Denied for a secured card

[TBA]

it doesnt matter when they report it/when you pay it as long as you pay it on time. they will report activity and payment history. you dont have to carry a balance to rebuild your credit.

[flowerchild]

it doesnt matter when they report it/when you pay it as long as you pay it on time. they will report activity and payment history. you dont have to carry a balance to rebuild your credit.

Sorry but this is just not true that it doesn't matter when they report. Yes you must pay on time but the reporting of your balance makes up 30% of your score. It is called utilization and high utilization can tank your scores faster than the blink of an eye. Utilization is simply your balance divided by your limit. A person who has just come out of bk has fragile credit anyways and this utilization can be the kiss of death, or the case of denial. I've seen peoples scores tank over 30 points plus based on utilization and when the utilization goes down the scores go up.

For example, lets say that you have a credit card whose statement date is the 15th of the month, however the credit card reports the balance as of the 30th of the month. Lets also assume that you have a 1000 credit limit. On the 15th of the month you pay in full your balance of 200 and bring the account to zero. You have accomplished what you said, pay in full and on time. However on the 20th of the month you make a 900 charge that you will pay in full on the 15th of the following month. That means that on the 30th of the month, when your credit card reports to the credit bureau it will report 900. That is 90% utilization and that is what will drive your scores down. And if perhaps this is your only open account after the bk it will cost you big time.

Without this kind of knowledge a person will swear that they are doing everything correct but because many major credit cards and store cards report mid-cycle rather than the statement date, your scores are much lower than they should be. In this above example, armed with this knowledge, I would hold off making that purchase until after the 30th of the month and still pay in full. This of course means nothing to the person who is not concerned about rebuilding as some people know this and still will make they purchase. They know full well that as soon as they pay that debt down then their scores will recover.

However as a person with a bk on my reports, I am very cautious to not let this happen because I don't want my creditors to think that I am being irresponsible when in fact that I am not.

[TBA]

@ Flowerchild, I dont think you understood my post.

It doesnt matter when the credit card company reports to the bureau when you are trying to REBUILD your credit history. It only matters when you are APPLYING for a loan. That is the only time it really matters - you are correct - Balance to high credit limit does impact your score - BUT WHO CARES when you are trying to rebuild if you are not applying for anything.

Why do people let their score dictate their lives?

Here is a real world example...

Jewelry store owner goes out in October and maxes out all of his personal credit cards in preparation for the holidays to make sure he has stock on hand to meet the needs of his customers. By february, he has paid everything off again. From october to february, he shouldnt try to buy a house or a car... From about march or april thru october, he is golden, all things remaining constant. His score could fluctuate more than 150 points!!! But does that keep him from doing business (read: living his life)? Absolutely not.

The moral of the story... Who cares what your score is unless you are applying for a loan. Your score is a snapshot in time. it looks at your balances at the moment it is pulled, not at your balances over time.

I am not by any means suggesting you go out and max your cards, but i am suggesting that your score is only a number that wont be forever displayed on your tombstone or represented as a tattoo on your forehead, so stop worrying about it every day. Do pay your bills on time, and in time, your scores will come up because good new replaces old bad.

going to buy a car/house? Then pay all your CCs off a month or two before hand. It is about the best way and only way to improve your score short of building credit history. But isnt that why we are all here?

[flowerchild]

@ Flowerchild, I dont think you understood my post.

I believe that I did and is why I gave a different perspective.

It doesnt matter when the credit card company reports to the bureau when you are trying to REBUILD your credit history. It only matters when you are APPLYING for a loan. That is the only time it really matters - you are correct - Balance to high credit limit does impact your score - BUT WHO CARES when you are trying to rebuild if you are not applying for anything.

Again another perspective is if you are truly trying to rebuild then you won't leave out 30% of the factor in calculating your scores. You don't need to be applying for credit when your own credit card does an account review do you? You don't need to be applying for credit when that account review that your current creditor just did results in an adverse action because your current creditor doesn't like what they see on your report. Ever heard of Barclays? They are one of those creditors that are easy to get after bk, but notorious for closing an account for nothing amounting more to than a small case of flatulence. One account review and they see high utilization and they might close your account. For a bk'er high utilization = possible alert to creditor that you are getting into to more debt than you can handle.

Why do people let their score dictate their lives?

Why are you assuming that I'm advocating that? I don't plan to ever live my life driven by a score and I hope others don't as well. But I think that people need to be aware of other than what you or I believe in to be the stronger or more logical of the facts. In other words show the whole pie instead of just a slice.

