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479 to 579 in six months is not very likely. 120 late is a major hit to your FICO scores. The only way I see of correcting this in six months is to start a goodwill letter-writing campaign and request a goodwill adjustment. Write a letter to the CEO and president of the company with compelling reasons for the loan company to remove the reported late payments. I would explain the misunderstanding. Be persistent. Write weekly. At some point, they might get tired of addressing your letters and remove the late to be rid of the headache.
Ultimately, what a person needs to improve their FICO scores and build credit are three open credit cards (secured or unsecured) in good standing and one open installment loan in good standing such as a car, home, student, personal, share secured, or credit building loan. This combination is what the myFICO score theorists here have determined is what you need for optimal credit building and FICO score. You can have more CCs and more installment loans, however, this will not increase your FICO scores.
Next, is paying in full all of the credit card balances each month, before the posting date, except one. This is called the All Zero Except One (AZEO) method. The one credit card you allow to post a balance needs to be less than 8.9% of the credit limit of the card. So using one card each month to buy lunch, letting it report and then paying in full will maximize FICO scoring.
The installment loan will have its greatest impact on your FICO score when the amount owed is at its smallest such as a few months before the loan is paid in full. If you don't have an installment loan you can check into SelfLender or a Share Secured Loan at a Credit Union.
Keep in mind, building credit is a marathon, not a sprint. It involves demonstrating to a potential creditor that a person can handle credit responsibly. Having open, active accounts that are being paid on time and low credit utilization is the fastest way to build good, solid credit.
Self Lender would NOT help your FICO score any further, however, it would give you another positive tradeline, thickening your file, and help you towards building an emergency fund when you are through paying it off.
@Anonymous wrote:
So I need to get it together. I have five student loan accounts about $20,000 and my car about $10,000. My car is always on time, but my student loans recently reported 120 days late because of a payment plan misunderstanding. They stated they do not do retroactive reporting, and here we are. I was only in the mid 500s when I took this hit.
I've gotten a Fingerhut Fresh Start account today, but I don't have the extra money to open any secured cards right now. I could maybe do one. Are there any Fingerhut-similar sites or places that do very minimal personal loans and report? Is Fingerhut and one secured card enough to raise my credit atleast back to 579 in six months?
Any suggestions welcome!
I wouldn't rush to open new accounts at this time. I would concentrate on making a good record with what I have. You have enough credit to be in the 800's when your negatives are gone.
Bear in mind that the passage of time, without new applications and accounts, increases your scores, while every new application and account costs you points.
@Anonymous wrote:
Thank you both. I don't have any credit cards except the secured I applied for today. I supposed my credit dropped so much because my car and student loans are the only things there beside collections. I'm pretty much resigned to waiting around on two more credit cards and natural improvement over time. Its just a bummer that I'm 27 and would love to have normal credit now.
A couple more things for you two:
I just registered for a trial to see my FICO/Experian scores. Apparently it is 549? I have always used Credit Karma and my TransUnion and Equifax are 489 and 479. Why are the numbers so different across these two and which are the more important numbers?
Credit Karma's scores are completely meaningless. Your FICO scores are what count.
You mentioned collections in a couple of posts but not the original. Those are holding your score down too just like the 120 late. Is there any way you can pay those off while requesting they delete the collection? I'm sure getting the student loan lates removed will be very difficult, but depending on the company and amount you may be able to get the collections gone. Every baddie that isn't on a report helps.
