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New Member
Syphen
Posts: 9
Registered: ‎05-08-2013
0

Rebuilding my credit, not 100% sure what to do next. [wall of text]

Ok here is the back story.  Several years ago, during the first 2 years of my time spent in the Military, I did not care about credit.  All I knew was I had a couple of credit cards, maxed them out, and now they wanted money each month.  All it was to me was an annoyance, so I just didn’t make payments.

 

I did eventually get my butt in gear and start trying to get on top of things, but it’s been rough going.  My wife and I have pretty specific goals in mind, but it seems my terrible credit is going to take a LOT longer to fix than we originally thought, and I’m still not very confident on how it all works.

 

So I guess what I’m looking for are some fingers to point me in the right direction.  I have been making timely payments for well over a year (or maybe even 2 years) now, but beyond that I’m not sure what to do, besides just pay off all existing debt.  So here is where I’m at:

 

Car Loan:  Almost paid off, less than $400 left, so I will pay it off within the month.

CC 1:  CL of $1500, balance as of now is around $800.  This is the 1st card I quit paying on so long ago.  Been making regular monthly payments.  I think this will be the next item to go after the car is done.

CC 2:  This one is tricky.  This is the 2nd card I quit paying on so long ago, but it is no longer considered a credit card account.  The account is “closed” but I’m paying off the remaining balance.  There is around $3500 left on it and I pay a bit above minimum per month, but its going slow as the interest rate is not good (not sure what it’s at).

Student Loan:  There are two loans with Sallie Mae that I pay on every month.  I also quit making payments for a time on them, and so it reflects on my credit report.  There is around $3700 left on these two combined.

 

Besides that, there are two “Potentially Negative” collections on my report.  I don’t know where they came from.  One is $42.00 and one is $30.00.  The $42.00 account is still “Open” and has a phone number.  The $30.00 account is “Closed” and has a phone number.  I’ve read that if you pay them off not only does it not help your score, it makes the time on it current, causing your score to drop.  Is there a way I can make them STOP reporting this to the CRA’s?  If there is I will gladly pay it to get it off my report.

 

I talked to a banker several months ago (I bank with Wells Fargo) and he told me one thing I could do to help my credit is to get a secured credit card.  I thought this was a great idea after learning what it was, so I started to save.  I saved up $500 and was going to use that to get a $500 secured credit card through Wells Fargo.  I submitted the application and they promptly said no to me.  Their excuse was that I had missed payments with them in the past (obviously).  When that hit my credit my score with Experian dropped 60 POINTS!  It has since come back up by 20 something, but man.  I was finally getting close to 600 and to have it washed down to the 520s in an instant was just demoralizing as hell.

 

So there is my story.  I apologize for the wall of text, but I really would like to get some friendly advice or tips on where to go next.  Should I try to get a secured credit card with a smaller, local credit union?  What are my next steps?  I make about $50,000 per year and my wife and I really would like to buy a house, but it seems impossible at this point.  We need a new car too!  Having one car and a family is NOT GOOD.

 

Thanks for your time!

 

tl;dr - My credit sucks, I'm about to pay off my car, what should I do next to continue repairs?


(May 8, 2013) Starting Score: EX: 543 - EQ: 627 - TU: 599
Current Score: EX: 543 - EQ: 627 - TU: 599
Goal Score: EX: 650 - EQ: 650 - TU: 650


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Established Contributor
InvincibleSummer3
Posts: 640
Registered: ‎11-20-2012
0

Re: Rebuilding my credit, not 100% sure what to do next. [wall of text]

As far as your collections: no, paying them does not restart the CTRP (credit reporting time period). I would suggest a PFD (Pay for delete), which is where you offer to pay in full and in return the collection agency agrees to remove. Some will and some won't, so it's a bit of a crap shoot.  If you're eventually planning to app for a mortgage you're going to need to pay these anyway.

 

Have you read this yet? If not, you should:  http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/Your-Guide-to-Credit-Scoring/m-p/718550#M1168...

 

The reason I say that is that I suspect that the $42.00 is still factoring into your utilization. Which means paying that one could give you a bit of a score boost. This will also show you how scores are calculated.

 

As far as your other questions: Installment loans don't have as big of an impact on your score as revolving (credit card) accounts do. So your first move should be to focus on the two cards you're paying down. If there is a way to lower your SL payments, that could free up some money to put toward your credit cards.  A secured card is also a great idea, and to be honest - Wells turned me down too and I have banked with them over a decade. Don't take it personally. Have you tried Cap One? They get a lot of heat sometimes, but I've had a relatively good experience with their secured card. There's an annual fee but it won't gouge you. The inquiry when you apply will cause a temporary score drop (as you've seen) but don't worry, it'll come back.

 

I don't think you're in terrible shape....hang in there. Let us know if you have questions.

