When to apply for 2nd credit card?

[ssc2761]

Hi all, these forums are great and helped me get my reports cleaned up much as possible and get my 1st credit card to rebuild credit via Cap One. Now I have my school loan and the Cap One card. I was d/c 7/7/10 and was approved for the card 12/4/10. It said 7-10 days to receive so I don't know the credit limit. My question is: When is a good/best time to apply for a 2nd credit card? Is it best to wait a year from d/c so the offers get better? Should I keep the one card and just make my payment in full for each month for a while. I don't want a card with fees, like annual or monthly. The Cap One card does not have those fees for me as I applied to a pre-approval offer. What other card out there is BK friendly and has none of these fees. I appreciate all help/responses. Thanks!!

[HHM]

It's best to wait. Wait until you start getting pre approved offers from main line credit card companies (Chase, Citibank, Cap One, Discover, etc).

In reality, it isn't necessary to have multiple credit cards. Credit usage is credit usage regardless of the number of accounts. The goal with a credit card after BK is to reestablish credit usage, charge $50, pay it off each month. etc.

Credit recovery after BK is a 3 phase process. (also, part of THIS particular process is to establish better credit habits, not just about score maximization).
Phase 1: credit report clean up: this is the task of making sure all accounts are reporting properly after the BK (this is not about getting the BK removed, or other shenanigans that generally don't work).
Phase 2: reestablish credit usage. Get credit card very quickly after BK, charge it for a tank of gas or 2 each month, and pay it off.
Phase 3: Credit variety. This is a long term phase. You mentioned you have a CC and student loans (note, student loans are not weighted heavily in the credit score). Then comes car loan and eventual mortgage. Not that you should purposely seek out debt, far from it. What I recommend is saving a enough cash to buy a car outright; but then using 20% of that fund as a down payment on a car that is worth as much as your SAVED cash. Make payments, but always keep the cash in reserve that can pay off the car.

[backtoschool]

I respectfully disagree HHM. If the OP is looking to get a mortgage, 3-5 positive trade lines are what is looked for. It is better to get those trade lines up front and take the hit all at once than to wait in my opinion.

I do agree that a variety of positive trade lines helps. That is why I got an auto loan, even though I could afford to pay cash for the car.

[ssc2761]

Great advice HHM. I will wait about a year out or so from d/c to see what kind of offers are coming in at that point. That way I can make 6mo or more of timely payments on my Cap One card, which I am only going to use for gas and pay off in full each month. So I have completed phases 1 and 2, although a little more of phase 1 is left as some creditors take longer to correct on my reports. Fortunately we were able to keep out house after chapter 7 and did not reaffirm it. Our longterm goal is to rebuild our credit as much as possible and then get a rental home. So I guess my cap one is good enough for now. It has no annual fee and no monthly fees. I will know the credit line once I receive it. The interest rate is 22.9 after 9/2011, but then again I am not going to carry balances forward. The goal is definately to improve credit spending habits and also score maximization.

[ssc2761]

Backtoschool: Thanks for your advice also. My only concern is getting more cards from subprime companies with annual fees involved. I understand that closing out older cards affects your credit alot. That is why I got the Cap One w/o annual or monthly fees. I don't know if their are other cards out there for me that would have no annual/monthly fees. The Orchard's and those types all have some sort of annual fee. Wouldn't it be best to wait after making numerous ontime payments on my cap one card, and then maybe better pre-approval offers would show up in the mail from the better credit card companies. Other than that, I see your logic that a lender wants multiple trade lines managed properly before lending to you. I have a friend who discharged chapt 7 in early 2008. She only got two cards from First Premier. I am not sure why she got two cards from that same company. Her cards do have annual/monthly fees. However, she was still able with those two cards, to secure a mortgage loan in October of this year for around $150k. She did have a student loan that she was paying as well. I am just throwing info out here, but for my situation I don't know whether I should actually just wait for better offers or get another card now. I cannot get a mortgage loan for around 3 yrs anyway, as one of our houses is going through foreclosure process right now after being surrendered in the bk.

[backtoschool]

Backtoschool: Thanks for your advice also. My only concern is getting more cards from subprime companies with annual fees involved. I understand that closing out older cards affects your credit alot. That is why I got the Cap One w/o annual or monthly fees. I don't know if their are other cards out there for me that would have no annual/monthly fees. The Orchard's and those types all have some sort of annual fee. Wouldn't it be best to wait after making numerous ontime payments on my cap one card, and then maybe better pre-approval offers would show up in the mail from the better credit card companies. Other than that, I see your logic that a lender wants multiple trade lines managed properly before lending to you. I have a friend who discharged chapt 7 in early 2008. She only got two cards from First Premier. I am not sure why she got two cards from that same company. Her cards do have annual/monthly fees. However, she was still able with those two cards, to secure a mortgage loan in October of this year for around $150k. She did have a student loan that she was paying as well. I am just throwing info out here, but for my situation I don't know whether I should actually just wait for better offers or get another card now. I cannot get a mortgage loan for around 3 yrs anyway, as one of our houses is going through foreclosure process right now after being surrendered in the bk.

