Point bump after medical collection falls off?

[isoldmyatlas]

Hi all,

Last night my SO and I ran his TU & EX reports (EQ required a mail-in, so we skipped that)  to find out what was on them, since he knows he has bad credit but has been afraid to actually look at them.

TU shows just one item - a medical collection, paid, expected to fall off February 2013.  Didn't sign up to check his actual score.

We did check his EX score - 597 - with the same medical collection & expected drop off date.

When this collection drops off, how much of a score bump can we expect?

He's never had any credit cards and his student loans have been paid off for a few years.  Last night we had him app for the Cap1 Newcomers card (which I was approved for with no credit), but he wasn't approved.  I know they don't really do recons.

We'd like to start rebuilding his credit but I'm unsure if we should go the secured card route now and eat the annual fee, or try again for an unsecured card in February or March.  Any input?

[Anonymous]

If that medical collection is the only negative item on his report then the removal will help a lot. It's kind of unclear from your post whether he has any active open tradelines at this point. If not then a secured CC or two would definitely give him a score boost. The student loans will satisfy the installment lines that FICO likes to see as long as they remain on the report. If there are additional negative marks on his reports then the drop off of the medical collection will not have a significant effect.

Also in case you are not already aware the score you purchased from EX is not a FICO score or one that lenders will use so that is not a great indication of what his true credit score is. You can purchase his FICO scores from EQ and TU on this site. You have limited ways of getting an EX FICO without an application for new credit or a mortgage. A read through the forums will provide the alternatives.

You can find a number of sites that will allow you to track his progress in repairing / building his credit through monitoring all three credit reports. There is a great sticky on credit monitoring services that you may wish to read. I prefer the USAA monitoring as it allows a daily pull if you wish of all three. Again just ignore the scores and the advice and focus on the data only. When you have questions on what to do to improve his (or yours) credit profile the forums are full of knowledgeable members who will offer what advice they can.

[RobertEG]

+1

Use of discretionary, revolving credit is a large factor in the FICO risk analysis.  As a future rebuilding move, revolving credit is a good move.

Secured cards are a great way for those rebuilding to get revolving in their credit file.

However, dont expect an immediate improvement.  Several factors will initially be negative, but are necessary for the long haul.

The new inquiries needed to get the card will impact for a year.  Accts under one year will impact for the same time.  Average age of accounts will be lowered.

But mix of credit by showing the presence of revolving and a mix of revolving and install will improve.

It will take time to recover, but in my opinion the right step for the longer term.

[isoldmyatlas]

Yeah, when he gets home tonight we are probably going to buy his TU FICO score.  That's the one that only has the med. collection on it.

I don't love the idea of him having to go the secured route and pay an annual fee to get started with revolving credit, but I will try my best to not project my own distaste for it since we're in very different credit situations!

If he can get a BankAmericard or something and manage to get 6mo of on-time payments under his belt by the time February rolls around and the collection drops off, it will probably be worth it for the score jump.  It'd probably be a bigger jump if he had an active tradeline at the time of the drop-off, yes?