topic Re: Need help determining next steps in Rebuilding Your Credit

Need help determining next steps

LJ555 — Fri, 19 Jan 2018 15:56:37 GMT

Hello everyone - I've lurked here on and off for years, and this is my first post. Bear with me - I'll try to be as concise as possible but that's not really my strength. There are goals I have, things I want to do, things I NEED to do, and things I know I SHOULD do. It can become a confusing mess trying to sort all of that out. With that said, here are the basic facts:

EX - 627, EQ - 636, TR - 596. Note that I've recently had about a 20pt decrease due to utilization, more info on that below.

I have three open cards.

Cap1 Sec Plat: $300 Limit (oldest card, opened 2013) / $0 balance

Cap1 QS (just upgraded from QS1 as of yesterday): (opened 10/16) $4K Limit / $3600 balance (note: pending $300 pmt for 02/02) -- emergency jumped util on this from 30% to current

-started at $1000 limit, auto CLI after 5 months to $4K - no auto CLIs since then nor have I requested any

Chase Amazon Visa: (opened 05/17) $500 Limit / $400 balance (note: pending $200 pmt for 02/02)

Credit profile:

*2 open student loans for total balance of $2415

*1 open mortgage for total balance of $160,425 (note: mortgage payments split 50/50 with fiance who is also on loan)

*most recent late payment on any account is 1 year 6 months ago.

*all open accounts are current

*negative $3965 from 1999, college balance charge off

*1 collection, 2013 $2551 - hospital bill

*1 collection, 2016 - paid off, no balance showed - physical therapy. But still shows on report?

*3 hard inquiries, most recent 05/17 when I opened Amazon card

No savings to speak of, but I'm working on it. Goal is to have at least 1 month salary saved in next 3 months.

Solid employment history - 12 years at current job. However, looking for new job with higher salary. Hence, questions about timing for next steps.

Related to potential new job: need new vehicle, laptop, phone. Current phone & computer paid for by my company, so will need my own for job search (have a few solid leads). Need reliable & fairly newish vehicle (shopping used) for new position. Haven't had car payment in 7 years, been driving beater vehicle since paying that off.

So. I have been working on rebuilding my credit for last few years. Two years ago, scores in mid-500s. Getting there, but still have a way to go to join the 700 club. Feeling good about my progress, but at a point where I'm not sure what I should do next. I desperately need a newer vehicle, shopping used in the <$20K range. Pre-approved for >$37K through Cap1. Not in huge hurry, could wait a few months on this purchase if necessary.

Things I want:

*New CC with higher limit (Best Buy Visa? Could get computer as 1st purchase... ? Discover? Other?)

*CLI on existing Cap1 QS

*Vehicle

Ran through some pre-approval sites yesterday, but forgot I had a freeze on my credit so had to unlock and now have to wait another week before going through again.

My questions are as follows:

Should I ask for CLI on existing card after next payment is posted, or apply for new card with hopefully higher SL first? How long after an upgrade should you wait before requesting CLI?

Perhaps wait for either of those options until I make more payments? I'm currently making payments every two weeks on payday for both cards with balances so I can get them down more quickly. Mostly $200-$300 each time.

Should I cancel oldest secured card? I'm not using it.

Should I ensure I get new vehicle BEFORE leaving current job, for the advantage of having solid employment history/salary? Or wait unti I get new job to see what financial situation is like? Very likely to have sales job (not what I do now) where decent vehicle will be critical to job performance/getting hired. I'm not in a huge rush to find new job but at the same time, I have a feeling my company isn't doing well and I'd like to get off the ship before it sinks. Currently getting paid about half of what my position SHOULD be paid given current location/experience/education so I'm confident next job will be significantly more lucrative.

Another potential factor - engaged to be married. Hope to get that done this year. We were gifted a little money for that though, so don't expect to accrue debt for wedding.

We may re-finance the house this year - haven't decided.

Sorry for such a long post, I just want to make sure I've given all the information I can. I want to know what the very next thing I should do that will give best shot of increasing scores quickly.

Thanks so much!

Re: Need help determining next steps

LJ555 — Fri, 19 Jan 2018 20:23:04 GMT

Maybe this is a case of too much information?

Re: Need help determining next steps

LJ555 — Fri, 19 Jan 2018 22:00:42 GMT

Buehller?

Re: Need help determining next steps

Anonymous — Sun, 21 Jan 2018 04:42:24 GMT

Hi LJ555, this is my first post as well after lurking for many years. I'm in the process of rebuilding at the moment as well.

