Hello all as you can see by my post count I am new here, and to the world of understanding my credit score. I would like to purchase my first house in the next year to year and a half and I am looking for some advice on improving my credit score before then.
My TU score: 614 as of dec 24th
I am currently married and do not know my wife's score but assume it is lower than mine because of her granted credit. her situation:
Capitol one card opened in July (?) with a limit of $500
Store card opened in Dec with a limit of $400
Store card has a $0 balance Capitol one has almost a full balance, which i plan on completely paying off this month.
3 medical bills in collections one for $700 one for $300 and one for $400
2 medical bills not in collections one for $200 one for $400
WAMU card with CL of $4500 has $3900 used
BOA card with CL of $5500 has $4900 used
Citicard with CL of $1100 has $500 used
Store card with CL of $900 has $450 used (paying off in full next week)
I currently have the ability to pay about $400 - $500 a month to credit debt and I am looking for my best strategy to lower my amount of bills and improve my (and my wife's) credit score so that we can buy a house in the next year or so.
thank you for any help or advise in this matter.
Hi there and welcome to the forums! Since your wife has hit the 6 months mark on her Cap1 card, I would ask her to get a credit limit increase. And if she pays off the balance in full on the other Cap1 card, then she should expect to see a score jump. As for the medical collections, please refer to the HIPAA process: http://ficoforums.myfico.com/fico/board/message?board.id=rebuildingcredit&thread.id=27537&jump=true
Now for your credit. It seems to me that you have never been late on payments but the only thing thats bringing you down is your debt utilization on the cards. So basically right now, you are currently using 81% of your revolving credit. The main goal is to bring it down to less than 30% to see a nice jump. But while your paying down the balances, you will probably expect to gain a few points here and there.
My strategy for you would be pay off your store card and citi off while still making your more than minimum payents to BOA and WAMU. At the same time, I would call WAMU and BOA and see if you can get an interest rate reduction. I'm assuming those 2 cards right now may be at a 15-21%APR? During your process of paying down the 2 cards, I would then request a credit limit increase every 3-4 months. This way, your debt utiliztion will be lowered, and at the same time you might snag another few points or so.
You might also want to go through a budget and cut out unnecessary expenses that you can use to pay down the bills. But whatever you do, please do not take out money from either your savings, 401K, or IRA ..if you have one. If you can stay disiciplined, by the end of this year, your utilization (with the credit limit increases and budgeting) should be at around 35-40%..maybe less. By then, you should be in the higher 600 or low 700's. While your paying down your balance, just always make sure to have a flawless payment history. I also recommend buying a pack of gum on your citi card every 3 months and PIF so you can maintain activity on the card. If you can maintain activity, then again...ask for a credit limit increase. Hope that helps and good luck! You should be in the 700's soon!
For the CC debt, having it at or below 9% is optimal. Pay down the one with the highest interest first, then take the money used for that one and pay down the next high interest one. Continue doing that until they are all paid.
For the medical collections, look up the HIPPA process here and follow it exactly as it says.
The medical not in collections, make arrangements with the OC to get them paid so they do not go to collections.
If you can pay the two medical debts that are not in collections yet, I would do that so that it keeps them from going to collections.
As mentioned, use the HIPAA process(see link in signature) for the other medical debts if you can PIF. If you can't PIF yet, you'll have to wait.
ETA: Guiness is a faster typer than I am.
Broc, to hear that the 700's is even within my reach sounds delightful! That is my goal as I hear that "good credit" really starts in the 7's.
Unfortunately however my wife actually went overlimit on her cap1 card early on in having it. I may still ask for an increase on it as the worst they can say is no.
Her store card should not be a problem and I plan on having her use it once every 3 months or so and paying it right off to keep the account open. (once our debt is cleared I will probably do same with all our cards revolving through them in order and paying them off right away)
As for my cards my intrest rate is actually very low 9.99% on the WAMU and 12.99% on the BOA. I will still call both of them and ask for a rate reduction and a credit limit increase as both would improve my situation. Would it be a good idea to ask for those things seperately or is it ok to ask for both in one phone call?
As for my other financial obligations, they have been pretty much minimalized as much as possible. I even use the twisty style light bulbs to keep my electricty bill as low as possible My 401k and IRA are currently untouched and will stay that way, however I do not have any real savings outside of that, something I know I need to work on. I know I have the decipline to stick to this because it is very important to me, all of my credit cards are locked in a safe so theyre not just calling to me from my wallet.
Thanks again for the support Broc, ill be sure to keep you posted on my progress
Guiness, sidewinder you both type faster than I do.
I will be looking into the HIPAA process in the near future when I can PIF on those accounts and will definately focus on keeping the other two from ever entering collections in the first place, even if I have to start with small payments. Question tho after following the HIPAA guidelines are these items removed from my wife's credit report? Is it worth it to us to pay these off before the credit cards balances? Keep in mind my current goal is a better score in one year, and I will only just be able to pay off most of my debt in that time frame if I am going to save for a down payment on a house.
ok, so a small suprise after looking at my three credit reports (not scores) most of my closed accounts are in my negative side I assume there is nothing that can be done about this!?
Also both my wife and I have some older collection accounts listed in our reports. Since I hear these stay on your credit report for seven or more years is there any benefit to paying them off?? Should I hurry and pay them off as fast as I can or for my short term goal of buying a house in one year be better acheived by leaving them unpaid and focusing on my revolving credit and saving what extra money I have?
Do you still have an unpaid balance on the closed accounts or has it been satisfactorily paid? One thing you could do is see if you can have the accounts reopened.
Threes not really a benefit unless you can arrange a pay for delete with the CA. Having a Paid status compared to an Unpaid is pretty much just the same when it comes to the scoring model. However its a little different with a manual review when the mortgage officer is going through. But I think in your best interest, a PFD would be nice. Since its an old collection account, is it out of SOL?