Here is a real world example...

Jewelry store owner goes out in October and maxes out all of his personal credit cards in preparation for the holidays to make sure he has stock on hand to meet the needs of his customers. By february, he has paid everything off again. From october to february, he shouldnt try to buy a house or a car... From about march or april thru october, he is golden, all things remaining constant. His score could fluctuate more than 150 points!!! But does that keep him from doing business (read: living his life)? Absolutely not.

Okay, not exactly the example I would use but let's go with it anyway. So the jewelry owner maxes out his personal credit for his business ? Okay well where I live your insurance is based on your credit history and my insurance renews in October, insurance company does a review and now that my score is 150 points less than what it was the last time they checked, I now pay more, and lots more. True story about that when the bk hit my reports. Wasn't until I cleaned up my credit and got my scores over the 700 mark did my insurance go down.

Wanna know how bad it was? With bad scores I was paying 1200 a year for a rust bucket 1995 Honda, and 2700 a year for home insurance. After my scores increased to over 700 my homeowners insurance is 1650 and my auto insurance is a little higher at 1250 a year, but that is for a 2013 GM Terrain. So again from another perspective if I was just "living my life" and not giving a hoot about a huge fluctuation in my score then I would say my pockets would be a lot lighter.

The moral of the story... Who cares what your score is unless you are applying for a loan. Your score is a snapshot in time. it looks at your balances at the moment it is pulled, not at your balances over time.

I care because I have to live with other circumstances that use scoring to dictate how much moolah I have to depart with

I am not by any means suggesting you go out and max your cards, but i am suggesting that your score is only a number that wont be forever displayed on your tombstone or represented as a tattoo on your forehead, so stop worrying about it every day. Do pay your bills on time, and in time, your scores will come up because good new replaces old bad.

Yea I wouldn't want that stupid 3 digit number on my tombstone either and I sure as heck ain't loosing sleep over my scores. Besides, how would I get my beauty sleep if I did that?

going to buy a car/house? Then pay all your CCs off a month or two before hand. It is about the best way and only way to improve your score short of building credit history. But isnt that why we are all here?

One last tidbit....the sweet spot to maximizing your score for a major purchase like that is not having a zero balance on all of your accounts because you still take a bit of a hit in score for that, but the perfect score is one that shows a balance of less than 2% only on one card.


So here is the thing, I think we both are saying close to the same thing. I think we both believe that we shouldn't live our lives based on the crappy 3 digit number that these scoring models give us. The biggest difference in our opinions is that I believe that when you have been bankrupt that the game is not the same anymore. IThere are plenty of stats to prove that. What rules applies to a person without a bk versus one with a bk is vastly different. I mean if you sat us all in a room together, all things being equal with credit, income, etc., and everyone had on white t-shirts, the bk'ers are still singled out because we have red targets on our backs so we get watched more closely. Forget the fact that we are probably better off than some of those who haven't filed !

And I believe that as bk'er you just have to play the game long and smart enough to not only get what you want, but get it and keep it.

[justbroke]

Even worse, many creditors perform monthly or quarterly "maintenance" (or so-called periodic) reviews of your credit. If they see your score go down with high utilization, they can and usually will lower your credit limit. That lowering of the credit limit further puts you into trouble as you now have even higher utilization (maybe over 100%).

There are also some scoring models that look back at your utilization over 6 months -- as a rolling average. That way, they can find the people who are "buying down" the score.

In any event, there are two things that you should always remember. First, don't let a score drive your life.

[Amy26]

it doesnt matter when they report it/when you pay it as long as you pay it on time. they will report activity and payment history. you dont have to carry a balance to rebuild your credit.

Also, having a zero balance on a card can actually lower your score... there is usually a "sweet spot" for maximum score impact when it comes to carrying a balance. It goes by individual card balances as well as overall utilization. As well as your current credit profile. a 10% utilization is going to affect someone with a 820 score way differently than someone with a 630 score.

When you are "rebuilding" obtaining a higher score is the goal is it not?

I can see your point that a score doesn't matter unless you want something... but there are other factors to consider... if for example, you want to buy a house in 2 years but just don't really give a darn about your credit in those two years... you may have a hard time getting the score to come back up to where you want it to be in a short period of time. Yes scores fluctuate depending on the speed of the breeze that is blowing but if you stay on top of what keeps your score higher and just keep it there all the time, you don't have to worry about scrambling to figure out how you're going to get X number of points in 2 months to get the interest rate you want.

