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Member
Eterion
Posts: 12
Registered: ‎03-19-2011

Success Story! FICO 496 (ugh) to 656 in < 2 years.

Long story short, I cosigned for a family member who ended up having his car repossessed. At the time, I was laid off and wasn't able to cover his car payments in addition to the bills I already had piling up. Multiple accounts ended up in collections - but not before the 30, 60, 90, 180 day lates started tacking on. I went from perfectly good credit (my parents added me as a auth. user to their AMEX) as well as paying off my first car loan properly) to really bad credit. Even the subprime credit card lenders (you know the ones with the massive annual fees/maintenance fees) turned down my application.

 

First - there is no such thing as a easy shortcut to rebuilding your credit. Regardless of what anyone says - the ONLY way you can really rebuild your credit legitimately is by showing lenders you're responsible with your credit and that you can make your payments on time. I started out getting a secured credit card with a $1000 deposit. The higher the deposit, the better - esp. if you plan on using your card - since it gives you a higher "ceiling" before you hit that 30% utilization (magic number - don't spend more than this amount if you can handle it). At the same time, through my local credit union, I also managed to get a Computer Loan through them - which was a fixed-rate installment loan. The thing about installment loans is they do wonders for your credit. After nearly 2 years of proper payments - always pay more than the minimum on your cards and make sure you keep the total balance of ALL your cards no more than 30% of your total revolving credit line, I recently applied for a personal loan to consolidate all my high interest credit card balances - the report ranked me at 656. I still have two collection accounts but those are due to "fall off" within the next 4-6 months, so I imagine my score will be even higher.

 

For those with high revolving balances, it's a good idea to try to convert those into a installment loan type of deal. Even if you can't cover ALL your revolving balances with a loan, try to get the balances below that 30% magic marker. And keep your balances below that point/spend responsibly.

 

You know your credit is improving when you start getting pre-approved offers from reputable lenders. I nearly cried tears of joy when Citibank offered me a pre-approved application for their Diamond card (which looks snazzy). The credit limit was low ($1K) - but you gotta start somewhere. Plus they offered 0% APR for all of 2013. My credit union also pre-approved me for a auto loan (up to $30K) with a reasonable rate.

 

Be sure to check your credit report regularly - you can get 1 free report from each of the three major bureaus once a year. You can also get a free report if you apply for credit and get declined (which has not happened to me recently). I found a few discrepancies in my report where collections were trying to bill me for the same account TWICE - called them out on that, and the bureau ended up deleting it when the collection agency couldn't explain why BOTH showed up.

 

Remember, rebuilding your credit takes time. Once you get to the point where you're getting offers in the mail (yay) - don't accept every offer that comes to you. That's a quick way to kill your credit. Use your credit responsibly. Took me 2 years to get to a decent score - but results vary.

Valued Contributor
rckstrscott
Posts: 2,659
Registered: ‎04-25-2011

Re: Success Story! FICO 496 (ugh) to 656 in < 2 years.


Eterion wrote:

Long story short, I cosigned for a family member who ended up having his car repossessed. At the time, I was laid off and wasn't able to cover his car payments in addition to the bills I already had piling up. Multiple accounts ended up in collections - but not before the 30, 60, 90, 180 day lates started tacking on. I went from perfectly good credit (my parents added me as a auth. user to their AMEX) as well as paying off my first car loan properly) to really bad credit. Even the subprime credit card lenders (you know the ones with the massive annual fees/maintenance fees) turned down my application.

 

First - there is no such thing as a easy shortcut to rebuilding your credit. Regardless of what anyone says - the ONLY way you can really rebuild your credit legitimately is by showing lenders you're responsible with your credit and that you can make your payments on time. I started out getting a secured credit card with a $1000 deposit. The higher the deposit, the better - esp. if you plan on using your card - since it gives you a higher "ceiling" before you hit that 30% utilization (magic number - don't spend more than this amount if you can handle it). At the same time, through my local credit union, I also managed to get a Computer Loan through them - which was a fixed-rate installment loan. The thing about installment loans is they do wonders for your credit. After nearly 2 years of proper payments - always pay more than the minimum on your cards and make sure you keep the total balance of ALL your cards no more than 30% of your total revolving credit line, I recently applied for a personal loan to consolidate all my high interest credit card balances - the report ranked me at 656. I still have two collection accounts but those are due to "fall off" within the next 4-6 months, so I imagine my score will be even higher.

 

For those with high revolving balances, it's a good idea to try to convert those into a installment loan type of deal. Even if you can't cover ALL your revolving balances with a loan, try to get the balances below that 30% magic marker. And keep your balances below that point/spend responsibly.

