topic Re: I must admit I feel Stupid!! in Rebuilding Your Credit

I must admit I feel Stupid!!

lisal101370 — Sat, 06 Sep 2014 22:42:26 GMT

I have to admit I feel stupid. I have spent countless hours reading in these forums and I still feel like I don't know where to start. I guess that makes me stupid!?! I don't know, perhaps overwhelmed, not sure...a little of both I guess. Anyway, I apologize in advance for this being so long and thank you in advance if you read it all.

I have got myself in such a mess I don't know where to begin. A year I had an average credit score of about 670, well I have messed that up royally. I don't know what my scores are now but I know they are pitiful. They have been going down for about a 8 months. I pulled my Walmart score today and is said 514 which I know comes from Transunion, I'm sure the others are just as bad....

Long story short, my husband lost his job Dec. 2013 and I lost mine March 2014 so as you can imagine we have lived off credit, paid credit with credit, etc. well it all finally caught up with us. I tired to stay on top of all the minimum payments but got to the point where I could no longer do that.

Our scores have tanked. I just don't know what to do to get them back up and if it's even possible. I know to try to keep paying on time, but don't know if the damage that has already been done is irreversable other than waiting 7.5 years.

We have not had any collections (yet) or closed accounts but we have a couple 120 day, 90 day, 60 day and 30 days as of now. I've considered bankruptcy, just don't know what to do. We are both working again, but the damage that was done and living off credit has put us in the hole every month.

We have about $200,000.00 in total debt (cars, loans, credit cards). Have a total of approx 20-25 open accounts and out of that number only about 10-12 are paid as agreed and on time with no missed payments, the others have lates on them, some only 30 days and some as much as 120 days.

Any suggestions on how to fix this mess? Since thay have not gone to collections PFD I guess would not be an option. Is GW my only option? Any suggestions are greatly appreciated and sorry to be so long. Thank you for reading.

Re: I must admit I feel Stupid!!

myjourney — Sat, 06 Sep 2014 23:00:32 GMT

Welcome to the forum

Sounds like your only ave are GW's

The good news is by you not being in collections and i'm assuming your cards are still open you stand a good chance of success

Good luck and welcome again

Re: I must admit I feel Stupid!!

lisal101370 — Sat, 06 Sep 2014 23:04:35 GMT

Thank you for your reply. Yes, I was thinking GW is my only option. I haven't had any cards closed yet, but my credit limits have been decreased on several.Hoping thats not the tale-tale sign that they might close them once they are paid.

So if GW does not work then my only way is to wait 7.5 years, correct? I have read that 30-60 days after 2 years don't have as much impact but the 90-120 days will hurt me the entire time, is that correct?

Re: I must admit I feel Stupid!!

BrickTime — Sat, 06 Sep 2014 23:29:52 GMT

Hi, and welcome to the forum. I admire that you have taken the initiative to confront this by posting. There are two sides to your issue. One side is protecting/improving your credit score, and the other side is getting back on your feet financially and having enough cash flow to pay your bills and make minimum payments on your credit cards without adding to your debt. Are you at an income level to accomplish this?

If you are not, I would suggest selling your cars that you have loans on and even borrowing against a 401k in order to pay another loan off. I would ONLY do this if you are cash flow positive at the end of the month. If you are, getting rid of loans will allow you to throw money at your credit cards and then you can worry about your credit score.

Re: I must admit I feel Stupid!!

myjourney — Sat, 06 Sep 2014 23:37:02 GMT

@lisal101370 wrote:
Thank you for your reply. Yes, I was thinking GW is my only option. I haven't had any cards closed yet, but my credit limits have been decreased on several.Hoping thats not the tale-tale sign that they might close them once they are paid.

So if GW does not work then my only way is to wait 7.5 years, correct? I have read that 30-60 days after 2 years don't have as much impact but the 90-120 days will hurt me the entire time, is that correct?

Correct and I see you have done your research Bravo

Who are the lenders some may balance chase but I hope not?

Chase is known to and the tale-tale sign is each time a substantial amout is paid down the limit is then reduced again

Re: I must admit I feel Stupid!!

lisal101370 — Sun, 07 Sep 2014 02:39:05 GMT

Thank you for your reply Brick Time.

Yes we are on our feet somewhat and the income is sufficient to cover the minimums.

What I have been doing is paying down the smallest and then once it is paid off, apply that payment plus the minimum to the next smallest balance. My thoughts are that once I have several small accounts paid off then the minimum payments of say $30.00-$50.00 can be applied to the next ones in line. Hope that makes sense as I explained it.

I think we will be okay going forward to stay up to date on payments. I've caught up just about all the past due amounts on all the credit cards but two accounts...and hoping to have those 2 current in the next few weeks.

The thing that hurt us the worst were payday loans..we both took them out and paying them every two weeks has been a nightmare...trying to get out from them and still pay all the other bills. Seemed like a good option when we needed the money, but they are Expensive to pay back...sorry I'm going on and on.

Re: I must admit I feel Stupid!!

lisal101370 — Sun, 07 Sep 2014 02:44:05 GMT

Hi myjourney, thank you again for responding. I really appreciate the input. Several of the accounts are GE/Synchrony backed cards such as Walmart, JC Pennies, Rooms To Go, Capital One, Dress Barn and Navy Federal and yes, Chase is one of them too

Re: I must admit I feel Stupid!!

myjourney — Sun, 07 Sep 2014 02:52:12 GMT

@lisal101370 wrote:
Hi myjourney, thank you again for responding. I really appreciate the input. Several of the accounts are GE/Synchrony backed cards such as Walmart, JC Pennies, Rooms To Go, Capital One, Dress Barn and Navy Federal and yes, Chase is one of them too

Good luck I'll be pulling for you and let us know if you need any help

Re: I must admit I feel Stupid!!

