Rebuilding

[Greysky]

We were discharged September of last year and have been living on cash since then. My FiICO is sitting at the 610-630 range. Wanted to start rebuilding our credit so I finally applied for a Capital One card and was approved for a thousand dollar limit. Am I correct that for this have a positive impact on our credit score I should not charge more than 10% of the card's limit. I will be paying it off every month so I figured I would just charge a few lunches and a tank of gas or something. We are hoping to buy a house at the end of next year too.

[LadyInTheRed]

From wha I've read, below 10% is best. You might want to talk to a mortgage broker now and get recommendations on how best to qualify for a mortgage. They may tell you you need another trade line or two.

[TXskyblue]

Ideal utilization is 1 to 9% for FICO purposes. Do not ever go over 50%.

Please note that this doesn't mean you should carry a balance. Pay it in full every month. Calculate your utilization as what your statement balance is divided by your credit limit.

If you're planning to buy a house in 16 months, my opinion is that you need a three credit cards for an ideal FICO score. These card should be at least a year old, so you'd probably want to open them within the next few months. Merrick is BK-friendly as well. Are you a member of a local credit union? They can offer you a secured credit card. Discover it offers a secured version as well.

There are forums out there that focus on maximizing credit scores. It sounds like you haven't done anything to improve your score over the last year, which is unfortunate since you want to buy a house now and that's the one time in life that credit score really, really matters. Still, you can take charge now.

Have you pulled your credit reports from the free annual website? There may be erroneous or outdated information.

By the way, congratulations for living on cash for about the last year. For someone like me who was addicted to charging and carrying a balance on credit cards, it was a big change and wasn't easy.

[BNKRPTinNC]

............By the way, congratulations for living on cash for about the last year. For someone like me who was addicted to charging and carrying a balance on credit cards, it was a big change and wasn't easy.

This statement made me smile. I guess that's the difference between a 7 and a 13. Have been living a "cash only" life for over 5 years now. Just applied for a Cap One cc as I too am trying to improve the old credit score.

[LadyInTheRed]

This statement made me smile. I guess that's the difference between a 7 and a 13. Have been living a "cash only" life for over 5 years now. Just applied for a Cap One cc as I too am trying to improve the old credit score.

Yeah, being in Chap 13 is like having cash only training wheels.

[grizindabox]

We were discharged September of last year and have been living on cash since then. My FiICO is sitting at the 610-630 range. Wanted to start rebuilding our credit so I finally applied for a Capital One card and was approved for a thousand dollar limit. Am I correct that for this have a positive impact on our credit score I should not charge more than 10% of the card's limit. I will be paying it off every month so I figured I would just charge a few lunches and a tank of gas or something. We are hoping to buy a house at the end of next year too.

It is not correct that you should charge no more than 10% of the cards limit. You want your statement to cut with a balance less than 10% and then PIF before the due date. This may mean you make 2 payments per billing cycle, 1 prior to when your statement is cut to bring the total balance under 10% and then a payment to pay that balance in full prior to that statements due date.

[Greysky]

HI TX,
We pulled our report and everything is clean on all three. I wanted to make sure we had a decent savings before we got our credit cards. Also I think I just had a fear of plastic. We are meeting with a friend of the family who is a BK attorney in our new town and planning our strategy. We also have family who want to help us buy if it becomes an issue.

[TXskyblue]

Also I think I just had a fear of plastic.

That's a healthy fear. Look how many people get their fresh start with BK and end up saddled with debt again.

I know I fear that so I make sure I have cash in my hand for any purchase I make. Not "it will come out of next paycheck". Not "I can sell a rifle if I don't have the cash when the bill comes." I either have the cash or I don't. If I don't have the cash, I don't use the card.

[Greysky]

The other thing we did was build a healthy savings account. I can't stress enough how valuable this has been. We have had a few emergencies like car repairs, vet bills etc. and are able to pay cash. When it gets below a certain threshold we cut back spending and save. In addition we now save for our vacations in advance where as before we would just put it on the card.