Multiple Loan Accounts, to improve your credit score

[Anonymous]

As per understanding, myFICO is based on these 3 bureaus reporting except their scoring model/algo is different. So any ways when u see any problem in myFICO, you will eventually have to go to bureaus to rectify that, and wait till it gets updated on myFICO. I might be wrong. 

But I would rather work and clean my 3 bureau's report and then shift gears to myFICO as that is what lenders might be using.

[Anonymous]

Hi NormanFH,

I just called Capital One, and yes they can offer 2nd secured credit card. I have secured card with Capital One since Aug 2014 started with $500 and in 6 months, they raised to $900. I asked the rep today, if they can increase the credit limit, and he said NO with other explanations. Is it worth to add deposit to same card and have credit limit increased or go for another secure credit card with $500?

What do you suggest considering the impact on credit score?

[Anonymous]

Apply for the UNSECURED QS1 card on their site. Do not add more to the card, that doesn't help. Don't call it in, just apply online.

[Anonymous]

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@Anonymous wrote:

Yes, I guess, based on all your inputs, i would rather open another Capital One secured credit card, with a limit of $500.

Regarding Installment Loan, i am staying with one, I will monitor the difference by next month. Will defintely keep you guys updated.

My capital one score was 610 on March 11, 2015, I went to Lender few days later for FHA mortgage loan, they pulled the real FICO score, I was shocked it was 557, not even close to 600. Not sure how to compare, or how much difference to add in, but then after started monitoring on daily basis with 3 credit bureaus. Mortgage lenders pull the FICO 4 model, not the newer FICO 8. If you do a one time report purchase from here (myfico) you will get to see the most important FICO versions for that bureau - FICO 8, Mortgage version, Auto enhanced version, Bank enhanced versions, etc.

Below is a small tracking I am doing from 3 bureaus almost daily, but at high level, this is how it looks: 

I have 4 charged off accounts from 2011, 2 active CC on time payment: one individual and another one AU, 3 mortgage inquiries in Mar 2015.

On April 22, 2015

EX560/EQ596/TU643

On May 1, 2015

EX571/EQ600/TU644

On May 11, 2015

EX581/EQ611/TU649

Just to add in, I had disputed few errors with Credit Bureaus, and one paid collections with them in last 3 weeks. 

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Tell us about the charged off accounts from 2011 - we may be able to offer advice.

[Anonymous]

NormanFH,

I had terrible 2011 year, and had to use all the funds available on CC. 

April 2011, was the last payment date on Discover, AX, Wells Fargo, Chase.

Discover - $23918

AX - $1872

WF - $6749

Chase - 7633

They still have the accounts, now reporting charged off. When i called them to settle, they transferred me their collection agencies, one was Calvary, Capital Mangement, and forgot other, but all of them are collection agencies. CAs are not reporting these debt. It shows as Charged off by original creditors.

[Anonymous]

Ouch. Yeah, those are gonna kill ya. CO with a balance are going to count against your UTI% for FICO scoring (not so much for the Vantage scores you get from the CRA's) IMO, you're going to have a tough time getting your FICO scores much past the mid 500's until you get those settled and reporting zero balance.

I would approach the lowest one first and see if they will settle for 50%. You should try to settle them before the CA's start reporting them as collections too. 

[Anonymous]

NormanFH,

Accounts are reported as Closed, but Yes Balane and Past Due still shows up. 

Now regarding paying them, I tried settling with them, came up to an amount, but their CAs will not report "Satisfied"/"Paid in Full"/"Paid" etc...nothing that will positively impact after paying these out of statute debt. Instead they are going to report "Paid in Less than Balance Owed", which is worst for any other future lenders. This is going to drop down the score. CAs are saying its not in their control and its Creditor who will report. I called original creditor and they said, till you pay full, we cannot report Satisfied or Paid in Full or Paid. Now this much of amount of $40000, I would rather put in my down payment and get better rates and pay less in interest.

Again its better to have zero balance than something - I understand, but i read online, talked to a mortgage broker also, his suggestion his let it stay their, dont have any settled accounts on ur file that will make lender insecure, and we can explain that you had a bad financial year, and rather pay other credit cards on time, and try to improve your score. So i even got an installment loan.

[Anonymous]

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@Anonymous wrote:

NormanFH,

Accounts are reported as Closed, but Yes Balane and Past Due still shows up. 

Now regarding paying them, I tried settling with them, came up to an amount, but their CAs will not report "Satisfied"/"Paid in Full"/"Paid" etc...nothing that will positively impact after paying these out of statute debt. Instead they are going to report "Paid in Less than Balance Owed", which is worst for any other future lenders. This is going to drop down the score. CAs are saying its not in their control and its Creditor who will report. I called original creditor and they said, till you pay full, we cannot report Satisfied or Paid in Full or Paid. Now this much of amount of $40000, I would rather put in my down payment and get better rates and pay less in interest.

Again its better to have zero balance than something - I understand, but i read online, talked to a mortgage broker also, his suggestion his let it stay their, dont have any settled accounts on ur file that will make lender insecure, and we can explain that you had a bad financial year, and rather pay other credit cards on time, and try to improve your score. So i even got an installment loan.

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Settled for less is as good as paid, as long as it gets the balance to ZERO - that should be your goal. Yes, it is less than ideal, but you can only get what you can get. Either way it sits there until it drops off. If they won't deal, then your choices are either 7 years of "Settled" or 7 years of "Unpaid Balance".  One of those choices allows your scores to rebound, the other doesn't. Scorewise there is no difference between settled and paid. As long as that balance is showing unpaid on an old CC account you are literally throwing away 30% of your score. I would be VERY surprised if you managed to break 600 with that amount of CO skewing your UTI%.

I would suggest you talk to some other mortgage brokers. As a lender I would MUCH rather see a settled account, than 40K of unpaid debt sitting out there.

Talk to some of the folks in the mortgage forum about this.

Are these debts past SOL yet?

[Anonymous]

Damm Norman, you really know your stuff. Your a treasure to this site and I just want to throw you a BIG THANK YOU !!! I can't tell you how much I learn from reading your posts. Great job !!!