topic 21 years old & credit score has dropped over 150 points in Rebuilding Your Credit

21 years old & credit score has dropped over 150 points

Anonymous — Tue, 16 May 2017 13:03:10 GMT

Long story short; i lost my job in febuary; it came at a bad time; i had just gotten into the office space for a freelance buisness i was starting a few weeks before; so my monthly expenses essentialy doubled... with losing my job at a time i wasn't ready for i ended up in a rough situation & had to completly stop paying all 3 of my credit cards; along with using them almost to the max... after missing a payment; all 3 of them had pretty much gone over the limit & continued to as i was charged fees for beeing late/missing payments... also i desperatly tried to find loans to accept me so that i could stay afloat & also get the last few things i needed to make my freelance business happen so i could support myself again...

well i was denied every loan i applied for(adding a handfull of inquirys on my credit) ; the lease on the office fell through (made a deal to get out of it early) and 1 of my credit cards was closed by the bank for missing 3 months of payments, my 100% on time payments status also fell to about 75%...

Now, my real concern is how am i going to be able to dig myself out if this situation as far as getting my credit score back on track? It seems in todays world if you don't qualify for credit your opportunitys for alot of things (especially renting) are slim to none. The only thing on my credit that has continued to be paid throughout this is my car payment. My credit score has fallen to about 480; so i really need some tips on how i can fix this/how long it would take to get it back on track so my creditscore doesn't hold back opportunities in my life.

Re: 21 years old & credit score has dropped over 150 points

Anonymous — Tue, 16 May 2017 13:13:39 GMT

Call your lenders and ask for options to avoid charge-off. They will close the accounts but possibly help you with payment options.

Look for every possible side job, part time job and gig economy job you can do. Uber? Instacart? Work at the mall or Target on nights and weekends?

Do you have any assets you can sell that aren't necessary for living, like your TV, xbox, bike, etc?

What is your total debt balance and your minimum monthly total? Any chance of downsizing your apartment?

The first thing I would do is cancel ALL unnecessary utilities -- cable, internet at home, downgrade your cell phone service, etc. Close Netflix, Amazon Prime, Spotify, too.

Re: 21 years old & credit score has dropped over 150 points

Anonymous — Tue, 16 May 2017 13:22:30 GMT

I'm sorry you had to go through all that but I applaud you for trying to fix the situation.

A couple questions first.

1. How much do you owe on each CC? If you don't know try reaching out to the CC company to find out.

2. Have all 3 credit card accounts been sent to collections?If they are still with the original creditor see if you can do a payment plan through them, once the balance is paid off you can try to send a goodwill letter to see if they will remove the negative info on your CR. If they have been sent to collections reach out to the CA to see if they will do a PFD if you can or ask if they can start you on a payment plan.

3. As for your payment history you need to establish more on time payments, your car loan is helping but I would suggest getting another tradeline. You said you've been turned down for other loans but a lot of banks will offer secured loans, you just have to be able to give collateral. Start with a secured card from a credit union, they typically have lower rates for their secured cards. Discover, Capital 1, and Citi are also options for a secured card if you're looking for one from a big bank. Discover actually offers a rewards program with theirs which is pretty nice.

Re: 21 years old & credit score has dropped over 150 points

Anonymous — Tue, 16 May 2017 13:29:06 GMT

My main worry here is when it comes time to fix it; not necesarilly getting the money; i have a few big payouts coming up from the freelance stuff i still do; and i need to know the best things that are going to fix my credit when it comes to paying a bunch of it off; and how long it will possibly take.

Do i go try & deal with the credit card that was closed first because it may have been sent to a collection agency (haven't called to find out yet, just found out it was closed)? Or do i pay off the other 2 cards I have?... or Is paying off all at once really going to be my best option right now? Or should i gradually pay them off to help bring my on time payments % back up. Really i just want to be able to bring my score back up as quick as possible since my last employer kind of screwed me.

Re: 21 years old & credit score has dropped over 150 points

Anonymous — Tue, 16 May 2017 13:32:33 GMT

Call all the creditors today -- including the charge off. Most of these calls will go quickly, taking 10-20 minutes.

Explain the situation, tell them WHEN you will have money coming in, and ask for payment arrangements to prevent collection activity. Then stick to the payments.

If you won't have money coming in for 2 weeks, go sell assets. Just sell it all if it isn't necessary for breathing and eating and sleeping. When one of my businesses collapsed many years ago (went from $300,000 income a year to zero) I actually prevented default across all my accounts by calling in advance of being late and voluntarily asking to close the accounts and set up a payment arrangement until my income returned. I sold my extra car for cash and all of my household electronics and paid the minimum for 4 months until my income was up again -- and none of those banks ever put anything negative on my reports.

This is also a big lesson for a young entrepreneur: don't go into new business ventures without a strong savings to back you up. At least 6 months of expenses in savings will get you through 90% of business cycles.

Re: 21 years old & credit score has dropped over 150 points

Anonymous — Tue, 16 May 2017 13:44:29 GMT

I agree with ABC, try to establish an arrangement with your cc companies to prevent the accounts from going to collections. It's definitely worth it to just pay off the cards that are still open because at least you won't have a monthly bill to worry about. God forbid anything happen with your income but if the bill is already paid you won't have to worry about making minimum payments every month.

If your main goal is pulling up your score focus on the factors that are dragging it down. Late payments, overlimit on cards, delinquent accounts, high utilization.

I paid off an account I'd been carrying a balance on for almost a year and my score shot up 40 points, YMMV but it's definitely not a bad thing to do especially if utilization is one of the factors hurting your score.