Halfway through credit rebuild - would love next step suggestions!

[Anonymous]

Hi guys - long time reader, first time writer! (Apologies this is so long!)

I opened my own restaurant about 9 years ago, and unfortunately had to close it about 3 years later, never making any money. In setting it up, I didn't protect myself as well as I probably should and ended up losing the house and almost losing the car. Credit score 5 years ago was 485. 

I flirted with bankruptcy but didn't want to go through that process, so slowly worked hard to pay off business-related debts. 2 years ago I had 8 negatives on my report, now I have 1 - a court judgement related to the business, that unfortunately isn't going anywhere for about 3 years. Also, because of this rebuilding process I do have a lot of hard inquiries - 12.

Finally got a secured card about 2 years ago (thanks Capital One!), and then got approved for a couple of the higher interest cards - First Premier ($500) and First Savings ($700). 

After about 9 months, Capital One offered me a QuickSilver with a $500 limit, then a few months later they offered me a Visa Platinum with a $2,500 limit. Recently, the QuickSilver got a CLI to $2,000 and the Platinum got a CLI to $4,500. Capital One then offered me a Venture card about a month ago and I was approved with a $15,000 (!!!) credit line!  I also got approved last month for a Best Buy Visa with a $2,000 limit.

I had a loan with Toyota during the restaurant debacle, and I was 3 months late with payment so they attempted repo. I sold the car to a friend for my payoff amount, which was about $3k under KBB so they were happy, and paid Toyota directly to close the loan. However, they still listed it as a charge-off. I've sent a letter to them contesting that, and hopefully it'll be removed as a negative, but right now it's on all 3 reports. 

I did previously have a Mazda loan that was paid in full on time and an auto loan with E-Loan that was paid in full on time, both were from 10 years ago. I've also had an auto loan in the past 2 years (with a verrrry high interest rate, but it was part of the rebuilding process) that was paid in full on time each month.

Currently my TU score is 714 and my EQ score 710.

I would like to buy a new car in the next few months, but am still in that spot where my credit worthiness is still on a fine line. (Cap One gave me a $15,000 limit, but Amazon wouldn't give me a CLI bump from the current $800 limit)

I would LOVE some recommendations on what to do next to keep that score inching forward. I'm really happy with the work I've put in over the past 2 years (100% on-time payments across the board!), but I know I've still got work to do. Should I cancel those 2 high interest rate cards, First Premier and First Savings? Should I close my secured Cap One card? 

What other steps should I take, other than not applying for any other cards for a while?

Thanks so much in advance for any help, and for reading this tiny novel! 

[Anonymous]

Which TU/EQ scores are u using? There are so many different scores and FICO has 6 different scores used for auto lending alone. How old/recent are your inquiries? Maybe you can wait until some of them fall off after the 2 year mark.  Be careful about closing cards. You will reduce your overall utilization and may be canceling cards that prop up the average age of your accounts.  And definitely lay off applying for any other type of credit in the meantime. Hope this helps a bit.

[Anonymous]

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@Anonymous wrote:

Hi guys - long time reader, first time writer! (Apologies this is so long!)

I opened my own restaurant about 9 years ago, and unfortunately had to close it about 3 years later, never making any money. In setting it up, I didn't protect myself as well as I probably should and ended up losing the house and almost losing the car. Credit score 5 years ago was 485. 

I flirted with bankruptcy but didn't want to go through that process, so slowly worked hard to pay off business-related debts. 2 years ago I had 8 negatives on my report, now I have 1 - a court judgement related to the business, that unfortunately isn't going anywhere for about 3 years. Also, because of this rebuilding process I do have a lot of hard inquiries - 12.

Finally got a secured card about 2 years ago (thanks Capital One!), and then got approved for a couple of the higher interest cards - First Premier ($500) and First Savings ($700). 

After about 9 months, Capital One offered me a QuickSilver with a $500 limit, then a few months later they offered me a Visa Platinum with a $2,500 limit. Recently, the QuickSilver got a CLI to $2,000 and the Platinum got a CLI to $4,500. Capital One then offered me a Venture card about a month ago and I was approved with a $15,000 (!!!) credit line!  I also got approved last month for a Best Buy Visa with a $2,000 limit.

