Next Steps on Rebuilding Journey - Apps and PC's, plus an interesting Ollo situation

[Anonymous]

@Anonymous wrote:

OP, you never stated the reasons given by Amex (or Discover) for your CLI denial. In your older thread you stated that your Amex limit was $1k, which is generally considered a starter limit and indicates that they may have some concerns with your profile, despite your credit score. Credit scores are only one component of creditor consideration, your overall profile is actually quite important. 

I encourage you to address the reasons listed in your CLI denials, build up your current accounts that are worth keeping, then worry about building your portfolio. Apping for prime cards now, despite your score, will likely result in toy limits or denials, in part because of your existing low limits and sub-prime cards. 

I had a BK too in 2010, it’s not off my reports, but I have two $15k Amex revolvers, a Gold card and a $9k business card, a $8.5k US Bank Cash+, a $10k Credit Union, and $10k Lowe’s all with the last year. I began with a single Cap 1 card 5 years ago and never messed with sub prime cards or multiple store cards. 

Build a a solid foundation with a prime lender, then app other prime cards. Get rid of all but one store card and ditch that Ollo card, it’s a sub prime stain on your reports.

As always YMMV based on your profile but hopefully this helps in some way.

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That's a good point -- someone did ask me to follow-up, and it slipped my mind. One reason was income-to-overall debt. I think they're primarily looking at my student loans -- as that's the only debt I have, and I PIF my credit cards. My student loans show as good, though -- and I have an affordable payment. (Of course, that might have no effect on how Amex reads the reports lol). 

There was a second reason given, that was more confusing:

" Your recent payments are too low relative to your requested total line and your debt obligations with American Express." 

My recent payments being too low? I pay in full (obviously more than the minimum), way ahead of time, using the AZEO plan. So, I'm not sure what the meaning of this one is. Any ideas? Is there something I'm not doing right?

I looked this up and some people seem to think this is a sign that I haven't used the card enough. Others seem to think this is just Amex's way of saying "we're getting to know you still". 

I think the CLI's from Amex and Discover may only happen, occasionally, and once they get truly comfortable with me. I don't have a ton of income, but I do handle my obligations completely. My limits, therefore, are understandably less than others. But I'm a good customer; I pay in full; I'm exceptionally careful with my finances these days. And, if I never get a CLI from Amex or Discover -- that would be fine with me. I only use cards to the degree I can afford them.  

Reading over the rest of your advice, though: I probably will close my store cards (other than Target) and also Ollo. Because, separate from the CLI's, I'm still hoping that I can add some of new cards I'm looking at to match my spending habits, though. At this point, trying to figure out if it's better to close these cards I'm not using FIRST, or wait to close them after my new apps go out. 

[Anonymous]

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@Anonymous wrote:

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There was a second reason given, that was more confusing:

" Your recent payments are too low relative to your requested total line and your debt obligations with American Express." 

My recent payments being too low? I pay in full (obviously more than the minimum), way ahead of time, using the AZEO plan. So, I'm not sure what the meaning of this one is. Any ideas? Is there something I'm not doing right?

I looked this up and some people seem to think this is a sign that I haven't used the card enough. Others seem to think this is just Amex's way of saying "we're getting to know you still". 

I agree with both things you’ve read, you don’t use it enough, and the low limit means they are being cautious.

Amex in my opinion, has a more involved and proprietary method of establishing how much credit they will give you. They truly want to see how you manage your spending and paying, which take time and most of all USE. If you don’t use it frequently and pay it, they won’t know your spending and payment patterns. 

Regarding the first denial reason, what is your current DTI?  

My 2c is that if you have fairly limited income to spend on a monthly basis, and you’re trying to develop credit, you need to concentrate your spend with your top priority creditor. If that is Amex, spend the most with them and they will notice. Spending $20/mo on multiple cards (I don’t know your actual spend, just an example) really dilutes your rewards potential with limited spend. And again, get rid of that Ollo card ASAP. Prime creditors will notice when someone who is actively using a card with a toy limit specifically designed for bad credid. It really is a stain on your report. Close it and let them know you’re moving on to a more solid profile. I would truly advise you NOT to app for anything until you see some movement with Amex and/or discover. Your scores are high but something about you profile is making them be very conservative. Apping and getting toy limits looks bad to other creditors, and denials beget more denials.

