topic Re: Rebuild after stupid mistake in Rebuilding Your Credit

Rebuild after stupid mistake

Anonymous — Wed, 25 Mar 2009 14:46:49 GMT

After my divorce and the purchase of my home - I closed all my lines of credit. I thought it would raise my score and simplify things. well - it tanked my score from 730's to 650's. My debt to credit ratio is high. I pay my bills and have since opened two credit cards. I'm unsure if opening a large line of credit would help or hurt my score. I had 10 to 15 credit cards (no balances) and a $20,000 line of credit previously. Not sure what to do to raise my score. Any guidance????

Re: Rebuild after stupid mistake

Anonymous — Wed, 25 Mar 2009 14:52:47 GMT

Cocoa,

I can't tell you much you don't already know. It was a harsh blow to close all of your credit lines. If you aren't using credit FICO will kill your scores. When did you open the last 2 credit cards? Can you reopen any of your old ones?

The closing of your old credit cards and opening new ones is most likely killing your AAoA.

Re: Rebuild after stupid mistake

Anonymous — Wed, 25 Mar 2009 14:59:18 GMT

New cards are 5-6 months old. I was completely shocked when I checked my score - had no idea what I did. I'm using the new cards - paying them every month religiously. Would opening a large line of credit help or hurt me? Should I contact a credit counselor for help? I don't have high balances, or issues paying bills, etc. I just need to rebuild and would like to do so quickly. I'm just beside myself.

Re: Rebuild after stupid mistake

llecs — Wed, 25 Mar 2009 15:02:50 GMT

Opening a LOC won't help any because LOCs are scored as revolving accounts, of which you have a couple opened already.

~~Do you have any balances on those closed cards?~~ Nevermind.

Message Edited by llecs on 03-25-2009 11:02 AM

Re: Rebuild after stupid mistake

Anonymous — Wed, 25 Mar 2009 15:07:38 GMT

What's the fastest way to increase a credit score? Thoughts on any companies or firms that can help improve my score?

Re: Rebuild after stupid mistake

Anonymous — Wed, 25 Mar 2009 15:17:10 GMT

I would try and call the companies that you closed your cards with and see if they will reopen them. This could give you a little boost.

Honestly are aren't any legitimate companies that can increase your score.

Re: Rebuild after stupid mistake

Anonymous — Wed, 25 Mar 2009 15:19:08 GMT

Thank you. Beyond re-opening accounts (which I will inquire) what things can I do to improve my score? How long would score increases take to start showing up?

Re: Rebuild after stupid mistake

llecs — Wed, 25 Mar 2009 15:20:45 GMT

cocoa2009 wrote:
What's the fastest way to increase a credit score? Thoughts on any companies or firms that can help improve my score?

Don't contact these repair companies. They are a scam and anyone reading this who went those these firms would likely agree. Anything they can do, you can do for free. Many of these companies will take courses of action that can actually harm or damage your reports and credit.

The fastest way to improve your score is via utilization on your CCs. While you would have received a drop by closing all of your old cards, opening new ones should have rebounded your FICO scores back to 700 or so. You mentioned that your debt to credit ration is high. Make sure your two CCs are reporting less than 9% of your credit limits.

The new CCs are also dinging your score. Your AAoA dropped as a result of the new credit (can't do anything about that) and the new credit also took a toll. Give it another 6-7 months and you'll see some bumps in score, assuming you don't apply for new credit.

As mentioned, you could benefit if you can open up some of your old cards. You likely wouldn't see an increase, but those closed accounts will drop off your reports 10 yrs from when you closed it and when they drop your scores will drop. Reopening them will prevent them from falling off.

Do you have any baddies on your reports?

Re: Rebuild after stupid mistake

Anonymous — Wed, 25 Mar 2009 15:21:51 GMT

Well, right now you are absorbing the initial shock of the new accounts reporting. You are almost at your 6 month anniversary so points should start to come back. What utilization are you letting report each month to the CRA's?

Re: Rebuild after stupid mistake

Anonymous — Wed, 25 Mar 2009 15:23:53 GMT

llecs,

You are too fast for me. And you wrote all that in one mintue?

Excellent answer as always!

Re: Rebuild after stupid mistake

Anonymous — Wed, 25 Mar 2009 15:33:43 GMT

Thank you very much for all your insight. I have a couple 30 days late - one in March 2008 (divorce), one 30 days in June 2008 (total oversite on my part), one 30 days late Aug 2005 and a medical bill that went to collections July 2008 (this was due to insurance arguements). Mortgage has always been ontime and current, same with all car payments, student loans and all other cards. How does that rank overall?

My report has the following breakdown.