You've done a great job so far rebuilding your credit over the past two years...Great job! Keep it up, you don't want to lose your progress! So let's see if I can help. It's good you've come to the forum for advice on next steps first! If I were in your shoes, I would write down all of my financial and credit goals, that helps keep you on track and allows you to create a plan to reach those goals. Before you apply for anything, I would take a few months to stablize and get a few things together. For example, I would try to save at least two months of expenses prior to taking on a car loan, and I would try to pay Quicksilver down to under 30% before I apply for another credit card. This would be my plan if I were you:

1. Save at least two months of expenses (anything can happen at anytime, you want to have a safety net, even two month's of savings can prevent you from missing payments and ruining the credit progress you've worked for)

2. Pay Quicksilver down to 28.9% or less and let it report. (Lenders consider over 80% utilization to be maxed out, which could be considered derogatory. As you saw, this can lower your score, and if you are approved for a credit card, cause you to have low SLs)

3. Request soft pull CLI on Quicksilver

4. Request CLI on Amazon Chase (Only if soft pull)

5. Clean up reports a little. I would dispute the student loan from 1999. Is the DOFD over years? If so, I would have the bureaus remove it as they aren't allowed to report it. I would also dispute the paid off physical therapy collection. If that doesn't work, which it should I would try sending a goodwill letter. I would try to offer a PFD for 30% with the hospital bill to have that collection removed. Finally, I would send goodwill letters for my past late payments. Those could still be holding your scores down. I know this is tedious and time consuming, but this extra step will put you in the best postion possible for your future credit approvals and increaes.

5. Check Discover Prequalifier and see if I'm pre-approved for Discover it. If so, apply for Discover it through the pre-qualifier (It's a soft pull)

6. Garden. You could apply for another credit card at this point, but I would garden for at least 6 months to raise my scores with the AZEO(All Zero Except One) method.

7. Apply. At this point I think you'd be ready for a more prime card of you choice. AMEX has been approving apps with similar profiles as yourself.

If I were you, I wouldn't get a new car until you start the new job and see how it plays out. As long as your secured card doens't have an annual fee I'd keep it, if so I'd cancel it before the next fee is charged.

I really think you just need to be patient and play the waiting game. I can really see your score dramatically improving if you remain consistent, but I can also see you falling into a position where you can cause your score to drop due to not having an emergency fund. Good Luck! Hope I made sense and I hope I helped!

Re: Need help determining next steps

LJ555 — Mon, 22 Jan 2018 19:10:42 GMT

Thank you for your reply! A few questions...

How do I know if a company does a soft or a hard pull when requesting a CLI?

Also to clarify, I should get my utilization down BEFORE requesting the CLI correct? I know that might seem like a dumb question because the answer seems obvious but I'm pretty new to the whole "actually actively trying to improve things" game.

Also what is the best way to go about cleaning up those items on my credit report? I'm not really sure how to dispute something. I did call the collection folks about the PT account several times and they keep telling me it's removed. Should I go back to the orignal PT company and see if they can help?

And last... what exactly is a goodwill letter?

I can be pretty patient and I'm not in a SUPER hurry to quit my job - after all I've been here for a long time and I'm a manager so I feel stable, but it's just not the best position for me at this time and they can't afford to pay me what I deserve and even what is normal for my area. I'm exploring all of my options there for now. I think the savings will be the hardest part. There is always something to pay!! But I'm going to certainly try a little harder to sock some cash away each paycheck. Maybe I should stop making CC payments each payday and just do a monthly payment.

**ETA: I've searched here about goodwill letters. Now that I understand what exactly they are (and I read the "saturation method" thread) I just need to figure out exactly what to write!

Also, any other helpful advice would be greatly appreciated. I just feel kind of... stalled out.

Re: Need help determining next steps

Anonymous — Tue, 23 Jan 2018 05:15:40 GMT

-You can call the credit card company and request a CLI---at that time you can ask them whether it's a hard or a soft pull.

-Yes, you should get your utilization down prior to asking for a CLI. This ensures that you receive the maximum CLI you're eligible. For example, and this is purely hypothetical, if you request a CLI while you're using 89% of your credit limits, you may receive an increase of $1000. If you request one while your utilization is below 30%, you may receive an increase of $5,000. It is possible for you to receive a good increase while your utilization is high, but based on your profile I think a lower UTIL % would help a lot.

-As far as cleaning up your credit, I would first do a debt validation letter to the collection agencies, and if the debt is truly validated (they provide a contract, something with your signture, etc.), I would send a Pay for Delete letter offering a percentage of what's owed if they delete the collection from your report.

