Seeking advice on how to proceed with rebuild

[Anonymous]

Hey guys, I've been working on my credit for a while, but I'm still pretty new to the nuances that I've come across on this forum. Example, I just figured out how the CC statement balance is what hits your credit report and when each of my cards reports. Previously, I was just using them and making payments, sometimes the minimum, sometimes much more, but I wasn't really paying attention to the statement balance or utilization. So although I haven't missed any payments, I haven't been improving very much. In fact, I am rebounding from dropping down from 630>580 all for not paying close enough attention.

Here is the basic rundown of where I am now
EX 619 TU 627 EQ 630

Three cards
CapOne QS1 (PC'd from Platnium, no fee), $600 limit, last reported 7/9 at 68% utilization. Will report 0 next statement. This is my oldest credit account at 1 year 9 months
CapOne QS, $1100 limit, just got $100 CLI (was hoping for much more when I asked, but took it due to covid. It feels like a sign of good faith from them or something), last reported 7/20 at 13% utilization, down from 62% on 6/20. Account is 7 months old.

Fingerhut account, $900 limit, but dropping to $700, as I declined to use a temporary line increase, last reported 6/28 at 25% utilization, now at 0. Account is 1 year 3 months old.

I also have an installment loan on my car, which is 6 months old.

So what I'm getting at is that for the first time, I am trying to set financial goals for myself and I'm learning as I go, as evidenced by having a Fingerhut account. I am not really happy about losing $200 in credit when my line is already quite small. I'm wondering if anyone has an idea of how much closing this account altogether will impact my scores, and if it's worth closing it. I've seen anecdotal evidence of Fingerhut giving and taking credit line increases that can cause your score to drop several times, versus the one time drop for closing an account.

Moreso, I am wondering what direction to go if I do close the Fingerhut account, as that takes me down to two revolving accounts. The offers I have preapproved are not extremely enticing, CreditOne, Mission Lane, Destiny, Avant, Milestone, Surge. Since I already have Capital One, I am much less enticed by these cards, and am apprehensive of jumping on any of them just to keep a higher line of available credit. But I also really want to have more available credit, so I find myself strongly considering one of these subprime lenders.

I can't decide whether it is worth it to essentially pay to open an account I won't likely use much, to close an account I already don't use much, but may fluctuate credit limits, and cost me points on my score, or if I should just close Fingerhut and sit tight with the two CapOne cards.

I know this is a looooooong one, but I have been making myself crazy over how to proceed, and I'm hoping some of you will be gracious enough to give me some advice.

[Jannelo]

Don't go for a subprime card with a high annual fee when you already have three CCs reporting and an installment loan in place.  You will possibly end up with a low SL anyway.  You are doing good and building a positive payment history. My advice is I would drop Fingerhut when you get your next card in place, but that's when you are able to move up to a better credit card, one you can grow with.  Why make a lateral move?   When your  credit card updates to 0 percent utilization from 68 percent utilization, you should see a nice bump in your FICO scores.  You're getting there.  Before you know it, you will begin prequalifing for better cards.  People on here usually advise that joining a credit union is very important.  That might be a good avenue for your next credit card.   

Have you checked Discover for prequalification?  For DPs with regard to my rebuild, I had  just hit a 635 Fico score, and most recent credit card age 3 months, when I prequalified for an unsecured Discover.

Congratulations on developing good habits with regard to utilization of your credit cards.    I'm not the most qualified to give advice.  But seeing that no one had responded yet,  I thought I would offer my two cents.  Hopefully, you will receive more responses to your post.

[Anonymous]

Agreed with @Jannelo on Discover. I was approved for $2800 with a 627 score two years ago (things have gotten tighter though). Your card that's at 13%? Pay it down to about 7% to get it in the lowest usage category, let all your reports reflect that 7% usage and zero on the other two, and then check prequal for Discover. Even if they only offer a secured card, take it. Once it's reporting, dump Fingerhut. Manage your cards well and Disco can unsecure in as little as seven months, often with an increase.

A note on Disco - since Covid started they've been militant in requesting 4506-T forms from cardholders to verify claimed income via tax documents. If you apply, use the lowest income you've had from your 2017 through 2019 years of taxes. It's likely they'll request verification from you, so if you use your lowest earning year from the past three, you'll be fine. There's no harm in underreporting income, but overreporting will get you shut down faster than you can blink.

[Anonymous]

Thanks for the advice. I was trying to get the QS paid to 0% on the report that hit the 20th, but it was the first round that I realized that I had to pay it down by the statement date and had pending transactions push through the same day the statement dropped. Bah! I've run so many credit simulators that push me up to 670 once all the work I've done hits the statements, but I don't know how accurate it is. It forecasted +6 for dropping my utilization to 13% on the one card and I went up 13 points, so I'm hopeful. I just really want to be able to take more action. And I'm worried the the Fingerhut fluctuations could mess with my progress.

[Anonymous]

All the more reason to get rid of them. Are you familiar with AZEO? It's the technique you want to use to max your scores. I think @AllZero has a macro he can share with links to good explanations of it, but in effect it's what I was describing above, with one card reporting a small balance and all others at zero. Once you're positioned that way and see what your scores do, you can assess apping for a new card and dumping Fingerhut.

Don't put too much weight in the predictions of the simulators. Sometimes they align with reality but they don't consider many factors of scoring and are more entertainment than accuracy.

[Anonymous]

Thanks for responding. I have pre-qualified for the secured Discover, I think I am just impatient with regards to a secured card graduating. 

I'm hoping to see a nice bump when the payments all go through. I've also made a schedule for when to use which card in order to have the best balance possible when the statement comes out.

I am mostly concerned with Fingerhut changing my limit and dropping my score due to something I didn't want from them in the first place. Not so much once, but I've read about them doing it to people up to 4 times a year and I don't like having that outside of my control. At least with a subprime card I can hook up Netflix to auto deduct and pay, and they likely won't just increase then decrease my limit if I don't use the increase.

But, working on credit is such an exercise in patience. Which I also need to work on, ha.

[Anonymous]

Lol it's never easy to be patient when it's your finances, especially when you start seeing encouraging signs. That's great that the Disco secured prequal is there. I'd sit tight until everything updates and then try the prequal again - maybe it'll push you over the threshold for the unsecured card.

Even if not, the secured one is a great card and you get all the same cash back benefits as the regular card. Many people have had a $200 secured card graduate into a $2000 regular version. Waiting a bit longer to see how your scores shake out would be worth it for the possibility of the regular card, with the secured as a good consolation prize if not. 

[Anonymous]

I have heard of AZEO, and it is what I'm working towards. I think after reading through, I'll hold on to Fingerhut until my score bumps up and I can replace it with something better, instead of something I'll be asking about dropping in a year. 

And the simulators definitely work for entertainment purposes haha.

[Anonymous]

Excellent plan. Disco can be a long term keeper for sure, and after a year of history with no derogs and good management, Amex will be another good possibility. I'm looking forward to your progress. Please keep updating as things happen and by all means ask questions when you want clarification on anything. We're all here to help

[Anonymous]

Very much appreciated! I'm sure I'll be too excited when good things happen not to share.