Need advice on my next move (building credit after defaulted student loan)

[Remedios]

@Anonymous  If I may suggest something here  ( one last thing) 

How about you do nothing for a few weeks applications wise, instead when you have time, read threads around the forum. There seem to be profound misunderstanding on your part on how credit works and how excessive credit seeking affects your ability to borrow in the future 

Building credit  is not amassing the large number of cards in shortest period of time. 

I am not saying this to me mean, I've done it myself. I saw nothing wrong with it, I thought more is better. It can be. But not with the cards I've gotten, and certainly not with the cards you have. 

Cards you want, the ones that would actually be beneficial to you are either outside your reach right now, or if approved, you're looking at low SL and poor approval terms.  Most algorithms are going to see you as a very risky borrower at this time. 

Because you've been seeking credit so aggressively, lenders may approve toy limits to limit risk to them. 

You've picked up a bunch of rocks and now you have to carry them around . In terms of credit/payment history, 14 months is blink of an eye. 

You're pretty much shooting yourself in the hand that types the application. 

If you really want to build credit and improve your future odds at anything, wait till your newer cards are a year old. That's only five months away. 

While that's not a guarantee for approval, your odds go up. 

You're putting up a lot of resistance to solid advice, but that's your right. It's your credit, you're free to do with it as you please. I'm sorry we were not able to provide you with the answer you wanted. 

Good luck with your future efforts. I really hope it works out for you  

[Anonymous]

I would like to provide further advice on the student loans. Federal student loans never go away. The will take your tax refund, garnish your wages, etc. It feels like a blessing because they have fallen off but really it's a brief reprieve. When they get placed with a new collection agency they will likely hit you twice as hard. I understand that you were defrauded by the University of Phoenix. You might fall in the forgiveness due to the borrower defense. You don't necessarily need a lawyer though it would probably help. It will also cease collection efforts on your defaulted loan. What is not on your side right now is time. Currently, the Dept of Education had not been refusing to process these applications for over a year. When they do they'll have a huge backlog. I would spend some time gathering evidence of the fraud because that could at least save you some time (and paying a lawyer for it). I would also consider other avenues that you could explore on your own, for free, while you wait. A CFPB complaint might go your way, especially if you have done the legwork and gathered as much paperwork as possible (unofficial transcripts, statements, etc.). It forced my servicer to admit their error when they were trying to force me into default due to a processing glitch.
If your application for forgiveness falls through or a lawyer cannot help you, you're looking at getting out of default and starting payments if you want be able to get a FHA loan. Your options will be rehabilitation or consolidation. Rehabbing can take 9-10 months to complete.
You probably already know all of this. I'm only saying this because you mentioned that you want to get a mortgage in a couple of years. As I was previously informed by another borrower, if you consolidate the loans, being defrauded by the original loans may become irrelevant. So basically your only option becomes rehab and the timeline required for it
If you decide you want to rehab early, just let us know and we can walk you through the process. Once you do, the borrower defense to repayment application will hault your payments. If not, I can probably provide you with a few good website that have tips from people who have also had to use the defense to have their loans forgiven, as well as various non-profit articles on the process.
Good luck on getting the loans removed and congrats on your progress in rebuilding your credit.

Borrower Defense To Repayment
https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/borrower-defense

[Anonymous]

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@Remedios wrote:

@Anonymous  If I may suggest something here  ( one last thing) 

How about you do nothing for a few weeks applications wise, instead when you have time, read threads around the forum. There seem to be profound misunderstanding on your part on how credit works and how excessive credit seeking affects your ability to borrow in the future 

Building credit  is not amassing the large number of cards in shortest period of time. 

I am not saying this to me mean, I've done it myself. I saw nothing wrong with it, I thought more is better. It can be. But not with the cards I've gotten, and certainly not with the cards you have. 

Cards you want, the ones that would actually be beneficial to you are either outside your reach right now, or if approved, you're looking at low SL and poor approval terms.  Most algorithms are going to see you as a very risky borrower at this time. 

Because you've been seeking credit so aggressively, lenders may approve toy limits to limit risk to them. 

