Penfed Member advice going forward..

[sweetland]

I just signed up with Pen Fed due to all the talk about the union on this site. What should I do to get my foot in the door at this point? I applied for the "bottom of the barrell" card and was turned down  : (   My scores are in the low to mid 600's with no recent baddies in atleast 4 years. Do they have a secured card to get going? I had no idea I was going to be turned down for that card!

[creditreformer]

they have 2 secured ccs.  my description is based on my convo w/2 penfed reps.

initiator- for those w/no credit and/or those w/bad credit but who have good credit over the past 6-12 mos.  500-1k limit.  must put up full amount of CL.  must have full $ of CL IN your penfed acct WHEN apping.

rebuilder- 500 max limit.  must put up full amount of CL.  must have full $ of CL IN your penfed acct WHEN apping.

they pull EQ.  i got DENIED for both w/EQ in mid 600s (near 660 last time i checked) and NO baddies since 2003, low utilization on 7 ccs, etc.  penfed said they're VERY conservative and stressed that my PAST mistakes hurt me more than my PRESENT good.  they stressed my unpaid tax lien (filed in 2003), so if you have BK and/or tax liens, they appear to be public record unfriendly.  they did say i could ask for recon.  i was surprised they denied me for a secured CC w/1k in my penfed acct.  seriously, if they gave me a 500 secured CC w/1k in my acct, they have a 'safety net' if i defaulted (which wouldn't happen).  even BA gave me their 99/500 secured cc and supposedly BA's also public record unfriendly, so i guess penfed's tougher than BA?

my plan w/penfed- keep the 1k in there for 6-12 mos.  work on keeping my ccs PIF, utilization low, perfect history w/new ccs (been rebuilding since early 07).  move back to repairing my credit via disputes.  maybe reapp in 6-12 mos when some more of my old baddies drop off.  hope that keeping the 1k in my penfed acct will help penfed 'favor' me in the future.

my plan for more credit- apping for US bank secured cc w/1.5k limit minimum (my 1st 4 digit cl cc)...hope they accept me.  if they reject me, i'll go for citibank secured cc.

[jmbfl]

PenFed is just not going to give you credit if you have unresolved baddies. Period! Aged lates are one thing - an unpaid tax lien is something else entirely. I doubt they will buy off on current anything - judgements, collections, liens, lates. None of it.

Keep with it. Keep some money on deposit. Talk to them. Take out a secured share loan and pay it back. It might help - but an unresolved tax lien is a real problem. You're to have to take care of that if you want to access superior credit products. And, on top of everything else, public records are not removed when they are paid!

[creditreformer]

Working on resolving the tax lien- not the easiest thing to do.  Part of the problem is that the ftb (calif) doesn’t update the tax lien so it looks like I’ve made NO payments when in reality, they’ve been garnishing my wages on and off since 2003.  I won’t even get into the exorbitant (and erroneous) late, interest, penalty, etc. charges.

penfed (and other ‘good’ creditors) just see the full amount of the tax lien and it’s a mess to deal w/.  PIF is currently not an option not to mention the amt. claimed owed is wrong.  Tax liens are a bit of a unique beast b/c the reporting clock is extended if you pay.  currently, CRAs say the unpaid tax lien will drop in 2013.  if I pay it, it will be extended by 7 yrs from the date it’s paid off.  I’ve heard of people paying tax liens and having them on their reports for 15-20+ yrs.  I’ve heard of people NOT paying tax liens and having them DROP after 7 yrs.  In hindsight, BK probably would’ve been a better option.  @ this pt, the tax lien’s my biggest and most troubling baddie fico wise.  however, even w/it, I’ve been able to rise from mid-high 500s to mid-high 600s in the past yr…and I’m hoping I’ll rise more once my latest round of ‘repairing’ efforts kicks in and some of my ccs age more.

I’m in w/BA through the 99/500 and BA said if I keep using my current ccs as I am, that they’ll graduate me in 9-10 mos. and I’ll get at least a 500 cl, so that will be my first 4 digit ‘prime’ unsecured cc.  Us bank seems willing to work w/me through their secured cc and said it will graduate in 12-13 mos.  by then, I can dump first premier and my ficos should be ok.

Both penfed reps were surprised that I was denied for their secured cc, so perhaps *some* applicants w/tax liens and/or other public records are given ccs through penfed?

[jmbfl]

There is a common confusion between debt on your credit report and debt that YOU OWE. Debt that you legally owe may not appear on you CR. Doesn't mean they cannot collect it. Debt that you DO NOT OWE (may have already paid or be an error) will appear on you CR. A tax lien that does not appear on your CR may still be collectable. Also, debt that is past the SOL is debt that you still owe - they just have no means of collecting it as their remedies are time barred.

An unsatisfied tax lien will NEVER go away unless it is someone's oversight. You would have to check your state's laws on tax liens to see how they are treated over time. Yes, the currently reported tax lien will fall of you CR's after a period of time, but without satisfying the underlying problem not only can the lien be refiled, but other collection activities may occur as well. As for dumping owed taxes in a BK it is possible, but taxes are a separate class of debt and resolved differently in BK than consumer debt.

[creditreformer]

Jm, I know the difference between debt you owe and debt that shows up on your cr.  I also know that there are SOLs for certain things and that if someone sues you for that, you can raise SOL (among other things) as a defense.  I also know that despite the common view that taxes NEVER go away, that is NOT true under certain situations.  I also know that our govt makes ERRORS in deciding what you owe and are SLOW to fix those errors (if they ever fix them).  I also know that even if you make ANY payments on tax liens (through say wage garnishments), the tax agency does NOT update the lien records and so your lien looks like it was NEVER paid even if you have made SOME payments. 

I also know that if I PAID the tax lien NOW, that would EXTEND the time it remains on my CRs which may mean that rather than dropping off in 10 yrs (which is quite a long time anyway), the time it remains on your CR may be extended up to 17-22 yrs- and frankly, I can’t see the advantage of that.  I also know that no matter how hard/long people TRY to resolve tax liens, govt agencies are NOT exactly the easiest to deal w/.  Trust me, I’ve discussed this matter w/several esqs., some of whom were former IRS agents.

As I said, I would like to resolve this tax lien (and have been trying to for 5 years), but I am not going to put myself in the position where the lien ‘extends itself’ on my CR for another 7-12 years.  At this point, I am a bit ‘stuck’ on progress through no fault of my own.  People think CAS and cc cos. are a nightmare, but they are a walk in the park compared to tax issues.

[Anonymous]

Keeping in mind that YMMV, PenFed is not PR unfriendly. If you have a PR, make SURE it is OLD (6 or 7 years old) AND FICOs in the 700's.

[jmbfl]

I womder what exactly the G has a lien on... If it is real estate it will be satisfied eventually.

Best of luck.