Wow--what a response--appreciate you taking the time to write that post! I'll try to respond to your questions with my answers in bold--one by one...
@CreditBones wrote:
@Anonymous wrote:
My pertinent info:
EQ: 607
EX: 588
TU: 589
Credit Karma and Experian's credit monitoring still lists the charge offs as pulling me down, in addition to the new collection account. I've got 3 credit cards with zero balances that I've never been late on--but they've all been open less than two years. I've also never paid late on either of my car loans.
Welcome to the myFICO Forums!
You cited your scores, but also mentioned Credit Karma. What is the source of your scores?
Credit Karma & Experian Monitoring
This is what I would do:
1) Know my FICO Auto Score 8, and FICO Auto Score 9. And base my strategy solely on those scores specifically.
According to Experian--FICO Auto Score 8 is 567. They didn't have an Auto Score 9 listed
2) Approach the case by order of credit file importance:
• 35% of the score is Payment History and Derogatory Marks (Congratulations on your positive on-time payment history! About the Derogatory Mark, first, I would try pulling the Debt Ownership Verification card on both, the collection agency, and the credit bureaus where it is reporting. If that doesn't work, I would try Pay for Delete with the collection agency. If that fails too, I wouldn't have any more options other than to simply pay it for it to show a $0 balance.)
• 30% of the score is Credit Utilization [UTIL] (The golden rule is to have a balance of 8.9% or less on all the credit lines, including credit cards [CC], auto loans [AL], personal and student loans, etc. Right now, the auto loan that owes $20k is at 67%, and the other one is at 70%... and, this is affecting that 30% section of your credit score. And even though you are planning on trading one of the cars in, the score pulled to approve your new truck will not include that consideration.)
• 15% of the score is the Average Age of Accounts [AAoA] (You mentioned you have 3 CC, but all of them are less than 2 yrs. Do you know your total AAoA? Taking in account your 2 AL balance %, and speculating they were financed at 6-7 yrs, they would be around 2 to 2-1/2 yrs old too. In your particular case, there is no other way to improve this 15% of your score other than waiting for time to age your credit lines.
• 10% of the score are Hard Inquiries (Hard inquiries or Hard Pulls [HP] expire by themselves at the 2yr mark. Your 3 CC, that are less than 2 years, have existing Hard Inquiries, as well as every time you tried applying for that vehicle. All of those are dragging this 10% of your score down.
• The remaining 10% are the amount of accounts, and the type of accounts; credit cards, personal loans, auto loans, student loans, mortgage loans, etc. The amount is as important as their diversity. You have 3 CC & 2 AL, with a great payment history, but too young. You have no mortgage loan, and no personal loan. Based on these, some credit bureaus may consider you have a thin credit file.
Maybe, using part of those $10K to open 5 or 6 strategic accounts (two $5K Secured Loans, that you will pay 82% back in the first month, but allow them to live their full life, and 3 or 4 Secured CC with the remaining $1,800), which wont include HP, could be an option that would allow you to raise the Credit Limit [CL] on your credit file, as well as diversify the type of credit lines in the next 2 years while you rehabilitate your credit file.
I would say that, other than dealing with your write off, and the Secured credit lines, the rest is about letting time run its course in order to lower your UTIL (your auto loans would be close to 33% if not less because you have made additional payments to them), and the Age of oldest Account [AoOA] become 4-5 years old.
There are many members with great strategies and real life experience in this forum. Hopefully you get more suggestions and ideas where to choose from. Good luck!
Thank you again for the info--I've never had anyone explain the components of the score that clearly, before! Much appreciated!
as of 1/1/23
AU:
