topic Re: I just can't win with credit please help in Rebuilding Your Credit

I just can't win with credit please help

bott6698 — Sat, 16 May 2009 04:33:05 GMT

Hello again all, I can't seem to get ahead no matter what I do. I have tried so many methods to build my credit so I can get some things changed but no matter what I try I get denied denied denied or everyone wants to approve me for loans at 18%...I know I have put myself in this mess but I truly have pushed hard to make sure I pay all bills on time which I had troubles in the past with but I just can't win anymore and wanted to seek the advice of my friends at myfico.

I feel I have nothing to lose anymore so I am disclosing everything on my credit report exactly as it is.

This is my entire credit report and the scores I can't seem to get away from. Please let me know what advice would get me to a point where I can refinance all the crap % deals I have been ripped with,

Thanks as always,

Negative accounts,

1 med collection on EQ only for 1,373 but is due to drop off by August

HFC HOLOC $17,000 and at high interest and just does not budge by paying the $250 per month

minimum. Started 8/2005 There are 6 lates but last one was dated 14 months ago.

Chrysler Financial Minivan Paid $28,207 and balance is $7,920 started 12/2004 and was late 30 days one time

in May 2006

Positive accounts/never lates

Saxon Mortgage $108,000.00 and balance of $106,000. Dang loan financed at 10% that I can't seem to get out of. Established 1/2005

HFC LOC $20,000.00 and balance $20,000.00 started 8/2007 and at crazy interest rates to build onto my home.

Paying $450 per month into nothing as the balance will never go down with minimum payments.

WAFCU Wife's Harley got in 6/2008 and paid $10,250 and balance is $9250

American General Finance refinanced a loan with them and got some addl cash out but shows up now as

2 accounts, 1 as refinanced and one as a new account in 2009. Loan amount $5000 and Balance $4800

Hub Finance Co started 4/2007 $5,664 loan and balance of $3,189

Peak 5 car loan started 1/2004 at $10,089 and balance of $1,747

Kay Jewelers started 5/2008 $3,686 and balance is $922.00

Home Depot started 4/2008 $1000 and balance is $486

Toys R us started 6/2008 $500 and balance is $240

Macy's started 4/2008 $600 and balance is $290

Orchard started 3/2008 $320 and balance is $150

Best Buy started 4/2008 $320 and balance is $150

Zales started 4/2008 $500 and balance is $207

American General Finance shows started 6/2008 but refinanced account

Chase auto started 9/2003 and paid off

Crown Jewlers $2500.00 started in 3/2008 and balance is $0

PNC auto started 11/1996 and paid off.

This is my goal, If I can get my score back above 620 I can get an FHA loan at 5.75 I was already preapproved 2 months ago but didn't have some money to pay some back taxes. My scores were 630-648 and I was fine. Now when I got the American General loan refi'd it dropped my score down. My current scores are 589 TU 589 EX and 637 EQ.

I would have been able to not only refi the crappy mortgage I have but also pay off the HELOC with HFC. This would leave the HFC for 20k but I was told by HFC I can rewrite the loan into just a closed end loan so it won't count as a credit card loan etc. HFC used to finance more than one LOC per customer but have since dropped this so I need to have the HELOC paid to be able to do anything with the 20k LOC. These LOC's are crushing my credit score.

Now, I don't have a lot lot of money extra lately to pay things down. I made sure I paid down my cards to the 49% threshold which barely helped. I refid the AMerican General Loan to be able to get the money to pay taxes to be able to refi my house and little did I know it ruined my chances with the new score LOL

I am just pleading for advice here as to what I can do and a goal I can focus on to strive for.

Thanks so much for reading,

Message Edited by bott6698 on 05-15-2009 09:33 PM

Re: I just can't win with credit please help

medicgrrl — Sat, 16 May 2009 13:53:38 GMT

Do you have any extra money to work with? I would start by paying off the small cards with the $150 balance. Take what you would normally pay as minimum on that and work on the next one with the $150 balance. Keep working on the small cards until you get them paid off. The more revolving accounts you can show with a $0 balance the better. This will not only lower your utilization but will also lower the number of accounts with balances...both affect your scores. The quickest way to raise your score will be with your revolving debt. If you don't have the funds to pay one of those cards you may want to ask the auto loan company if you can defer a payment. Most companies will defer one payment per 12 months. It tacks on to the end of your loan but it will help you get a handle on your finances now and get you closer to being able to refi. Once you refi you could always make that extra payment so it won't extend your auto loan.