And not to mention what JustBroke said about the account reviews... if you get an adverse action because you "don't care" about your score then it will just go down more because like he said, they will either lower your limits or close your accounts. Barclay is notorious for monitoring people's credit after they get a credit card and then taking an adverse action if they see something they don't like.

And just because you are aware of your credit and take steps to make sure it is as good as it can be does not mean it "rules your life". It takes little effort to maintain your credit and would hardly be considered a life sucking thing. Could someone get obsessed with it? Sure... but people get obsessed with lots of things... credit is a powerful thing as long as you use it and don't let it use you.

[TBA]

I think we are arguing semantics. Its not that i dont care - i am paying all my bills on time, but i cannot freak out because i bought three tanks of gas this month on my secured credit card...

I am rebuilding to qualify to purchase something - to me, the score is a side effect, not a priority. How can this be? As i just said, if i do everything else right, utilization is the only thing i can immediately impact/control when i apply for my purchase... If i want to buy a house in two years - i pay my bills on time and about a month or two before i apply, i pay all my revolving debt down to nil. or almost nil... Same score as the guy who watched it weekly - all things remaining constant. (because your score is a snapshot in time).

When i am rebuilding - i am doing so because i have shot my credit to hell from the life circumstances that forced me into bk - i cannot buy a house or a car because i wont qualify - My insurance is what my insurance is - i can pay down my cards for help there when i know my insurance is due - but a lot of times it isnt just the score that goes into these calculations. They see bk and i dont even qualify for companies even though i have a spotless driving record and a decent post bk score.

I am rebuilding so i can get my scores up enough to qualify to go out and buy a car or a house. And to let enough time pass to qualify for the underwriting guidelines. Insurance isnt a choice, so i have to live with what i get.

As for inquiries, i was under the impression that account reviews are soft inquiries - And therefore shouldnt impact your score. They do show up - but because you are not applying for new credit, these should not be factored into your score. If you have companies doing hard inquiries, look at who you do business with carefully - look at their little account rules and regs, and make sure you didnt agree to such things. If you did, well... then you only have yourself to blame.

As for ruling your life - worrying about balances to control your score while rebuilding (not applying for a loan) - to me - is letting it rule your life. I took a secured card after bk with a $250 limit (i dont think they will be decreasing my limit...). I buy gas and such on it, and pay it off each month. I dont care what my balance is right now, and i dont think other people should worry about it as they rebuild either. that is my opinion. If you know your insurance is coming due in oct - then by all means - make sure your balances are paid down - but then go back to living your normal rebuilding life. if i buy three tanks of gas and am at a 90% ratio, and my insurance isnt due, or i am not applying for a loan, then i pay it off, and start new again the next month, what is wrong with that? (That AR inquiry that just lifted my interest rate up on my credit card that i dont carry a balance on so it doesnt matter what the interest rate is anyway? nah.)

and finally, what score looks at balances over time? I have never seen such an animal and would be curious as to more info on these.

[Pjmax]

When i am rebuilding - i am doing so because i have shot my credit to hell from the life circumstances that forced me into bk - i cannot buy a house or a car because i wont qualify - My insurance is what my insurance is - i can pay down my cards for help there when i know my insurance is due - but a lot of times it isnt just the score that goes into these calculations. They see bk and i dont even qualify for companies even though i have a spotless driving record and a decent post bk score.

I am rebuilding so i can get my scores up enough to qualify to go out and buy a car or a house. And to let enough time pass to qualify for the underwriting guidelines. Insurance isnt a choice, so i have to live with what i get.

As for inquiries, i was under the impression that account reviews are soft inquiries - And therefore shouldnt impact your score. They do show up - but because you are not applying for new credit, these should not be factored into your score. If you have companies doing hard inquiries, look at who you do business with carefully - look at their little account rules and regs, and make sure you didnt agree to such things. If you did, well... then you only have yourself to blame.

I filed in Aug. 2012, discharged the end of Nov., so my rebuilding efforts haven't started, however, I have 6 (8 at time of filing) hard inquiries on my CR. They only include 'account reviews' from existing creditors or JDB's, and inquiries from insurance companies from a year and a half ago when I was auto-insurance shopping. 2 dropped off since filing and each time my Credit Karma score went up 7 points.

