Repairing terrible credit profile

[Anonymous]

Hi.  I was turned down yesterday by my credit union for an automobile loan for a 2006 Subaru.  I was shocked to find out that my "beacon" i.e., FICO score (Equifax) is only 472.  I have had my house for 5 1/2 years, three delinquent payments (30 days each) 2 years ago.  I was unemployed for well over a year, and then underemployed for about two years, before becoming employed at a salary (in Spokane, WA) similar to one I earned in 1993 in California.  The mortgage price is lower, but everything else is the same price.  I also have two "satisfied" judgments from Capital One and a local collection agency on a speeding ticket from 2005.  I have no open credit card accounts, and make around $27,000 annually.  How do I improve my credit score with this salary and with little or no previous skills in mitigating this damage?  I am willing to do almost anything (secured credit card) and plopped $100 into my credit union account today, with intentions to put around $100 a month into it for the next 12 months.  I also have a 401K account through my employer, but not employer-contributing.  With the current credit crisis, is it wiser to move it to an IRA in 2009, keep it where it is, or put it into pure savings (no deferred compensation) in order to save for a car?

[Anonymous]

Send GW letters for the lates.

Is the collection on the speeding ticket paid or unpaid? If paid, send GW letter for removal. If unpaid and you can PIF, I would DV then PFD.

How old are the judgments? Those remain for 7 years from filing date.

Do you have any CC reporting at all?

It might be beneficial to your score to add a few, even if secured. A lot of people recommend the BoA secured card.

[Anonymous]

"I have no open credit card accounts"

This may be why.  "Can't have a credit report with no credit to report."  That's what we were told.   

My DH has 5 repos.   I gave him AU on one of my cards, and opened four other lines of credit at the same time.  It's been almost two years since we opened those cards for him and his credit score is currently 619 and improving every month it's paid on time with low util.  Before we opened the credit cards his score was around 500.

If you remove a collection account from your CR that's worth lots of pts. 

Edit:  His credit would be much better than mine if we actually started paying off or negotiating his outstanding debt but it's all cars.     Mine were all credit cards with small amounts. 

Message Edited by shawtycat on 11-18-2008 05:55 PM

[Anonymous]

---

shawtycat wrote:

If you remove a collection account from your CR that's worth lots of pts. 

---

Not always. It really depends on the situation.

If it is a newly added collection, getting it removed could gain you some points.

If it is your only collection, you'll likely see some points.

If it isn't your only collection and fairly old, don't expect much.