I'd like to re-read the OP when I get a few minutes, to allow a more thorough response.
For now I want to say that the OP makes some great points, and attempts, I think, to set the tone that seeking subprime credit is not actually a proper habit of building good credit and is not optimal repair strategy. Cleanliness and Time are the most important factors. I agree with those general assertions. I do wish many builders and rebuilders would take that to heart.
Like everything, however, absolutes are rare and there is a nuance to each situation.
@Anonymous wrote:
As with everything, your mileage may vary, but more likely than not, adding new accounts during rebuild is not a good idea.
Before with 1 retail card, 1 heloc, 4 derogs; After 1 Credit Card (New) , 1 retail card, 1 heloc, 1 derog. After last derog I gained another 28 pts. about month or so later. Patience (a matter of waiting 7 days) would have gotten me a better card, my only regret.
@Remedios wrote:
@Anonymous wrote:During your credit repair process you have to be laser focused in cleaning up your reports. You have to focus all your energy making sure your credit report is as clean as possible which includes collections, charge offs, late payments, past due balances, open balances, etc but also new accounts and inquiries!
Nah, one still needs open and active accounts. The key is moderation and avoidance of certain TLs that can cause more financial harm than benefits
Please link me to a few threads where we recommend people to open new accounts as a means to improve their score.
I see this over and over again and I can't emphasize this enough: Stop seeking new credit during your credit repair process! New accounts are not a way to raise your score. While you can argue that the credit limit would help lower utilization, you need to start paying off debt if your goal is to lower utilization. New accounts and inquirires will not help you get there. They will lower your AAOA and the inquiry will hold your credit down for a while.
New accounts are not only meant to raise the score. 2-3 new accounts with good payment history set the stage for later. Again, it's not reasonable credit seeking that's the problem, it's the type of credit that causes more problems.
When someone is seeking to improve their credit score, adding inquiries and accounts should not be the focus. My post clearly specified if the person has no revolvings reporting, then yes, adding new accounts is a wise decision and will more than likely improve their score in the short term. But someone with 3-4 accounts reporting will be minimal to no improvement in their score, usually its a negative impact.
I know you want the tradelines and it is a good feeling to get an approval but getting a sub-prime approval (Open Sky, Credit One, etc) with a 500 score when you can get much better approvals a couple months down the road is not a good strategy.
Well, you're not going to start with Bank of Dubai. There is something called necessary evil. Short term, perfectly fine.
If you would like to recommend someone to apply for Credit One, you are welcome to do so. I`ll always advice to improve their credit first, and go for a Capital One instead. I did not start my credit journey with Credit One. Neither did my wife. Neither did anyone I have helped.
If you want to lower utilization, try to focus instead in finding a reliable source (family, close friends) to add you as an Authorized User instead, as many as possible. Or if you lack an installment account try to do something like Self Lender which could actually improve your score.
Actually, during the app, most lender's have built in algorithms that will separate AU accounts.
Ever wonder why you cannot get a chase card with 3 month history and 20 year old AU card? That's why. Also, once AU accounts are removed, a lot of lenders will totally remove TL. Then what? You just helped somebody else get rewards.
You are pointing out so obvious and narrowed down examples that I really don't see the point of your reply? If you want to suggest never adding an AU tradeline to your file then you are welcome to do that. That would be really bad advice on your behalf.
Unless you have zero credit cards reporting, don't get a secured credit card until you have cleaned as much as possible your report. A lof of these cards require a deposit. Use that deposit to negotiate settlement on your charge offs/collections or to lower your current balances.
Probably the closest thing to the truth but unless someone is contemplating a BK, one month without coffee will pay for deposit on decent secured card. Rebuilding is not just about dealing with present, but also planning the future. A few positive lines will not make your credit perfect or even good, but for some it takes a couple of years to clean up enough. That's too much time to waste
The approvals will come, trust me. But in due time.
Again, a very narrowed down example. If you would like to suggest people to open new accounts as a way to improve their credit score, you are welcome to do that.
I can certainly appreciate the sentiment in your post, but speaking in absolute terms when it comes to rebuilding is a big mistake.
The reason you should not do that is that every situation is different and should be approached from unique point of view
A person could have had financial issues 3 years ago, but be in a much better place today and be able to afford security deposits while simultaneously working on derogs
Why would they wait?
Another narrowed down example.
At the same time, somebody drowning in debt probably should not be putting money in deposits.
Someone who's burned all or most major lenders is in a different situation than someone with 10 medical collections, even if amount of debt is same.
I could go on like this, but I merely wanted to illustrate why you dont see many posts like yours.
It's because one size fits all really does not work with credit.
When a poster comes here for help, we pretty much interrogate them to get as much info as we can from them to assure responses are relatively personalized.
Do this! and Dont do this! used as absolute statements are over simplifying
If you want to sum up what to do during rebuild.....Dont miss payments, skip TLs that force you to buy useless trinkets and mind your utilization.
Essentially your post took very valid concepts and adviced and diluted it to a couple of narrowed down specific examples. Don't see the point of your reply.
With credit YMMV, but if you want to see the most absolute and best result of your credit repair process, give yourself the opportunity for your credit to improve before you go out seeking new credit. If anyone wants to go out and seek new credit as means to improve their credit and if you want to tell them that's a good approach, you are welcome to.
This is my wife's credit over the last 30 days.
This is my wife's credit after applying for Capital One and BOA.
