I don't really know how this whole thing works. I've always been really responsible and never had a single late payment on anything and for that reason I thought I would have a better score. But here are my problems, from what I understand: First, I was stupid and co-signed on two loans for an ex-friend who had three late payments, one was 120 days late. I was out of the country and wasn't notified until too late. Second, I took out a car loan three months ago for 8,000 (well, with all the interest if I only pay the minimum it will be 11,000 in the end - which is what shows on the report). Finally, I only have one credit card with a limit of 4,500, and I currently owe 3,500.
After reading a bit I guess it helps your score to have more open cards, but at the same time it hurts to open new accounts. So, my questions is, if my husband and I want to buy a house next year, what can we do to improve my score? Should I open some more accounts? Also - How much are those co-signed late payments hurting me? How much will me score improve when the card is paid down more?
Thank in advance for your comments!!
Hi, welcome to the forums!
Who was the lender on the loan with the lates? You can try asking for GW (goodwill), asking/ begging that they not report the lates, as you were a co-signer and were never notified that the loan was delinquent. Is it current now? Or paid off? Are you still on the hook for it?
Otherwise, that $3500 balance on a $4500 CC is HUGE. That needs to get paid down to $400 max, ideally less.
As AndySoCal said, look at one of your FICO score reports. (Not reports from TrueCredit, or freecreditreport-dot-com, etc. etc.) On a FICO score report, whether from Equifax or TransUnion, screen 2 shows the negative factors that are hurting your score. The first one listed hurts you the most, and then the rest in descending order.
I'm guessing that you'll see presence of a serious derogatory (the 120), high revolving utilization, and insufficient revolving credit, in one order or another. Start going after those before apping for new credit. You'll get much better deals.
If you haven't already, please read Understanding Your FICO ® Score and Credit Scoring 101 (at least the first post.)
These will give you the background knowledge you need to understand what you read here on the forums.
All very good advice. Two other tools that can help you learn are the Simulator and the Fico Score Estimator. If you purchase a report from MyFico then you can use the Simulator to experiment with possible scenarios, based on your report. With or without a report from here you can use the Estimator here to estimate your score based on information you provide. Neither is exact, but each is useful. The Simulator is somewhat more accurate because it is based on an actual report. The Estimator is less accurate, but it allows a wider range of scenarios than does the Simulator. Time spent fiddling around with both will teach you a lot about how FICO scoring works in your circumstances.