This is more looking for affirmation that I'm on the right track, and doing the right thing(s).
I had terrible credit a year ago. There was a Federal Tax Lien from 1995 for $13,000, (4) different collecton accounts - all medical related, (1) Public Record (tax lien), and that was about it.
I started by seeing what I could do about the FTL first. By reseacrhing tax code, I found out that according to IRC 6502 and IRC 6502(a) that as long I did not enter into any "Offer in Compromise", "Installment Payment Agreement" or any other agreement with the IRS, that they only have 10 years to collect that tax debt once assessed in their system. So, I wrote a letter to the IRS stating their IRC 6502 & IRC 6502(a) wording, and their response couldn't have been more surprising. The IRS verified that what I had written was 100% correct. After, a request for a Removal of Federal Tax Lien was sent to them, I got a notice back stating that I owed $0, and that the FTL was no longer valid and was automatically withdrawn. Wow, was I shocked to learn that. Knowledge is power.
I took the IRS Notice of Release/Withdrawl of Federal Tax Lien to the County Couthouse in my city, and went ot the Clerk's Office, showed them my documentation, and they removed the notice from their Public Record system. This whole process took about 2-3 months of calls, writing letters, and going to the courthouse.
Then, I tackled the Collection Accounts. 2 were from the same Collection Agency, so I called them. The guy on the phone (Michael) was as nice and professional as could be (they were an attorney firm), and I explained my credit situtation and my financial situation. The total for 2 bills they had for me was only $463. I was shocked when he said that they would settle the debt for $165! To be up front, I live on a very small private pension, and there isn't much more to get out of me. He said that once they had the money, they would take the item(s) off my credit report. I sent them a Money Order, and about a week later, the items were removed. Again, was I shocked and happy. I called hiim back and thanked him for keeping his word.
That left the other 2. Had a bit harder time with these. So, I found out about the SOL in my State in regards to Medical Bills. That SOL in my State is 3 years. I then investigated the authenticity of the Colection Aggency itself, and found that they had numerous complaints and unscupulous practices. So, I disputed with the CRA's on those premises and that they were not allowed to collect these accounts. Just thought it might work. Well, it did. They removed them.
That cleaned my report up. Here's where I could use advise or affirmnation or what to do next:
In Januaury 2015, I applied for a Secured Capital One Platinum Card, was approved and I put a $300 deposit. In April, I applied for a Chase Freedom Card, and was instantly approved for $1200. In May, I applied for a Discover It Card, and was instantly approved for $1250.
In August 2015 Capital One gave me an automatic CLI of $300 on my Secured Card for a CL of $600. On November 6, 2015, I went on-line to Discover It and asked for a CLI. They did a SP and gave me a $1000 CLI for a CL of $2250. On November 25, I appplied for a Chase Slate Card and was instantly approved for $2500. Same day I applied for a Capital One Quicksilver Master Card, and they said "need further investigation". So, I called the Recon number, and they said that since I put a Credit Freeze on Experian (due to another unscruplous collection agency trying to collect on a 1987 Student Loan Balance of $671!, and Experian will not remove that item, so I froze Experian from being pulled), that they needed me to verify my Driver License, Social Security Card, and my Bank Statement, which I immediately faxed over to them. The representative said that once my verification gets into the system, that it will be 24-48 hours before (his words - it shows up in my account). I took that as if they were going to approve me, but we will have to wait and see. I called bacl today to verify they received my fax, and was told it could take up to 3 weeks to get into the system. And, they said they were extremely busy with the holidays.
So, that's the extent of my currenct credit building/chasing venture. As it stands today, my Transunion Score is 737- they use a Vantage Score Now, my Equifax Score is 697, and my Experian Score is 639* due to that 1987 Student Loan that they refuse to remove. Other than that Student loan, there is nothing but good on my report(s).
My plan from here today on, is to Garden, untli January 2018.
Captial One Secure Card Balance: $16
Chase Freedom Card Balance: $165
Discover It Card Balance: $286 (just paid my car insurance in full. Due to better credit my premium went from $418 down to $286 for 6 months!)
Chase Slate Balance: $0
And if approved for Capital One Quicksilver Balance: $0
So, from you folk's experience and knowledge, am I on the right track? Is my Gardening plan correct and efficient? I know I have too many inquiries now, but had to do that to get the cards and rebuild the credit. Thus, why no more pulls for 2 years, at minimum. For Inquiry sake: TU 6, EQ 7, EX 8.
Thank you all ahead to time for your repsonses. I tried to include all information to get nformed advise. Thanks again!
What are your goals?