Regular Contributor
txmomma26
Posts: 246
Registered: ‎02-27-2013
0

Re: Rebuilding my credit, not 100% sure what to do next. [wall of text]

Welcome!

 

My first thought is that once the car loan is paid off, you take that money and add it to the next thing on the list, in your case, CC1 to get it paid off within a couple months. Once CC1 is paid, you take the money from the car and CC1 and apply it to the current payment on CC2 until it's gone.

 

I would also call those 2 collection accounts and offer full payment in exchange for a deletion from your credit report (PFD).  If you've got the $72 today, do it now and be done with it.  If they don't or won't delete from your reports, the best thing to do is GW them to death until they cave and remove. Paying in full will not help your score, but will look better upon manual review (ex: car loan) than just unpaid debt.  It will not renew the SOL, as once it's paid in full, they have no reason to sue you for the debt.

 

As for the student loans, I know very little.  My only suggestion is to send GW letters for removal of the late payments and say that you've realized the error of your ways as a younger person and take full responsibility, as noted by your recent payment history.

Start: (2-26): EQ 602 (Myfico) TU 579 (Credit Karma) EX 634 FAKO
Current: (7-12): EQ 690(myfico) WalmartTU 696 EX 689 (lender 6-3)
1st Goal: 680 across the board - DONE June 2013!
2nd Goal: 725 across the board
New Contributor
ABuckNow
Posts: 107
Registered: ‎03-03-2013
0

Re: Rebuilding my credit, not 100% sure what to do next. [wall of text]

Don't pay off the car loan first - installment UTIL is basically irrelevant (I mean, keep making the minimums of course!)

Revolving UTIL is basically a third of your score.

Sounds like one CC is still open - pay that down ASAP. That should be your focus - get that UTIL down under 9% (multiply your CL by .09, that's what your balance should be at or below on the day your CC statement cuts)

Is the 2nd CC a charge-off?  Sent to collections?

If yes to both of those, the TL from the OC will read a balance of 0 so don't worry about UTIL on that.  Offer a PFD with the CA and/or OC.

Do you have copies of your CRs? If you can post specifics on how the 2nd CC is reporting we can help more.

 

New Member
Syphen
Posts: 9
Registered: ‎05-08-2013
0

Re: Rebuilding my credit, not 100% sure what to do next. [wall of text]

[ Edited ]

InvincibleSummer3 wrote:

As far as your collections: no, paying them does not restart the CTRP (credit reporting time period). I would suggest a PFD (Pay for delete), which is where you offer to pay in full and in return the collection agency agrees to remove. Some will and some won't, so it's a bit of a crap shoot.  If you're eventually planning to app for a mortgage you're going to need to pay these anyway.

 

Have you read this yet? If not, you should:  http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/Your-Guide-to-Credit-Scoring/m-p/718550#M1168...

 

The reason I say that is that I suspect that the $42.00 is still factoring into your utilization. Which means paying that one could give you a bit of a score boost. This will also show you how scores are calculated.

 

As far as your other questions: Installment loans don't have as big of an impact on your score as revolving (credit card) accounts do. So your first move should be to focus on the two cards you're paying down. If there is a way to lower your SL payments, that could free up some money to put toward your credit cards.  A secured card is also a great idea, and to be honest - Wells turned me down too and I have banked with them over a decade. Don't take it personally. Have you tried Cap One? They get a lot of heat sometimes, but I've had a relatively good experience with their secured card. There's an annual fee but it won't gouge you. The inquiry when you apply will cause a temporary score drop (as you've seen) but don't worry, it'll come back.

 

I don't think you're in terrible shape....hang in there. Let us know if you have questions.



Thanks for your reply and your words of encouragement.

 

I just paid the $42.00 collection.  They told me that I could call them back after 72 hours and request whatever it is I need to get it removed from my report (or at least have them stop reporting it).  I tried to pay the other one but, they put me on hold and my lunch hour ran out, will call again later today or tomorrow if they are closed.

 

I read over the link you gave and I can tell I'm going to need to bookmark that page and read it a few times, and keep using it for reference.  Thanks for that.

 

I will then start to focus fire on the credit cards, starting with the one that has the lower balance.  I'm also going to try to get a secured card again.  I have accounts with USAA as well, although I'm not sure if they even offer secured credit cards.  I'll try them first, if that's a no go, I'll look into Capital One, then some local places.  I'm right there with you I've had my Wells Fargo account for 11 years now I think.  That obviously means NOTHING to them and I didn't just figure that out with this latest application.  I don't know why I even use them anymore, probably just the hassle of switching banks.

 

Thanks again.


