Just Started Rebuilding my Credit

[Johnworker1]

I was surprised with a discharge email from my attorney on 10/7 and the next day I tried Capital One website for their preapproval for credit card without pulling my credit and it said I had an active bankruptcy. So today 10/11 I checked my credit bureaus ready to contest all 3 to show my bankruptcy was discharged when low and behold all 3 were showing that it was discharged.

On Experian website it showed I was prescreened or there were offers for several credit cards. Being frantic I picked the first one which was Ally and I was approved for $2,500. I was elated and was about to post on here then reread a previous post from someone getting a Capital One card a few days after being denied so I nervously went to Capital One website again and this time it said I was preapproved so I applied and surprise I was accepted for a Capital One Savor card with a $2,000 limit. Now after my 30 second celebration it is time to make a plan.

First question should I stick with 2 or try to get a 3rd for the optimum rebuild process?
If I should get 3rd should I do it now or wait and if wait for how long?

Second question is how should I charge on the cards in relation to their limit? And how do I pay off the 2 cards (or 3 if I should get one now)? I haven't used a credit card in over 10 years so please keep it plain on how much I should charge them (I will use groceries and bills that I typically pay with my debit card) and exactly how much should I pay them monthly of the balance or should I pay the whole balance. Also when specifically should I make payment when I get the bill or before I receive the monthly bill?
Thanks

[shipo]

Two cards are good, three is considered optimal. As for how to manage them, my recommendation would be to pay all but one to zero immediately prior to each statement cut date; as for the remaining card, do one of the following:

• Pay it down to a trivial balance (say, less than $50) prior to the statement cut date, and then pay it off immediately thereafter
• Pay it off a week or so before the statement date and then use it for a trivial charge or two which will get reported on the statement

[Johnworker1]

Two cards are good, three is considered optimal. As for how to manage them, my recommendation would be to pay all but one to zero immediately prior to each statement cut date; as for the remaining card, do one of the following:

• Pay it down to a trivial balance (say, less than $50) prior to the statement cut date, and then pay it off immediately thereafter
• Pay it off a week or so before the statement date and then use it for a trivial charge or two which will get reported on the statement

I have 3 credit cards now and found out the reporting date is also important because 2 of them reported my balances before the billing cycle due date. I wasn't able to pay them down in time and my credit useage of 20% was reported. But next month (Dec) I paid 2 down to $0 and let one have $10 carryover balance. How high should I charge the cards? Up to now I charge all 3 almost to the max then pay them off 5 days before the due date.

Why is 3 cards the goal? Why not 2 or 4? I thought the available balances matter most or does number of accounts factor into credit scoring?

[shipo]

A few comments:

• Charging your cards up to near max might help you with an individual creditor as far as potential increases in your credit limit, but it doesn't do diddly for your FICO scores.
• For rebuilding three cards is considered an optimal balance between the minimum number of cards to have for full score card scoring while not incurring more hard pulls (which degrade your score) and not diluting your average age of accounts (AAoA) which also degrades your score).
• After the first year when your hard pulls cease to be scored, adding more cards will not hurt as much, but even then it will sting a bit because new cards drop your AAoA.
• Keeping one or two cards below 1% of the card's credit limit for the purpose of reporting will give you optimal scores, so the amount reported will vary by card; a card with a $1,000 credit limit should never report more than $99 for the best score, however, a card with a $10,000 credit limit can get away with a reported balance of $999.
• While I personally refuse to practice AZEO (All Zero Except One), most months do report that way because I always pay my cards to zero before the due date and then rely on a few latent charges to cause a balance to be reported when the statement is cut. That said, a couple times per year I end up with the "AZ" (All Zero) penalty, which typically dings my FICO 8 scores about 20 points for the reporting month.

[justbroke]

shipo, I'm thinking you meant "never below 10%" (and technically below 9% just in case the interest hitting causes the reported balance to approach 10%).

[Johnworker1]

A few comments:

• Charging your cards up to near max might help you with an individual creditor as far as potential increases in your credit limit, but it doesn't do diddly for your FICO scores.
• For rebuilding three cards is considered an optimal balance between the minimum number of cards to have for full score card scoring while not incurring more hard pulls (which degrade your score) and not diluting your average age of accounts (AAoA) which also degrades your score).
• After the first year when your hard pulls cease to be scored, adding more cards will not hurt as much, but even then it will sting a bit because new cards drop your AAoA.
• Keeping one or two cards below 1% of the card's credit limit for the purpose of reporting will give you optimal scores, so the amount reported will vary by card; a card with a $1,000 credit limit should never report more than $99 for the best score, however, a card with a $10,000 credit limit can get away with a reported balance of $999.
• While I personally refuse to practice AZEO (All Zero Except One), most months do report that way because I always pay my cards to zero before the due date and then rely on a few latent charges to cause a balance to be reported when the statement is cut. That said, a couple times per year I end up with the "AZ" (All Zero) penalty, which typically dings my FICO 8 scores about 20 points for the reporting month.

So all 3 credit cards reporting zero balance LOWERS your scores?

[justbroke]

So all 3 credit cards reporting zero balance LOWERS your scores?

AZEO - all zero except one. If you don't revolve some debt (< 9% on one card), it doesn't show that you can manage debt (make payments). You actually get penalized for having all your revolving cards report with a zero balance. I know, it's weird, but FICO looks to behavior and having a bunch of credit cards and you never revolve debt doesn't give the score any indication of how you would manage debt if you did have something report > $0.00.

I have used AZEO in practice and the score difference can be from 5-20 points (5 for lower scores, and increasing to 20 points for FICO "high achievers.")

[Johnworker1]

Ok AZEO it will be for me!!!

[Johnworker1]

AZEO - all zero except one. If you don't revolve some debt (< 9% on one card), it doesn't show that you can manage debt (make payments). You actually get penalized for having all your revolving cards report with a zero balance. I know, it's weird, but FICO looks to behavior and having a bunch of credit cards and you never revolve debt doesn't give the score any indication of how you would manage debt if you did have something report > $0.00.

I have used AZEO in practice and the score difference can be from 5-20 points (5 for lower scores, and increasing to 20 points for FICO "high achievers.")

Well one of mines lowered 16 points and the other 12 I think so I am a believer. This month shows all 3 are zero but I have a payment due in a few days on one that I will INSURE I won't pay it all down.