topic Re: Let the rebuild begin! in Rebuilding Your Credit

Let the rebuild begin!

dytch2220 — Sun, 30 Jun 2019 14:03:33 GMT

I first joined this forum some time ago but lost my way in the intervening years. I'm back, on a mission to improve my credit. I've recently purchased a truck and gotten a terrible interest rate (22.259%) so getting a better rate is on my goals list along with buying a home and enjoying some rewards down the line.

Right now I have the recent auto loan, a secured card with cap one, an installment loan with Self Lender and plan to open a secured card with NFCU. I have about 6 derogs on my history ranging from $150 to 5100. The largest two being a broken lease at $1700 and a repo at $5100. Other than paying these new items on time and paying off or down the derog items, should I be doing anything else? Also, how long until I should expect to be able to refinance or achieve some of my other goals? Current FICO 8 scores in my signature are from within 30 days and don't yet reflect the new activity.

Re: Let the rebuild begin!

Remedios — Sun, 30 Jun 2019 01:51:35 GMT

@dytch2220 wrote:
I first joined this forum some time ago but lost my way in the intervening years. I'm back, on a mission to improve my credit. I've recently purchased a truck and gotten a terrible interest rate (22.259%) so getting s better rate is on my goals list along with buying a home and enjoying some rewards down the line.

Right now I have the recent auto loan, a secured card with cap one, an installment loan with Self Lender and plan to open a secured card with NFCU. I have about 6 derogs on my history ranging from $150 to 5100. The largest two being a broken lease at $1700 and a repo at $5100. Other than paying these new items on time and paying off or down the derog items, should I be doing anything else? Also, how long until I should expect to be able to refinance or achieve some of my other goals? Current FICO 8 scores in my signature are from within 30 days and don't yet reflect the new activity.

That is a terrible rate, indeed

If you're looking for score improvement, maybe a third card would be a good thing. Your self lender loan is redundant, because you already have a car loan. It's not helping you any, especially with auto loan being new and fairly fully utilized.

If you have any accounts in collections, you can try PFD.

You stated above " Other than paying these new items on time and paying off or down the derog items." It should not be "or", it's "and" if you are looking to improve your scores.

If your derogs are updating, and based on your scores they must be, you wont see any significant scoring gain till they are either paid, settled or fall off. I dont think if you're financially in the position to do do so, but unfortunately those are the only options

As far as when to refinance, six month is usually long enough providing that there is score improvement.

Your truck has really bad financing terms so I'd imagine getting it refinanced is not going to be a walk in a park.

Maybe ask some questions in auto loan forum and see if anybody has any suggestions for you.

Good luck

Re: Let the rebuild begin!

DIYcredit — Sun, 30 Jun 2019 03:38:34 GMT

I agree that you should pay down that debt which would be necessity moving forward.Your cc should be at 1-6% utilization.You shouldn't open another secured cc.You should use your current credit accounts to make monthly on time payments.In 6-12 months you can probably upgrade your cc to an unsecured cap one like quicksilver.You have a great variety of credit accounts,so only open cc's that beneficial to you in the long run,so only open credit accounts that you need.In the long run you should have three unsecured cc's.You can ask for a cli on your unsecured cc every six months and keep it open to make it oldest open cc.As the derogatory information ages and becomes less recent along with these positive steps your Fico score will improve over time.GOOD LUCK...

Re: Let the rebuild begin!

FireMedic1 — Sun, 30 Jun 2019 07:05:30 GMT

@DIYcredit wrote:
I agree that you should pay down that debt which would be necessity moving forward.Your cc should be at 1-6% utilization.You shouldn't open another secured cc.You should use your current credit accounts to make monthly on time payments.In 6-12 months you can probably upgrade your cc to an unsecured cap one like quicksilver.You have a great variety of credit accounts,so only open cc's that beneficial to you in the long run,so only open credit accounts that you need.In the long run you should have three unsecured cc's.You can ask for a cli on your unsecured cc every six months and keep it open to make it oldest open cc.As the derogatory information ages and becomes less recent along with these positive steps your Fico score will improve over time.GOOD LUCK...

Update: Cap One doesnt graduate or upgrade secured cards any longer.

OP. Check in 4-6 months for a Disco secured that will graduate as your score recover from the recent activity.

Re: Let the rebuild begin!

dytch2220 — Sun, 30 Jun 2019 14:01:39 GMT

Thanks for the replies all.

Yeah, definitely intend to clear the derogatory items as quickly as I can. Paying off a short term loan that I needed in order to move and keep my job. Once that's done in about a month I'll move on to the smaller ones and work my way up to the repo.

If it's a consensus that there is no benefit I will look into cancelling the Self Lender account, I read they can be ended at will.

On the Disco... If say allegedly I had a card with them about 20 years ago that charged off and went the full 7 years without collecting, will that still prevent me being approved for a new card with them?

Re: Let the rebuild begin!

calyx — Sun, 30 Jun 2019 16:06:57 GMT

@dytch2220 wrote:
Thanks for the replies all.

