Improved credit score from 580-665 in 3 months. What now?

[Anonymous]

Hi, this is my first post but I’ve been lurking on these boards for a few months, right around the time I made a conscious decision to prioritize my credit, and am very impressed with the overall knowledge and resourcefulness of the users here.

I’m a single guy in my late 30’s, have a very limited credit history, though luckily not a bad one. Income around $55k. My Credit Karma score was 582/585 in mid December 2017, the first time I had checked.

My credit timeline:
12/4/17- Financed ‘17 Accord with co-signer

12/5/17- Applied for Capital One secured card. $200, approved.

12/16/17- Paid off $160 to collection agency from 2014, only derogatory mark. Did not ask to have it removed, didn’t know this was an option.

1/4/18- Applied for Citi secured. $200, approved.

2/1/18 Applied for Chase Freedom Unlimited (long time Chase/WaMu checking account holder, since 1995, otherwise don’t think I would have had a chance. Was actually denied at first but that’s a different story). CL $3,500, approved and received on 2/20

My first Chase statement recently cut and my scores have updated from around 653-665 accordingly. I’m at 9% utilization as I’ve let the 2 secured report 0% and the Chase card 9%. I intend to follow this routine with an occasional 10-19% report.

So I now have 3 credit cards, a $3900 limit, and one car loan. I also fully intend to get the Chase Sapphire Preferred later this year, after I’ve established a good standing on the Freedom U, which I believe is part of the 5/24 restriction.

So my question is do I sit on what I have? Get rid of the secured cards (or wait for them to graduate)? Let everything garden? Any advice is greatly appreciated!

[Anonymous]

The first thing you want to do is get a genuine FICO score to see where you stand.  Credit Karma scores are not FICO scores and are not meaningful.  The best way you can get one for free and super fast is at creditscorecard.com, which is offered by Discover to everyone even if you don't have a Discover card.  That will be your EX FICO 08 score.  If you're interested in your EQ and TU FICO 08 scores as well, you can grab those at Credit Check Total for $1 along with the EX FICO 08 score you already got from creditscorecard.  Please report back your FICO score once you get it and we'll take it from there!   

[Anonymous]

My FICO 8 is 660 according to Experian and creditscorecard.com. I should also mention that in my initial denial letter for the Freedom Unlimited they reported that my equifax FICO score was 707, this was on 2/2/18, before approval and subsequent report obviously.

[Anonymous]

Nice job getting that EX score.  It's good to know where you stand at 660 and you can go back every 30 days and refresh that score.  The biggest thing holding you back is going to be that one negative item you referenced in the original post.  I'd contact the creditor and see what you can do to get it removed via goodwill.  Basically, you just want to apologize and ask them to remove it as a one-time gesture of goodwill.  You can try this via phone, snail mail, email, etc.  Getting rid of a lone negative item can raise your FICO scores 60-80 points, which of course would be huge for you. 

Outside of that, you're in a good place with 3 cards and 1 loan.  Just sit on those and let everything grow.  When the time comes that you can unsecure the cards you can do so.  Definitely don't close them.  Once they are unsecured you may be able to product change them to a different card offering that better suits your wallet.  In the meantime just use them and pay them off in full every month.  For maximum scoring benefit, allow 2 out of 3 of your cards to report a $0 balance every cycle, while the 3rd reports a small balance.  "Small" means 8.9% or less of the credit limit.  On a $200 limit card, that's a pretty small balance, which may be difficult to do at times depending on how your spend goes.  I'd suggest using your Chase card, as with a > $3k limit you could let a couple hundred bucks report on there and you'd still be at 8.9% or less.

[Anonymous]

Thanks for the reply! I’ll contact the collection agency this week to see if they can remove it. I didn’t realize such a small ding could be so impactful, even after paid off. If they won’t remove it I just have to wait the 7 years for it to disappear?

As far as utilization goes; keeping it under 9% total and reporting 2/3 at 0% is exactly what I plan on doing. I’ve been letting the secured cards report 0% after activity and the Chase card reports a small balance, last statement was $331 I believe.

Should I still go for the Sapphire Preferred? It’s the only other card I definitely have my sights on for this year because I want to be able to pair it with the FU. I was thinking of applying as soon as I get a pre-approval notice or my chase banker suggests it, as it seems to practically guarantee approval once she gets involved.