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The 400 Club. How do I build from the ashes?

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pennccrn
New Contributor

Re: The 400 Club. How do I build from the ashes?

Hi Iconic! Without sounding too trite, I'm going to reinterate what treasurekids has to say. Don't give up and don't get frustrated. There have been a number of great suggestions by our esteemed community here. I don't plan on reinventing the wheel. I do think you did the hardest thing, you checked your credit report and now are an informed consumer. That means your going to be smart consumer with regard to your future credit management.  A significant number of the population has no idea what's even on their credit report, and most of these people may be living (and spending beyond their means) without even realizing it. (Although, I'm sure its less now than what it was pre-2007). Here is my $.02:

 

1) Join a credit union (CU) or local community bank. Even if you don't get approved for a secured credit card, its a good idea to have a rapport with the credit union for the future. CU's love members who have a long history with them.  Unlike banks, credit unions are owned by their members, so if your a member you can actually go before the loan committee and plead your case. Having a face to match to the name makes the world of difference. I agree with most of the contributors here that getting a secured card by a small amount (say $500, or so) and eventually "graduates" to a coventional card (unsecured) is a good step. Be up front with them before you apply. Also, make sure that they report to the credit bureau if you have a secured card.

 

2) Become an Authorized User (AU). If you have a responsible friend or family member who has an excellent credit history, get them to add you as a AU. Don't let them give you the card, some of their good history will start to post to your report. Although, I'm unsure exactly how much.

 

3) Time heals all wounds. This goes double for FICO. Important point is FICO score is just your snapshot at one particular time, one part of the score will take into account if your paying your bills on time. Even though, negative (or as FICO calls it derrogatory) information stays on for seven years, the improvement in your score will become evident as soon as one year, and in two years there will be a significant increase. Yes, your derrogatory information will stay on there but it will have less effect over time.

 

4) FICO 481 = not all accounts being paid as agreed or charge offs are very recent (like just one or two months old) If you have a FICO in the 480s, I would assume that you still have some accounts that are not reporting as agreed. You get severely dinged if you have any accounts reporting as agreed. Try to settle these will your creditors. Beware, if you are dealing with debt collectors, always get a payoff amount IN WRITING, and pay only by money order. Not all, but some of these guys will take your checking account number off the bottom of your check and keep debiting your account, same goes for a credit or debit card.  Keep that written letter forever, until you die.

 

5) Charge off = income taxes. My apologies to add fuel to the fire here. Charge offs is money that the creditor didn't get repayment for, thus they can deduct it from their business taxes as a loss, and as a result THEY pay less tax. What does this mean for you? The money that is charged off may get reported to the IRS and you could be responsible for income taxes on that amount. A 1099-C (Cancellation of Debt) might be sent to you for filing on your taxes next year. I only mention that so you can do what you can to prepare for that situation. The reason is this, the company that didn't get paid means that you got income (at some point). I'm not a tax-person, so you should check with a CPA or someone important that handles that stuff.

 

6) Paying bills on time will be your friend. Paying bills on-time every month will be a significant factor in your credit score, that and credit utilization make up more than 1/3 of your score. So don't get discouraged, you'll get there!

 

Hope this helps, you'll make it don't worry. It will take some time, but just remember your credit score doesn't define the rest of your life. Its set up so that it can be improved! Hang in there!

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Starting Score: TU 620 EX 535 EQ 615
Current Score: TU 818 EX 815 EQ 807
Goal Score: 800


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Message 21 of 30
bahbahd
Established Contributor

Re: The 400 Club. How do I build from the ashes?

There is some strange encoding in the filename of the image source URL in your signature. It is strange cuz the filename renders correctly in the browser and it looks correct. Try this link http://ficoforums.myfico.com/html/assets/challenge.png

 

 

Message 22 of 30
bmblbg
Regular Contributor

Re: The 400 Club. How do I build from the ashes?


@Iconic_since1989 wrote:
Yes that is my plan however i don't think i have a chance to get a secured card yet with my score being 481. Im planning on trying to wrote some good will letters to try to bump my score up enough to get a secured credit card. I don't know what else I could do! The problem is i don't have any open account reporting anything to anyone right now. Thats the biggest issue. I thought by paying off my debt my score would increase but i guess thats not the case due to the charge off's.

