A car and a credit card...

[RBisDebtFree]

Hello, we have obtained a car loan and a credit card 4 days after our discharge.

Car loan ended up being at 8.59% (from a very nice local CU, not a dealership or some scam company) and we will be paying 2-3 times the monthly payment scheduled to pay it off within 2 years while we'll be heavily saving to be ready for whatever we can reasonably be ready for.

Credit card is from Capital One and will be used once a month for a tank of gas (maybe half a tank of gas depending on the credit limit and though the balance percentage used). Honestly, I don't want credit cards as I love the life on cash so I didn't even want to apply for the Cap1 card but I guess I have to if I want to see my credit score go up. I don't see anything wrong with having a good credit score (at minimum, it's easier to rent and get employed with a good score). Though I don't like credit cards, I still have to use them to rebuild my scredit score.

So my question is: should I be getting like 2 more credit cards and use them once a month too? If so, when and with what banks should I try? Or is what I have now more than enough to rebuild my credit history?

Thanks!

[jadams]

With a 8.59% car loan and one credit card, I would think you're all set.

Most people that are doing multiple cards, only certain percentage of the balance used, etc. are playing the FICO game to try and get a higher score so they can buy/refi their car loan to something reasonable. Post-BK people are getting upper teens to low 20's as their car loan interest rates. Being able to refi that down is very attractive.

Since your car loan is already quite decent, I wouldn't worry about it and would just focus on paying off the car, keeping the credit card pay-in-full, and letting all the bad stuff age.

You don't want a bunch of crap cards just for the sake of getting cards. After 8-12 months with your current card and the auto loan, maybe try for a card at your credit union that has better terms than the Capital 1. If you add the new accounts now, you may have trouble in 8-12 months trying to get that better CU card because they see too many inquiries and new accounts.

I got HSBC, Capital 1, and a secured card from my Credit Union -- but I am playing the FICO game. I was treading below the minimum score required by my business credit card processing company (to accept cards as payment). I was able to boost the score up to not good but not going to get me cancelled -- so now I need to be patient and let stuff age.

[RBisDebtFree]

I see, that's probably what I am going to do, I kind of want to be set with it and just keep making payments and use my CC charge-and-pay-in-full. I just want my credit rebuilding to be a background task that I don't focus on too much, again, in two years, I don't want to be sorry for not taking action now.

However, it looks like I'm ok and maybe later I'll get another card or two but from a good institution, don't want to go with anybody would approve me...

[sguerra923]

Just out of curiousity.. Don't credit card companies want you to leave at least small balances instead of paying off the card totally? I mean its good for us because we won't have to pay interest but if the CC sees that they're making some sort of money off us will that give us better chances of credit line increases and us able to lower our APR?

Because my mom paid hers off all the time and they actually lowered her credit limit from 22k to 11k... and shes has a crazy credit score of high 700 never been late ect..

Just curious what everyones input is on that.. thanks in advance..

[RBisDebtFree]

Well, they probably decreased her limit because of the way the economy is right now. I do not think that it was due to her paying off her balances every month.

Credit card companies make money everytime you purchase something. I had a business where I was accepting credit cards and they were charging me 0.30 per transaction plus 2-3% of the transaction amount. Maybe it is rather high as for the fees but I don't think you can get much lower than that. That should give an idea on how they make money on us and businesses that help us.

Maybe somebody else can add more information on this...

[nerves]

RB - Can you advise what kind of credit union it was? Thanks so much!

[RBisDebtFree]

It was Washington State Employee Credit Union, wsecu.org...

[Logan]

Hello, we have obtained a car loan and a credit card 4 days after our discharge.

Car loan ended up being at 8.59% (from a very nice local CU, not a dealership or some scam company) and we will be paying 2-3 times the monthly payment scheduled to pay it off within 2 years while we'll be heavily saving to be ready for whatever we can reasonably be ready for.

Credit card is from Capital One and will be used once a month for a tank of gas (maybe half a tank of gas depending on the credit limit and though the balance percentage used). Honestly, I don't want credit cards as I love the life on cash so I didn't even want to apply for the Cap1 card but I guess I have to if I want to see my credit score go up. I don't see anything wrong with having a good credit score (at minimum, it's easier to rent and get employed with a good score). Though I don't like credit cards, I still have to use them to rebuild my scredit score.

So my question is: should I be getting like 2 more credit cards and use them once a month too? If so, when and with what banks should I try? Or is what I have now more than enough to rebuild my credit history?

Thanks!

I would get at least 3 credit lines-especially if you want to get a mortgage in the future.

Logan

[RBisDebtFree]

It was Washington State Employee Credit Union, wsecu.org...

I was in a real hurry when responding, I think it's a regular credit union but it's only open to present or former state employees (public school, city, state employees or contractors) or their relatives... I qualified through my cousin-in-law, I would try for something like that, I guess it was just for me going from door to door and not giving up... I wish good luck and a good deal to you!

[RBisDebtFree]

I would get at least 3 credit lines-especially if you want to get a mortgage in the future.

Logan

I have a few questions for you:
1) Should I get cards from wherever I can? I have a Cap1 CC right now, should I get one from Orchard and some other bank right now? I mean, would you do that? Or would you be shooting for some well-known financial insituations?
2) Let's say in a year, I qualify for BoA or Chase CC and I go ahead and apply and get a card from well-known banks, should I cancel the ones that I had from the beginning and just keep the new ones? Or should I keep all of them?
3) Is my auto loan considered a credit line? If so, I have a CC and an auto loan, does it mean that I only need another CC?

Thanks!

[aces67]

Your car loan is a line of credit. I would wait a few months and see if you can get a CC through your CU.

Another board I'm on says that you should keep all CC's open for a minimum of 2 years otherwise it can have a negative effect on your credit. I'm not sure how true that is I'm just throwing it out there.

[Logan]

Since you just discharged I would wait 6 to 12 months and apply for another credit card. I know from my experience in the mtg business 3 lines of credit was the minimum a lender would like to see.

I wouldn't worry about what bank the CC is from.

Logan

[RBisDebtFree]

I see, well, maybe I will be getting another CC sometime later, I now I can get a secured one now for sure but I am not sure if I want to go that route...

[Hopeful09]

I've been lurking here for awhile - we were discharged back in July and are now trying to rebuild.

RBisDebtFree - We are in an area with WSECU and are eligible to join, do you happen to know what your credit scores are? I don't want to get my hopes up....

[Never_Again]

My understanding is that one fixed line, and one revolving line should be sufficient. Multiple lines will increase the amount of credit available, which can increase your score (based on utilization), but there seems to be some number of accounts that can do just the opposite. Remember, Fair Isaac corporation does not tell anyone exactly how they arrive at the score. (Wouldn't it be great to have a product that everyone was so obsessed about that they would jump through hoops, and do just about anything to manipulate this three digit score?)

If you go with your one account, use it to no more than 20% utilization each month, and pay it off every month (hopefully you have a grace period, so it doesn't cost you anything), and keep doing this over time, your credit line will increase (lowering utilization), and it will continue to rebuild your credit, as time goes on. I would not get excited trying to open other accounts.