-Rebuilding is a marathon, not a sprint. If it's hard for you to put away money now, having higher credit limits might land you hot water without discipline. I would focus on budgeting and saving first. If you don't have a budget, increased limits will inevitably lead to more debt. Keep paying down your credit cards, and save as much as you can when you can. Look for things you can cut out (there's always something).

Re: Need help determining next steps

LJ555 — Wed, 24 Jan 2018 15:53:56 GMT

Thanks... I will look into the debt validation letter plan. I assume I'd only do that for the 1 open collection? And somehow I need to find out why the other collection is still showing even though it was paid a year ago.

I have discussed some of this with my fiance and have decided on a few things. I really felt like I needed a new phone and laptop which are fairly large expenses, only because ethically it feels weird to have potential new employers contact me on my current company phone. But I decided for now not to worry about that and not make any new purchases at this time. I've even paused the job search - actively at least. This way I can just keep driving my current vehicle for a while. I'm going to give it another 3 months then reevaluate.

I'm not really too worried about debt getting too out of hand with a CLI - I really only want it for the purpose of increasing my available credit and maintaining a lower util%. The only reason I'm at such a high utilization right now is due to an emergency and thank goodness I had that $4000 limit at that time. Prior to that, my total util was less than 30% for the whole time I had these last two cards. I have learned some hard lessons over the years so I'm not a frivolous spender. I don't go shopping, I don't buy new clothes or electronics or anything really. My biggest weakness financially is probably food. I don't look at prices at the store, and we love to cook a lot and don't skimp on high quality ingredients - though we rarely eat out. So I spend a lot on groceries - that's probably where we need to cut back and we decided to buckle down there and are saving all of our receipts and using coupons, comparing prices - all of those things I don't currently do. I just say "oh that looks good" and toss it in the buggy. $80 leg of lamb? Suuuuure! My average spending on groceries each month for the 2 of us is about $500 - that's just MY expenses, not his. I expect he's about half of that since I do most of the grocery shopping. I'm really not sure what is normal but I have a feeling that's pretty high for just two people.

So yeah. I'm going to keep working on paying off my two cards and building some savings, then in 3 months see where I am and if I need to make different choices. Then re-visit the job search, the vehicle, etc. I'm going to need a new vehicle at some point for sure - not sure how much longer this will last with almost 300,000 miles on it but I guess we'll see.

Still wondering if I should cancel my old secured card with low limit?

**ETA: Got a new savings account setup with a direct transfer every payday.

Re: Need help determining next steps

Anonymous — Wed, 24 Jan 2018 14:42:59 GMT

First and foremost, BUDGET.

You need to prioritize savings since your utilization is high due to relying on a credit card for emergencies.

Also, be careful tossing around the word need. i.e. you can go to the library and use a computer for free for a job search. (sounds like you're already figuring this one out.) I also think you can get a Google Voice phone # for free.

Start putting what you would spend on a car payment in a separate savings account (this is not the emergency fund I mentioned above) and get every mile out of your current car that you can. I see cars with crazy mileage all the time. You'll likely have cash to buy a nice reliable used car for $5k before your current car dies.

Once the above is all in motion, tackle the debt.

Re: Need help determining next steps

LJ555 — Wed, 24 Jan 2018 14:55:29 GMT

So for the Physical Therapy collection. It's listed under the Collection agency, and of course also lists the original creditor. It was paid in January 2017. So - do I dispute with the agency or the OC? Is this a PFD situation or a GW letter? Just not sure who to contact to get this removed.

Re: Need help determining next steps

LJ555 — Wed, 24 Jan 2018 15:55:22 GMT

Bear with me... Ok for the 1999 College loan. It says opened 1999. No payment history whatsoever. The account status is listed as "closed, charge off". But then it says:

Status Updated Nov 1, 2016

Balance -

Balance Updated Dec 30, 2016

Original Balance $3,965

So even though it has been closed/charged off - and has been for years, what exactly does a "balance update" and "status update" entail? Why does it go from 1999 to Dec 2016, with nothing in between? And why is the balance line blank? What makes the status updated, and is this a PFD situation? If they can't report it after 7 years, then why is it there? I have no idea where I can come up with that much money to satisfy that debt right now, so I feel like this one will stick around for a while. I'm a little confused about this one.

Re: Need help determining next steps

thornback — Wed, 24 Jan 2018 16:31:14 GMT

@LJ555:

When was the date of first delinquency (first 30 day non-payment period)? Negative items remain on your report for 7 years + 180 days from the date of first delinquency, not account open date.

