topic Re: Advice on where and how to start in Rebuilding Your Credit

Advice on where and how to start

Anonymous — Thu, 30 Dec 2021 02:59:53 GMT

I was injured on a job and tanked my credit. I would like to begin cleaning up my mess and moving towards good credit again.

My current scores are

Trans 620

Equi 635

The good:

I have a small credit builder loan through my credit union. It was opened in November of this year for 5,000

I am an authorized user on two credit cards with 30 months of perfect payment history.

I have a good income and a great household income. We are wanting to buy a house in the next year and don't really need my credit to make the purchase but, it would probably help.

The bad:

I have a charge off on three credit cards, a bank loan and an automotive loan.

They are Cap 1, Discovery and Barclays for CC, Chase for the automotive loan and A local credit union on the small loan.

I have the cash on hand to pay off everything which is about 40k. Is paying off the charge offs first thing the best initial step? What are my best options for moving forward?

Thanks

Re: Advice on where and how to start

OmarGB9 — Thu, 30 Dec 2021 03:34:40 GMT

Yes, paying off all your charge offs would be a great first step. Then you could attempt to write goodwill letters to all those creditors (once they get the money and the payoffs are reflected on your credit reports) and ask that they remove the accounts from your reports altogether. It's highly unlikely they'll do so, but it's worth a try.

Re: Advice on where and how to start

Anonymous — Thu, 30 Dec 2021 03:41:57 GMT

Goodwill letter over a pay for deletion deal?

I am dealing with Midland Management, Portfolio Recovery and RMP.

Re: Advice on where and how to start

HowDoesThisAllWork — Thu, 30 Dec 2021 04:01:00 GMT

Quick question for clarification:

Those two scores - by chance that they are from Credit Karma?

When people mention both Transunion and Equifax (and not Experian) that smells suspiciously like a Credit Karma (or similar) origin.

If this is true, then please note that the two scores are *NOT* FICO scores but Vantage Score 3.0 (which no one really uses). Additionally, these scores are very likely to be higher than FICO scores.

Not trying to be a turd, but it is an important distinction.

Re: Advice on where and how to start

Anonymous — Thu, 30 Dec 2021 04:05:25 GMT

Yes, I should have clarified that. They are in fact Credit Karma scores.

When I went to my credit union to take out a small loan they showed me the score they used and it was closer to 500 if I remember correctly. I had/have a decent amount in the bank so they had no issue with a small 5k loan but, they said I wouldn't be eligible for a credit card or a mortgage.

Re: Advice on where and how to start

HowDoesThisAllWork — Thu, 30 Dec 2021 04:07:05 GMT

@Anonymous wrote:
Goodwill letter over a pay for deletion deal?
I am dealing with Midland Management, Portfolio Recovery and RMP.

Yes, that is what Omar is suggesting. Contact each of the Collection Agencies and discuss a so-called PfD (aka, Pay for Delete). Just be 100% ready and capable of following through on your agreements.

Additionally, there might be some requirements BEFORE a CA will be willing to discuss a PfD (one such common requirement - and I use that word loosely - is that an account be at least two years old).

For a list of Collection Agencies that are open to a PfD, please consider the below link:

Collection Agencies that do Paid for Delete

Removing ALL of your collections accounts from all of the CRAs on which they appear will have a HUGE positive effect.

Re: Advice on where and how to start

Anonymous — Thu, 30 Dec 2021 04:12:54 GMT

Paying off my debt was my initial plan. After the debt is paid which could be as early as tomorrow what is the next step?

My goals are mortgage and a premium travel rewards card. I travel a decent amount and i have alot of points that would be decently impressive with a good rewards card. I'm over 500k IHG points and idk how many miles.

Re: Advice on where and how to start

HowDoesThisAllWork — Thu, 30 Dec 2021 04:15:02 GMT

Okay...

For some reason my old eyes saw "Collections". You have Charge Offs. Different Animal.

So, to be clear (and please forgive me for being "that guy"): all of the accounts that are deliquent - they all show up as Charge - Offs, correct?

Have you looked at your credit report? It seems pretty clear that you have, but I like to ask (I am not smart enough to assume anything).

And, if you want a FICO score, then I might suggest creating a free account at Experian. That will show you your credit report and will have EVERYTHING listed (well, to be clear, everything that is reported to Experian. While it is a safe starting point to assume that all "financial instituations" report to all three Credit Bureaus, it is a dangerous assumption).