Try the Open Sky Secured CC.  I have been pretty happy with it. And there's no HP for the application, which is great! Smiley Happy

Don't feel so bad.  I started with a 433 in September 2012, and now 2 of my 3 scores are above 600!

 

I got a bad-credit car loan in September- which is when I realized how terrible my score was!! I didn't start working on it until November, but once I did things happened pretty quickly for me.  I made some calls, wrote some GWs, and had some success.  In January I got a Capital One secured card (took the HP- figured it couldn't make my score much worse than it was!) and the Open Sky CC (yay to the no HP!!).  With just those and getting an old- and iincorrectly reported- CA account off my reports I've seen pretty significant gains.

 

Good luck to you!! Smiley Happy

Mortgage Scores:
11/26/2018 EQ: 542 EX: 610 TU: 548
8/30/2018 EQ: 571 EX: 504 TU: 533
7/30/2018: EQ: 598 EX: 591 TU: 608
4/5/2018 EQ: 543 EX: 522 TU: 467
Message 23 of 30
lorreann
New Visitor

Re: The 400 Club. How do I build from the ashes?

Hi! Don't ever let your self esteem be connected to your credit report! It sounds like you might have been dealing with people who bought the loan after it was charged off? If you have been paying them, then you need to request that they report it to the credit bureau as paid off and satisfied. Yes, it will still show up as charged off, but having it paid off will make a big difference when you apply for credit later. Your credit score will still begin to rise in response to current positive activity. It won't take 7 years. (And you can start to rebuild with a secured credit card if necessary) Also, it is possible to dispute details on the report that are inaccurate. Even if it is minor details, such as the amount, or the day it was opened. If the original owner of the loan that charged it off chooses not to respond to your dispute within 30 days then it will be dropped from yor report. Also, you might need to send a letter to all three credit bureaus disputing the balance if you don't notice it being reported as paid off within the next month. Even if the charge offs stay on your report for 7 years you will still be able to start rebuilding your credit now, and the fact that it's paid off will be a big plus in your favor.. You might consider seeing a credit counselor or take a class that many churches have on finances...such as Dave Ramsey or Crown financial Ministries. Not having credit isn't the most awful thing on the world. A large percentage of our country is in the same boat. For future reference I would be careful who you deal with over the phone, and make sure to clarify that they are the original lender. If they say they are a collection agency you definitely need to verify who you are dealing with, and never give out your check card or personal information over the phone. Make them send you something in writing, and if they don't want to do it then be very suspicious!!
Message 24 of 30
cgrang
New Visitor

Re: The 400 Club. How do I build from the ashes?

@sghosh5: Was that efective on any account, even the major lenders or just the collection agency itself? Is that something I can easily do within each credit bureau website?

Message 25 of 30
sghosh5
Valued Contributor

Re: The 400 Club. How do I build from the ashes?

There is no rule for that. You can dispute for collection agency or major lender accounts as well. All 2 CBs have that option in general. But it may or may not work depending on the lender's response or ability to repond within 30 days.




Shell FCU : 5K
Message 26 of 30
wjbsea
New Visitor

Re: The 400 Club. How do I build from the ashes?

All is not lost, you just have to have patience. My wife and I hired a credit consultant who came reccomended to us by a trusted associate and she helped clean up our mess. You might want to consider a similar route.

Message 27 of 30
VLGaffEsq
Regular Contributor

Re: The 400 Club. How do I build from the ashes?

I totally agree with applying for the "Open Sky" secured credit card (www.openskycc.com).  It reports to all 3 credit bureaus, there is NO credit check to obtain this credit card (so you get no hard pull inquiries on your credit report) and you can open up to a 5 K. line of credit if you have the cash.  I have had their credit card with a limit of $1,200 for over two years, and have been very pleased (my goal is to raise the limit to $2,000, as the credit bureaus like to see limits of over 2 K).  Good luck!

Message 28 of 30
Krizno
Member

Re: The 400 Club. How do I build from the ashes?

I have to say when reading this thread it is very inspirational. **bleep** luck on your quest. Great thread!!!
Message 29 of 30
vfree
Established Member

Re: The 400 Club. How do I build from the ashes?

Not sure how old this post is, but I feel the same way as you.  Sending you positive vibes.

Message 30 of 30
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