Lost 29 points by paying off an auto loan

[Revelate]

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@jamie123 wrote:

I'm sorry for responding so late. I've been busy.

You should get a small bump in your scores after your credit cards turn one year old but it probably won't be much. Your scores will start to rise now month to month from all the good marks being put on your reports from the CCs.

Once your cards are 6 months old you should evaluate your options on getting 2 more cards. It will depend on where your scores are at that point. You might need to wait for a year.

A "Yuppie Food Stamp" is Revelate's term for a small cost or fee that is not noticed by Yuppies. Ya know, like the cost of a couple of Starbucks coffees. Yuppies won't think twice about spending money at Starbucks but will sometimes complain about the cost of pulling a credit score that will actually benefit their financial well being. (Is that about right Revelate?)

An auto loan usually is for a lot of money so I can't recommend paying it down unless your interest rate is exorbitant. We are playing with small $500 share secured loans from credit unions to do our testing. We still don't understand what the best payoff percentage is but we are working on it.

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Actually a Yuppie Food Stamp is explicitly a $20 bill: the common demonimation from an ATM; was a lot more prevalent of a term in the 90's, dating myself haha. 

[Anonymous]

I wonder if a twenty is still apropos? Perhaps with inflation a $50 is appropriate. Question is, do you have to turn your collar up?

Barclays declined after three recons. They all said the same thing - file is too thin. There was some glimmer of hope though as they asked I just show them a little. I have been working my new cards and they are set for auto pay.

My intent is get close to max and pay off a few times per month. Just to show I need a CLI - is that logic sound? I will also leave a reporting balance just shy of 9% on one card as instructed. I am moving very close to eliminating the collection. I am hopeful my score will jump to good when this happens. Until then, I plan to try to increase limits, stay in the garden and be patient. Are there any other steps I am missing? 

Learning about how this works is like learning a new language. You just want to pick it up and speak fluently.  

[jamie123]

Well...You have reached a fork in the road...

You have 2 options that are dependant on how soon you think you can have that collection removed. If you think that the collection can be removed within the next 3 to 4 months, I would suggest waiting on your next credit card app until that happens.

If you think it might be longer than 3 or 4 months you should app for another credit card now. I would suggest apping for either a Bank Of America Cash Rewards card or a Discover IT card. Now, bear in mind, these two companies might not offer you a "standard" card if you don't qualify for it but will counter with a "secured card offer". The BoA offer is sometimes a $50 secured for $500 of credit. That means you have to put down a $50 deposit to get a $500 credit card credit line. Same goes for Discover. These "secured" credit cards will graduate to unsecured after about a year at which point they will issue you a new card and send your deposit back. I would apply for the Discover card first. You only need one more card so stop after you get it.

[Anonymous]

As Frost would say, "whichever way I go, I am sure to miss something good on the other path"

I am confident the collection will be removed. I am going to hold tight for now. I have a very long relationship with Chase and prior to my scores taking a dip for closing the auto loan - I was pre-qualified for a couple of CCs. Just never realized how important having cards were, so I always ignored the invites.

When I follow your advice and utilize the cards (I currently have) to maximize CLI's over the next two to three months I am hopeful I can apply for a premium. During Barclays recon they all suggested I try back in a couple of months after I establish a bit of CC history. They were emphatic they were different from other companies and no need to wait a predetermined length of time before applying again. They suggested 2-3 months was plenty. I do not know if this is market standard or if you have insight? I was inspired though and felt like they really wanted to say yes, just couldnt quite pull the trigger.

I am anxious to tie down the first three, garden and build...

If others don't share - you are pretty awesome to take time from your day to help us newbies. Much appreciated!

[jamie123]

Yeah, you are on the fence right now. You have some good credit, just not enough of it.

As long as you are willing to be patient, that really is your best course of action. Wait a few months until apping for another card.

I'm not sure Chase would accept you yet. I would suggest that when you are ready that you try their prequalification site before apping Chase. Chase and other top tier lenders usually like to see at least 1 year of good credit history managing at least 2 credit cards before they will approve you for one of their cards. Make sure when you do it that you app for the Chase Freedom card.

[Anonymous]

Patience is the hard part.... It seems to be hurry up and wait!

I also need to accept - my bank (Chase) will give me an auto loan for $50K @ under 5 points but may not offer a CC with a $500 limit at over 20%.

For now I will just keep learning. I wonder if proactively deposting additional funds into my CC will help with a CLI? Or should I max out, pay and repeat?