My strategy: any comments?

[Andrew22]

Hello friends: so, here is what I've done, for better or worse, and would welcome any input as to how much I've helped, hurt my fico score for the next 6-12 months.

I recently fixed my credit (from 606-726 with your help!) got married, and with my new credit, got a mortgage at a great rate, and a home. Going through all of this credit stuff, I decided to just bite the bullet on inquiries, etc, and get EVERYTHING squared away. So, in the last month, in addition to the mortgage, I got an Amex Green, a USAA Amex Cash Rewards low-rate card with a $3000 limit, and I added an overdraft line of just $300 to my checking account (which required a credit pull). I also closed a crappy Chase CC account from 2000, which had the $3000 credit line reduced to $250 during the great recession. Chase sucks.

My thinking was, get it all done now. I shouldn't need any new credit for years...

My score was 726 based on:

4 student loans, paid in 2007, (opened in 1985!) deferred but reporting as paid/closed/never late til 2017.

1 card, clean history from 2007, $3,300 limit

1 AU on DW's card, clean history from 1995, $30,300 limit

1 card since 2000, $250 limit, 30-day late two years ago, now closed.

1 best buy charge card, $500 limit.

1 line of credit, since 2007, clean history, closed in 2009 (reports positively)

Negs still reporting:

1 IRS lien, satisfied in 2007.

1 satisfied judgment from state tax (no lien filed) for $199, due to come off in 2012.

1 30-day late (on the closed card above).

TO THIS, I'VE NOW ADDED:

1 amex green

1 amex cash reward $3,000 limit

1 overdraft line of credit for $300

1 mortgage (300K)

None of these have reported yet.

AND I'VE SUBTRACTED:

$250 in credit limit

and, I've had the IRS lien withdrawn--it should be coming off my reports in the next 30 days. (yeah!).

My average age of account before all this was 14.4 years. Oldest account, 25 years old.  My utilization is about 8%.

My question is: was it wise to add the final credit accounts I needed right now? Should I have waited? I realize when all this new credit reports around the same time, I could take a whopper of a hit. But, my feeling was, in six months, I'll get a lot of that back, and I'll have more age on the accounts...

Thoughts?

[Booner72]

Wow Andrew - I am going to do exactly what you did.  FIrst off is to get the OD protection account, I was thinking of 300 myself.  I also need a credit card.  Hopefully the Credit Union will be able to offer both of these things to me with the same credit pull.

We are paying 24% interest on a truck that has 8000 left to pay.  I'm hoping that we can get either a credit card or a personal loan to get that paid off.  Do you guys think I would qualify for that?

Andrew- I think that what you did makes sense financially, and taking the bite on inquiries just had to be done, right?

[kjm79]

The 4 new accounts you opened will lower your AAoA, but you're starting with such a great AAoA, you might see only a small ding, if any at all.  It may not even drop your AAoA under 14. 

Depending on what other inquiries you have on your reports, the 4 new inquires shouldn't cost you that much either.  And worst case scenario is that you do get dinged a bit more for the new accounts, with what you've got, you shouldn't need to be app'ing for any additional credit for a while.  At least until the new cards have aged some.  It all looks pretty good.  I think you're good to garden.   

[Andrew22]

Thanks for that. This was exactly my plan: get straightened out, take a hit in the near-term, and just cool it after that. Just waiting to see what happens to my score, but I am pretty confident whatever happens I will bounce back scorewise over the next year and then some. This site was key for me, BTW. The power of information...

Good luck to you all, too!

[RobertEG]

Looks impressive!

Getting the tax lien deleted was big  That is a major derog!

The new credit inquiries are meaningless after one year.  The hit for the new accounts will be a reduction of your AAoA, but since you have multiple accounts, some with significant age, that should not be major.  that is not a big scoring category.  The new installment loan will help your credit mix.

The new CLs on the new accounts will, of course, have a postivie effect on reducing your % util, so they probably give you more benefit than the hit on age of accounts.

The only questionable action was the closing of the CC.  You lost its CL, but since it was small, again, little effect, and you dont have to concern yourself with it anymore.

The only caution I would offer is that many who get new credit and CLIs often feel the freedom to go on a spending spree.  I would thus focus on keeping your % util at its current level.

Great job!

[Andrew22]

Thanks Robert, you were one of the first to help me here, and I've valued the input you offer to this forum.

I closed the Chase card for two reasons. The first, is because I hate Chase. This is an old Providian card, and they are charging 32%, and despite offering all kinds of low rates and cards, they refuse to make this current account competitive. Since it is a former subprime, they treat me like subprime. But the real reason is because it is the source of my only 30-day late. Two years ago I bought a pair of shoes online, and this was the card that was on file. I never use this card, and didn't really look closely at the billing info. I am afraid it might still lurk out there!

And, your caution about spending is well-advised. Luckily for me, my wife now controls the purse strings! I'm happy to have the new credit for emergencies (I travel a lot for my work). We'll be paying off our remaining small balances by years's end, at which point we'll have all cards at 0, andone card with a small revolving balance.

As for the tax lien: never a dull moment. I got a Score Watch alert yesterday saying that the lien was now being reported on EQ. It was never reported on EQ, just TU and EX. However, there was no score change in the alert. And, when I went to the EQ dispute site, the lien is NOT on my report. I think what happened is that the withdrawal form was sent to the agencies by the IRS, including EQ, and Score Watch read the logging of the withdrawal form in the system as the logging of a lien? Sound plausible? Anyway, having a little anxiety about that! TU and EX say they will remove, FYI, just waiting for the papers...

thanks again for all your help!