After filing a Chapter 7 bankruptcy in September 2016, in early 2018, I began the process to rebuild my credit by applying for a secured Visa credit card with Wells Fargo and a couple of unsecured subprime credit cards; one of which was the Total Visa credit card. I used these cards very judiciously and always paid more than the minimum payments required and more often than not, paid the entire balances owed each month. I never exceeded the limits on these cards and in March 2018, Capital One bank financed a used 2017 Jeep for me.
By mid-2018, I opened an unsecured LendUp credit card with a $1000 limit. By the third quarter of 2019, my credit score had risen to 680, and shortly thereafter, SunTrust Bank approved a 3-year $40,000 auto loan for me. In February 2019, I was notified by my credit monitoring sevice that a negative credit item had been submitted and as a result, had caused my credit score to plummet 40 points. As it turned out, it was Total Visa that had reported that my outstanding balance of $319 had exceeded my $300 limit because of their applying an annual fee of $48.00 to my outstanding balance. In all honesty, I had completely forgotten that the Total Visa credit card had an annual fee because I had previously canceled a Reflex MC which was the only other credit card I had that charged an annual fee.
Needless to say, I immediately paid off the entire balance and requested that the Total Visa account be closed. Unfortunately, it is not such a simple matter to raise my credit score 40 points since I already have $0 balances on all of my remaining revolving credit accounts. More than likely I will open 1 to 2 rewards credit card accounts to increase the dollar amount of unused (available) credit. I have also learned that paying off installment loans, e.g.auto loans, etc., does not readily have a significant positive impact on your credit score. e.g., when I paid off a $135,000 student loan, singularly, it had no effect on my credit score other than to lower my total indebtedness.
The lesson learned: opening subprime credit card accounts with high interest rates and annual fees may be necessary and beneficial in rebuilding your credit score and profile, but remember to cancel all such accounts at the earliest juncture that it is possible and feasible to do so, or at least early enough that you are safeguarded from the arbitrary harm such accounts can cause your creditworthiness.
Bottom Line: No, I would not recommend this to a friend