Advice For Additional Credit

[jaffy83]

Howdy Howdy :-)

I followed shipo's overall advice on reestablishing credit and went with the following after my Ch 13 discharge:

• NFCU secured card w/$5k limit
• Ally cash back w/$1.3k limit (started at 1k and received an unexpected CLI of $300 6 months later)
• Cap1 (regular) with a $300 limit (this was the first card I applied for after discharge)
• 36 month secure share loan

All cards are more than a year old at this point. I've followed this advice given here, as well as elsewhere to keep almost all of the CC balances to zero except for a few bucks on one of the cards. While my FICO scores have increased about 60 points overall (currently at 690 FICO 8), I can't seem to get NFCU to graduate my card, nor a CLI from Cap1. Ally does not allow CLI requests. It looks as though my poor performance with credit prior to filing BK is still the cause of this. When I attempted to request a CLI from Cap1, I got back the boilerplate "there are too many seriously delinquent or derogatory credit obligations" as the reason for denial of the CLI. I was wondering if anyone could advise to the following:

• 7 years from filing would be June 2024 where I assume all of the prior negative marks would all be gone and the BK will clear off Experian and Equifax shortly before June
• I can afford to open up another high dollar secure card to help show responsible use with "large credit lines" but not sure if this is the way to go, nor if $5k is considered "large credit lines"
• I don't have any specific need to obtain a new credit product other than the eventual (1-2 years from now) purchase of a "new" car
• Would it make more sense to wait until May/June when everything negative should be gone/can be disputed to be removed to see how things shake up?

Much appreciated :-)

[shipo]

Congratulations on your rebuild so far; a few comments in no particular order:

• I was in your shoes about 30 months ago; at the time my gut told me to sit on the cards I had (TDBank, CapOne, and PenFed) and wait until the bankruptcy fell off my reports. This is the evolution of my recovery:
  • When the Chapter 13 fell my reports in January of 2022 off all 28 of my FICO scores shot from the mid-600/low-700 range up into the 800s, literally overnight.
  • That year I only applied for two new cards, both with surprising starting limits, but for different reasons; I got a CapOne SavorOne card with a starting limit of only $2,000 (the Quicksilver card I got about 10 months after my discharge had a limit of $3,000), and then I got approved for a Chase Sapphire Preferred card with a starting limit of $11,700.
  • Also during 2022 I purchased my first nice new vehicle since 2002, a fully tarted Toyota Tacoma TRD Sport 6MT and Toyota Finance approved me for a 48-month loan at 2.49%.
  • Finally in 2023 Chase sent me a preapproval for a Freedom Unlimited card; I took the bait, and got a starting limit of $23,600! It should be mentioned here I burned Chase in my Chapter 13 for something north of ten-grand, so I was surprised to get approved for any of their cards, much less these two.
  • At this point, I've been granted several unrequested CLIs from TDBank and CapOne, and coupled with the two Chase cards, my total limits are now many times what I need/want/desire, somewhere north of sixty-grand.
• As I inferred above, I think in your case you'd be best to simply wait until your credit reports switch to a "Clean Score Card" in June and then wait another month or two before applying. Why wait? I have heard anecdotally some financial institutions use credit reports which are one to two months out of date for their underwriting decisions; waiting will allow their reports to catch up.
• I would also suggest leveraging your NFCU membership as they are widely known for rapid limit growth on their cards. I'm thinking first stop would be to ask for a graduation of your secured card, and if that fails, apply for one of their other cards.
• Another possible option would be to apply for a new card with CapOne, I've read numerous anecdotal reports where folks who were approved for a "bucketed" low-limit card early in their recovery, and were unable to get that first card to grow, were able to apply for one of CapOne's better cards and get approved for a high limit card.

Keep us posted on how you make out.

[justbroke]

It's not your poor prior performance on your prior accounts. The serious delinquency is the bankruptcy.

In many cases, it is difficult to get over a 700 FICO with a bankruptcy still reporting on your credit report, unless that bankruptcy has aged somewhat significantly. That means at least 2 years since your bankruptcy case was closed. I would say anything over 680 with the bankruptcy less than 2 years since it closed is pretty good for that bucket.

When the bankruptcy falls off (because it's a Chapter 13 which falls off after 7 years), you will be rebucketted. You may or may not get into the 700s and your score could go down slightly due to rebucketting.

It makes 100% more sense for things to start to fall off. Make sure you read my post on early exclusion. I believe it's in the same Shipo Guide to Rebuilding Credit (sic) thread.

Note: the AZEO isn't a sometimes thing. You have to do AZEO before reporting all the time if you want the AZEO bump. The card that is reporting must be less than 9% balance when it reports. For NFCU, I maintained a relationship with other accounts such as share savings and two vehicles. I think they like vehicles for cross-collateralization.

[jaffy83]

shipo and justbroke - appreciate your feedback very much!

shipo - appreciate the advice on waiting a bit even after June in the event creditors use older reports for their decisions. In follow up, I'm wondering if it would be wise/or even matter if I close the low limit Cap1 if it is being replaced by a new card with a higher limit? I'm less concerned of the average age reducing since I'm basically "brand new" anyway.

justbroke - I went through your post on early exclusion - it was how I was able to get the BK off TU in December. Based on your analysis, my BK should fall off EX in March and EQ in May. Regarding AZEO, I use this practice each month religiously. I somehow lucked out that the reporting date for almost all of my cards is within the same 5 day window which makes tracking payment dates much simpler. Regarding rebucketting, when the BK was removed from TU, my TU FICO jumped 24 points, but TU remains my lowest FICO score out of the three. I'm hoping.... hoping when the BK falls off EX and EQ, I will see a bump as well. Time will tell.

Thank you both, again. Much appreciated.

[shipo]

jaffy83, unless your CapOne card has an Annual Fee, I don't see any benefit from closing it, but no downside either. If it does have an AF, close that sucker. FWIW, one of the false starts I made after my discharge was to get a CapOne secured card with a $1,000 limit; that card proved to be insufficient for my monthly usage levels so I started paying if off weekly; that triggered an Anti-Money-Laundering protocol and they started holding my payments; I closed the card after less than seven weeks, and figured CapOne would hate me forever. Bzzzzt! I'm sorry, that is incorrect. Almost exactly six months after I closed the secured card they sent me a preapproval for an unsecured Quicksilver, and when I applied, I was instantly approved for a $3,000 limit.

Regarding when bankruptcies fall off of credit reports, I considered early exclusion, but given I had no immediate need to apply for anything, I let my Chapter 13 fall off organically, Experian fell off in December 2021, and Equifax and TransUnion fell off in January of 2022.