1 mortgage - current

28 revolving - balance 4,851 all current

6 installment - balance 50,000 all current

1 Collection - $0.00 balance

Re: Rebuild after stupid mistake

Anonymous — Wed, 25 Mar 2009 15:40:44 GMT

cocoa2009 wrote:
Thank you very much for all your insight. I have a couple 30 days late - one in March 2008 (divorce), one 30 days in June 2008 (total oversite on my part), one 30 days late Aug 2005 and a medical bill that went to collections July 2008 (this was due to insurance arguements). Mortgage has always been ontime and current, same with all car payments, student loans and all other cards. How does that rank overall?

My report has the following breakdown.
1 mortgage - current
28 revolving - balance 4,851 all current
6 installment - balance 50,000 all current
1 Collection - $0.00 balance

For the medical, follow the HIPAA process and check out our new board "Recovering from Medical Debt".

For lates, send GW letters.

For paid collections, send GW letters.

28 open revolving? What is your current util being reported? To calculate total balances/total CL. Don't include accounts that are closed, unless they have a balance. Then only include the balance, not the CL.

Re: Rebuild after stupid mistake

Anonymous — Wed, 25 Mar 2009 15:43:27 GMT

Thanks. Just cause I'm new - "GW" refers to Good Will letters? The 28 is the high level summary all but 4 are closed. What's "util"?

Re: Rebuild after stupid mistake

Anonymous — Wed, 25 Mar 2009 15:45:11 GMT

Yes, GW means Good Will.

Util - Utilization....how much of your revolving credit are you utilizing? This is important in the FICO formula. You want no more than 9% on each card and no more than 9% total reporting.

Add up all balances and divide by total CL...this equals util.

Re: Rebuild after stupid mistake

upinflagstaff — Wed, 25 Mar 2009 15:45:19 GMT

Write GW letters on the lates. It can't hurt and they might even remove the lates (they are pretty recent). I would write,

Dear creditor,

I am writing to ask for a goodwill adjustment to the late payments reported to the CRAs for March 2008, June 2008, and Aug 2005. I was going through a divorce in 2008 which caused me to get behind. I mention this not as an excuse, but to explain that this is not my normal behavior (something like that) as you can plainly see by my recent history.

You want to tell them you are "better now" and you will never be late again.

Of course if these are closed you might not have as good luck. Also, search out the GW letters, they give a pretty good guideline.

Re: Rebuild after stupid mistake

llecs — Wed, 25 Mar 2009 15:47:06 GMT

cocoa2009 wrote:
Thank you very much for all your insight. I have a couple 30 days late - one in March 2008 (divorce), one 30 days in June 2008 (total oversite on my part), one 30 days late Aug 2005 and a medical bill that went to collections July 2008 (this was due to insurance arguements). Mortgage has always been ontime and current, same with all car payments, student loans and all other cards. How does that rank overall?

My report has the following breakdown.
1 mortgage - current
28 revolving - balance 4,851 all current
6 installment - balance 50,000 all current
1 Collection - $0.00 balance

Did you pull your FICO score before the CA appeared? That could be a big source there.

You would want to send a GW to the CA asking them to remove it. A CA with a $0 balance is just as damaging as a CA with a $10,000 balance.

Keep up with the installment loans as scheduled.

Pay your CC balances down below 9% utilization per card. For a rough calculation, for every 10% of your overall utilization you pay down, you roughly gain 10 points. So, if you pay down 50% down to 6%, for example, then expect over a 40 point jump. But individual util matters too.

Send GWs for the lates.

ETA...everyone types faster than I do.

Message Edited by llecs on 03-25-2009 11:47 AM

Re: Rebuild after stupid mistake

llecs — Wed, 25 Mar 2009 15:49:54 GMT

Donks3369 wrote:
llecs,

You are too fast for me. And you wrote all that in one mintue?

Ever see the movie, The Matrix? One of our super-mod abilities is to plug ourselves into the FICO Matrix and get instant knowledge and type with superhuman speed. j/k

Actually I was responding to a message that was posted over 20 min. earlier. Typing lessons would apply well here.

Re: Rebuild after stupid mistake

Anonymous — Wed, 25 Mar 2009 15:53:45 GMT

Many thanks to all! I'll calculate my UTIL. I need to pull a more recent report.

Re: Rebuild after stupid mistake

upinflagstaff — Wed, 25 Mar 2009 16:02:42 GMT

I've used the free typing program, Bruce's Unusual Typing Tutor. But since I don't use Windows any more than I have to I have tracked down one to keep using... (Way off topic)

Re: Rebuild after stupid mistake

Anonymous — Mon, 30 Mar 2009 01:37:42 GMT

Llecs - I'm still learning after spending numerous hours on here, but seeing the 10 point increase for every 10% util (theoretically ) you pay down was amazing!!! Now I know how I can bump up my score super quick!