Will getting a new CC help my low fico?

[jarmll]

Just wondering if a CC that is kept up to date and with a low balance will be helpful in rebuilding my credit score. I would like to get to the 600 mark by April 1. It is possible paying the debts down, just wondering if this would help at all?

[StartingOver10]

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@jarmll wrote:

Just wondering if a CC that is kept up to date and with a low balance will be helpful in rebuilding my credit score. I would like to get to the 600 mark by April 1. It is possible paying the debts down, just wondering if this would help at all?

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Yes, jarmil, it will help.  Read the stories here on the boards. Building or Rebuilding your score is two things:  repairing the 'baddies' and showing good on time payments on open credit cards and installment loans.  Do you have any open tradelines now or will this next credit card be your first card? 

Here is a thread (below) that I first read when I got here and I found it very inspirational.  He started where you are now. Read it. I hope you find it inspirational too:

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/CREDIT-REBUILD-PROJECT-LOG/td-p/290152

[jarmll]

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@StartingOver10 wrote:

Yes, jarmil, it will help.  Read the stories here on the boards. Building or Rebuilding your score is two things:  repairing the 'baddies' and showing good on time payments on open credit cards and installment loans.  Do you have any open tradelines now or will this next credit card be your first card? 

Here is a thread (below) that I first read when I got here and I found it very inspirational.  He started where you are now. Read it. I hope you find it inspirational too:

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/CREDIT-REBUILD-PROJECT-LOG/td-p/290152

Thanks for the quick reply. I currently have no open credit cards, but I do have a couple old bad lines that need to be addressed.

When trying to clean up old CC like Merrick, Cap One, PayPal, does it matter if you settle with them? They are all in collections agencies now and have been for a while.

I did skim some of that thread, LOTS of details! but watching the updates as the scores moved higher was pretty awesome.

In the short term my goal is to get up into the 600-620 range to buy a car with no cosigner. From there I would like to move as high as possible. I am really not interested in buying a house. I see them purely as money pits. With homeowners insurance and Kansas property taxes you never truly own it anyhow. I know a guy that bought a house for $150k, had $75k down and his payments are still around $900 because taxes are $250/mo and HOI is $200/mo. So even after he pays the house off he still owes someone $450/mo forever??? How is that an incentive to buy? I would rather rent for $800/mo and not have the added stress of stuff going wrong.

[StartingOver10]

Having a paid collection is better than an unpaid one, but best of all is a "PFD" - paid for delete. Search the boards here you will see how to handle collections. 

Start here for strategies:  http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/Helpful-Rebuilding-Threads/td-p/224981

[cuthatcard]

Believe me, it does help ! 

I just added my 1st card, in yrs, ( Care Credit ) and even though my EQ is showing an unpaid Judgement that is 6 yrs old ( it is paid , 8k , and I've disputed it), my EQ scores just took a huge jump by nearly 100 points!  

Now, I have another TL that's showing on my report as "open" but I don't even have the card for it . It's was an old account,  no bad information on it, but my score was stagnant,  going nowhere until the new one hit ! So yes, a new card will help ! 

Hope this helps you out ! 

[Anonymous]

If you currently have 0 open accounts it will help tremendously. If you already have one open account then adding 1 or 2 more and keeping the reported balance at $0 will help a little. If you already have 1 open account be very particular about what you apply for, avoid anything with fees. Additionally having at least one open positive account while you work on your negatives (or even if you just wait for them to fall off naturally) will be a great jump start in rebuilding. Instead of having no credit when your reports are clean you'll have a nice thin file.

Collections on your report be it unpaid, paid, or settled hurts your score about the same, but if you have the tradelines from the original creditor on your reports with a balance that will be taken into account for your utilization. For e.g. if you had a card with a $300 limit charged off with a $350 balance that 115% utilization will drag down your scores. However before you do anything about these understand the DOFD, SOL, and how negative information is removed after 7 years from your reports.

[jarmll]

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@Anonymous wrote:

If you currently have 0 open accounts it will help tremendously. If you already have one open account then adding 1 or 2 more and keeping the reported balance at $0 will help a little. If you already have 1 open account be very particular about what you apply for, avoid anything with fees. Additionally having at least one open positive account while you work on your negatives (or even if you just wait for them to fall off naturally) will be a great jump start in rebuilding. Instead of having no credit when your reports are clean you'll have a nice thin file.

