550 FICO score - what next?

[floweryu]

Back in 2012 I lost my job and was in a very difficult position and could not pay my credit cards. I had 3 charge-offs:

1. CapitalOne (limit $1200)

2. Orchard (limit $300)

3. Citi (limit $6800)

First 2 were sold to Portfolio Recovery who wouldn't negotiate and they promptly reported the collection. I couldn't negotiate with them and at the end had to pay almost in full, give them my bank account because they wouldn't settle differently. I settled for Citi (with the interest the total debt was around $8500) for $2500 and paid that. Currently I have 0 debt, but my score dropped from 620 last July to 544 when Portfolio Recovery reported both accounts.

I can't find any pre-approvals because I had charge-off with Citi and CapitalOne. I used to have VS and Jcrew cc which still appear open on my credit reports, but were closed long time ago, probably around 10 years ago. I used to have AmericanExpress student, which I closed back in 2006. I have one car loan which I paid in full with no late payments.

I have a good paying job and I don't really need a credit card, but I would like to build my credit history and buy a house in a couple of years (and have a cc so that I can rent a car or pay for a hotel).

I have an account with Wells Fargo, so I was thinking that my best option is to open secured card with them. I am pre-approved for CreditOne card, but I heard that I shouldn't go for it.

ANy suggestions would be appreciated!

[Anonymous]

i was in the same boat, 550 score when i started my rebuild.

i went with 2 secured cards, BOA $300 and CapOne $300.  I was able to get a Chase Freedom and SM MC in a year.

I was able to unsecure the BOA card at the 1 year mark, n then i PC to a reward card.  After the new card arrived, i took a hard pull for a CLI and finally got it at $6600.  Cap1 is still secured at 650 after 1 CLI.  I highly recommend BOA since they will grow with you.

[floweryu]

I applied for Wells Fargo secured card and I got a message that they need to verify a few pieces of information before making a decision. I have a checking account with them and I earn over 100K, so I am not sure why they can't approve $300 *secured* card. If I don't get a secured card, I think I will quit. It's a mission impossible to repair credit, it seems.

[Anonymous]

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@floweryu wrote:

I applied for Wells Fargo secured card and I got a message that they need to verify a few pieces of information before making a decision. I have a checking account with them and I earn over 100K, so I am not sure why they can't approve $300 *secured* card. If I don't get a secured card, I think I will quit. It's a mission impossible to repair credit, it seems.

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try one with BOA, it should be fairly easy

[J91605]

I'm pretty new at this to. It sometimes seems overwhelming. I make good money and really don't need a credit card either but it's nice to have. Don't quit, if nothing else take it slow at first. As your scores rise a little it will get better. Just keep your head up and tak'em one at a time.

[floweryu]

If they deny me for a secured credit card, I will close my account and switch to BofA. I have an account with them as well, but I am not really using it and considered closing it.

I don't need credit cards for buying anything, I prefer to pay with real money, but it is impossible to travel, pay for car rentals, hotel security holds etc if you don't have a credit card. I essentially want a cc to be able to pay for gas at the as station without having to go inside and pay by card (because I don't want to use my debit card outside), to be able to rent a car and pay for security hold for a hotel. 

[Anonymous]

u will need credits eventually for large purchases,  house/cars....etc.. 100k isn't much when you have a family and multiple bills start coming in. 

[Anonymous]

Hi, if the ones you want don't come through try Open Sky and Primor. I have both and I believe there's no HP for both. Good luck

[rockbttm442]

Give Cap 1 a few months. They are very forgiving and will let you back in. Just check the prequal site every once in a while.

[floweryu]

Thanks for all the advice! Turned out that I was approved for Wells Fargo secured card, they just needed to verify my information because they had an old address. I got $300 secured card. I will try Capital One in a few months. I paid the charge-off back in March.

Btw, I checked my CreditKarma score and it was 640. Fico is now using new scoring algorithm and the score is much lower. It shows that my old (FICO 5) score was 629, but the new (FICO 8) score is 550.