Have you tried to GW any of the creditors? If so, just keep mailing those GW letters. Email the higher ups. Kill em with kindness and explain that you are trying to improve your financial position and refi the subprime mortgage.

Re: I just can't win with credit please help

Anonymous — Sat, 16 May 2009 16:25:40 GMT

Hello bott!

Wow, can I relate. Coming back from the bottom is a tough climb. And the first thing I believe everyone making the "come back" needs to do is get a clear perspective on what they want to accomplish, as well as what credit they need and can handle.

Handle: this does not mean that you can make the payments, it means you can make damage to the principle beyond the minimums (like 4-5x the minimum as the minimum).

1. Create a written budget. Identify all income and all expenses.

2. Kill all non-essential spending. No eating out, no movies, no impulse buys.

3. Buy generic and store brands for food and personal care. This will on average save you at least 20% on these type of expenses.

4. Adjust your AC thermostat up a few degrees (going to feel a bit warmer in the house) and the heating down a few degrees (may need a sweater at night). This will save at least 10% on your current utilities.

5. Sell stuff. The stuff you don't use, don't want, don't even rememeber stored in the garage, closet, under the bed or in paid storage. Sell stuff that you don't need or is a luxury you really can do without. Have a garage sale, ebay sale, craigslist sale.

6. Consider getting another part-time job. An extra $300 to $800 per month will "budge" those debts not making current headway.

7. Don't accumulate any new debt.

These are ideas that can help you maximize your short 9 month 0% (really 3%) intro rate. Good luck and happy hunting (kill the debt hunt)

While you are working your way back up, you should focus on "secured" cards with credit unions, and secured loans against your savings.

Right now while you are building, your core focus should be paying off debts (which improves credit), allowing time to age on existing accounts and building your cash savings and emergency funds.

Failure to have emergency and savings money is generally why most people end up in the toilet with their credit. When the unexpected happens (loss of job, medical situation, etc.) there is little or no room to work when you have no cash reserves.

And this is why "saving secured" credit is ideal. It allows you to build your cash reserves, while also building quality, long term credit.

Pick a good credit union that offers:

1. Credit builder loans (this is a secured loan in which they loan you the money to put into savings, in case you don't have any savings to put up as collateral). So, you get a loan, it is put into savings and you make payments against it. The interest rate is usually only 2% over your savings rate, so you pay very little. At the end of the loan, you now have the value of the loan amount in savings and a positive credit reference for the loan.

2. Secured loans. Allows you to establish a savings account which you pledge as collateral against a personal loan. Interest should only be around 2% more that your savings rate of return.

3. Secured Credit Card. This allows you to establish savings and have a reported credit card, which can be a convenience for use, but also a good credit reference.

STRATEGY:

Once you pick your ideal credit union (like an Alliant Credit Union) or a local with similar services and rates. Put your savings into this CU. Deposit your paychecks (get direct deposit if possible). Add to your savings each month, even if it is only $20.

1. Then, take out a secured loan. As an example, lets say you have $1000 in savings with Alliant CU. The savings rate is 2.5% (they pay to you).

2. Then take out a secured loan against your savings. Alliant will charge you about 2% above your savings rate (meaning they will charge around 4.5%, while paying you 2.5% on your savings balance....therefore it "cost" you 2%).

3. When you get the $1000 loan check, deposit it back into savings. You now have $2000 in savings (your original balance, plus the loan amount).

4. You now have a "free" loan. Why is it free? Well, remember the savings rate is 2.5%. And the loan is around 4.5%. But you are now being paid 2.5% on $2000 and only charged 4.5% on $1000. This is effectively the same as a savings return of 5% on $1000, which is 0.5% MORE than what your loan is costing you in interest. Plus, your savings is paid "compounding" interest, while the loan is only charged "simple" interest. So the net difference is even better because you will be paid increasing amounts of interest on your interest, while paying decreasing amounts as you pay the loan balance down.

5. Have your loan payments "auto-drafted" directly from your savings account. Try to add to your savings each month the equivalent of the loan payment. Pay the loan off after at around 12 months. Once you have paid the loan off, you now have $2000, plus accrued interest, in your savings and a positive loan and relationship with the CU.

6. Continue to make your "loan payment amount" to your savings account to build this up further.

7. Request an unsecured card about 6 months into the loan. If they won't go unsecured yet, talk to them about a secured card.