I know plenty of people are happy apping and getting approved for any card, at any limit. I focused on quality not quantity because I wanted a solid rebuild foundation and prime creditors. I don’t know what your priorities are.

[Anonymous]

My DTI is 38%. I hadn't really calculated it before. I'm sure this is what's got them a little cautious - - it's right on the edge.

My priorities match up with yours. I'm going to follow your advice. My plan is to close Ollo and all the store cards (probably even Target, though I shop there). I'm going to focus on my NFCU, Amex and Discover. And if I see Amex and/or Discover make a move with CLI in my direction, I'll start my apping plan.

If you look over my list of cards I'm interested in, they are quality cards that also match my spending habits for maximum points and rewards. To be honest, I won't part with my NFCU or Discover, but if I had to choose between dropping my Amex BCE to get, say, the U.S. Bank card and/or the Chase cards - - I'd go with the latter, because they fit my spending better. But I keep Amex because I feel like it's worth building the relationship, for when I do have a better DTI. Am I wrong?

I do agree that, at this stage, all things considered, its best to focus on my best lenders already in my wallet, then one or two more - - especially if they already fit my spending.

Amex is a toughie to consider keeping, actually, in that scenario. Lots to think about.

Again, I don't need big limits, though - - I'm happy with cards that start out small but fit my spending. I know they're considered "toy" by some, but if they work for me amd I can afford them, is a low limit card on yout report really a big deal to lenders? Especially if it fits your finances?

But nevertheless, yeah...thanks for the honest advice. It really was useful!

[Anonymous]

Don’t worry about “relationships” with creditors , you’ll read about this and it’s nonsense, don’t get sucked into it. Creditors want you to spend money with them and pay it back. We are numbers to them, deemed either an asset or a liability and credit given based on numerous metrics. Make credit work for YOU.

Set a goal, make a plan of which cards are going to fit your spend best. It may not ultimately be AMEX, but they will be a good barometer of your profile strength. App for other products as your profile strengthens. I cannot overstate that a high FICO score is not enough on its own to get the cards you ultimately want. 

Limits in themselves don't matter to you and I agree, but what you are missing is that the fact that creditors only want to give you small limits does matter. It’s an indicator. Whether you need a $10k limit is immaterial, it indicates a solid profile and higher limits beget higher limits. It’s all a game, don’t take it too seriously, just play it to your advantage.

[Anonymous]

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@Anonymous wrote:

Don’t worry about “relationships” with creditors , you’ll read about this and it’s nonsense, don’t get sucked into it. Creditors want you to spend money with them and pay it back. We are numbers to them, deemed either an asset or a liability and credit given based on numerous metrics. Make credit work for YOU.

Set a goal, make a plan of which cards are going to fit your spend best. It may not ultimately be AMEX, but they will be a good barometer of your profile strength. App for other products as your profile strengthens. I cannot overstate that a high FICO score is not enough on its own to get the cards you ultimately want. 

Limits in themselves don't matter to you and I agree, but what you are missing is that the fact that creditors only want to give you small limits does matter. It’s an indicator. Whether you need a $10k limit is immaterial, it indicates a solid profile and higher limits beget higher limits. It’s all a game, don’t take it too seriously, just play it to your advantage.

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This is very good advice. You've really gave me something to think about -- and, frankly, considering where I actually want to take my credit and rebuild next, I'm glad you chimed in. 

You're right -- I don't just want a wallet full of plastic, accumulating cards to build up a number of credit lines over many different creditors.  I'd rather have cards that work FOR ME, with creditors and banks that work FOR ME. I'm thankful, in many ways, because I think that Navy Federal probably was a solid bank/creditor for me to get started with, to help me learn this next lesson. And I think they're a solid company to stay with, because they do seem interested in working for me on my finances. Of course, there's no illusion -- they're doing it because they want my deposits and my credit card transactions. And that's fine. As long as they keep up the excellent work, it's a fine business relationship to keep. 

