Need to raise score... reopen Macys? apply for Walmart CC? or both?

[Dapper_Dan]

A little background:

Credit was never a problem back in the early 2000's.  I had an Amex Gold, Disco Platinum, car loans, etc... life was easy.  High standards and no limits.

Then 2007 happened.  I stopped paying anything that revolved.  I went off the grid.  In some cases, I settled.  But I left the modern world in a big way.

Current Situation:

My scores are actually surprisingly high, as of 8/13/2012:

584 TU (myfico)

577 EQ (myfico)

AAoA: 8 years (this is the only thing that's really giving me hope)

Outstanding debt: 94% (Discover Charge Off)

Last hard inquiry: 2009

All I have is a mortgage.  No collections.  No judgements.  No credit cards.  I just paid off 2 cars (Mercedes in April and VW in July).  I also sent out GW letters to MBFS and VW to remove a single 30 and a single 60 day lates from 2010 and 2011 from each lender (2 30's and 2 60's combined). 

What's really killing me is the Discover charge off for $15k.  It's from 2009.  My total outstanding debt is "94%" because of the charge off.

My Goal:

I would like to apply for a car loan in November.  I need to get my score to no less than 690 within 3 months so that I can get a low(er) interest rate.  It's clear from reading this board that I need get a revolving line at the very least.

My question:

I used to have a Macy's card - my very first card in my life - back in 1997.  I reopened my Macy's card once in 2003, and they backdated the account to 1997.  I'm wondering, since my AAoA is 8 years... if it will behoove me to ask Macy's to reopen this account?  Will this boost my score?  I'm thinking it will increase my AAoA if anything.  Or should I go for a revolving card?  The Macy's card will add a 15 year TL to the AAoA, the "new" card will lower the AAoA considerably but add a much needed revolving TL.  I'm thinking I should first reopen Macys and then get a revolving credit card - will this inject 100+ points within a few months?

[Dapper_Dan]

Update:

This post got me motivated to do something drastic - http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/OMG-119-point-increase-on-TU-faints/td-p/1543...

I couldn't apply at macys.com and get my old account reopened because they validate the application against a valid credit card (and I haven't a single credit card since 2008).

In light of that snafu, I decided to bite down and apply for the Walmart card through walmart.com.  I was instantly approved for a $500 CL.  I will report back with a score update when I get my alert.

I still plan on reopening my macys card (to increase my AAoA at the very least), but not until I see what impact this new walmart card makes.

[Revelate]

The only way you're going to get that kind of increase is to get those negatives airstruck from your credit report.

While yes, getting a few credit cards would help your FICO some, you're just not going to make 100+ point gains in 3 months without getting that credit report clean.  You're going to have to suck up the higher interest rate auto loan otherwise, but that's temporary as you can refinance later.  Fact is you're just not a pretty consumer right now, so get some credit cards (2-3), try to get your report cleaned up and pull the trigger on the car as late as possible, and plan to refinance six to twelve months out.

There's no real magic cure for this unless you get a massive amount of forgiveness from the lenders.

[Crashem]

You would need to get util to under 10% to have chance at 690 with that co showing.  Obviously getting charge off remove works.  If you can get 100k in revolving credit, you should be good too.

[Dapper_Dan]

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@Revelate wrote:

The only way you're going to get that kind of increase is to get those negatives airstruck from your credit report.

While yes, getting a few credit cards would help your FICO some, you're just not going to make 100+ point gains in 3 months without getting that credit report clean.  You're going to have to suck up the higher interest rate auto loan otherwise, but that's temporary as you can refinance later.  Fact is you're just not a pretty consumer right now, so get some credit cards (2-3), try to get your report cleaned up and pull the trigger on the car as late as possible, and plan to refinance six to twelve months out.

There's no real magic cure for this unless you get a massive amount of forgiveness from the lenders.

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Thanks for the help.  I should preface a few things...

My credit score on June 11, 2012 was 500.

All I did was pay off the car loans (MBFS in April and VW in July).  VW hasn't even reported yet.  I'm current on the mortgage.  I have nothing else to pay besides a charged off Discover card from 2009.

I read that even if VW and MBFS GW the 30 and 60 day lates from 2010 and 2011, it won't really help the score because it's not a recent late mark.

I'm just glad that I got instant approval on the card from walmart tonight - I take that as a good sign.

The "score simulator" on myfico suggest that I will hit 684 on TU if I continue to pay on-time for the next 3 months.

I know what you mean about taking the higher interest auto loan.  Been there, done that.  Never again.  But that's a topic for the other myFICO forum

[Dapper_Dan]

I settled with Amex a while back.  I don't want to get into the details on how, but I paid $0.20 on the dollar.

If I go back to Amex, I would probably have a limit.  I don't know how Amex factors into the score if I end up getting approved for the "charge card" instead of the "credit card" product... (ie: blue).

Quite frankly, Amex confuses me with their billing cycles and everthing else and I'm glad to be rid of them.

I can't pay Discover to delete the trade line because the charge off is out of the statute of limitations in my state.

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@Crashem wrote:

You would need to get util to under 10% to have chance at 690 with that co showing.  Obviously getting charge off remove works.  If you can get 100k in revolving credit, you should be good too.

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[Crashem]

Being out of statue is a good thing.  It doesn't mean you can't settle for deletion.  In fact it means the opposiTe as you have more leverage.   All statue means is that they can't sue you for money.  Careful though, in some states, admitting the debt is yours can trigger reaging of statue.  I would call discover and see if they will pay for delete.

[Dapper_Dan]

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@Crashem wrote:

Being out of statue is a good thing.  It doesn't mean you can't settle for deletion.  In fact it means the opposiTe as you have more leverage.   All statue means is that they can't sue you for money.  Careful though, in some states, admitting the debt is yours can trigger reaging of statue.  I would call discover and see if they will pay for delete.

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I highly advise against reaffirming debt, even if outside the SOL.  Technically, any creditor can sue for their money at any time, but it's down to the judge to dismiss the suit because the debt is time barred.  Since I'm focused on obtaining a lower rate for a car loan, the BEACON score weighs more on installment loans and on-time history (being clean for the past 12 months is key).  I think I'll play it safe and just have a few small revolving accounts created just to satisy the overall FICO score.  Walmart was a successful step 1.  Step 2 would be to reopen my Macys account from 1997.  Step 3 would be to go back to Amex.

[youngandcreditwrthy]

That Discover TL is haunting you obviously.. I'm surprised they aren't taking other legal action. Auto credit is still easier to get than most types of credit. The Walmart card will grow with you too!

AlsO, you could get an auto loan at a higher rate, then refi a year or two later.. So if you don't get to 690, maybe go for it any way, then refi later at a lower rate.

[youngandcreditwrthy]

You could try to dispute the old Disc. account on all the CBs. An initial dispute is always worth a try, esp. if it's out of the SOL!