Help needed to fix my bad credit

[Anonymous]

Just found out that my FICO score is fairly low... around 69X...

Besides a short account history, I also have two items to worry about:

1) high credit usage of more than 50%

    What does it exactly mean? For instance, I have a credit card with a limit of $5.5K, but my average monthly balance seldom reaches 1K. How come the credit usage is so high?  Unless it means something else...?

2) a "serious delinquency" that have been paid off in 2006 but still remains on my report.

    According to the 7-year rule, does that mean that I have to wait until 2013 to get it removed from my report?

Is there anything else that I can do to improve my credit score quickly? For example, shall I apply a couple of more credit cards and maintain low balance on each of them? (Currently I have only one credit card...)

Thanks in advance for your help!!!

[guiness56]

Hi and welcome to the forums.

Your utilization is how much of your total revolving credit you are using.  Is the CC the only revolving you have?

The delinquency will fall off 7 - 7.5 years from the DoFD.  It doesn't matter when it was paid.  And paying it will not remove it.  Since it is paid you can send a good will letter to who is reporting to see if they would remove it early.  Would this be the OC or a CA that is reporting?

Do you have any installment loans like a car or a mortgage?  FICO likes to see a mix of credit.

Adding another CC may help.

[RobertEG]

I think you have a problem that might allow you quick credit score improvement.

The prior derog from 2006 will remain for 7 years, if a montly derog on the OC account, or for 7 1/2 years from the DOFD on the OC account, if it led to a CO or CA.

Your payment of that debt does nothing to remove it from credit scoring.  You can only pursue its removal by sending GW letters. Not a qucik fix, and not an assurance of their acceptance.  So try it, but dont rely on it.

You % util is a separate matter.  First, and foremost, % util has NO historical memory in FICO scoring.  By that, I mean that a simple reduction this or next month of your % util will erase the old, and only score the new.

If your CL is $5.5K, and you only currently carry a balance of up to $1K, that is simple math.  That is only  a current 18% util. 

Get your current balance under $550 a month, and your % util will then be under 10%.

Yoiu seem to want quick score increases, which suggests that you are planning to apply for new credit in the near future.

You ask whether you should apply for new credit cards.  I cant answer that definatively, so offer my opinion on its pros and cons.

Pros, it may add additional CL, but if you can control your current % util, you may not need the addtiional CL. It may add additional credit mix, if you dont have at least two or three CCs now.

Cons, each application will hit your current CR as a new inq.  If the CC is opened, it will lower your average age of accounts (AAoA).  Does the increased CL it affords warrant the hits on a a new inquiry, and reduction of AAoA?  Yes,, if long term credit building is the goal, but probably not if it is to obtain short term FICO increases.

[Anonymous]

Thanks, guiness56 and RobertEG, for your suggestions!  It seems that a GW letter is probably my best shot for short-term...

If I adjust my goal to restore my credit in 1 or 2 years, what actions should I take?

Also, a question regarding credit card: If I apply for a credit card but get rejected, will that do harm to my FICO score? If so, does that mean I can only choose from those spam mail letters with pre-approval credit card offering?

Thanks!!!

[guiness56]

The inquiry may drop your score a point or two.

What you can apply for really depends on what is on your CR.  You can go to whogavemecredit.com and see what others have been approved for in a similar situation.