Time to rebuild

[Anonymous]

Like many people cover has had And affect on my finances. I'm self-employed. At the beginning of Covid when Sales drops I stopped doing direct for myself and my employees because money was tight and I was just barely making payroll every week. I didn't deposit my checks for a month. I generally don't have to look at my personal bank account whatsoever. I deposited my checks. And I paid all my bills. My personal bank held the checks are drawn from my business account for something like two weeks or more. Long story short this resulted in 2 30 day lates on my credit report. I had 100% on-time payments up until that point. My vantage credit score at the beginning of this year was 745. That 30 day late Combined with keeping balance is a little higher than usual over the summer took my credit score all the way down to ~580 and stayed there for several months while everything was being paid on time.  With exception of the first month of quarantine's Covid actually helped our sales and money wasn't really a problem. Fast forward to the past couple months we are waiting on backordered supplies for months and I have been forced to not pay myself for a couple months now. I now have at least 30 day late on five or six accounts. Car payment and cards. I suspect that not only will I get current but I can literally pay off all of my credit card balances here in the next month or so. I'm sitting at high 400 score now from 745 earlier this year.  Even with nothing in collections. No derogatory's with the exception of 30 day late. Am I looking at multiple years to get a 700+ score again? 

[Anonymous]

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@Anonymous wrote:

Like many people cover has had And affect on my finances. I'm self-employed. At the beginning of Covid when Sales drops I stopped doing direct for myself and my employees because money was tight and I was just barely making payroll every week. I didn't deposit my checks for a month. I generally don't have to look at my personal bank account whatsoever. I deposited my checks. And I paid all my bills. My personal bank held the checks are drawn from my business account for something like two weeks or more. Long story short this resulted in 2 30 day lates on my credit report. I had 100% on-time payments up until that point. My vantage credit score at the beginning of this year was 745. That 30 day late Combined with keeping balance is a little higher than usual over the summer took my credit score all the way down to ~580 and stayed there for several months while everything was being paid on time.  With exception of the first month of quarantine's Covid actually helped our sales and money wasn't really a problem. Fast forward to the past couple months we are waiting on backordered supplies for months and I have been forced to not pay myself for a couple months now. I now have at least 30 day late on five or six accounts. Car payment and cards. I suspect that not only will I get current but I can literally pay off all of my credit card balances here in the next month or so. I'm sitting at high 400 score now from 745 earlier this year.  Even with nothing in collections. No derogatory's with the exception of 30 day late. Am I looking at multiple years to get a 700+ score again? 

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First, Vantage Score 3.0 is extremely volatile and almost no creditors use it. At a minimum, I would get the EX app and get your free Fico score from them to gague where you are really at. Maybe it is not as bad as 400.

Honestly, it probably will not be pretty regardless of scoring system. Lates across most of your accounts will definitely sting your scores and especially since they are very fresh. 30d lates can be overcome, but it will be more of a time and patience thing. Paying your bills will be step 1, but it will not get your scores back to where they were pre-lates.

I would also be concerned that once you pay your cards, that you may get balance chased or have some sort of AA (limits cuts, accounts closed etc.) from the combination of your scores going down, utilization going up, and the recent lates. If you do not go past the 30d lates, you can hopefully avoid the account closures. Have you reached out to your creditors at all to discuss you plans to pay soon? While it will not improve your scores, remove lates, or perhaps not change anything, it may help in some way to save your accounts.

Once you are caught back up and back on your feet, you can always try going on a GW campaign to ask if they would be willing to remove the lates. You may not get a yes the first time or at all, but you can always plead your case, explain covid and paying your employees and go from there. The lates remain for 7 years, so all you have is time to try until they age off. They will certainly hurt less as the years go by. Probably the first 2 years will be the most painful. You should hopefully get some gains after the 1 year passes. 

Aside from the lates themselves, once utilization goes down, that will also help greatly, scorewise.

What I should have led with is:

First and foremost is finances over fico. You need to survive and you have done the best you can and you managed to keep your business going and employees paid. You should be proud of yourself for managing this far! Once you can pay yourself again, worry about your credit then. While it weighs on your mind in the meantime, just remember it is most important to keep a roof over your head and food in the fridge and worry less about your credit scores. I do understand they are still important while running a business, but just hang in there, you have a plan, just keep moving forward!

Best of luck! Do let us know how it goes and if you need any more guidance/assistance!

[SouthJamaica]

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@Anonymous wrote:

Like many people cover has had And affect on my finances. I'm self-employed. At the beginning of Covid when Sales drops I stopped doing direct for myself and my employees because money was tight and I was just barely making payroll every week. I didn't deposit my checks for a month. I generally don't have to look at my personal bank account whatsoever. I deposited my checks. And I paid all my bills. My personal bank held the checks are drawn from my business account for something like two weeks or more. Long story short this resulted in 2 30 day lates on my credit report. I had 100% on-time payments up until that point. My vantage credit score at the beginning of this year was 745. That 30 day late Combined with keeping balance is a little higher than usual over the summer took my credit score all the way down to ~580 and stayed there for several months while everything was being paid on time.  With exception of the first month of quarantine's Covid actually helped our sales and money wasn't really a problem. Fast forward to the past couple months we are waiting on backordered supplies for months and I have been forced to not pay myself for a couple months now. I now have at least 30 day late on five or six accounts. Car payment and cards. I suspect that not only will I get current but I can literally pay off all of my credit card balances here in the next month or so. I'm sitting at high 400 score now from 745 earlier this year.  Even with nothing in collections. No derogatory's with the exception of 30 day late. Am I looking at multiple years to get a 700+ score again? 

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1.  Your Vantage scores are not FICO scores, so you may be getting misled by them. Please disregard Vantage scores and find out your FICO scores.

2.  Since your situation was brought about by the pandemic I would reach out to the lenders and ask them for "goodwill" removals of the derogatories.  If that doesn't work I would send verification letters to the bureaus, that sometimes gets things removed.

3.  Going forward, if you're going to be late on a payment contact the lender ahead of time and ask for a deferral based on Covid.