Impossible?

[Athena123]

Hi! I've received so much help here in the past that I thought I would try again. =) 

My husband passed away almost 2 years ago leaving behind some debt that I've been working to resolve. That, and a crazy mishap with my car put me in a strange position with my credit. (Car was left in public parking lot while i was out of town for two weeks. Towed, and sold by lienholder. I have tried to remedy this, but was told there was nothing to be done. I have never been late, though my credit report reflects that since the sale of my car, I have never made a payment. I am still making monthly payments to pay off a car I do not have, and have never missed a payment on. I disputed the late status with the bureaus today. it also is marked as a repossession, which is interesting because, again, I was current on my payments.)

 I'm currently living in California and spending about 2700/month on rent.  This has sparked me to feel as though I'm throwing my money away and should look into buying.  

To do so, I need to improve my standings regarding my credit, but I'm curious for some advice on how best to do this. I'm well aware that this can take some significant time. As my husband passed away while on active duty, I am eligible to use a VA Home Loan. 

My situation looks like this:

I currently net just over $72,000 annually.

I currently have $291,000 in investments.

My FICO Mortgage scores are as follows:

     Equifax: 563

     Transunion: 551

     Experian: 523

I own my vehicle outright.

My credit report shows the following:

USAA- Signature Visa -  Charged off. December 2015

            Balance: $0 - Paid in Full

            High Balance: $6966.00

            Limit: $7500

NAVY FED- Cash Rewards Visa-  Account Closed. December 2015

            Balance: $0 - Paid in Full

            High Balance: $1452.16

            Limit: $1500

NAVY FED- Line of Credit - Account Closed. December 2015

            Balance: $0 - Paid in Full

            High Balance: $3157.53

            Limit: $3500

**CU- Auto Loan - "Repossession" Account Closed. (No date listed.)

            Balance: $6178.00

            120+ days late

            Payment: $377.00

            High Balance: $25,358

I did talk to USAA today and they said that since I paid the account in full, I am eligible for a secured card. 

Any advice on how to improve this mess would be so greatly appreciated, as I would like to be able to positively move forward in my life from the setbacks.

Thanks so much!!!

[Anonymous]

The rebuilding portion might be the better area to get the answers you need now. That said, your car loan is an odd situation. On what grounds did they repo the car if you were not delinquent on the payments? That can make a big difference on your scores if that could be reported as a paid as agreed file. You will need to build your credit profile again. If USAA will give you a card get one. Never charge more than 30%. Look into capital one, see if you can get a card you can use and pay in full. The goal is to build up your trade lines and available credit. Your limits are going to be low to start so you will have to be sure you watch balances carefully. I would only let one car report a balance so be sure that you PIF before the statement cuts, would do this on what ever one has the smaller limit. You can probably get your scores where they need to be in a year if you're diligent.

[ShanetheMortgageMan]

I agree with Dvasil, something doesn't sound right about the car situation with the CU.  I can understand why they would report "repo" since they took the car back, but if all payments were made on time then the 120+ day late marks seem inaccurate.  Have you tried disputing or opening a dialog with them asking which payment were you late on?  Seems to me if they can't confirm a payment was late then they should at least remove the late payments, but "repo" still sounds accurate.

Your other negatves are old enough that they shouldn't cause problems getting a loan with VA financing, but underwriters want to see you've re-established credit after derogatory events like that.  To re-establish credit, underwriters prefer you have 3 trade lines that have 12 months history each.  Secured credit cards will likely be the easiest way to start re-establishing our credit, you may want to look into taking out a small personal loan ($1k or less) and repay it back over 12-24 months as well.  Get started on re-establishing credit while you try to get the inaccurate late payments removed from the CU auto loan.

[Athena123]

Thanks so much for your help!! I do greatly appreciate it.

