Does time really heal FICO wounds?

[Anonymous]

Fair Isaac tells us that time heals all wounds with a damaged credit file. In 2010 my FICO went down to 598 with a job loss, failed business, etc., but no bankruptcy. Since then I have lived a cash-only life but my mortgage has been paid on time - never a late payment. My FICO score has not budged even one point in two years and less than 10 points in 4 years. Just how much time is needed for time to heal this wound?

[seruby]

The only way to build credit is to show that you can use credit, so living a cash only life won't help much in that regard.     You could get a secured credit card to help you build your score up again until you can get unsecured cards.   The bads fall off your reports 7.5 years after the most recent day of first default  (I say most recent b/c bringing the account current then defaulting again changes that day[from what I've heard]).   

If you have money now to pay anything that went negative, you can see if the reporting company will accept payment for a deletion of the tradeline,  or send them letters asking if they will remove the negative marks, like lates, etc..    There's a lot more information on pay for delete and goodwill letters around this forum.

[Anonymous]

Thanks for the info. If I may read into it a bit, time by itself does NOT heal any FICO wounds - using new credit does. Even though my mortgage balance goes down by $500 a month, that is irrelevant as far as a FICO score is concerned.

My own situation is rather interesting - I owe over $100,000 with all the fees, interest, etc... to 3 Junk Debt Buyers. As far as them being able to enforce payment, that would be very difficult, as everything I own is below the Exemption amount and 100% of my income is exempt from levy under either Federal or State laws - I guess you could call me "Judgment Proof". It has been 4 years since any payments were made. My financial world collapsed in June 2010 and I have made no payments since. I may consider offering a settlement of the debts in 2 years after the mortgage is paid off. Would settled debt Trade Lines improve my score any? I really don't want any new credit cards, I am doing just fine without them and after 4 years I really don't miss them. I guess I have been listening to Dave Ramsey too much.

[TRC_WA]

Revolving credit cards are the best way to raise your score.

Without credit cards your scores will barely move... Installment loans aren't enough.

[seruby]

I'm right there with ya.   My score went from 700s to low 500s during a 9 month period where I was out of work in 2011-2012.    Been working since late 2012, and getting back on track, now I'm at low 600s.

For those accounts with JBDs/CAs, send them a DV letter.  You may get some to simply fold and say they'll delete their tradelines.   

[kjel]

Time alone does not heal all wounds, but time in conjunction with rebuilding and resolving the negative items on your reports does get you more mileage.

[taxi818]

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@kjel wrote:

Time alone does not heal all wounds, but time in conjunction with rebuilding and resolving the negative items on your reports does get you more mileage.

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Think of it like this so it will be simple.  2 wrongs to make it right. But 10 rights can ease the pain of the 1 wrong you did. Positives to outweight the negatives. Together with time. All is forgiven.  So yes. Get a secured card. And maybe secured installment loan. Before you know it. Joyous are use to doing right all the time.  It will show I. Your report and score. And the bad things in the past. A distant memory.  Good luck. 

[Jamex]

To the OP, time does heal wounds but that isn't enough to improve your score. The negatives will hurt you less as they age, but the only way to then actually see improvement in your score is adding positive tradelines: credit cards, an auto loan, home equity loan, etc. Credit cards are by far the easiest and most straightforward way to improve your credit score. You can't just reduce the damage, you also have to proactively rebuild a file that will score well on the FICO model.

If you don't like credit cards generally, consider getting a secured card. You thus stay consistent with your no-debt lifestyle, but a secured card is scored the same as an unsecured card on your report, so it will add a positive tradeline. I'd recommend getting two, and getting them through a traditional lender like Capital One or Bank of America. They have relatively modest fees compared to sub-prime lenders like Orchard or First Premier, and when you're ready, you can then convert your secured cards to prime unsecured cards. The real adavntage of converting them to unsecured is that the limits will grow, which will also improve your score since a big factor is the ratio of your credit card balances to your available credit. This is another reason the cash-only lifestyle isn't helping your credit profile: instead of having a healthy ratio like $300 balance / $3000 limit, you instead have $0/$0, which isn't helping your score at all.

The other thing to remember is that you only need a very little bit of credit card use to get the benefits of credit cards on your credit score. So if you want, you could get the cards, use them once or twice a month to put gas in your car or food in your pantry, pay it off immediately in cash, and let them sit in your wallet or sock drawer the rest of the month.

You definitely don't need to become a massive credit user to see a significant increase in your score, but you do need to build a portfolio. The main reason credit scores exist is to help lenders figure out whether you can responsibly manage credit, and the only way you can show them that is by getting some to manage.

Good luck, and keep us posted!

[Billybob_TX]

Check your state law, you may be past the Statute of Limitations for anyone to sue you if indeed you have not paid anyone in 4 years. That is a HUGE weight off your neck if that is the case, and nobody has sued on those debts and has a judgment already. After that, 3 more years and they go *poof* anyway from your credit record.

Have you pulled a hard copy credit report from all 3 bureaus? You need the hard copies b/c they show a TON more info than the online versions. You have to make sure there isn't a judgment sitting out there ready to pounce on your bank account, even SSI can be grabbed once it hits an account and you may get it back but it is a hassle. Next step is getting a secured card through a local Credit Union or whoever you normally bank with. Good luck, this is a marathon, not a sprint.

[myjourney]

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@kjel wrote:

Time alone does not heal all wounds, but time in conjunction with rebuilding and resolving the negative items on your reports does get you more mileage.

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Plus 10000 very very well said ....BRAVO

If you don't move forward and correct the mistakes on CR's and establish new credit to show lenders you've changed your ways scores will remain low...

If you think about it how can they improve with nothing new to show?