Best Course Of Action - Boost Credit Score

[Anonymous]

According to credit karma, credit score, and discover my credit scores are Transunion 705, Experian 707, and Equifax 713. I am trying to increase that credit score so that I can be a co-signer on an auto loan for my daughter (now 20). But I don't know what is best???

Help, please!

Balance on Loans and Credit Cards

Cap 1: $793.90 Balance / N/A Credit Limit / $47.00 a month / Opened 2014 – Adverse on CR (see below)

Cap 1: $593.25 Balance / $2500.00 Credit Limit /$33.00 a month / Opened 2017

Discover:  $2345.36 Balance / $5100.00 Credit Limit / $68.00 a month / Opened 2017

Care Credit: $789.52 Balance / N/A Credit Limit / $54.00 a month / Opened 2014 - Adverse on CR (see below)

Issues/Adverse on Credit Report

The Care Credit account above shows - Payments managed by financial counseling program.  It shows the date of last payment as January 2019 while I am still paying and current. Date closed 2015.

The Capital One account above shows - Account previously in dispute – now resolved by data furnisher.  It shows the date of last payment as February 2019 while I am still paying and current. Date closed 2015.

So I don't know if I need to pay off/pay down the two old account with adverse reporting on the credit reports? Or, transfer the two most recent credit cards to 0 percent interest rate cards (will have to apply). Or, do I try again with a goodwill letter to the adverse creditors on credit reports?

Any thoughts?

[Anonymous]

I would pay off the two adverse reporting accounts. If they're reporting closed then it may show up as those balances being 100% to limit, which would reduce your score. The next thing I'd do after that is try to get the Discover under 30% to limit. Getting accounts below 30% or 10% thresholds would be good, if possible.

[Anonymous]

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@Anonymous wrote:

I would pay off the two adverse reporting accounts. If they're reporting closed then it may show up as those balances being 100% to limit, which would reduce your score. The next thing I'd do after that is try to get the Discover under 30% to limit. Getting accounts below 30% or 10% thresholds would be good, if possible.

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^^^good advice here

Also, cosigning should basically always be avoided IMO. You could take 6 months and work on your daughter's credit and get her ready for her own loan.

[Trudy]

As quantom001 states, the closed accts with balances are reporting at 100% UTL.  If you can, paying those off is a great idea.  You are currently at 60% aggregate UTL.  Eliminating those balances would take you below the 48.9% UTL threshold and should garner some points.  But an additional $614 would bring your aggregate below 28.9%.  Ideally you want no more than 8.9% aggregate and 28.9% individual.

You note seeking an auto loan which may use auto scores and not your FICO 8 scores.  Auto 8 doesn't seem to care as much about # of accts reporting, but some Auto scores take this into account.  With 5 of 12 of my accounts reporting a balance (3 of 9 CC) it is the 3rd reason code for my Auto 5 (EQ) scores and 4th on my Auto 9 (EQ) score.    Depending on the FICO model you may want to consider reducing # of accts reporting a balance, but wiping out the closed accounts will contribute to that.

You also speak of a monthly amount.  When looking to go below a known threshold you have to consider the interest that will post if not paying the balance in full. The posted interest can push you out of a goal threshold.

Although it seems like a good idea to get a 0% card to reduce the interest on the other cards, I'm not sure how auto loans react to new accounts.  They too are listed under reason codes on my auto scores and my newest account is 9 months old.

And I see no harm in a Goodwill campaign.  It can only help if it works.

[Anonymous]

Ok, I have enough to pay off the two adverse accounts. However, the last time I paid off a derogatory account such as those mentioned, the derogatory statements remained. For example, SYNCB/Wal-Mart account paid off a year ago still shows Available Credit:  $1500, Reported Balance:  $975, Debt-to-Credit Ratio:  65%, Payment is payroll deductible.

Current Cap 1 (suggested to pay off) shows Maximum Delinquency of 30 days in October and December 2015. High balance of $2,620 from 11/2016 to 04/2019, Credit limit of $2,550 from 11/2016 to 04/2019 and something about DRG for March and April (thinking from first goodwill attempt). I don't understand why creditors do not report the current balance.

Do you think it is still best to pay off even if the derogatory stuff remains?

We would love to avoid cosigning. Just helping with the down payment and tag would be ideal. However, I don’t know how to avoid that considering she only works part-time and plans to add college this fall. We have attempted to show her some credit building steps such as borrowing against her savings (two months remain). She has her first small limit credit card $300. Beyond adding her as an authorized user on cards we keep in good standing, we have no clue how to prepare her. We are ok with finding a vehicle we can cash for or used. But we don't want something that will be leaving her stranded.

Thanks everyone, 

We will keep to the suggested goal of no new credit and paying off balances.

Just a few more minutes of your time for a bit more clarification will be highly appreciated.