I'm so lost

[Anonymous]

I really don't understand any of this, I just know I seriously screwed myself over being an irresponsible person. My current Equifax score is 584. A few years ago I paid off all my debt but just assumed it would be easier to avoid all credit from then on. Now, obviously I know that was dumb. I'm just lost how I can get any increase in my score. I recently applied/received for a capital one card, $300,  but according to the simulator If I pay all bills on time for 24 months my score would range from 584-614 (no increase or 614 best case, still no mortgage- in 2 years.) It said if I applied for another card ( I'm sure I can get an orchard bank $200-300) the score would go up to 594-624, but then it says I shouldn't seek new new credit.

A guy at the bank was telling me about a CD secured loan. I would have to take out a  a 1 yr $5,000 CD and then take a loan against, so basically I'm paying the bank to hold my money.  Would that really help? If so I'm desperate enough to do it but damn. Anyway, is there anything else I can do that I'm missing? I did dispute a few charges do to being on active duty and hurricane KAtrina really screwing things up, but I'm not holding my breath on that.

EDIT for clarification:

In my whiny rant I didn't mention my flags are 5 accounts with late payments mostly in the 2005-6 time frame one in 08.  2 were charged off  in '05 was a charge off which I disputed because the company told me I account was clear due to Hurricane Katrina, the other in '08 was a camera speeding ticket I never received. No bankruptcies or anything, I paid them all off.

[haulingthescoreup]

Hi, welcome to the forums!

A secured loan won't help all that much. Yes, a healthy tradeline (any type of credit account, revolving or installment) helps, but it's revolving credit that helps really move your scores.

I'm surprised that your scores are so low, as your only negatives are lates and charge-offs. What month was the one in 2008? --in other words, has it been 24 months yet?

I'm assuming that your EQ score is from FICO. If so, look on screen 2. What are the negative factors, listed in order? These are the things that are holding down your credit scores, listed in order with the most damaging at the top.

I'm guessing that you need to get in with a credit union. They are good about working with those who've had some hard knocks in credit, and the credit cards they issue generally have better CL's. Are you still eligible for Navy Federal CU? (active duty, reserves, etc.) I know you're eligible for USAA and PenFed, although these two will be a bit tougher for cards, at least for right now. But Navy would be a great match for you.

If you do want to add an installment product, like what your bank is waving at you, it does help --it adds another open, healthy type of credit, and it adds to your "credit mix." But you'll do best to have 2 or 3 open credit cards. Revolving credit is the riskiest (as you've found out, unfortunately), so healthy revolving credit is rewarded in the scoring formula.

In the meantime, keep working on the negatives. The two most important are the charge-offs, especially the more recent one.

[RobertEG]

First, please list all open, active accounts you now have, and the last reporting of those accounts to your CR.

I am presuming that, since you recently received a FICO score, you have open accounts reported in the last 6 months?

[Anonymous]

To haulingthescoreup:

Your question about the 24 month time frame got my attention.

"I'm surprised that your scores are so low, as your only negatives are lates and charge-offs. What month was the one in 2008? --in other words, has it been 24 months yet?"

I'm new to this so I'm curious.......what's important about 24+ months out when dealing with lates and charge-offs?

[haulingthescoreup]

30 day lates stop counting after 24 months, other than in the notation of multiple accounts with negatives. (Splitting hairs, I know.)

60 day lates start being scored like 30's after 24 months.

Other derogs continue to be scored as what they are (collections, charge-offs, etc.), but they all weaken with time. Having clean records for 24 months does help your scores (even though the remaining negatives still hurt), and lenders often want to see a certain length of time without any lates, etc, before taking a chance on you again. Even with some impressive messes in your past, a string of 24 squeaky-clean months is often taken as an indicator that you've probably changed your ways.

Well, not you personally, of course!