Collections on your report be it unpaid, paid, or settled hurts your score about the same, but if you have the tradelines from the original creditor on your reports with a balance that will be taken into account for your utilization. For e.g. if you had a card with a $300 limit charged off with a $350 balance that 115% utilization will drag down your scores. However before you do anything about these understand the DOFD, SOL, and how negative information is removed after 7 years from your reports.

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I had a car loan that was consistently 60 days behind. I got behind last year and could never get caught up. I paid enough to stay out of repo, but never got the traction to get out ahead of it. I just paid it off last week. I have old (2+ years) CCs that I intend to pay but the one that agrees to a PFD(?) first will get my first payment. I have the cash in hand to pay one or two low balance CCs off, so I am thinking I should do that if they agree to delete. Is this agreement something they will do in writing? 

I may have gotten in my own way a bit, but with my current scores I am not sure anyone wants to take a risk on me. I applied and was approved for a Credit One card. I figure I will pay the fees until I qualify for something better. If I simply let them charge the $8 monthly fee will that be enough to keep them reporting to the credit bureaus or should I put something like Netflix on it ($9.99/mo)? I don't really want to use the card, but I want SOMEONE reporting a positive for me while I get started on this journey.

*****I just reread that last paragraph, I sound desperate, but I want to put the 500s behind me and never see them again!

[rmduhon]

Hubby's Credit One card reported every month to all 3 bureaus even with no balance or activity. I don't know if they'll report the service fee as a balance (probably will) since we closed the card at 11 months before the monthly fees hit

[Anonymous]

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@jarmll wrote:

Just wondering if a CC that is kept up to date and with a low balance will be helpful in rebuilding my credit score. I would like to get to the 600 mark by April 1. It is possible paying the debts down, just wondering if this would help at all?

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Absolutely it will. In fact, credit scoring is most about managing credit cards. You should have three revolving accounts for optimal scoring.

[Anonymous]

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@jarmll wrote:

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@StartingOver10 wrote:

Yes, jarmil, it will help.  Read the stories here on the boards. Building or Rebuilding your score is two things:  repairing the 'baddies' and showing good on time payments on open credit cards and installment loans.  Do you have any open tradelines now or will this next credit card be your first card? 

Here is a thread (below) that I first read when I got here and I found it very inspirational.  He started where you are now. Read it. I hope you find it inspirational too:

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/CREDIT-REBUILD-PROJECT-LOG/td-p/290152

Thanks for the quick reply. I currently have no open credit cards, but I do have a couple old bad lines that need to be addressed.

When trying to clean up old CC like Merrick, Cap One, PayPal, does it matter if you settle with them? They are all in collections agencies now and have been for a while.

I did skim some of that thread, LOTS of details! but watching the updates as the scores moved higher was pretty awesome.

In the short term my goal is to get up into the 600-620 range to buy a car with no cosigner. From there I would like to move as high as possible. I am really not interested in buying a house. I see them purely as money pits. With homeowners insurance and Kansas property taxes you never truly own it anyhow. I know a guy that bought a house for $150k, had $75k down and his payments are still around $900 because taxes are $250/mo and HOI is $200/mo. So even after he pays the house off he still owes someone $450/mo forever??? How is that an incentive to buy? I would rather rent for $800/mo and not have the added stress of stuff going wrong.

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Thats a relatively high property tax, but the the HOI! Is he in a flood plain or something? Thats ridiculous for HOI - mine is a little over $30 per month on a $140K home. No matter where you live you are going to pay property tax. Some cities/counties are higher than others. Most are around 1% annually. Once a home is paid for you are no longer required to carry HOI on it.

Heres the thing about renting vs buying from my perspective. You have to think long term. If you are young this may not be apparent, but rents ALWAYS RISE. 30 years ago I could rent a place for $200-$300 a month. That same place today would rent for upwards of $1k-$1.5k. So by purchasing a home you are basically "locking" your housing cost for the next 30 years, after which it will drop. While you will still have property tax, you will now have a ton of equity - which can essentially be sold back to the bank in the form of a reverse mortgage - essentially eliminating your housing cost entirely during your retirement years and paying you a monthly sum to boot. Do you know any renter thats going to stop charging you rent when you retire, and start sending you a monthly check? Just something for you to think about.