So, based on re-orienting my thinking, I'm going to sit-down and adjust my strategy today. I think my new plan will change in the following ways: 

Of my current providers, I think I should focusing on spending with NFCU as my central creditor, because their cards fit my spend patterns well and I believe they'll provide generous CLI's as my profile strengthens; secondarily, Discover actually fits my spend patterns well, too -- and I believe they'll provide generous CLI's as well -- so they will also be where I focus my spending. Amex...I'm on the fence (see below). 

I've decided to close all my store cards, except Target (for now). I shop at Target and the card comes with a 5% discount and other perks throughout the year. I'm on the fence about closing my Target card for this reason, as these values beat what I would get back in rewards from any standard credit card. But I'm going to keep a sharp eye towards whether having a Target card is really worthwhile, if it actually works for me as much as I think it does. So, that might go, too. 

I've also decided to close my Ollo card ASAP. If it's seen as a rebuilder and I don't really need it, then I don't want it to be what's holding me back from the next level, as my profile improves. All it will do is provide CLI's, occasionally (perhaps) -- but no rewards and I can't product change.

After making these changes, I'm going to wait to have some success with Amex or Discover before apping, as you suggest. If I do see some movement with either, my plan is to app as I planned before -- the banks I was considering were high-quality. The cards I'm most interested in acquiring are the Chase Freedom and the U.S. Bank Signature. But I'm going to do so judiciously, take my time and only move for it if the cards I'd like to have really work for me. Because I think working on my overall profile sounds like the thing you're suggesting I do, though. 

For now, though -- it's time to close some cards.

One thing: I'm on the fence about Amex. I have the BCE; I do spend with it, but it's not a great fit. But, based on what you wrote, it sounds like you're implying that keeping a card with Amex and seeing how they work with me, as a "barometer" of my profile, isn't a bad thing. Is this fair to say? 

[Anonymous]

Amex will only be a barometer if you use it heavily. If Amex doesn't fit your spend, don't use it except occasionally to keep it alive, and don't worry about your CL or getting CLIs. If Amex is not your goal creditor to have large lines and/or multiple cards with don't worry about them.  Use the cards that fit your spend.

Use your Navy and Discover cards heavily for your spend if they fit best. Your use and positive payment history on these cards will show on your reports, and you'll eventually get CLIs.  Keep Target if you find value in it, and use it.  Just remember not to dilute your spend over too many cards while you are actively building towards goal cards. You want to show that you can spend sizable amounts and repay it. Remember, they all want your spend, the more the better within reason of your income. It's how they make money.

Sounds like you have a good plan. Prune the cards you don't need or want, focus on building with current creditors and then go for your goal cards.  All my cards do (or did) have a very specific role. Cap 1 is kept for its age.  Golden 1, Amex BCE and Cash+ were specifically for category spend cash back.  I've now switched to a focus on Amex MR points and so I now heavily use the Gold, BBP and ED.  Always think of how you're going to make your credit and cards work for you.  Get every penny you can out of your ordinary everyday spend and pay the absolute least interest possible for cars/mortgages, that's how you "win" the game.  Having good credit/solid profile is the path to that goal, not a goal in and of itself.  SImilarly the cards you app and creditors you choose should fit with that goal in mind.

[Anonymous]

You're speaking my language there, friend. How you're handing your credit and card portfolio is what I envision for myself, once I enter the final rebuild phase and prepare for auto-pilot. So, thank you for the extensive advice and encouragement.

I'm looking forward to rewriting the final phase of my plan tonight, taking this view into account. Given me a lot to think about. And I'm actually looking forward to pruning. I very much like the idea of a nice, clean portfolio with solid lenders like NFCU, Discover and Amex. It sounds like having such a portfolio will only help me with existing and future lenders. Actually makes sense, once one steps back to think about it. Thanks!