(May 8, 2013) Starting Score: EX: 543 - EQ: 627 - TU: 599
Current Score: EX: 543 - EQ: 627 - TU: 599
Goal Score: EX: 650 - EQ: 650 - TU: 650


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New Member
Syphen
Posts: 9
Registered: ‎05-08-2013
0

Re: Rebuilding my credit, not 100% sure what to do next. [wall of text]

[ Edited ]

txmomma26 wrote:

Welcome!

 

My first thought is that once the car loan is paid off, you take that money and add it to the next thing on the list, in your case, CC1 to get it paid off within a couple months. Once CC1 is paid, you take the money from the car and CC1 and apply it to the current payment on CC2 until it's gone.

 

I would also call those 2 collection accounts and offer full payment in exchange for a deletion from your credit report (PFD).  If you've got the $72 today, do it now and be done with it.  If they don't or won't delete from your reports, the best thing to do is GW them to death until they cave and remove. Paying in full will not help your score, but will look better upon manual review (ex: car loan) than just unpaid debt.  It will not renew the SOL, as once it's paid in full, they have no reason to sue you for the debt.

 

As for the student loans, I know very little.  My only suggestion is to send GW letters for removal of the late payments and say that you've realized the error of your ways as a younger person and take full responsibility, as noted by your recent payment history.



Thanks for the replyI'm glad to be here!

 

Yes I do plan to do what you mentioned and "snowball" my debt as I pay it off.  I did pay off the $42.00 collection today and will try to pay off the $30.00 one later or tomorrow.  If I can't get them off my report I'll take your advice and send GW's.  I will also send a GW to the student loan company and hope they are willing to help me out.

 

Thanks for your advice!


(May 8, 2013) Starting Score: EX: 543 - EQ: 627 - TU: 599
Current Score: EX: 543 - EQ: 627 - TU: 599
Goal Score: EX: 650 - EQ: 650 - TU: 650


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Frequent Contributor
Countingpennies
Posts: 465
Registered: ‎02-14-2013
0

Re: Rebuilding my credit, not 100% sure what to do next. [wall of text]

[ Edited ]
If you have a decent local CU, I would look into joining one now, and getting a secured card with them. Building a relationship may help when you are ready for an auto loan. I've heard going in person if possible, is very helpful in the approval process.

Are you a full member with USAA? Eligible for NFCU?
Contributor
samdubs
Posts: 80
Registered: ‎04-02-2013
0

Re: Rebuilding my credit, not 100% sure what to do next. [wall of text]

USAA does offer a secured card. I thought I would have to go that route myself but they approved me for $1000 AMEX card. I got my utilization to around 14% now and my credit score drastically improved by doing the exact same things that the other posters talked about. NFCU is awesome about helping you out with credit also. I did not hit them for a card until myfico was at 648 so I am not sure how low they go on approvals. Good luck!!

Established Contributor
InvincibleSummer3
Posts: 640
Registered: ‎11-20-2012
0

Re: Rebuilding my credit, not 100% sure what to do next. [wall of text]


Countingpennies wrote:
If you have a decent local CU, I would look into joining one now, and getting a secured card with them. Building a relationship may help when you are ready for an auto loan. I've heard going in person if possible, is very helpful in the approval process.

Are you a full member with USAA? Eligible for NFCU?

Totally agree on the NFCU thing....I'm a full member at USAA too but not eligible for NFCU. If you can get your foot in the door there, I'd jump on that.

New Member
Syphen
Posts: 9
Registered: ‎05-08-2013
0

Re: Rebuilding my credit, not 100% sure what to do next. [wall of text]

[ Edited ]

ABuckNow wrote:

Don't pay off the car loan first - installment UTIL is basically irrelevant (I mean, keep making the minimums of course!)

Revolving UTIL is basically a third of your score.

Sounds like one CC is still open - pay that down ASAP. That should be your focus - get that UTIL down under 9% (multiply your CL by .09, that's what your balance should be at or below on the day your CC statement cuts)

Is the 2nd CC a charge-off?  Sent to collections?

If yes to both of those, the TL from the OC will read a balance of 0 so don't worry about UTIL on that.  Offer a PFD with the CA and/or OC.

Do you have copies of your CRs? If you can post specifics on how the 2nd CC is reporting we can help more.

 



Thanks for the reply.

 

As far as the car payment goes I basically have the equivelant of one payment left so I might as well just get it done (owe $380ish normal payment is $340ish).

 

Regarding the 2nd CC, I'm not sure what a charge-off is, but I know it's not been sent to collections.  Wells Fargo still has the account, here is a screen shot of the report on it.

[IMG]http://i.imgur.com/zFdRbpC.png[/IMG]

 

Link in case image doesn't show up.

 

I hope this helps.  Any information is appreciated.

 

Thanks again.


(May 8, 2013) Starting Score: EX: 543 - EQ: 627 - TU: 599
Current Score: EX: 543 - EQ: 627 - TU: 599
Goal Score: EX: 650 - EQ: 650 - TU: 650


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