If you want to be 100% sure, then I might suggest going to Annual Credit Report (aka, annualcreditreport.com) and getting all three. Due to COVID-19, we are allowed to get a weekly report from each of the three Bureaus through April, 2022!

So, I would create the free account with Experian for the FICO score and would go to annualcreditreport.com for all three Credit Reports. That way you are 100% sure that you have the latest and greatest information.

Re: Advice on where and how to start

Anonymous — Thu, 30 Dec 2021 04:36:49 GMT

Just checked Experian and it's a 555. That's definitely not good.

I did find some inaccurate information. Misspelled name, wrong addresses, wrong phone numbers and I'm sure other things. I'll call them tomorrow and see of that stuff can be deleted.

Re: Advice on where and how to start

FireMedic1 — Thu, 30 Dec 2021 12:05:32 GMT

Once all the CO's are paid you'll see a score change for the better. They are being used against you for util %'s. CO deletions from GW's wont happen. JMO. Getting things cleaned up and investing all you can to get a home should be priority one. Once it all updates after payoffs. Get your FICO scores from here or credit.com. You'll want to look at your FICO Mortgage scores. Yes a card or 2 in your name will do more than AU's. But on the other hand. Lenders dont care for getting new credit in the 1 yr before applying for a mortgage. Fix whats broken first. Post it here and we can help you reach your home ownership goals.

Re: Advice on where and how to start

OmarGB9 — Thu, 30 Dec 2021 14:37:36 GMT

@Anonymous wrote:
Goodwill letter over a pay for deletion deal?
I am dealing with Midland Management, Portfolio Recovery and RMP.

So you said you're dealing with charge offs, but those 3 companies are collection agencies. So who is reporting on your reports then? Is it the original creditors, or these 3 collection agencies? Or both?

I ask because that makes a difference. If it's only the collection agencies who are reporting, and they all are willing to do a PFD (which I know at least Portfolio and Midland do; not sure about RMP) then you'll be in great shape once they're deleted. However, if it's only the original creditors reporting, then as I said, you can pay and they'll eventually update their reporting, but it won't get the TL deleted. Asking for GW to try and have it deleted is an option, but the odds of it happening are slim to none. Still, paying a charge off should help your scores some, especially if they've been updating monthly.

Re: Advice on where and how to start

Anonymous — Thu, 30 Dec 2021 17:27:58 GMT

Everything I have is with a collection agency with the exception on a truck loan through Chase that has been an issue for over three years now.

The issue with Chase is 100% on their end and hopefully they make things right with me.

Re: Advice on where and how to start

OmarGB9 — Thu, 30 Dec 2021 18:39:38 GMT

@Anonymous wrote:
Everything I have is with a collection agency with the exception on a truck loan through Chase that has been an issue for over three years now.

The issue with Chase is 100% on their end and hopefully they make things right with me.

Yes, but WHO is reporting on your credit? Is it ONLY the CAs? Only the original creditors? Or both?

Re: Advice on where and how to start

Anonymous — Thu, 30 Dec 2021 20:44:15 GMT

The collection agencies are reporting on the old credit card debt and chase is reporting on the truck debt even though when I call them they claim I am not a customer and I've never had a loan through them.

Are you asking specifically what agency each card issuer sent my account to?

Re: Advice on where and how to start

OmarGB9 — Fri, 31 Dec 2021 01:09:55 GMT

@Anonymous wrote:
The collection agencies are reporting on the old credit card debt and chase is reporting on the truck debt even though when I call them they claim I am not a customer and I've never had a loan through them.

Are you asking specifically what agency each card issuer sent my account to?

No, just trying to clarify whether the original creditors (OC) are still reporting the delinquent account, but with a zero balance or whether only the collection agencies (CA) are reporting the delinquent accounts. If it's the latter (excluding Chase), then once you pay Portfolio and Midland, they'll delete the TL and there'll be no trace of there ever being any account (much less a charge off) with whomever originally owned those two accounts.