Accounts that are charged off / closed may update at anytime, so long as they haven't sold the debt.

You said the original balance line item shows the balance, but the Balance line item is blank - it's possible the original creditor sold the debt in 2016 and instead of showing "0" for that line item, it's blank.

Find out the date of first delinquency so you can determine when it is due to drop off, and your next steps. You may have to get a paper copy if your report to get this info if it does not appear on your online report. You can also find out the drop off date by calling the credit bureaus.

If the debt is still within the statute of limitations for collection, leave it alone since you cannot afford to pay right now.

Pay for Delete will only work if you can manage payment in full.

You can ask Transunion for an early exclusion / delete up to 6 months before the drop off date; Experian is beteeen 1-3 months; Equifax is 1 month.

Re: Need help determining next steps

LJ555 — Wed, 24 Jan 2018 19:39:20 GMT

Hmm.. ok. Pretty sure DOFD was in 2000 IIRC. I would think after 18 years it would be gone. BUT I just tried to log in to my Experian account (where I'm getting most of this info currently) and botched my login so now I'm locked out for an unspecified window of time. But I'll check that as soon as I can.

So in between checking here for responses and browsing some of the other threads (ABCD's threads are super helpful) I've done the following:

*Taken advantage of my bank's free tools & services and set up a budget plan, adjusting my goals for certain categories like food, etc. *Reviewed my spending reports (very enlightening).

*Set up a new savings account with a direct deposit each payday, and a target savings amount set for July 2018 - I figured 6 months was a good short-term savings goal?

*Obtained contact info for the three late pay reports from several years ago - 2 x 30D and 1 x 90D - plan to get started with GW letters

*Obtained contact info for the paid collection on the physical therapy charge - will call both CA and OC to see about getting this removed

*Almost forgot - set up autopays on all 3 cards even though I don't use the one secured card with low limit and I haven't had any late payments.

I also plan to not be a procrastinator this year and file my taxes ASAP. I would like to use my refund to work on paying some of this stuff off. It won't be much but it will help.

I think I'm on the right track?

Re: Need help determining next steps

LJ555 — Wed, 24 Jan 2018 21:50:34 GMT

Me again... talking to myself.

I logged into the NSLDS to see if that loan was listed. It is NOT. Therefore, this negative chargeoff from 1999 is NOT a federal loan. The only two listed in the database are on my CR as being paid and both are current with no lates.

That said. If it's not a federal loan (not Perkins or... the other one without exclusion), then it should have fallen off my report years ago correct?

Re: Need help determining next steps

LJ555 — Mon, 29 Jan 2018 13:56:14 GMT

First, I'll say that I've mailed my GW letters. Fingers crossed.

Second, I'm wondering on that old student loan if the DOFD was more recent because of possible forbearance/deferral? I had multiple loans, most are paid off - 2 are current and won't take too much longer to pay off. This one seems to be an outlier and I honestly can't remember if I had this deferred or not - I know, sounds crazy but I thought my only deferrals were for the two I'm currently now paying on.

So my question is this, and forgive me if this sounds stupid. I'd like to call the college and ask for more information on this loan, but I'm unsure of my position if I do so. By calling them, is that going to re-set the process all over again? Will that establish new dates on record, or new reporting? Though it's already there sooo... I guess I'd just like some assurance I won't make it worse. I'd rather talk to someone and know exactly where I stand and what my options are. If they won't accept payments and will only take payment in full, that will be problematic. I feel like it never hurts to ask but I want to ensure I'm not missing something important, and want to be aware of what my rights and responsibilities are with that phone call.

Re: Need help determining next steps

LJ555 — Thu, 01 Feb 2018 16:36:06 GMT

***EXCITING UPDATE!***

Last week I mailed my first GW letter to remove a paid collection. This morning I logged into Experian to find that they have removed it! My score has increased 13 points to 640! WOOT! Now fingers crossed I have as good luck with the GW letters for late payments from 2015.

So now the only remaining collection is the hospital bill. What to do.

Also if anyone could answer some of my previous questions about the student loan (which is currently the only negative) that would be great.

Thanks so much for the advice I've already received, and I'm grateful for these forums. I would have had no idea GW letters were a thing until I started reading about them here. First success, here's to more!

Re: Need help determining next steps

LJ555 — Mon, 05 Feb 2018 14:33:55 GMT

+ Another 8. So 21 point increase since I started this thread. (where I'm happily talking to myself)