I think it takes quite awhile to get prime offers post bk. By awhile I mean several years. In the meantime, a couple of cards, applied for right away, can be helping your credit. I got a secured card from my credit union, two cap one cards, and an orchard card which I never use. My score has gone up quite a bit (my scores are all around 680 now) and I am one year post discharge. When I applied for a car loan this fall, I got 4.42% from Cap One. I could have taken money out of savings a bought a new car, but I wanted to improve my credit and have the trade line.

I would never get First Premier, they are a predatory subprime card.

[ssc2761]

So you can actually apply for a Cap One card two times. Did you do all this via pre-approval offers or took it upon yourself to apply? Also did you apply for the car loan with Cap One directly by calling or website? Thanks for your help again.

[ssc2761]

Backtoschool: Also by right away, do you mean within the same day, week, month. I was just approved for the Cap One on this Saturday 12/4/10 and was the first anything I applied for after d/c and cleaning my reports.

[backtoschool]

Backtoschool: Also by right away, do you mean within the same day, week, month. I was just approved for the Cap One on this Saturday 12/4/10 and was the first anything I applied for after d/c and cleaning my reports.

I waited a couple of months then applied for a second cap one card. I applied for auto financing this fall which was 10 months post discharge or so, and I had ten months of credit history with Cap one. I applied proactively for all of my cap one stuff and never had a preapproval offer since I am opted out of all offers on all three credit bureaus by choice. (I don't want to get 5656474756 first premier offers a week. )

[Amy26]

You could also get a Hooters MC. I have one without an annual fee and its really good. Also, you could try going the credit union route. I tried applying for capital one twice and the second time they denied it saying there was evidence of bankruptcy on my file... I'm like no shit, you didn't seem to care when you gave me the first card.

[ssc2761]

Hahha thats funny, that they gave you the first card and didn't care until you applied for the 2nd one. Do you have to apply for the Hooters MC and then they tell you whether there is an annual fee ? Is there a pre-qualification page or do you just apply and are at their mercy for the annual fee? I guess since I just got my first card from Cap One, then I will wait at least 3 mo b4 applying for a 2nd card. I am a part of a credit union, maybe I will look into that option.

[Amy26]

Yea was really wierd... I BK'd them on an account I only had for a few months before my bankruptcy...so I figured they'd hate me for quite a long time. I applied with them about a month after my discharge and they denied me stating "previous deliquency with capital one". I tried one more time and they still denied me... then, I chose a different type of card to apply for the third time (I waited a few months between the last app) and they approved it. Was the credit steps one. So, a few weeks ago I tried for the second card and ya they said "evidence of bankruptcy on your file"... so, I think their approval methods differ depending on which credit card you chose to apply for.

With hooters its a wait and see. They pull Trans Union. The fee ranges from nothing to 59 a year I think. But they seem to be more generous with limits than HSBC. I started with 1,100 and now I have 1,300 after a year. Hooters was the first card I got after my bankruptcy about a month after discharge.

[tobee43]

Hahha thats funny, that they gave you the first card and didn't care until you applied for the 2nd one. Do you have to apply for the Hooters MC and then they tell you whether there is an annual fee ? Is there a pre-qualification page or do you just apply and are at their mercy for the annual fee? I guess since I just got my first card from Cap One, then I will wait at least 3 mo b4 applying for a 2nd card. I am a part of a credit union, maybe I will look into that option.

ssc....actually we followed bts advise on this one.....we applied for capitol one we rec'd a 2k limit...0% for almost a year...but then it when it goes to 22%....
orchard bank...i got 1300....12.99% and i had to pay $39 for the fee...my other half got 1500....12.99% no fee...fixed rates.

now, i understand what hhm is saying here...but we want to buy this house...(although now we found out the owner will finance...), however, we will still most likely in the near future..although i am really hoping NOT...but we may at some point (sooner than later) need a car as ours is going on 11 years old now.

we are finding it hard to use them...and argue all the time about paying them off the second we charged something...it's killing us to maintain a balance...so...i lost the battle and don't know if the cards will help that much...the louder half is winning and i'm having to pay them as soon as we use them. we'll see i guess what happens.

personally, i think time will be the key here to all of it...from mortgages to car loans...the more time between your bk and applying for another "large"...i think the better the chance is going to be. i hope!

[ssc2761]

Since I was just approved, do you recommend maybe waiting around 4 mo to apply for the Hooters card? Also as a side note, I looked into the credit union cards and you have to choose which one to apply for and they would be secured against the monies in your accounts. The card is actually unsecured, and although you don't put in money into it, it is still considered secured. Sort of like an RC Willey furniture store card, where the merchandise you buy can be repo'd even though the card you use didn't require putting money into it. wierd. Do I need to do anything else besides having like 2 credit cards and cleaning up my reports, to build my credit faster?

[Amy26]

Well, this is up to you. The only warning with Hooters is that a few people were approved for a hooters card and then a few months after they got it, Merrick closed the account saying they had too many new accounts. I have not had any problems with my card and I've had it for over a year now. What do your credit scores look like right now?

I'd say if your Trans Union report looks fine then it should be ok. 2-3 major credit cards managed responsibly will do your credit well. It also helps to have a car loan or something on there reporting positively as well. Your credit isn't going to magically improve overnight though... most of us getting out of bankruptcy are getting low limits and will have a low "average age of accounts" metric on our reports for a while. This is why I chose to get credit sooner than later. I wanted the rebuilding to start closer to my discharge date even if I had some not so fabulous credit cards so that 1-2 years later I would be in better shape.