Do you want credit cards with good rewards (cash back? travel?). Are you looking to get to having $10,000 credit limit cards from good banks and credit unions? Do you have an active installment loan, if not and if you are trying to increase the quality of your credit reports and scores, would you be interested in opening a $500 secured installment loan?
Vantage scores are worthless, mine are over 800 and trust me, my real scores are nowhere near that... the score you are getting from the Discover It and Chase Slate are real FICO scores.
Without knowing your goals yet, I would suggest no more applications until the recent credit card applications are 6 months old, and proceeding at that point only if your FICO scores have improved significantly. I don't think I would wait more than a year though, unless you are trying to get a Mortgage. The only exception might be if you wanted to join Alliant credit union and then get a secured installment loan, since they don't do a HP for a secured loan.
@Anonymous wrote:Great questions.
Not sure what my goal is, until your question. Was really trying, at this point, to have decent credit. Most cretainly don't need more than the credit available to me now, for the reason that my finances can handle where I'm at confortably. But, yes, would like the cards I have or would be interested in to be issued by good banks.
I do not have any installment loans. Have considered doing a Credit Union Secured Shares Installment Loan from my local Credit Union, and have talked to them about it
And, they have said when I'm ready just let them know. Their's is a 6 month $300 Secured Loan.
Transunion informed me that the score they gave me was a "Vantage Score:. My Discover It Credit Score says it's 710 (It's noted in the fine print that their information is from TransUnion, although it does say FICO.). My Chase Slate Credit Score says it's 639 (It's noted in the fine print that their information is from Experian) and that would make sense since Experian is the only CRA that shows the Student Loan from 1987).
I guess I figured it out late in life how inportant my credit was. My interntion of waiting the period of time regarding gardening, was to eliminate some of the inquiries.
Not going to buy a house or car anytime in the near or far future. As, you can see I can use all the advise I can use.
If I had to concerete my goals:
Credit Score of 740+
Total Available Credit: $10,000+ (I'm at $6550 now, without the waiting approval of Cap One QS.) I doubt that my limit will be that much, more around $1000?
I truly appreciate you questions, comments, and advise.
Don't take that installment loan. An installment loan is beneficial while it is open, and since that one is only for 6 months, its only good for someone that doesn't have anything on their credit reports. You are beyond that now. If you were to get a secured $500 installment loan from Alliant for 4 years, you could cancel the automatic monthly payments and then pay 90% of the loan off right away, then the next payment that is due is pushed out for over 3 years. That way, you have an open installment loan for 4 years, with the score advantage of the loan reporting as mostly paid, and not have to worry about paying it every month since the next payment isn't due for years... However, you do pay a tiny amount of interest, and this is mainly a technique for when you need a small boost to your score, like if you plan to get a mortgage or a car loan in the future. And it only works with certain credit unions.
It is advantageous to your FICO score to have some credit cards with $10,000+ limits. So if you have cards that allow requesting increases without a hard credit pull, certainly work on getting those limits up. Credit limits can increase quite rapidly when you always pay on time, and when you are requesting increases. Of the cards you have, Discover, and I think Capital One, allow increases without a hard pull.
You might want to try for a CITI card, not a co-branded one, sometime in the future since they provide a monthly free Equifax FICO score. the Citi Double Cash might be a good choice. But get the FICO scores up and the Inquiries aged first.
Inquiries do not affect your FICO score after a year, and they have the most impact when they are less than 6 months old. So having a lot of recent inquiries and recent cards will make it hard to get more approvals, and if you did get approvals, the limits would be very small.
Read this thread about how you can optimize your FICO score just prior to applying for more credit, by manipulating how much money reports on each of your credit cards. http://ficoforums.myfico.com/t5/General-Credit-Topics/How-do-I-play-the-1-9-Utilization-Game-Please-Help/m-p/2471257#M199479
Read this thread to obtain a plan of good credit cards that will give cash back in the spending categories that you use the most. Then you can work on slowly obtaining those cards. http://ficoforums.myfico.com/t5/Credit-Cards/Cash-Back-credit-card-charts/td-p/4004725
More on secured installment loans:
I joined Alliant, opened the savings account only and got the secured loan. I specifically did not open a checking account, and as expected after about 6 weeks I was offered $50 to open a high return checking account. $50 more than pays for any interest I ever expect to pay on the installment loan. Savings is currently paying 0.95% APY and checking is 0.65% APY, so I use Alliant to park money in checking that I then use to pay off my various credit cards.
A bit later they offered me a car loan, HELOC, and credit card. I tried for the credit card, its a basic 1% cash back card but had a $100 sign up bonus if I spent $500 in the first 3 months. So there was another small profit to me.
They do reimburse up to $20 in ATM fees a month if you have to use an ATM that is outside of their network.
My next payment on my installment loan is due in January of 2019...