01-14-2013 10:21 AM - edited 01-14-2013 10:28 AM
I am 38 years old today, and I have a sorted past when it come to my credit score. Aside from a few mistakes in my early youth, I had decent credit until about 4 years ago. When the economy tanked I lost my job, ran through my savings and had to start making hard decisions about which bills to pay, and eventually I had to think about how I was going to eat each day. Long story short, I am back on my feet. I have a decent job which pays me about 65k a year and after 2 years of diligent work I am improving my credit score. I started out in the mid 500's in 2010 and I am now sitting at:
I hired Lexington Law firm in late 2010, and experience nominal success with that company, but I fired them when I saw no progress for 4 months straight. I still have some old debt, namely Hunter Warfield (2009) for 3k (in collections) and a judgment (2006)t for $1888. I have a few other negative things on my credit report some of which will fall off this year due to length of time. I do want to repay these debts, but I am recently married with a very young son and money is very tight. I until a few days ago did not have a credit card. Debt scares me now that I have been bitten by it, and aside for a auto loan my father cosigned for me 2 years ago I have no debt. The auto loan was for 18k and will be paid off at the end of this year with not one late payment. My Experian score was 659 2 days ago, but I app'd for a Wells Fargo credit card and got denied. When I received the letter of denial I went with Capital One unsecured card with a limit of $500, no apr for one year and $39 a year fee. I got a credit card because I heard it was necessary to rebuild your credit score, but 2 inquiries lowered my score 8 points. My questions are as follows:
What other options do I have to rebuild my scores?
The 2 debts on my credit report are extremely difficult to deal with, one being Hunter Warfield, the other a local government for personal property tax...any suggestions on what to do with either?
Are 3 credit cards the way to go to rebuild credit? I am scared of applying for more cards if it lowers my score?
My goal is a combined score of 700 (or more) and I want to achieve that this year. Please help me!
Oldest acct in good standing is 11.2 years and average acct in good standing is 8.8 years. I have a total of 5 negatives on my 3 credit reports, 3 with balances all totaling about $5,500, and 2 that are charge offs.
01-15-2013 07:48 AM
Welcome to the forums!
I'd suggest reading the following:
Credit Scoring 101 - great for knowing what is in your credit score and to see how your score is impacted.
What Steps Do I Take - great for learning the repair process.
and Example letters - PFDs, GWs, DVs, etc.
First off, check the source of your scores. You mentioned Experian. If you purchased all 3 scores together and/or bought your Experian score somewhere online, then know that the score you have isn't a FICO score. EX blocked consumer access to FICO scores a while back. I mentioned this because you mentioned the importance of scores and score rebuilding.
IMO, a CC was a good start. Mix of credit is a significant component of FICO scoring. If afraid to use it, then rip it up and toss it in a drawer. To keep activity on it, put a utility bill or something like that and pay in full. Or if you decide not to cut it up, buy a pack of gum or coffee every 3 months and then PIF to show activity.
A second CC may be of benefit, but before you do, I'd let the first age and use that time to focus on the baddies. Your score won't improve to where you want it to go without first addressing the baddies. It's unlikely you'd go past the mid to high 600s without repair first.
Keep your state's SOL in mind. SOL won't apply to your tax issue or the judgment. It will apply to Hunter Warfield. If SOL expired, then send a DV. If they verify and you agree, then send a PFD. If SOL had not expired, make sure you have the $$$ to PIF if you had to (to avoid a judgment if it ever came to that) before sending any letter or doing anything. Otherwise wait for SOL to expire.
The judgment will go away this year if it was a judgment from 2006. It won't mean the debt will go away though. They can still garnish, sieze property, etc. Most states have an SOL of 10-20+ years when collecting on a judgment. Personally I would take steps now to get it removed and satisfied, if you had $$$ set aside to do so. If not, save. Some have had success in removing judgments by paying the debt and asking the plaintiff's attorney to have the case vacated, which in turn can result in a deletion.
The tax issue will have to be paid. I'd pay that ASAP. You can't send PFDs for a tax lien, but you can ask the tax agency if they can remove it. Some jurisidctions are open to that. Some aren't. Regardless I'd pay it though.