Should I open new accounts to increase score?

[js0319]

Currently, I have:

Positive Accounts:

Mortgage

2 Auto loans

No Open CC's

Negatives:

Defaulted SL (beginning rehab this month)

1 CC CO

6 Medical Collections

2 CC Collections

When I started two months ago I had:

Positive Accounts:

Mortgage

2 Auto loans

1 Secured CC

Negatives:

Defaulted SL 

2 CC CO

7 Medical Collections

2 CC Collections

Should I, or do I need to, open another CC to try and increase my score? I am working on taking care of my baddies, but I still want to work on showing more accounts with timely payment history. 

If so, does anyone have any suggestions as to what types of accounts to open, or (for CC) through which lenders?

[Anonymous]

Couple of things to answer:

1) Do you need credit card(s) right now?

2) What's your FICO (if you know)

Basically, if I were you, I'd only apply for credit cards that are still useful several years down the road, i.e. a good rewards card with low or no annual fee. I'm sure you can get a card or two now, but will they grow with you? That's really the question. Many of us have Cap1 cards as good starter cards, and I've kept mine open because they're still useful to me. But, in retrospect, I would not have applied for one of the two and instead held out for a better card.

You already have a mortgage, which is seen by most as the "biggest and baddest" credit you need, so at this point you can afford to be very strategic on new accounts.

[llecs]

My vote is to focus on repair and stabilize your finances. Looks like a recent CC CO baddie was added within the past couple of months. I'd get all of this repaired then aim for another secured once everything has calmed down.

[js0319]

The initial post was incorrect - I have paid a CC CO since, not added one. My credit scores are listed in my siggy.

I don't need a CC as I have been living on cash for the last few years. I am just trying to get more accounts in good standing, and my CL on my CC is only $300 - so I can't even fill up with gas without going over 10% utilization. It's like I have a CC just for the sake of having one, charging one item, and paying it off before the statement cuts. What I'm really trying to do is get my score up enough so I can at least re-finance both of my vehicles to save money - I have one at almost 16% and one at 20%. 

Every baddie I have will fall off of my CR by the end of 2015. I haven't had any late payments on anything in 4 years. Of course I'd like to try and get where I want to be faster. Do you think my current open/good standing accounts will help me increase my score with time, or hold me back?

[llecs]

You might benefit from another CC, but I'd focus on repair first. I don't foresee being above 620 for the next couple of years without some repair.

[RobertEG]

+1

You definately need revolving credit for long term score improvement, but getting revolving credit at acceptable levels and terms will first require a decent score.

The catch-22 of credit repair.  You need revolving credit for long-term scoring, but seeking it with low approval chance will just add more unnecessary inquiries, and frustrate you.  With 9 or so major derogs, I would concentrate on preventing further damage on the unpaid accounts, and seeking removal by way of PFDs on the unpaids, and GWs on the paid.

[Anonymous]

From what I can see, secured credit cards are probably the only option for you now.  Even with secured cards, you need to pay attention to their credit standards as people can and often do get rejected for them.  Maybe work with a good CU and see if they have secured card that unsecures after a while and will grow with you.  One of the previous posters made a great point of finding a card that will grow with you if possible.

[js0319]

I hear a lot about getting secured cards with CU's - the problem with that is I had 2 vehicles repo'd that were financed by a CU 4+ years ago. Do you think this would matter if I tried another CU, or could I even try the same one I had the repos with?

[Anonymous]

Shrug.  Depends on the CU.  There are a lot of CUs and some major lenders (HSBC/Orchard) that don't run any credit check when you open a secured CC.  Time to do some research I think.

[Revelate]

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@Anonymous wrote:

Shrug.  Depends on the CU.  There are a lot of CUs and some major lenders (HSBC/Orchard) that don't run any credit check when you open a secured CC.  Time to do some research I think.

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I suspect that's few and far between, and somewhat doubtful on the HSBC/Orchard case but I never applied for a secured card from them.

As for the original thread: if you can get a secured card, do so.  Get two even.  Living on cash is not where you want to me (as I can attest) and even if you got all the derogs off, your positive history would be scant at that point.  Frankly you save yourself a few years in credit score rebuilding if you open accounts now, and let the score increase come from both directions rather than simply working on the derogs... neither of those two strategies are dependant on each other, so they should be done in parallel.  

You know your score is challenged (mine sucks, I admit it), but you need *both* positive tradelines and removal or mitigation of the negative ones to help your score.  Might as well take the short-term penalty on scores that new accounts bring now, then after your scores start to go up.