 

You know your credit is improving when you start getting pre-approved offers from reputable lenders. I nearly cried tears of joy when Citibank offered me a pre-approved application for their Diamond card (which looks snazzy). The credit limit was low ($1K) - but you gotta start somewhere. Plus they offered 0% APR for all of 2013. My credit union also pre-approved me for a auto loan (up to $30K) with a reasonable rate.

 

Be sure to check your credit report regularly - you can get 1 free report from each of the three major bureaus once a year. You can also get a free report if you apply for credit and get declined (which has not happened to me recently). I found a few discrepancies in my report where collections were trying to bill me for the same account TWICE - called them out on that, and the bureau ended up deleting it when the collection agency couldn't explain why BOTH showed up.

 

Remember, rebuilding your credit takes time. Once you get to the point where you're getting offers in the mail (yay) - don't accept every offer that comes to you. That's a quick way to kill your credit. Use your credit responsibly. Took me 2 years to get to a decent score - but results vary.


I would say below 10 percent, not 30... 

 

You definitely not getting the most out of your FICO if you are carrying 30 percent UTIL

 

-scott

Starting FICO Score: 10/10: TU 498 | EQ: 502 Current FICO Score(lender pull): 05/12: TU: 722 | EQ: 712 | EX: 686
Collections Removed: Hunter Warfield, CBE Group, Merchants Credit Guide, EOS-CCA, Enhanced Recovery, Portfolio Recovery, UCB, American Collection Company, Medical Business Bureau, Jefferson Capital, Credit Portfolio Associates, FCO, LVNV, Convergent, Armor Systems
Other Negative Entries Removed:Plains Commerce CO, HSBC CO, 2008 Judgment Santander Reposession

Still Working On: Illinois Paid Tax Lien,
Positive Accounts:10/10: 0 | 07/12: 6 | Mortgage Closed 5/12, Macy's AMEX $3900, Citi/Home Depot $2000, Capital One Cash Rewards $1500, Capital One Secured $500, Credit One Bank $500. Total Utilization: 6%. AAoA: 1yr, 7mth. INQS: 8 TU, 8 EQ, 4 EX
Established Contributor
bahbahd
Posts: 729
Registered: ‎08-12-2011

Re: Success Story! FICO 496 (ugh) to 656 in < 2 years.

 

I would say below 10 percent, not 30... 

 

You definitely not getting the most out of your FICO if you are carrying 30 percent UTIL

 

-scott


 

I have been trying to keep my over all spending on any particular card below 30% before I make a payment. Sometimes this means multiple payments a month. This is before any statement cuts and balance reports. I don't want a manual review to see a "highest balance" on my CR report and to think that at one point I maxed out the card.

Valued Contributor
rckstrscott
Posts: 2,659
Registered: ‎04-25-2011

Re: Success Story! FICO 496 (ugh) to 656 in < 2 years.


bahbahd wrote:

 

I would say below 10 percent, not 30... 

 

You definitely not getting the most out of your FICO if you are carrying 30 percent UTIL

 

-scott


 

I have been trying to keep my over all spending on any particular card below 30% before I make a payment. Sometimes this means multiple payments a month. This is before any statement cuts and balance reports. I don't want a manual review to see a "highest balance" on my CR report and to think that at one point I maxed out the card.


Right.

 

Whatever you are comfortable with as far as carrying a balance..  it is always YMMV

 

I am merely stating, from a FICO standpoint, it has been widely accepted that below 10 percent TOTAL util is way to achieve the most points for your revolving utilization..

 

-scott

Starting FICO Score: 10/10: TU 498 | EQ: 502 Current FICO Score(lender pull): 05/12: TU: 722 | EQ: 712 | EX: 686
Collections Removed: Hunter Warfield, CBE Group, Merchants Credit Guide, EOS-CCA, Enhanced Recovery, Portfolio Recovery, UCB, American Collection Company, Medical Business Bureau, Jefferson Capital, Credit Portfolio Associates, FCO, LVNV, Convergent, Armor Systems
Other Negative Entries Removed:Plains Commerce CO, HSBC CO, 2008 Judgment Santander Reposession

Still Working On: Illinois Paid Tax Lien,
Positive Accounts:10/10: 0 | 07/12: 6 | Mortgage Closed 5/12, Macy's AMEX $3900, Citi/Home Depot $2000, Capital One Cash Rewards $1500, Capital One Secured $500, Credit One Bank $500. Total Utilization: 6%. AAoA: 1yr, 7mth. INQS: 8 TU, 8 EQ, 4 EX
Senior Contributor
fishbjc
Posts: 3,328
Registered: ‎11-30-2007

Re: Success Story! FICO 496 (ugh) to 656 in < 2 years.

Congratulations on a job well done! 


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