Credit Questions

[cpchow]

I have a 55x FICO score at the moment (all 3 credit bureaus give near the same).

I want to apply for a car loan in September. 

I will be able to pay for at least 50% of my revolving/collection accounts.

I had 4 collection/charge offs CC.

I have 3 collections. 

I plan on getting a WF Secured Card (since I bank with them), USAA AMEX Secured Card, and Bank of America Secured Card. 

If the third isn't necessary, I'll ditch the WF Secured.

Will this increase or decrease my score?

I've read up and it seems that the first CC/revolving account will increase my account as the second one would show a minor increase/decrease. 

In that sense, would one be OK?

Does the AMOUNT of the secured cards matter? I plan on doing $400+400 on two cards for groceries and 'fun' card and pay them in full each and every month.

Any advice? 

I do have one Hard Pull (or several but was told that several HP from seeking a car loan will only count for 1 in a xx duration) that isn't on my report yet. 

[webhopper]

Hi and welcome to Myfico forum!

I think that you will definately benefit from opening the secured cards that you stated in your post.  In addition, a secured installment loan will help you re-establish positive installment history, and will improve your chances of getting a car.

In addition, you may be able to address some of the COs and/or collections using the strategies from the Rebuilding Forum.

You will find a wealth of information here!  I am going to suggest that you start the journey by reading the following threads: 

What Steps Do I Take?

That will give you a great place to start!   Also you want to opt out first before contacting these creditors... to opt out go to: www.optoutprescreen.com

The next advice I can give is to contact and deal with each creditor one by one. If you wake all the sleeping bears at once you may not be able to deal with them fast enough to avoid a judgment being filed. Best of luck and if you use the search function to search for each of your creditors you can see how others have dealt with them successfully in the past. Best of luck!

[boomhower]

Yes, adding the three cards will give you a boost in your score.  I would certainly do three as long as you can comfortably afford the deposits.  The amount is hugely importan in and of itself.  The only thing that is important is that you pay your statements before they close.  With the small limits small balances can result in a high utilization which will kill your score negating the positive effect.  For max score pay off two cards completely and leave a small balance<9% of that cards credit limit.  If possible wait for the cards to have reported for six months before applying for the loan for better score effects.

It is true that all HP for car loans will count as one but the time limit varies depending on the formula being used.  Usually it doesn't affect most people as the average time from search to buy is three days.  If memory serves it's 14 days for most formulas.

How old are your derogs?  Have you verified they are accurate and reporting correctly in every way.  If they are not dispute and have them removed.  Do some reading and research on how to do this the correct way to actually get them removed.  The strategies for OC's and collections are very different.  This is an involved topic and will consider spending a good amount of time dedicated to do it but the results are certainly worth it. 

When you go to purchase your car depending on your banking relationships you can attempt to secure your own financing before shopping, particularly if you have a good relationship with a local credit union.  But let the dealership have a crack as well.  They have sources and programs that you cannot access directly yourself. 

Good luck.

[cpchow]

Thanks for the replies

So I'm slightly confused. I.E, is it better to have 3 secured cards with 400$ a pop or 1 card at $1200? 

Also, would it be ideal to apply for three at the same time? Is it a soft or hard pull? 

[Anonymous]

I would say it is best to get only one card with the higher credit limit.  In the long run it may be good to have the 3 cards but that is years from now once they have establish plenty of good credit history.  In the short term (within two years) you have to know that adding three cards will add three credit inquiries which will negatively impact your FICO score.  Also in general adding new accounts can lower your FICO score due to it lowering your overall average length of history but that may not affect you if you don't have any other open revolving or installment accounts on your CR.

[InvincibleSummer3]

I disagree with the previous poster. In my case, I needed multiple revolving tradelines to help dilute out the effects of my collections. FICO doesn't score based on what your credit limit is; since payment history counts as 35% of your score, it made sense for me to get multiple tradelines reporting. AAOA is only 15% of your score, so while you will take a hit to the AAOA short-term, good payment history & utilization will help tremendously.

The only reason to do one larger-limit tradeline is if you are looking to get higher CL later on. Lenders are likely to look at responsible use of a higher CL as good reason to grant higher limits when opening new accounts. But if your goal is to raise your score ASAP you might not care about having larger credit limits. Keep in mind September is only 5 months away, so if you could give any new account at least 6 months you might see better results.

Last but not least - all your cards except one should report zero balance, and the one that has a balance should report between 1-9% of your available credit. This seems to be the Recipe For FICO Maximization around here. Good luck!

[Anonymous]

How many cards you have and what the CLs are really don't matter.  It is how they are managed.

When you are rebuilding it is sometimes a necessary evil to apply and get dinged for AAoA or an inquiry, etc.  You need revolving to help out.

[cpchow]

Yeah Ill probably wait for the 6 months when all the Soft/Hard pulls are off.

My credit is really bad (545 FICO TU) because of a very hard time with the family at one point.

7 CO from 4 Credit Cards, 1 from Utility, 1 from Electronics Loan, and GE Care Credit. Along with that is 4 collections.

I really don't know where to begin. :/

I was thinking about resolving the CO using PFD letters which accumulates to $2,800.

Then I was thinking about resolving the collections using PFD letters at a percentage of ~$7800 at 20-25% as all of them as been bought by CA of course. 

Does this sound reasonable? I'm only 22 (23 in a month) so I know I kinda screwed up at a  young age, but trust me, it was for good reason (to survive at that time). 

I really want my credit back regardless of the auto loan. I'm not worried about the auto loan because the bank would put my risk factor as low even with my credit when I put 60% deposit down and with my combined income at that time. 

Where should I begin?

I got declined by BoA Secured & Cap1 Secured because of past CO with them. 

I got approved for WF Secured for $300.

I'm trying to find a second secured card... any ideas?

Thanks

[InvincibleSummer3]

Don't be sad - you're young enough that you could be in a great place within a few years. I'm here because of some big-time life drama too, and I'm quite a bit older than that. I started at a 480. Things happen.

Your PFD ideas are great. Attempting a PFD's always a workable idea, in my book. Have you DV'd the CAs already?

WF took forever to decide I could have a secured card, and I'd been banking with them over a decade. High-five on getting that one! You could try US bank, or a credit union. I joined one as part of my rebuilding and it's worked out beautifully.

Above all - don't get discouraged. You can do this.

[cpchow]

Thanks! Just applied for US Bank Secured, but need to verify if I got approved by the BD numbers. 

Will do that on Monday. I want at least two secured cards. Hopefully I can get three.