@Nombie wrote:
I've been lurking the myFICO forums for quite some time now, and I've finally decided to get serious about rehabilitating my terrible credit score. I feel like I've learned enough from doing my homework to get this process started, and I owe both that and the motivation to do so to you, the forum members here at myFICO, so thank you from the bottom of my heart. I'm fed up with so many doors being closed to me and I want a better life for my wife and I.
A summary of my credit history problems: TransUnion score at 623, up from 548 where I started. 24 lates and one collections account. A big monster to tackle.
Back in 2009 I had three Stafford student loans come due when I lost my job and was unable to return to school. I was able to make a few months of payments before the floor dropped out from under my feet and, long story short, I spent the next eight months quite literally homeless with no income, address, nothing. I was 19. This left me with 8 late payments on each of the three loans, totalling 24 lates on my report that have been ruining me since. As soon as I was back on my feet I began making payments again and I've not missed a single one since. I have one account in collections with AFNI/Verizon from the same period.
It seems now that my only real options are to goodwill NELNET/DoE (My suggestion is send a simple GW letter once a month stating what happened, why you were unable to pay, and that you have been diligently paying monthly and on time once you were back on your feet, and would be thankful if they would be so kind to delete all or at least some of your late payments from their records...) for my lates and attempt a PFD with AFNI, (I don't personally know how they handle things, but what is the actual DOFD for this showing in your reports, and is it outside the SOL or not? If it's within the SOL, you can offer maybe down to 60% of the payment in return for deletion, and go up from there. But maybe wait to do this until you have the capability to PIF just in case. That way, if they will not budge and demand PIF for deletion or nothing at all, you can get rid of it. Just make sure to get it in writing from them that upon receipt of payment, they will delete from any and all reports.) which are both unlikely to succeed based on what I've read, but the only other option is just to wait it out, which has not been working well for me so far (go figure). (If nothing else, since they were from 2008, they should fall off sometime in the next year, and you may be able to ask the CRA (NOT dispute) for an early exclusion before the 7 year mark, sometimes as much earlier as 6 months. But YMMV.)
I can also open two or three secured credit cards (Try to pick cards that will grow with you. i.e. graduate, that you will use, and not just throw in a drawer once you get them. When you get these cards it will ding your score with INQs and lower AAoA at first, but will soon boost your score when they start reporting.) to keep my utilization around 20% (I would keep it below 10%, many of those with good revolving credit say as such.), which should help some. As of right now I have a 0% credit utilization (no open lines of credit) and and a debt to income ratio of 2%.
What do you guys think? I'm taking bets on just how hard NELNET is going to laugh in my face on my 24 lates, which we'll be measuring using the Richter scale. Any other ideas that might help?
These are my personal opinions. You may get better advice from someone else you wish to take. But I hope this helps. Good luck!
@Nombie wrote:
I am hoping that the GW letters will help, I would imagine that having those lates removed would have the biggest impact on my score. I'm going to attempt it either way and will report back any progress with that. As for the account in collections, I don't have see a DOFD but it does show that the account was opened 11/29/11, which is really odd seeing as this is a charge that happened when Verizon debited my security deposit into my checking account, then demanded that I pay it back to them for some reason that I could never fathom, and this was back in 2009. (This kind of thing is normal. The "opened date" is just when the collection agency received the case to collect. The DOFD would be the date the account first went into arrears, so my guess is 30 days from the date they decided to say you were billed for the deposit? This sounds weird to me, though. I would maybe get a DV asking for the original itemized bill. But I'm no legal advisor, that's just my thoughts. You might get a better suggestion from a moe senior member here with more knowledge on the subject.) The date first reported is 4/22/12. The balance is only $282 so I'm prepared to pay it in full to have it removed. I would have already paid it off had I known it was there, but it didn't pop up on my monitoring service until April 04 of this year. (Being ready to PIF is a good thing! If all else fails, try a PFD in full.)As for the cards, I do plan to use them, but only for very specific, recurring monthly expenses that I can pay in full after each month. I'm not going to be swiping these cards for anything, it's going to be a rigidly structured utilization plan and nothing else. If sub-10% is a good range to shoot for then I'll do that. (It really depends on what works for you, in my opinion, but many people will suggest the 3 cards with <10% utility. Some will say let all but one show zero, and that one be <10%, but hey, it depends on you and your credit file and how it affects you, ultimately.) I was approved for a Cap One card earlier today so I should be getting that sometime next week. I've never used a credit card because I didn't trust them when I was younger and once I was old enough to be responsible with one my credit had already been ruined by that point, so I don't know much about how they work. For rebuilding my credit is it best to pay off the balance each month or carry a balance at all times? (Like I said, it depends. for rebuilders, a lot of people suggest paying it in full, on time, each month, never carrying a balance. When I finally get my cards I'll be testing different structures to see what works for me, starting with the 0 carry over and then working up from 1-9%) Thanks for your help, xaiduz, its greatly appreciated.
You're welcome! Like I said, I'm not legal advisor, but I hope these suggestions bring you the results you want and deserve! Good luck.
@Nombie wrote:I'll probably try a few different methods with the cards and see what kind of results I can get. I actually checked myFICO and it also suggests opening a new credit card as my best bet for improvement. While you take a hit (sometimes) at first to your score due to a new Inquiry and a drop in AAoA for a new account, new TLs give your scores room to grow. They thicken your file and make it healthier.
Another area that my FICO report pointed out that I hadn't thought would have a huge impact is the amount remaining on my student loan debt. For whatever reason I've neglected to devote much attention to this part of my profile. I have three separate loans totaling about $4883. I've been paying the required amount every month, which is very small, because I never thought about the impact it might have to pay off more of the balance and I've been afraid to pay them entirely because these are my only open accounts. Minor impact to score, the util from it doesn't have that great an impact, not like the util from a revolving account would.
If I want to use this to improve my score does anyone know if it's better to make a large lump sum payment or just to start paying extra, say double the amount due per month? From a financial standpoint I would of course save money on interest with a lump sum but honestly the interest rate and the balance is so low that I don't mind paying extra for it if it will have a greater impact on my credit profile.
July 2013 score: EQ FICO 819, TU08 778, EX "806 lender pull 07/26/2013
Goal Score: All Scores 760+, Newest goal 800+
Take the myFICO Fitness Challenge
Current scores after adding $81K in CLs and 2 new cars since July 2013
EQ:809 TU 777 EX 790 Now it's just garden time!
June 2017 update: All scores over 820, just pure gardening now.
But those inquiries only figure into your score for a year. They stay for 2 years on your report, but FICO only scores them for a year.
July 2013 score: EQ FICO 819, TU08 778, EX "806 lender pull 07/26/2013
Goal Score: All Scores 760+, Newest goal 800+
Take the myFICO Fitness Challenge
Current scores after adding $81K in CLs and 2 new cars since July 2013
EQ:809 TU 777 EX 790 Now it's just garden time!
June 2017 update: All scores over 820, just pure gardening now.