at applying for credit again.  It's a long slow process that my wife went through and it took her many years to get through it.  Good luck with it and be prepared to be in this for the long haul.

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@Anonymous wrote:

Come to find out, there is no such animal as a "balance transfer only" credit card. Yes, you can get a BT if you have decent credit...

..but it seems really odd their is no product that lets you just transfer a balance and shut the account off, a one time use credit card for BT, per se.

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Nothing odd about it.  Credit matters for BT cards just as it does for any card.  Credit cards are revolving accounts and not designed to load a balance and close.  What you were looking for is a consolidation loan but those can be tricky to get as well.

You don't want to close cards with balances as they tend to report with 100% utilization.

Definitely take this time to educate yourself about credit to help avoid running into this again.

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@Anonymous wrote:

Anyone else finding amex accepted at places that won't take discover?

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Acceptance varies.  What othrs find doesn't really matter unless you shop at the same places.  You need to look at the places that you specifically shop.

[Anonymous]

So amex won't approve you down the road with a DMP even if the accounts are closed and prev. in good standing?

[Momof5]

Historically speaking from stories told.....

A DMP will report and it has the same effect on FICO as a BK13.  I have never researched that particular DMP company, but for the most part, your OCs are unlikely to negotiate interest rate reductions or balance reductions or settlement amounts when your accounts are current.  The DMP company then takes their fee out of your first 3 months of payments while letting your accounts go into default.  This will put the companies in the mood to negotiate.  Your FICO, will obviously, take a HUGE hit.  It will be after the negotiations that your OCs will report that your account is now in a DMP.

Honestly, if you are not late yet, the wisest course of action is to get a second job for a short period of time to help you pay down those cc's faster and in doing so, save on interest.

DMP companies (aka: Consumer Credit Counseling) are funded by creditors so that they can get more from you than they would in a BK.