I had a loan with Toyota during the restaurant debacle, and I was 3 months late with payment so they attempted repo. I sold the car to a friend for my payoff amount, which was about $3k under KBB so they were happy, and paid Toyota directly to close the loan. However, they still listed it as a charge-off. I've sent a letter to them contesting that, and hopefully it'll be removed as a negative, but right now it's on all 3 reports. 

I did previously have a Mazda loan that was paid in full on time and an auto loan with E-Loan that was paid in full on time, both were from 10 years ago. I've also had an auto loan in the past 2 years (with a verrrry high interest rate, but it was part of the rebuilding process) that was paid in full on time each month.

Currently my TU score is 714 and my EQ score 710.

I would like to buy a new car in the next few months, but am still in that spot where my credit worthiness is still on a fine line. (Cap One gave me a $15,000 limit, but Amazon wouldn't give me a CLI bump from the current $800 limit)

I would LOVE some recommendations on what to do next to keep that score inching forward. I'm really happy with the work I've put in over the past 2 years (100% on-time payments across the board!), but I know I've still got work to do. Should I cancel those 2 high interest rate cards, First Premier and First Savings? Should I close my secured Cap One card? 

What other steps should I take, other than not applying for any other cards for a while?

Thanks so much in advance for any help, and for reading this tiny novel! 

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Ummm.... From what I have read here, you can get DCU's lowest rate auto loan with something like a 680....

I would suggest closing the Cap One secured for sure, and app for a second QS card. Call and see if they will upgrade the Platinum card to QS. Use the new QS card as much as you can, PIF and request a CLI in three months. When it hits six months, combine its limit with the older QS card. App for a Barclays Reward MC to replace the FP card.

[Anonymous]

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@kokenwa wrote:

Which TU/EQ scores are u using? There are so many different scores and FICO has 6 different scores used for auto lending alone. How old/recent are your inquiries? Maybe you can wait until some of them fall off after the 2 year mark.  Be careful about closing cards. You will reduce your overall utilization and may be canceling cards that prop up the average age of your accounts.  And definitely lay off applying for any other type of credit in the meantime. Hope this helps a bit.

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Closing accounts does not effect AAoA. The closed account will still report for ten years and be included in AAoA.

[Anonymous]

You make a good point, but if you close a card that is significantly older than your other cards, it could lower your average age of accounts when it finally falls off your report, even though I would guess that it falling off 10 years from now wouldn't be an immediate concern today.

[Anonymous]

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@kokenwa wrote:

Which TU/EQ scores are u using? There are so many different scores and FICO has 6 different scores used for auto lending alone. How old/recent are your inquiries? Maybe you can wait until some of them fall off after the 2 year mark.  Be careful about closing cards. You will reduce your overall utilization and may be canceling cards that prop up the average age of your accounts.  And definitely lay off applying for any other type of credit in the meantime. Hope this helps a bit.

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So it turns out I was jumping the gun - I was going off Credit Karma scoring, and having just run a myFICO 3B report I find myself disappointed and not quite as far along as I hoped.

In order of EQ - EX - TU:

FICO Score 8 - 678 - 659 - 655

FICO Auto Score 8 - 657 - 671 -  657

FICO Auto Score 5 - 677 - 713 - 705

Those inquiries don't start dropping off until 4/16, but then they start dropping off at a rate of about 1/month. 

Thanks for the tips, appreciate your help.

[Anonymous]

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@Anonymous wrote:

Ummm.... From what I have read here, you can get DCU's lowest rate auto loan with something like a 680....

I would suggest closing the Cap One secured for sure, and app for a second QS card. Call and see if they will upgrade the Platinum card to QS. Use the new QS card as much as you can, PIF and request a CLI in three months. When it hits six months, combine its limit with the older QS card. App for a Barclays Reward MC to replace the FP card.

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Ahh, I had no idea I could even carry more than one QS card at a time, good to know, thanks. Is it worth keeping that Cap One secured card in case I end up using Cap One Auto Financing? Or will that not make much difference?

Appreciate the help!

[Anonymous]

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@Anonymous wrote:

Closing accounts does not effect AAoA. The closed account will still report for ten years and be included in AAoA.

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And thanks for this too!

[Anonymous]

No reason to keep it open, you've clearly moved past it with your other accounts.