Yeah, definitely intend to clear the derogatory items as quickly as I can. Paying off a short term loan that I needed in order to move and keep my job. Once that's done in about a month I'll move on to the smaller ones and work my way up to the repo.

If it's a consensus that there is no benefit I will look into cancelling the Self Lender account, I read they can be ended at will.

On the Disco... If say allegedly I had a card with them about 20 years ago that charged off and went the full 7 years without collecting, will that still prevent me being approved for a new card with them?

Disco isn't known for their black listing ways - If I were you, I would try their prequalification site - it's usually pretty accurate.

Re: Let the rebuild begin!

Caardvark — Sun, 30 Jun 2019 17:06:41 GMT

A lot of great advice so far. I have only one add:

I think your first priority should be to refinance or get out of the truck loan ASAP. I believe it should take precedence over all your other debts. At that interest rate it becomes exponentially more difficult to refinance with each passing month because it is depreciating faster than you are paying down the principle. Take for example a $20K loan at 22.25% interest with a 6 year term (monthly payment = $505). After 6 months you'd have paid $3030 but $2K of it will be interest. You'd still owe $19K of principle and the car would surely have depreciated more than that, making it extremely difficult to refinance due to LTV requirements.

I recommend paying as much as you can over and above your monthly payment each month and looking to refinance as quickly as possible.

If you are a member of NFCU, have you reached out to them to see if they can provide guidance on if/when you might be eligible for an auto loan?

Re: Let the rebuild begin!

Anonymous — Sun, 30 Jun 2019 18:11:26 GMT

@Caardvark wrote:
A lot of great advice so far. I have only one add:

I think your first priority should be to refinance or get out of the truck loan ASAP. I believe it should take precedence over all your other debts. At that interest rate it becomes exponentially more difficult to refinance with each passing month because it is depreciating faster than you are paying down the principle. Take for example a $20K loan at 22.25% interest with a 6 year term (monthly payment = $505). After 6 months you'd have paid $3030 but $2K of it will be interest. You'd still owe $19K of principle and the car would surely have depreciated more than that, making it extremely difficult to refinance due to LTV requirements.

I recommend paying as much as you can over and above your monthly payment each month and looking to refinance as quickly as possible.

If you are a member of NFCU, have you reached out to them to see if they can provide guidance on if/when you might be eligible for an auto loan?

Excellent advice here. I work in the auto industry and can't stress enough how important paying principal balance down is. Those derogs can wait a bit until you can refinance that loan. The quoted comment is a perfectly said statement. I would quickly join in with a credit union, work towards establishing that relationship ASAP, pay down that current truck loan and focus on maintaining the lines you have open and paying them on time. If that self lender loan can be cancelled without penalty I would do that right away. Be sure to get all the facts before ending it to avoid any unforseen fees or penalties against your CR. Good luck!

Re: Let the rebuild begin!

dytch2220 — Sun, 30 Jun 2019 18:13:22 GMT

Refinancing the truck is my number one goal. However, I don't think it's quite so bleak unless I'm miscalculating. I took a loan for 15k/45 mos on a 14k truck at payments of 460. The truck is 9 years old so depreciation should be reasonably slowed and it's a Toyota which holds value well. If the value remained static I figured I'd no longer be upside down within 6 mos.

Re: Let the rebuild begin!

Anonymous — Sun, 30 Jun 2019 18:22:33 GMT

@dytch2220 wrote:
Refinancing the truck is my number one goal. However, I don't think it's quite so bleak unless I'm miscalculating. I took a loan for 15k/45 mos on a 14k truck at payments of 460. The truck is 9 years old so depreciation should be reasonably slowed and it's a Toyota which holds value well. If the value remained static I figured I'd no longer be upside down within 6 mos.

Also keep in mind, as the truck gets older the lending options thin out dramatically. Most lenders have age/milage restrictions.

Here is an Amortization schedule for the next 2~ years

Re: Let the rebuild begin!

dytch2220 — Sun, 30 Jun 2019 18:33:48 GMT

Ok, so revised plan...

Deposit 200 into my NFCU savings, open a secured credit card. This card can convert later so I may just not fund the cap one due to rumors that they will no longer graduate. (Interesting side note is that I called them and spoke to a supervisor today who told me it is still possible to graduate depending on your credit. Whatever that's worth...)

Cancel the Self Lender plan, ensure no penalties.

Immediately following the payoff of the short term loan, begin paying the truck principal down to below the value. Refinance ASAP.

Maintain good payments on everything new and begin working to clear the derogatory items.

Re: Let the rebuild begin!

dytch2220 — Sun, 30 Jun 2019 18:36:42 GMT

Does the amortization change if I pay 230 bi-weekly? That's the actual repayment schedule.

Re: Let the rebuild begin!

Remedios — Sun, 30 Jun 2019 19:01:45 GMT

@Anonymous wrote:
@dytch2220 wrote:
Refinancing the truck is my number one goal. However, I don't think it's quite so bleak unless I'm miscalculating. I took a loan for 15k/45 mos on a 14k truck at payments of 460. The truck is 9 years old so depreciation should be reasonably slowed and it's a Toyota which holds value well. If the value remained static I figured I'd no longer be upside down within 6 mos.
Also keep in mind, as the truck gets older the lending options thin out dramatically. Most lenders have age/milage restrictions.

