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Credit Repair and applying for secured credit cards.

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bs6054
Valued Contributor

Re: Credit Repair and applying for secured credit cards.


@Walt_K wrote:

@newpete wrote:

Hey,

 

I was told back in 2004 by a mortgage broker tha it I wanted to improve my credit I should get three cards Max them out or at least get some type of balance and then just pay the minimum bal, and that within a year my credit should improve. You are saying that I should do the opposite? Please advise if you can before I make a terrible mistake.


That is horrible advice.  You'd think otherwise, but mortgage brokers often have no idea how FICO scoring works.

 

Best score results are generally obtained by having one card report a balance that is 9% or less of that card's CL, and all other cards report $0.


Of course, for the mortgage broker it's great advice!   By following that advice, newpete gets a lower FICO, which then translates into higher rates for a mortgage, which is more commission for the broker (assuming that the scores aren't too low to get a mortage of course, and that he would return to the helpful broker).  

Message 11 of 14
Wolf3
Senior Contributor

Re: Credit Repair and applying for secured credit cards.


@newpete wrote:

Hey,

 

I was told back in 2004 by a mortgage broker tha it I wanted to improve my credit I should get three cards Max them out or at least get some type of balance and then just pay the minimum bal, and that within a year my credit should improve. You are saying that I should do the opposite? Please advise if you can before I make a terrible mistake.


I suggest you do your normal spending through the credit cards and PIF every month. This builds a history of use and payments.  

 

When it is time to to apply for some credit (any kind), you can boost your score by paying early for lower utilization and better score.

 

Carrying a balance and paying interest just costs a lot of money for nothing in return.  

Message 12 of 14
Sparkz1920
Frequent Contributor

Re: Credit Repair and applying for secured credit cards.


@Walt_K wrote:

What do you mean about updating your charged off status?  Paying the charge off will not change it from being charged off.  The fact that it was charged off will contiue to report.  Is it also reporting a balance?  If so, there may be something you can do about that, but I am not sure.  You should post this in the rebuilding forum and you'll get more detailed advice.

 

Bank of America has a good secured credit product.  I believe I've read that NFCU does as well, assuming you're eligible.


I know what the OP means

 

After i paid 3 charge offs....the two that were orginally with Cap 1 were not updated on their end, but rather the third party collection agencies end.

 

So ugly Cap 1 is still on my report as a charged off account.


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Message 13 of 14
newpete
Member

Re: Credit Repair and applying for secured credit cards.

Ok my friend thanks for your advice.

Message 14 of 14
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