BrickTime — Sun, 07 Sep 2014 08:32:48 GMT

You are doing great! You are doing the debt snowball and it is very effective as long as you aren't adding debt every month. If you can figure out a way to get your payday loans paid off, the rest will be easy. Time cures your credit score. If you continue doing what you are doing, you will soon have your credit score and finances back under control. There is no quick and easy fix, but once you get it taken care of you will be glad you dug in and got yourself out of thiis situation.

Re: I must admit I feel Stupid!!

StartingOver10 — Sun, 07 Sep 2014 15:37:26 GMT

@lisal101370 wrote:
Hi myjourney, thank you again for responding. I really appreciate the input. Several of the accounts are GE/Synchrony backed cards such as Walmart, JC Pennies, Rooms To Go, Capital One, Dress Barn and Navy Federal and yes, Chase is one of them too

lisal101370, it is possible to recover from this. It will take work, but you are on the right path now working the snowball method.

You mentioned that your debt is $200k

What is your gross household income? That will be the determining factor on the probablity of working out of your current debt problem.

You are doing the right thing with your snowball payment method. Check daveramsey.com for budgeting tips. Check your household for things you can sell and not miss to get a savings account started so you have resources without having to go to a payday loan type place.

One point of clarification: 'balance chase' is when a credit card company reduces your credit line after each payment so you don't have the ability to charge up the balance in the future. It causes a huge reduction in your credit score because your utility reads 100% or more (maxed out) because there is no available credit.

Don't worry. It is tough now. But as you pay down debt and good payment patterns again, the credit card companies will once again give you credit line increases and your score will increase. As has been said here many times: take care of your debt (as you know) and the credit score will take care of itself.

Right now the important part is you have new jobs. You can pay your bills. Get your savings established and repay as you are doing and you will recover. Good work so far.

Re: I must admit I feel Stupid!!

lisal101370 — Sun, 07 Sep 2014 18:00:03 GMT

Thank you Starting Over10 for your positive words. Our combined income is about $90,000.00. I have been saving all my loose change ( I know it's not much) but the last time I took it to cash it in it was right at about $60.00. We have eliminated the cable extras, cut out netflix, bought less expensive groceries, changed our cell phone plan to a lower one, stopped buying gifts for people (cards only for birthdays, new babies, etc.....I am a HUGE gift giver and tend to overspend on others) etc...some small changes.

As for the balance chase, I believe that is happening. I had $7600.00 credit limit from Rooms To Go last month, I logged in to pay this month and I was reduced to $1600.00 credit limit with a balance of $1576.00 so I guess they cut it down just enough to cover what I owe them.

Not as concerned with higher credit card limits in the future, more so with just the over all score better. We want to purchase a home, have VA eligibility, but with our scores it won't happen anytime soon. I hate that this happened and am afraid we are looking at 7.5 years before we can purchase a home.

Re: I must admit I feel Stupid!!

empiror22 — Sun, 07 Sep 2014 21:26:09 GMT

the other guys have given some good advice on your current issues, i personally would pay the accounts with the higher interest first (instead of the lowest balance, i think in the long run it will save you money).

But i will make a few comments about the VA home loan thing.

1st: VA guidelines say something like you should not have a missed payment in 2 years (however you can usually explain if over 1 year, depends on situation), no I MEAN NO MISSED Payements within 1 year. So fix the issues now and you could be in a VA Loan faster then you think.

2nd: Scores will increase over time, (with good payment history), Many lenders for VA loans have lower "score requirements" then other loan types ( I have of a company or two that will lend money to approx 580 credit score, again work on payments and GWs and you should be above the 580 or higher in a year maybe 2)

3rd: look in veterans united, i have heard good things about them with people whom have similiar issues

Re: I must admit I feel Stupid!!

lisal101370 — Sun, 07 Sep 2014 21:35:45 GMT

thank you empiror22 for the input...I hope that is the case and that we can get in a home sooner.

2 years is better than 7.5 if we can do that it would be Awesome. I plan on getting as much paid off as I can and then keeping a very low running amount on one card once they are paid off. My student loans will be years before I can pay them off as well as our car payments.

Hopefully, if everything is paid down and all payments on time and as agreed going forward we will qualify in a couple of years.

I'm so glad I posted here. I've been reading this board for months trying to absorb as much information as I can.

Thank you everyone for your advice and words of wisdom. It is very much appreciated.

Re: I must admit I feel Stupid!!

empiror22 — Sun, 07 Sep 2014 22:56:05 GMT

just to let you know, i got my info from a VA loan underwriter policy work book ( ie the ones that real underwriters use when doing VA loans). So keep up the good work and you'll fix your credit and have a home in no time.

Re: I must admit I feel Stupid!!

lisal101370 — Sun, 07 Sep 2014 23:28:14 GMT

thank you empiror22. Is there anywhere on line that I could find the guidelines you are referring to? I would love to see what all it says.

Also, in reagrds to VA loans do different lenders have different requirements or do they strictly follow VA guidelines?