Rebuilding Credit and what to do next

[Anonymous]

Hello!  My first post.  Let me tell you about my situation.

Recently totaled my vehicle.  I was upside down on the loan.  I owe roughly $4100 on the car (Credit Acceptance loan).  I have yet to see what I will get back from the insurance company.  When I look up KBB value its telling me around $3500.  I also purchased the Gap insurance when the car was purchased back in 2011.  The car's final payoff date was April 2016.  I absolutely need to get another car.  My credit is subprime.  I need a seven passenger vehicle as I have 4 kiddos and would also like to get something with AWD/4WD because we live in NE USA and winters are brutal.  Me and DH have two vehicles.  His is paid.  He also had a five passenger vehicle so I absolutely need to get a family car this time around that will accomodate us all safely in one vehicle.  

I started to look at my credit since this has happened.  I know that I can only qualify for a subprime auto loan because my credit is so poor.  I checked my Equifax FICO through this site and its telling me 556.  So far I've checked my free credit report and tried to clean them up a bit.  I did dispute a debt on my TU that was way past its time (it was from back in 2001 and it has since been paid since 2007.)  But all of the rest is pretty much my problem at this point.  Here's whats negative on my report:

Capital One Card-- Charged off and sent to Calvary Portfolio $1914
Credit One Bank Card-- Charged off and sent to LVNV Funding $588
Enhance Recovery Corp for Sprint $614

I also have a repossession from Santander that was sold off to ? that is scheduled to come off of my report November 2017.  I'm not sure if its worth it at this point to pay it off or to just let it roll off next year?  Its roughly $2500.  I also have a debt from a dentist office in the amount of $99 that is scheduled to come off in November 2015 (not that its really affecting my score that much.)  I have no open credit cards.  The only thing positive on my account are my student loans (11K) that I'm in deferment with.  

So I was all gung-ho on paying off my Credit Acceptance loan and going out and financing a 20K vehicle, but the more I keep thinking about it the sicker I get because with this last car loan our interest rate was around 19.95%  I was thinking that maybe I could take the pay out from the insurance company and what I would use for a down payment ($1500) and buy something with higher mileage that could accomodate us and drive it around for the next year, year and a half while trying to fix my credit.  I'm not sure if this is even legal as I would still have the loan from the car that is totaled.  I have been handling the payments well and could continue to make the payments until April when it will be paid off.  I'm not sure what to do as I'm tired of being ashamed of my credit score.  Any suggestions?

Oh and I do have a full time job making roughly 50K per year.  I've been there since February and have a slight gap in my employment history (1 year) that I took off to finish school.  I was at the same company previously for 8 years then took a year off and was rehired.  I am currently living with family and really have no bills except my car loan, insurance, and a few other things but totalling less than $500 monthly.  

[needtodobetter]

I am sure the finance company is listed as a lien holder on the title of the totalled car.  When my son totalled his car, the insurance company sent the check directly to the lien holder.  He had a small remaining balance (did not have gap ins) and he had to pay that out of pocket within 30 days.  The finance company is not going to hold a loan on a car that is no longer of any value.  It is good you have the gap insurance - that helps a lot.  It is unlikely that your auto and gap ins companies will send you the check directly and if they do, it will likely have the lien holder listed as a payee.

IMO, if possible, I would make due with one car for as long as possible and try to save for a used car.  As soon as you have some time to rebuild your credit, you will be in a much better position to finance another car.

Good luck!

[Anonymous]

---

@Anonymous wrote:

Hello!  My first post.  Let me tell you about my situation.

Recently totaled my vehicle.  I was upside down on the loan.  I owe roughly $4100 on the car (Credit Acceptance loan).  I have yet to see what I will get back from the insurance company.  When I look up KBB value its telling me around $3500.  I also purchased the Gap insurance when the car was purchased back in 2011.  The car's final payoff date was April 2016.  I absolutely need to get another car.  My credit is subprime.  I need a seven passenger vehicle as I have 4 kiddos and would also like to get something with AWD/4WD because we live in NE USA and winters are brutal.  Me and DH have two vehicles.  His is paid.  He also had a five passenger vehicle so I absolutely need to get a family car this time around that will accomodate us all safely in one vehicle.  

I started to look at my credit since this has happened.  I know that I can only qualify for a subprime auto loan because my credit is so poor.  I checked my Equifax FICO through this site and its telling me 556.  So far I've checked my free credit report and tried to clean them up a bit.  I did dispute a debt on my TU that was way past its time (it was from back in 2001 and it has since been paid since 2007.)  But all of the rest is pretty much my problem at this point.  Here's whats negative on my report:

Capital One Card-- Charged off and sent to Calvary Portfolio $1914
Credit One Bank Card-- Charged off and sent to LVNV Funding $588
Enhance Recovery Corp for Sprint $614

I also have a repossession from Santander that was sold off to ? that is scheduled to come off of my report November 2017.  I'm not sure if its worth it at this point to pay it off or to just let it roll off next year?  Its roughly $2500.  I also have a debt from a dentist office in the amount of $99 that is scheduled to come off in November 2015 (not that its really affecting my score that much.)  I have no open credit cards.  The only thing positive on my account are my student loans (11K) that I'm in deferment with.  

So I was all gung-ho on paying off my Credit Acceptance loan and going out and financing a 20K vehicle, but the more I keep thinking about it the sicker I get because with this last car loan our interest rate was around 19.95%  I was thinking that maybe I could take the pay out from the insurance company and what I would use for a down payment ($1500) and buy something with higher mileage that could accomodate us and drive it around for the next year, year and a half while trying to fix my credit.  I'm not sure if this is even legal as I would still have the loan from the car that is totaled.  I have been handling the payments well and could continue to make the payments until April when it will be paid off.  I'm not sure what to do as I'm tired of being ashamed of my credit score.  Any suggestions?

Oh and I do have a full time job making roughly 50K per year.  I've been there since February and have a slight gap in my employment history (1 year) that I took off to finish school.  I was at the same company previously for 8 years then took a year off and was rehired.  I am currently living with family and really have no bills except my car loan, insurance, and a few other things but totalling less than $500 monthly.  

---

You will get a quick boost in scores just by opening a couple of credit cards. I would suggest applying for a Cap One card first - if you get denied for unsecured, apply for secured. Since you have no cards at all currently you could see as much as 50 points just by opening two revolving accounts. Pay off your current vehicle with the insurance payout (they will pay the lienholder directly), and as soon as your new revollving accounts show up on your reports, then see about financing a newer vehicle.