I'm not entirely sure what constitutes (or should) a hard or soft inquiry. The only things I know I initiated were the insurance inquiries, and I won't do that again.

[Epic]

Sorry but this is just not true that it doesn't matter when they report. Yes you must pay on time but the reporting of your balance makes up 30% of your score. It is called utilization and high utilization can tank your scores faster than the blink of an eye. Utilization is simply your balance divided by your limit. A person who has just come out of bk has fragile credit anyways and this utilization can be the kiss of death, or the case of denial. I've seen peoples scores tank over 30 points plus based on utilization and when the utilization goes down the scores go up.

For example, lets say that you have a credit card whose statement date is the 15th of the month, however the credit card reports the balance as of the 30th of the month. Lets also assume that you have a 1000 credit limit. On the 15th of the month you pay in full your balance of 200 and bring the account to zero. You have accomplished what you said, pay in full and on time. However on the 20th of the month you make a 900 charge that you will pay in full on the 15th of the following month. That means that on the 30th of the month, when your credit card reports to the credit bureau it will report 900. That is 90% utilization and that is what will drive your scores down. And if perhaps this is your only open account after the bk it will cost you big time.

Without this kind of knowledge a person will swear that they are doing everything correct but because many major credit cards and store cards report mid-cycle rather than the statement date, your scores are much lower than they should be. In this above example, armed with this knowledge, I would hold off making that purchase until after the 30th of the month and still pay in full. This of course means nothing to the person who is not concerned about rebuilding as some people know this and still will make they purchase. They know full well that as soon as they pay that debt down then their scores will recover.

However as a person with a bk on my reports, I am very cautious to not let this happen because I don't want my creditors to think that I am being irresponsible when in fact that I am not.

Great answer! I asked a similar question here: http://www.bkforum.com/showthread.ph...-is-calculated. Can you elaborate how utilization is calculated in that post?

[flowerchild]

I think we are arguing semantics. Its not that i dont care - i am paying all my bills on time, but i cannot freak out because i bought three tanks of gas this month on my secured credit card...

I am rebuilding to qualify to purchase something - to me, the score is a side effect, not a priority. How can this be? As i just said, if i do everything else right, utilization is the only thing i can immediately impact/control when i apply for my purchase... If i want to buy a house in two years - i pay my bills on time and about a month or two before i apply, i pay all my revolving debt down to nil. or almost nil... Same score as the guy who watched it weekly - all things remaining constant. (because your score is a snapshot in time).

When i am rebuilding - i am doing so because i have shot my credit to hell from the life circumstances that forced me into bk - i cannot buy a house or a car because i wont qualify - My insurance is what my insurance is - i can pay down my cards for help there when i know my insurance is due - but a lot of times it isnt just the score that goes into these calculations. They see bk and i dont even qualify for companies even though i have a spotless driving record and a decent post bk score.

I am rebuilding so i can get my scores up enough to qualify to go out and buy a car or a house. And to let enough time pass to qualify for the underwriting guidelines. Insurance isnt a choice, so i have to live with what i get.

IMO the semantics that you have is not what's best for a person WITH a bk who is actively trying to rebuild their credit. You say for insurance you have to live with what you get and I say you don't have live with that because you have *some opportunity* to influence your rates if it is indeed based on credit.

You say that account reviews don't impact you and I say, and not based on opinion but facts, that indeed account reviews can result in a significant adverse action such as account closure, credit line decrease, higher insurance rates, etc. And BTW, how do you know exactly when your creditor or insurance carrier will make an account review? Your assumption that it will only happen when it is time for renewal is not entirely correct either. Some companies may make their decision not based on what is currently on your reports, but at that "snapshot" in time from a month or two ago.

Your opinion is that your score is just a snapshot in time and nothing that significant UNTIL you need credit, but you only need that one not so good snapshot in time for adverse action or to not get the results that you want, or even the best possible result for yourself.

So let me say this for anyone reading this who may not fully understand and summarize my point like this:

The timing in which you make your payment to your creditor and/or make purchases in relation to when your payment information gets reported to the credit bureaus affects your utilization, which makes up 30% of your score. This is what you have COMPLETE control over. If you are cognizant of these dates then your scores, on a regular basis, will be higher than those who, if all other things are equal, do not use this information to their advantage.


It is true that not every decision made is driven purely by a score, but you could look at it like this. If the max score you could get is 100%, but the only thing that you fail on is utilization, again which is 30% of your score, you will be at 70%. That is not how it really works but is a good analogy. It is your choice to use this information or not, but the point is that you do have a choice.