They repossessed the car because it was towed while I was out of town.  They notified them as the lienholder, and not me.  I was unaware the car had been towed and as such, it remained there for 10+ days.  The credit union then took possession of the car and paid the tow fees.  They told me that they had to have the car in their possession for 3 days before being able to sell it.  I had not been informed at all that my car had even been towed.  I came home from my trip to find that my car was gone and I thought it had been stolen, I called my insurance and the credit union.  After filing a claim with insurance, when I called the credit union, they told me they had sold the car because it was towed and they never heard from me. They assumed I did not wish to reclaim the vehicle and they sold it.  They then told me that they were unable to recover the full amount for the car, and I still owed the remainder of my loan plus their loss on the car and tow fees.  Which took my total well over what was originally owed. My car was a very nice 7 series BMW with no issues. 

Needless to say, it was a mess. But, payments do and have always come out of my account automatically. I have never missed a payment on the car, or the remaining balance.

I've contacted the credit union to ask that they update the status and they said since the car was repossessed they report that the loan is in default even if I continue making payments on the balance owed. 

I have contacted the credit reporting agencies and ask that they investigate to update accurate payment of the loan.  I suppose I will see what they say.

[Athena123]

Thank you so much for this advice. I'll look into starting the USAA secured card, another card and possibly a small personal loan. 

Do the amounts of the credit limits on these accounts matter?

[Anonymous]

The credit limits don't matter unless you don't PIF the cards before the statement closes.  Then utilization will report any balances left and it will hurt your score.

Get THREE secured cards from lenders who you want a relationship with later -- ones that don't charge an annual fee if you can avoid it.  Try Discover Secured, it's a great rebuilder.

Get ONE secured savings loan (like Alliant's) that costs you only a few bucks in interest over 5 years and locks up just $44 of your money right now.  Very easy to do.

Write goodwill letters repeatedly to anyone you burned once you're out of SOL.  Keep writing them to different departments until you get some movement.  It took me close to 30 letters to 10 different addresses and departments to goodwill all my lates off a CC I still have active, but they did in fact remove ALL lates even 90 day lates.  Just a lot of letters, over and over.  I know they got sick of me.

Set up autopay on ALL your cards so you are never late again.  Make payments out of a separate bank account you only use for payments, and never let that account drop below $1000.

[Athena123]

Thanks so much for this advice. 

I've paid all accounts in full except for the car loan, and am still current on my payments to them. 

Since I have the accounts paid in full, should I start writing goodwill letters now? Is there a particular department to reference when doing so?

[Anonymous]

Goodwill is time consuming and frustrating because they're not mandated to even read your letters.  I started my GW process using Google by just typing "creditor name good will" and reading past histories.

After the first few months of letters went nowhere (zero responses even), I started to track down executive names for each creditor and started writing letters AND emails to them.  If I didn't know their email address, I tried the common ones at their domain name (like first initial, last name, or firstname lastname, or firstname.lastname).

Months of writing executives (letters and emails).  For one old CO, I never heard from them at all but magically it was replaced with NO lates and "paid as agreed, closed by creditor".  The other one I received an email from the VP of accounts or something and he said he would be happy to delete my lates because the account was current, paid off, and still active ($9.99 autopay on it).  A few days later EX updated that the account was not late, but EQ still hasn't updated (they can take forever).

One Goodwill letter campaign ended up with NO response initially but the entire TL was deleted and then I received a phone call and voice mail from an executive following up to see if I was satisfied.  Weird because I burned them out of the most and only asked for 90 days to be deleted, not the entire negative tradeline!  I called them back and she told me up front that once my scores were up I could reapply with them since she removed my history entirely and they are happy to extend credit to customers who are so diligent in fixing their past mistakes, haha.

[medicgrrl]

I would file a complaint with the CFPB regarding the auto loan.  I really don't see how they can show you as past due on the account when you aren't.  It's at least worth a try since it won't cost you anything but time.

[Anonymous]

If you haven't contacted an attorney to determine the legality of the repossession and the sale of the car and even the towing itself you should do so. If anyone at any point failed to follow the law you may have a case.