This is long...

[Anonymous]

Hi,

Long time lurker, first or second time posting.

I went through some life altering financial turmoil over the past 7 years or so. I had pretty good credit... upper 600s to 700s. I lost my business about 6 1/2 - 7 years ago, a few years before the whole Wall Street meltdown we all know and love so well. I couldn't keep my head above water. I put having food on my table and a roof over my head at the forefront of my priorities. Credit cards were dead last. 

Needless to say, I stopped paying on them. I could have filed bankruptcy... just before the bankruptcy laws changed. I chose a different path. I chose not to pay any of my creditors back. All of them. I'm not now finally putting my feet on solid financial ground, slowly. All told, I was/am about $69,000 in the hole.

A few of my delinquent accts have already fallen off my CBRs. In fact, a large one, $30k is scheduled to drop this month. By the end of the year, I'll just two accounts left on my CBR, a Sears acct (that I'm considering settling/requesting removal) and a Citibank acct that will drop off in a year. The Sears won't drop off until 2014. I have a few smaller accounts including one with my credit union for a bounced check that is still on Cheksystems, 5 years later. I'm going this week to pay them on a weekly schedule. Hopefully they won't laugh at me this time.

I pull my CBR at least once a year. I didn't all of last year (out of laziness essentially), but pulled it last month. I didn't buy my FICOs, but as of March 2010, they were around 550 (higher than my girlfriend's at the time who paid everything on time except her car note and student loans a few times).

Now, my question is, as things start falling off should I start opening accounts like department stores cards, gas cards? Should I go to my Wells Fargo branch and get a secured credit card? Is it difficult to get a Macy's card? I once had a Strawbridges (Macy's bought them out) years ago when I had no credit at all. My father opened up gas cards (Citgo and Esso) under my SS# when I was born. They still come up on my CBR, but the cards haven't been used in 10+ years.

Thoughts? Insight?

Thanks!

[Anonymous]

PS. Years ago, on the road to building my credit I went to a local CitiFinancial office and applied for $1000 loan. The interested was 22%-ish then. I've heard it's 39% now, but not built in, so I won't be paying $1390 back if I pay off sooner rather than later. Does CitiFinancial reflect well on your FICO now?

[Anonymous]

Howdy Bob, good to have you here.

The rebuilding will still be tedious at this point, the name of the game will become AAoA I believe. You're basically starting from scratch (except for the collections). There are quite a few threads at the top of this forum that have good info, a lot of which you probably already know.

As for which accounts to open first, that's subject to debate. I'd personally recommend a starter CC (Cap1 for example), or a secured one if necessary. If you happen to have one or two good auto loans on your credit, buying a car is also not a horrible idea (your auto-adjusted FICOs will be higher). Obviously, if you don't, you can't go this route except with a very sub-prime auto lender, who will charge 15-20%+ APR. Still can be worth it, especially if you can make lots of early payments.

Starting with $1000 personal loan (or a smilar "cash now" offer) is probably not ideal, because it's really just a maxed out credit card, right? It can work, but I'd consider secured cards before the personal loan route. Others may disagree.

All in all, I'd keep poking around here. It's done wonders for me in the last year and a half or so.

[Anonymous]

Thanks cassembler. I just applied for an Orchard card shortly after posting this. I logged in to check the status. Seems as though I was already turned down. So be it. It's an uphill battle and I've just begun. A secured CC may be the way to go.

I've never had an auto loan. I already know from a friend in the industry that I should expect to pay nothing less than 22% APR. My car is older, but pretty solid. I'll just keep putting money into it and keep it going for another 5 years until I'm well out of the subprime range.

[Anonymous]

Was it a secured Orchard? You could try calling to recon, not sure how successful you'll be. A human has the ability to interpret what's in the report beyond the score, so you may have success there. I'd be real picky about applying in general though, to keep inquiries down.

However, the Checksystem piece might be holding you back as well. I'm not familiar with how lenders look at it, but I know banks will lock the doors when they see this comming.

Again, keep chugging through it. Luck has little to do with it, it's all about making the "correct" choices, even if they suck.

[atarvuzdar]

Hi there!

I would suggest waiting for that $30k bomb to fall off your reports this/next month. Once it does, if you have a local credit union you can go and have a chat with them about opening a secured credit card. I also agree that you can try to recon the Orchard card and ask them to give you a secured card since you already applied and got the inquiry. If you can get a CC and keep it in good standing for a year (don't let more than 9% of the balance report each month) then that should help your scores. Right around the time it "matures" (a year of good CC use looks great on a report) you should see one of your other "baddies" fall off. Rebuilding is a marathon, not a sprint, unfortunately. But once you set those goals and get the ball rolling it's amazing how much better about yourself you will feel just knowing you're making strides to get back to where you once were. And remember that even if you can't seem to get anything going right now, time will do wonders for helping that credit report look a little cleaner. As things fall off it will get easier. Honestly, you've been through the most difficult part of your rebuilding already just by allowing a bunch of the bad stuff to disappear from the report.

Lastly, good luck!

[LisaPA]

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@Anonymous wrote:

Starting with $1000 personal loan (or a smilar "cash now" offer) is probably not ideal, because it's really just a maxed out credit card, right? It can work, but I'd consider secured cards before the personal loan route. Others may disagree.

All in all, I'd keep poking around here. It's done wonders for me in the last year and a half or so.

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A personal loan is not viewed as a credit card; it is viewed as a loan. However, FICO does not weigh loans as heavily, so a loan will do you less good than a credit card. Credit is 35% of the score - when I didn't have CCs for several years and then got a Cap1 card, my score jumped around 60 points. I only had 1 charge off and several cards with 120 lates, rather than the amount of debt you're discussing, but a single card really helped. I already had student loans and a paid off auto loan, which had very little impact on my crappy score.

If you can swing it, get a secured card - go to any bank or credit union you have a good relationship with and see what they can do.