You've picked up a bunch of rocks and now you have to carry them around . In terms of credit/payment history, 14 months is blink of an eye. 

You're pretty much shooting yourself in the hand that types the application. 

If you really want to build credit and improve your future odds at anything, wait till your newer cards are a year old. That's only five months away. 

While that's not a guarantee for approval, your odds go up. 

You're putting up a lot of resistance to solid advice, but that's your right. It's your credit, you're free to do with it as you please. I'm sorry we were not able to provide you with the answer you wanted. 

Good luck with your future efforts. I really hope it works out for you  

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This is sound advice and I appreciate you taking the time to post. 

However, I'd like to mention that you are misinterpreting my questions as resistance when in fact I am just trying to learn more from those more knowledgable than myself when it comes to credit. In fact heavily based on the advice I have got in this thread I have decided to do the following:

• Wait at least another 5 months from my last application before applying for anything else which will put me at a year since my last app or hard inquiry. 
• I have already closed my Kohl's and Victoria Secrets store cards that I rarely use. 
• I will be paying my Overstock and Newegg cards down to $0 over the next 5 months and closing them because my wife already has better rewards cards for purchases from these sites.  Just today I made a $1500 payment on my Overstock card and a $200 payment on my Newegg card. 
• No more applying for anything and everything to artificially pad my overall credit limit as I realize my false belief that a higher overall credit limit would lead to increased approval odds and higher starting limits was wrong. I now realize that aggressive credit seeking is a detriment to my credit profile and was falsely under the assumption that "more is better". 
• Once all my newer cards are 12+ months old and all my balances are paid down I plan on checking my pre-approvals and selecting a card that is in line with my needs.
• Once I have a card that gives me better than 3% cash back at Walmart I will be closing that one as well. 
• Once I get some higher balance cards and longer AAoA I will close Wayfair and Boscov's cards and replace them with higher tier cards that provide better rewards and aren't tied to one store. 
• I am going to research student loan forgiveness and forbearance and work on getting my student loan taken care of. 

The advice I have got in this thread was absolutely the answer I wanted and has been greatly appreciated. If anyone has anything more they would like to add it would equally be appreciated and very welcome! 

[mikesonthemend]

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@Anonymous wrote:
...

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 based on the advice I have got in this thread I have decided to do the following:

• Wait at least another 5 months from my last application before applying for anything else which will put me at a year since my last app or hard inquiry. 
• I have already closed my Kohl's and Victoria Secrets store cards that I rarely use. 
• I will be paying my Overstock and Newegg cards down to $0 over the next 5 months and closing them because my wife already has better rewards cards for purchases from these sites.  Just today I made a $1500 payment on my Overstock card and a $200 payment on my Newegg card. 
• No more applying for anything and everything to artificially pad my overall credit limit as I realize my false belief that a higher overall credit limit would lead to increased approval odds and higher starting limits was wrong. I now realize that aggressive credit seeking is a detriment to my credit profile and was falsely under the assumption that "more is better". 
• Once all my newer cards are 12+ months old and all my balances are paid down I plan on checking my pre-approvals and selecting a card that is in line with my needs.
• Once I have a card that gives me better than 3% cash back at Walmart I will be closing that one as well. 
• Once I get some higher balance cards and longer AAoA I will close Wayfair and Boscov's cards and replace them with higher tier cards that provide better rewards and aren't tied to one store. 
• I am going to research student loan forgiveness and forbearance and work on getting my student loan taken care of. 

The advice I have got in this thread was absolutely the answer I wanted and has been greatly appreciated. If anyone has anything more they would like to add it would equally be appreciated and very welcome! 

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You are going to do great!  Best of luck!

