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ericpwms

Getting ready to start CR, apply for HSBC?

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Hello,

This is my first post here so I hope you'll go easy on me! I have lurked on this site for a long while but was never in a position financially to start repair, but I think I'm ready now!

My first question is something of a time-sensitive one, and doesn't quite relate to repair itself. The last time I pulled my EQ report (April), it had 10 negative TLs, with about $9000 in student loans in default, a $3000 charged-off CC, $1000 in unpaid tickets and a few other smaller misc lines.

I'm getting ready to start the process, and the first thing I've done is apply to consolidate my student loans under Direct Loans--I don't believe rehab was going to be an option as the servicer was threatening garnishment and I know your chances of consolidation are toast once garnishment starts, so I was under a time constraint. I just mailed that repayment plan form back so if anyone knows different please let me know!

Anyway, on to the question. I know that the consolidation will have a negative impact on my scores as they reage the debt to the day the loan funds, and on a whim I filled out the HSBC prequalification form online. It recommended the Household Bank Platinum (i believe this is unsecured) for $49 processing fee and $5/month. I have no positive tradelines at this point--I understand that you want to have tradelines that have been open and positive for a while, and since I know repair is going to take some time my question is should I take a stab at this card prior to starting repair? It would just sit in my safe and not be used, but once the consolidation funds I doubt I would get the same prequalification due to the score hit. Any advice would be appreciated, and I look forward to being a part of this board!

Eric

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The consolidation may actually give you a boost, especially if you're going with a new company.

The current tradelines will likely update to something like "paid in full" (as opposed to "transferred" or some other term, if you used the same company that currently holds them). That's a good thing. Then all you need to do is stay current on the new tradeline and you're on the right track.

If you get a credit card, you have to use it. Not max it out, but keep a small balance on it (some people will say to pay it off in full every month - I think keeping a small balance is best - around 5% of the CL). Your CL will likely be !~$350, so use it at the gas station or to buy your daily coffee or something, and pay off most of it the day you get the statement (don't pay it the same day you make the purchase - though some people will say differently).

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Anyway, on to the question. I know that the consolidation will have a negative impact on my scores as they reage the debt to the day the loan funds, and on a whim I filled out the HSBC prequalification form online. It recommended the Household Bank Platinum (i believe this is unsecured) for $49 processing fee and $5/month. I have no positive tradelines at this point--I understand that you want to have tradelines that have been open and positive for a while, and since I know repair is going to take some time my question is should I take a stab at this card prior to starting repair? It would just sit in my safe and not be used, but once the consolidation funds I doubt I would get the same prequalification due to the score hit. Any advice would be appreciated, and I look forward to being a part of this board!

Eric

Eric, you may benefit from going with Crown Jewelers. You will get a 2500 TL reporting and you will have to buy some garbage jewelry, but you will have a TL. Then you will want to look at department stores and gas cards (I would recommend Macys as they are easy to get and you'll get a $100 CL initially, but every three months you call and you get a CLI that will be dependent on your use).

If you need a credit card, I strongly recommend that you get a secured (yes, you read right S-E-C-U-R-E-D card). Getting a credit card that you have to pay $5 a month is not wise. I know, because I had a card I had to pay $10 a month (which I fired after 6 months). And for a $350 CL, you are better off getting a secured card (from a real prime bank, like Bank of America or Chase).

After about 3 months of regular use with department store and gas cards and the secured card you got, you can definitely look at HSBC again, and you might get a $500-1000 card that will not have you pay $5 a month. It took me that long to get my HSBC. (got it in late January). I am one of those PIF folks Veve is talking about, and if you look for one of my posts that lists my FICO scores since March, you will see a nice, healthy progression from high 500s/low 600s to the scores you see in my sig.

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VeVe,

I'll read up on it again but my understanding was that since it is reported as a default and has many lates reported, when it is paid off by the consolidator (Direct Loans) it will be reaged and affect my score negatively. Was I wrong about that? Thanks for the advice, I'll be sure to use the card and keep a small balance.

AA,

I'm actually a customer of BofA so I will definitely be getting a secured card with them, I'm hoping to get rid of as many of the small negs as I can (utilities, an old overdraft and the unpaid tickets add up to less than $1k) and see about the 99/500 card. I have read about combining HSBC cards-would it be possible to get the card with the fees now and in 3 months apply for another card to combine them? My only concern about getting the secured now is that I am thinking the $500 I would use would better be suited to PFD any small collections I can't get rid of through the DV process. Thanks again for your help.

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AA,

I'm actually a customer of BofA so I will definitely be getting a secured card with them, I'm hoping to get rid of as many of the small negs as I can (utilities, an old overdraft and the unpaid tickets add up to less than $1k) and see about the 99/500 card. I have read about combining HSBC cards-would it be possible to get the card with the fees now and in 3 months apply for another card to combine them? My only concern about getting the secured now is that I am thinking the $500 I would use would better be suited to PFD any small collections I can't get rid of through the DV process. Thanks again for your help.

At the time folks were reporting the 99/500, I had scores better than they did and yet I got denied (not offered) but yet they didn't. I was happy that I put a portion of my tax refund toward a 4 digit CL anyway (that to this day has not gone over 50%.....yeah!) You can try for it though, but with the current credit crunch, I wouldn't recommend wasting that INQ. The secured card is a better deal, plus you saved money somewhere that you won't get back until 9 months-1 year. It will feel like a bonus when you have it again (provided, of course, you don't mess up paying BOA).

My HSBC hit me with a $59 annual fee, but I'm not paying $5 a month for the privilege, either...that must be some new thing, and I can never advise you to go for that. Also, in my case, I can only have 1 HSBC card but I gotta call HSBC and see if I can get 2 and then combine my history. I've just been terribly busy to do so.

As for the $500 on a secured, AFAIC, it's still your money. You don't have any agreements with anyone at this point (and you may never have any...as PFDs aren't always given). You can always save up for that amount at a later date OR get into a monthly arrangement. Trust me, $500 secured is the same as $500 unsecured as far as FICO is concerned. Yes, your card will report as secured, but that didn't make a hill of beans in me getting other credit, such as Hooters and my Juniper cards and also Target. Just do it, use it, and pay it on time.

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Please- do yourself a favor- stay away from the HSBC predatory cards- especially the ones that charge a monthly fee-- even if you never use- do you know how annoying it is to write a check every month for $5.00- Why do you think they charge you 5 a month rather than a lump $60 fee?? This way they get 12 chances for you to make a late payment- and charge late fees--- JOIN A CREDIT UNION!!!- get a secured card most counties have a credit union where you only have to be a resident to qualify- save $500 and then get a secured card- keep the balance low and pay off every month- create good habits- stay away from credit card application sprees- work on one good card for now- maybe after they release the money you get another card with the same credit union- some allow you to have a visa and a mastercard.

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