Here is an Amortization schedule for the next 2~ years

Whoa, that breakdown is actually scary to see. Thank you for providing it. A single image told a story by far better than any of us could

Now I know who to run to for auto loans lol

Re: Let the rebuild begin!

Anonymous — Sun, 30 Jun 2019 19:16:28 GMT

@Remedios wrote:
@Anonymous wrote:
@dytch2220 wrote:
Refinancing the truck is my number one goal. However, I don't think it's quite so bleak unless I'm miscalculating. I took a loan for 15k/45 mos on a 14k truck at payments of 460. The truck is 9 years old so depreciation should be reasonably slowed and it's a Toyota which holds value well. If the value remained static I figured I'd no longer be upside down within 6 mos.
Also keep in mind, as the truck gets older the lending options thin out dramatically. Most lenders have age/milage restrictions.

Here is an Amortization schedule for the next 2~ years

Whoa, that breakdown is actually scary to see. Thank you for providing it. A single image told a story by far better than any of us could

Now I know who to run to for auto loans lol

I always hate to see big interest rates on auto loans, scares the daylights out of me when I hear of someone buying a used vehicle in the subprime market. I always say "put a wedding ring on the key ring because you're married to that car for a couple years before you're above water"

Re: Let the rebuild begin!

Anonymous — Sun, 30 Jun 2019 19:23:29 GMT

@dytch2220 wrote:
Does the amortization change if I pay 230 bi-weekly? That's the actual repayment schedule.

Yes, quite a bit actually. I've enclosed an updated am. schedule reflecting that. Still worth it to pay double when applicable and as mentioned before, sit down with the loan officer of your NFCU and set up a plan to achieve refi with them ASAP. Who is the lender that you are borrowing from now, if I may ask?

Re: Let the rebuild begin!

dytch2220 — Sun, 30 Jun 2019 19:37:44 GMT

The lender is Bridgecrest through Drive Time.

Re: Let the rebuild begin!

Anonymous — Sun, 30 Jun 2019 19:47:55 GMT

@dytch2220 wrote:
The lender is Bridgecrest through Drive Time.

Yeah, get out ASAP, very predatory. I have seen them repo before a 30 day late payment. They also offer to advance a payment onto the end of a loan in times of hardship but they still report late. I understand we all gotta get back on the saddle, they were likely the best option for the dealer at the time of purchase. Generally dealers get what's called a "buy rate" where in, the lender offers you, say, 19% interest, a dealer can be allowed to claim a certain number of points of interest, sell you the higher rate and the dealer gets a kick back for guiding the customer to that loan. Lots behind the scenes that is deplorable in the name of profits. Once you're in the CU boat, soaking up small, single digit rates, you'll never look back.

Re: Let the rebuild begin!

dytch2220 — Mon, 01 Jul 2019 06:10:14 GMT

In case you do decide to call Cap One, here is the whole story...

I did a search on graduating the card, came up with a wallethub article saying to call this number: 1-800-227-4825.

I called the number and got someone unhelpful so I asked to speak with a supervisor. I was instead transferred to fraud. They later told me this was because I came in unverified. I'm not sure I completely buy this because I was asking a generic policy question and he kept insisting I needed to call new accounts. I too insisted he should be able to answer as he would for an existing client.

Anyway, I talked to the first fraud agent and explained I'd asked for a supv, she connected me to one. The supervisor looked up an internal article which indicated graduation is dependent on your credit profile. She also related she too personally has this card and recently graduated herself within the last 30 days.

That's it! Let me know if you get s different answer as I've heard this several times on the forum and saw a YouTube video saying graduation was defunct.

Re: Let the rebuild begin!

Anonymous — Mon, 01 Jul 2019 13:31:49 GMT

Thats right most lenders have a 10 year limit. After that options go down and interest rates go way up.

@Anonymous wrote:
@dytch2220 wrote:
Refinancing the truck is my number one goal. However, I don't think it's quite so bleak unless I'm miscalculating. I took a loan for 15k/45 mos on a 14k truck at payments of 460. The truck is 9 years old so depreciation should be reasonably slowed and it's a Toyota which holds value well. If the value remained static I figured I'd no longer be upside down within 6 mos.
Also keep in mind, as the truck gets older the lending options thin out dramatically. Most lenders have age/milage restrictions.

Here is an Amortization schedule for the next 2~ years

Re: Let the rebuild begin!

dytch2220 — Mon, 01 Jul 2019 23:56:25 GMT

Update, crazy good news on the auto loan. I decided to throw caution to the wind and apply to refinance through NavyFCU today. SUCCESS!

Same term of 45 month but interest rate is down from 22.259% with Bridgecrest to 7.09% at NFCU. All I need to do is send the check when I get home from vacation and get the new title to Navy within 90 days and it's a done deal. Woohoo!! Dropped my monthly payment by $78 and saved thousands in the end. They valued the vehicle at 15100 and the payoff was 15400, so it was very near to value already. Also, for future reference Navy will finance up to 20 years on a used vehicle.