[Anonymous]

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@Anonymous wrote:
I would like to provide further advice on the student loans. Federal student loans never go away. The will take your tax refund, garnish your wages, etc. It feels like a blessing because they have fallen off but really it's a brief reprieve. When they get placed with a new collection agency they will likely hit you twice as hard. I understand that you were defrauded by the University of Phoenix. You might fall in the forgiveness due to the borrower defense. You don't necessarily need a lawyer though it would probably help. It will also cease collection efforts on your defaulted loan. What is not on your side right now is time. Currently, the Dept of Education had not been refusing to process these applications for over a year. When they do they'll have a huge backlog. I would spend some time gathering evidence of the fraud because that could at least save you some time (and paying a lawyer for it). I would also consider other avenues that you could explore on your own, for free, while you wait. A CFPB complaint might go your way, especially if you have done the legwork and gathered as much paperwork as possible (unofficial transcripts, statements, etc.). It forced my servicer to admit their error when they were trying to force me into default due to a processing glitch.
If your application for forgiveness falls through or a lawyer cannot help you, you're looking at getting out of default and starting payments if you want be able to get a FHA loan. Your options will be rehabilitation or consolidation. Rehabbing can take 9-10 months to complete.
You probably already know all of this. I'm only saying this because you mentioned that you want to get a mortgage in a couple of years. As I was previously informed by another borrower, if you consolidate the loans, being defrauded by the original loans may become irrelevant. So basically your only option becomes rehab and the timeline required for it
If you decide you want to rehab early, just let us know and we can walk you through the process. Once you do, the borrower defense to repayment application will hault your payments. If not, I can probably provide you with a few good website that have tips from people who have also had to use the defense to have their loans forgiven, as well as various non-profit articles on the process.
Good luck on getting the loans removed and congrats on your progress in rebuilding your credit.

Borrower Defense To Repayment
https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/borrower-defense

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This is amazing advice. Thank you so much for posting it. I will definitely save this and start learning more about how it all works as soon as I have time! 

[Remedios]

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@Anonymous wrote:

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@Remedios wrote:

@Anonymous  If I may suggest something here  ( one last thing) 

How about you do nothing for a few weeks applications wise, instead when you have time, read threads around the forum. There seem to be profound misunderstanding on your part on how credit works and how excessive credit seeking affects your ability to borrow in the future 

Building credit  is not amassing the large number of cards in shortest period of time. 

I am not saying this to me mean, I've done it myself. I saw nothing wrong with it, I thought more is better. It can be. But not with the cards I've gotten, and certainly not with the cards you have. 

Cards you want, the ones that would actually be beneficial to you are either outside your reach right now, or if approved, you're looking at lowSLL and poor approval terms.  Most algorithms are going to see you as a very risky borrower at this time. 

Because you've been seeking credit so aggressively, lenders may approve toy limits to limit risk to them. 

You've picked up a bunch of rocks and now you have to carry them around . In terms of credit/payment history, 14 months is blink of an eye. 

You're pretty much shooting yourself in the hand that types the application. 

If you really want to build credit and improve your future odds at anything, wait till your newer cards are a year old. That's only five months away. 

While that's not a guarantee for approval, your odds go up. 

You're putting up a lot of resistance to solid advice, but that's your right. It's your credit, you're free to do with it as you please. I'm sorry we were not able to provide you with the answer you wanted. 

Good luck with your future efforts. I really hope it works out for you  

---

This is sound advice and I appreciate you taking the time to post. 

However, I'd like to mention that you are misinterpreting my questions as resistance when in fact I am just trying to learn more from those moreknowledgablee than myself when it comes to credit. In fact heavily based on the advice I have got in this thread I have decided to do the following:

• Wait at least another 5 months from my last application before applying for anything else which will put me at a year since my last app or hard inquiry. 
• I have already closed my Kohl's and Victoria Secrets store cards that I rarely use. 
• I will be paying my Overstock andNeweggg cards down to $0 over the next 5 months and closing them because my wife already has better rewards cards for purchases from these sites.  Just today I made a $1500 payment on my Overstock card and a $200 payment on myNeweggg card. 
• No more applying for anything and everything to artificially pad my overall credit limit as I realize my false belief that a higher overall credit limit would lead to increased approval odds and higher starting limits was wrong. I now realize that aggressive credit seeking is a detriment to my credit profile and was falsely under the assumption that "more is better". 
• Once all my newer cards are 12+ months old and all my balances are paid down I plan on checking mypree-approvals and selecting a card that is in line with my needs.
• Once I have a card that gives me better than 3% cash back atWalmartt I will be closing that one as well. 
• Once I get some higher balance cards and longerAAoAA I will closeWayfairr and Boscov's cards and replace them with higher tier cards that provide better rewards and aren't tied to one store. 
• I am going to research student loan forgiveness and forbearance and work on getting my student loan taken care of. 