Re: Advice on where and how to start

HowDoesThisAllWork — Fri, 31 Dec 2021 21:02:14 GMT

@FireMedic1 wrote:
Once all the CO's are paid you'll see a score change for the better. They are being used against you for util %'s. CO deletions from GW's wont happen. JMO. Getting things cleaned up and investing all you can to get a home should be priority one. Once it all updates after payoffs. Get your FICO scores from here or credit.com. You'll want to look at your FICO Mortgage scores. Yes a card or 2 in your name will do more than AU's. But on the other hand. Lenders dont care for getting new credit in the 1 yr before applying for a mortgage. Fix whats broken first. Post it here and we can help you reach your home ownership goals.

^^^^^^
This! @FireMedic1 usually has really good insight and cuts through the crap and gets to the point.

Re: Advice on where and how to start

HowDoesThisAllWork — Fri, 31 Dec 2021 21:20:53 GMT

@OmarGB9 wrote:
@Anonymous wrote:
The collection agencies are reporting on the old credit card debt and chase is reporting on the truck debt even though when I call them they claim I am not a customer and I've never had a loan through them.

Are you asking specifically what agency each card issuer sent my account to?
No, just trying to clarify whether the original creditors (OC) are still reporting the delinquent account, but with a zero balance or whether only the collection agencies (CA) are reporting the delinquent accounts. If it's the latter (excluding Chase), then once you pay Portfolio and Midland, they'll delete the TL and there'll be no trace of there ever being any account (much less a charge off) with whomever originally owned those two accounts.

^^^^^^^

What @OmarGB9 - please forgive me for speaking for you, OmarGB9 - is trying to establish is who owns the debt. That is key.

This might be a bit of a longer post, so if not interested, then stop reading here.

A Charge Off is simply an accounting mechanism used by Financial Institutions to say something to the effect of "We tried to collect this money from this dude but we were unsuccessful....dude still owes us said amount, but we aint never gonna see that cash from dude" and the FI sets the account to Charge Off. This - and the length of time associated with said Charge Off is a bit different depending on what kind of 'credit' the account is - usually happens at 180 days for a credit card. So, you will have six consequtive months of "delinquent' payments (you will see - typically - a red square with a '30' and then a '60' and then a '90' and so on). Once it reaches '150' you will see a second '150' and then you see the 'CO' (indicating 'charge-off').

Now, you still owe said debt to the original debtor. A charge-off does not wash your sins away (so-to-speak).

What will often happen is the original debtor (let's use Capital One as the example here....since everyone love to smash on CapOne) will do one of three things:

1. Sell said debt to a Collection Agency

2. Retain a Collection Agency to attempt to collect said debt on their behalf

3. Take you to Court to get a judgement

In the first case, Capital One has legally sold your debt to the Collection Agency. So, Capital One is NO LONGER the legal owner of your debt. Thus, were you to attempt to contact CapOne to settle it *might* be too late. They would likely direct you to the Collection Agency. So, you will see two entries on your credit reports: one from Capital One (as a closed account designated as a Charge-Off) and one from the Collection Agency (as a Collections account).

In the second case, CapOne still owns the debt. They are just tired of dealing with you (forgive my language here) and have hired someone else to deal with this (for a fee - of course). So, the Collection Agency is simply "the muscle" here. They have no legal ownership of said debt.

In the third case, well, hope it does not get to this point for you.

In FICO, there are a total of 12 "profiles". There are eight profiles for "good/clean" and there are four profiles for "bad/dirty". Good is defined as no delinquent payments and bad is defined as delinquent payments. Now, that is a VERY general statement.

So, having a Collection Account or a Charge-Off puts you one of the four "dirty" profiles.

Collection accounts - assuming a PfD is possible - can be 'manually' removed quite easily. The link that I included in my first reply to your post goes over many of the Collection Agencies that will (or, conversely, will not) do a PfD.

Charge-Off accounts are MUCH MUCH MUCH more difficul to remove 'manually'. These suckers will likely stay on your Credit Reports until the age off (typically, after seven years and six months from the original late payment in the string of consequtive late payments that resulted in the Charge-Off).

That is kinda the detail that OmarGB9 was referencing.

Re: Advice on where and how to start

Anonymous — Sat, 01 Jan 2022 04:48:33 GMT

These accounts are all over 4 years old and have been sold off with the exception of Chase and the truck loan.

If I am understanding you correctly, should I even pay those off or am I throwing good money at bad?

Truthfully I don't have an immediate need for good credit. I can play the long game without much inconvenience. My fiance has excellent credit and a great income. Buying a house is a non-issue.