I'm not entirely sure what constitutes (or should) a hard or soft inquiry. The only things I know I initiated were the insurance inquiries, and I won't do that again.

A hard inquiry is made when you are applying for credit and ding your credit slightly. These inquiries are seen by other creditors when you apply for credit. Soft inquiries are only seen by you and not other creditors. They come in the form of account reviews, when you access your own credit file, and insurance related inquiries.

Now I have never seen a hard inquiry for insurance companies on my credit report, only soft inquiries. So yea that is odd. Not saying that it doesn't or shouldn't happen, just that I have never seen it personally.

[flowerchild]

Great answer! I asked a similar question here: http://www.bkforum.com/showthread.ph...-is-calculated. Can you elaborate how utilization is calculated in that post?

Is utilization calculated upon the closing statement date, or at any given time during the statements month.

For example, say on a $2000 credit line, I charge $1000 during the course of a month (thus 50%). But pay $800 prior to the monthly statement closing, leaving $200 (thus 10%).

What is my utilization, 50% or the 10% at statement closing?


Also, I assume the 'high balance' reporting to the CRA's would be $1000. Does this negatvilty impact a credit score?

Because each creditor is different, you need to find out when they actually report. But let's assume that they do report the closing statement date. Then the $200 will be reported for THAT creditor. But if you have other credit cards with balances it will be calculated by the sum all of your balances divided by the sum of all of your limits, and that will be your utilization for that month.

Now if your creditor doesn't report the statement date, then you can find out by either calling them or just looking at your credit reports to find out what date they use to post. For me, it is easier to see on Equifax and Transunion, but Experian is sometimes a little difficult for me. But I guess it depends on which monitoring service you use.

As for the high balance, well most of the time it is just reporting the highest balance you have ever charged and really isn't a big deal. Some creditors will use the high balance for your credit limit but I believe that most major creditors don't do this, maybe its just those like AMEX when you have no preset spending limit. It is the credit limit versus your balance that is the important information.

[TBA]

If you are fresh out of bk - it is highly unlikely that you have a nonsecured card for them to lower the limit on or close based on ar. I have not seen a creditor close or lower the limits of a secured card - That is why it is secured. if you want an increased limit, you put more money down.

15 months after discharge, i am carrying an equifax fico of 682 with only two trade lines - one reaffirmed auto and one secured card for $250 - and i was 180 days late on almost everything inc mtg and multiple CCs (except auto) before filing. I havent inquired with my cc company to find out when they report. I just paid my bills on time. I was surprised it was that high myself, but the proof is in the pudding for me.

(i know my fico bc i recently was preapproved for a card i was later denied for - and i got my little adverse letter. You know why i was denied? Because i had a bk too recent on my file. it had nothing to do with my actual score).

[IBroke]

Well, I have a bunch of CCs right now - all with low CLs and low monthly payments. I'm paying them on time. That's ALL I'm doing right now to rebuild my credit and frankly, that's all I have to. I'm planning on getting a new car in about two years so it makes absolutely no sense for me right now to make sure that every card is reporting the correct, desired balance. It simply makes no difference for me in the long run. Even if a creditor would decide to reduce one of my little CLs even further, i could adjust the utilization accordingly within one single billing-cycle.

So maybe in a year or so, I might have a closer look at the reporting (in my case, CC closing)-dates and will adjust my payments accordingly. I highly doubt my score will be lower because I didn't do so right from the start.

[ben1381]

I was discharged August 2010 Chapter 7 and have gotten post BK unsecured cards. But my credit utilization has been high based on the low limits. I seem to be "stuck" with a FICO score of 640-660 even though over 2 years have gone by there has been no change in my credit limits or APRs on my cards in quite a while. I just completed paying off an auto loan but I am still waiting for a while before we get another car. Any ideas on how to raise my scores at this point?

[TBA]

@IBroke - that is what i was getting at. Thank you for sharing.

@ben - once you are ready to buy that car, then worry about it imo. A few months before hand, pay down those CCs to near nothing (or nothing at all...). but until then, i just wouldnt worry. But that is me, and that is how i am electing to live and rebuild my credit life. If you want to see what happens to your score, pay down those cards and see what you end up with.

You may also want to apply for a new card - one with a higher limit if you think you can qualify, or request and increase on your limits if you have been with those cc companies and have good history with them.