8. After 12 to 18 months of positive savings, secured loans and/or secured card, in combination with you continuing to clean up your past credit and credit report, you should be able to get whatever credit you need from your credit union.

Message Edited by txjohn on 05-16-2009 09:25 AM

Re: I just can't win with credit please help

Anonymous — Sat, 16 May 2009 21:53:55 GMT

Speaking from experience...stop living beyond your means. Sell your house,car,and motorcycle. Buy a cheap used car with the rofit from selling the other 3. Find a cheap place to rent and don't buy anything esle til everything is paid in full. Get out the board games, pb&j sandwiches, and cut up those cards. We all (I just did 2 years ago) need to relearn wants and needs.

These are wants...Nothing at ToysRUs, Zales, or Best Buy is a need.

Drop cable, eating out, cell phones (I am proof you don't have to have one), etc. Make life hard for 2-3 years and pay your debt off and you won't regret a min.

Re: I just can't win with credit please help

bott6698 — Sun, 17 May 2009 03:31:39 GMT

Kellea, The problem is not totally living beyond my means it is being rate jacked on all financing that I have.

Paying over $900 per month for a $100k mortgage is ridiculous and been stuck for 4 years. refi-ing will save me $400.00 per month. With 4 kids it is not easy just to sell and move so I don't plan to do that. My income is well over 100k per year so I am not poor but with all the high interest on everything it seems like I am lol. The reason I got those cards were to establish credit cards as I had none and wanted to add store cards etc and try to get a good mix. I was doing fine and credit was rising FAST as you can see when I started this forum I was in the 400's. So I have done a lot right but now just trying to get the rest of the way... I could pay off all those cards over the next few months I just didn't see it changing my score much when those loc's are so high since I went from trying to be maxed out on all cards and then droppoing to 49% it didn't do much.

I will take the advice of the above poster of paying down to 9% and paying off the cards just to see if this will be the added boost I will need to get those 40 or so points back to refi and paying off other cards so I only have a balance on say 2 cards total. The cards ar no big deal I can come up with a few grand I just don't want to throw a few grand at them if it won't help since I am being strangled by the high LOC's for home improvements.

Anyway, Thanks for the advice so far everyone

Re: I just can't win with credit please help

Anonymous — Sun, 17 May 2009 05:15:12 GMT

Not sure if this has been suggested, as I didn't read all the way through all of the above replies.

However, another option maybe, I know times are tough for many, but if there is someone who can loan you enough to pay some utilization down until you get your refi done, this might help you out in the short run. But I agree with some of the above comments, you need to develop a long run plan as well.

High interest sucks, I know where you are coming from. But you know, looking back, I realized one thing, I didn't have to take that high interest loan. It may have meant doing something different or doing without something that I could have lived without, but taking the high interest loan really wasn't my only option. Sometimes it takes losing everything you have to fully understand this and that is something that I would never wish upon anyone, but I think taking a second look at all financial decisions would be wise from here on out. Not trying to preach or judge, but just offering a word of advice from someone who has been there.

Message Edited by sidewinder on 05-17-2009 12:15 AM

Re: I just can't win with credit please help

medicgrrl — Sun, 17 May 2009 16:24:02 GMT

Since you have money to work with then definitely pay all the cards off but 1 and leave that one with only 1 or 2% remaining. Don't leave 2 with balances as that may not give you the boost you are looking for. You should raise your scores enough to go FHA.

Go over to the mortgage board and find out about FHA cashout loans. Since the rate would be so low compared to what you have now (I normally don't advocate putting unsecured debt into a mortgage but in your case...) See how much you can get out to pay off the first and the LOC along with the other LOC. Since your savings will be so large, I would definitely apply extra toward principal so that you are not actually drawing out that other loan over 30 years. I think FHA will go to 95% with two appraisals but definitely go ask on the other forum.

Re: I just can't win with credit please help

bott6698 — Mon, 18 May 2009 03:42:39 GMT

Ok, Medic, According to this I need to pay all the cards OFF and leave 1 card with 2% balance. If this is my optimum score chance I will do this thanks. I will let you know what happens over the next few months as to the results.

Also, When I refi with FHA my HELOC of 17k must be paid off because it is secured by my home and FHA loans must pay off first and second mortgages. Your right 95% is the current amount they will go up to. This will leave me with just the one LOC for 20k. Not enough equity in the home for anything more than this so this will be the best I can get for now and the money I save of $400 per month I can then put towards double paying the 20k LOC> Well, I think I have an established plan to follow thanks all.