The advice I have got in this thread was absolutely the answer I wanted and has been greatly appreciated. If anyone has anything more they would like to add it would equally be appreciated and very welcome! 

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I think you have a great plan there! 

My advice would be to stick around and read up when you can. You never know what you'll learn, and one cannot have too much knowledge 

Seriously, that's a great thinking on your part there 

[CreditInspired]

Hi there and welcome,

Since you already have a ton of credit, it is time to slow your roll on applying and allow the cards to age. I suggest going to the garden until the AoYAs turn 18-24 months. I suggest this age because of the number of CCs you have opened in just the last year. In the meantime, work diligently on getting your Overstock under 28.9%, then less than 8.9%.

After gardening (18-24 mos), work on getting prime cards. You really have way too many retail cards.

GL2U

[CreditInspired]

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@Anonymous wrote:

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@Remedios wrote:

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Hi and welcome to the forums 

You dont need to thicken your profile, you need to stop applying.  

Lower utilization by paying it down. If you cant, that means you're getting in financial trouble after only 14 months of using credit cards 

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I definitely agree with what you're saying and realize this is genuinely good advice. However, I have no idea if the defaulted student loan is going to reappear on my credit report so I am trying to establish as much credit and establish relationships with as many creditors as possible before that might happen. I could pay down the balances if needed but they are 24-month deferred interest purchases so I'd like to hold off if it's not going to make a big difference to my approval odds. 

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Please understand that even if you were approved for prime cards; so if/when the student loan default reappears, those CCs perform monthly ARs to see what's going on in one's credit profile. A derogatory of any kind could subject your CCs to adverse actions (CLD or even closure). So trying to beat the clock of a possible derogatory is definitely NOT a reason to continuously apply for credit. 

[CreditInspired]

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@Anonymous wrote:

I was also thinking that by adding a bunch of store cards that in the future when I added new cards it would help keep my AAoA from taking a dive. Also, I read that to get an "Excellent" score in the Credit Mix part of the credit score calculation required 21+ different accounts, is this not accurate? 

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Sounds like you were getting this info from CK, which is not good advice. CK is great for monitoring.

[CreditInspired]

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@Remedios wrote:

@Anonymous  If I may suggest something here  ( one last thing) 

How about you do nothing for a few weeks applications wise, instead when you have time, read threads around the forum. There seem to be profound misunderstanding on your part on how credit works and how excessive credit seeking affects your ability to borrow in the future 

Building credit  is not amassing the large number of cards in shortest period of time. 

I am not saying this to me mean, I've done it myself. I saw nothing wrong with it, I thought more is better. It can be. But not with the cards I've gotten, and certainly not with the cards you have. 

Cards you want, the ones that would actually be beneficial to you are either outside your reach right now, or if approved, you're looking at low SL and poor approval terms.  Most algorithms are going to see you as a very risky borrower at this time. 

Because you've been seeking credit so aggressively, lenders may approve toy limits to limit risk to them. 

You've picked up a bunch of rocks and now you have to carry them around . In terms of credit/payment history, 14 months is blink of an eye. 

You're pretty much shooting yourself in the hand that types the application. 

If you really want to build credit and improve your future odds at anything, wait till your newer cards are a year old. That's only five months away. 

While that's not a guarantee for approval, your odds go up. 

You're putting up a lot of resistance to solid advice, but that's your right. It's your credit, you're free to do with it as you please. I'm sorry we were not able to provide you with the answer you wanted. 

Good luck with your future efforts. I really hope it works out for you  

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OP, IMHO, please read Remedios' post twice, maybe even thrice, because it really is worth following it to a Tee.