Went from Good to Poor - Need advise on how to recover

[CRecovery]

Hi Everyone any advise would be appreciated.

Approximately 1.5 years ago - my DH and myself had decent credit around 720 for all CR's. We started a business (we had no savings and I continued to work at a W2 job) - business was great - customers stated that they would have a great deal of work for us. YEAH!! So - based on the added income we purchased a 2007 vehicle and a 2005 vehicle and a "new" home to us. Within a few short months - the work ended and my DH was forced to go back to work for someone else making far less then the business was bringing in. Every week we were loosing $3k to 3.5k. A few short months after my DH was involved in a vehicle accident thru work - he has been out of work for over 1 year now with surgery pending this month. Soon after not being able to pay for the vehicles and no hope in sight the vehicles were repossessed and the home foreclosed on. We moved in with a family member in another state to get a fresh start. I have landed a job making $40K. YEAH!!

Our credit has taken a very hard hit. As I knew that our credit was not going to be good with 2 repos (have gone to collection) and a foreclosure, I really wasn't ready to see my score. I only pulled one - I didn't want to cry to much. I only pulled my Equifax on 2/08, it was a meager 546! I was happy to see it wasn't 300 something! Probably saved by my student loans ($50K) that are on deferrment so they show as pays as agreed.

Now it is time to rebuild and make sure that we don't live beyond our means. I have started a savings account - there isn't much in there but that is okay. I applied for and received a Cap 1 Platinum card with a CL of 300. YEAH! I have a budget that I am adhering to. When I deposit my payroll check - I subtract the amount that I have budgeted for gas. I am planning on using the cc to pay for gas and then PIF when the bill arrives.

Any ideas on how I can continue to build my credit from here? The amount of the repo collections is the negative equity in the vehicles. I certainly do not make enough to pay them off.

Thanks for the help!

Message Edited by CRecovery on 03-04-2008 01:25 PM

[llecs]

Welcome to these forums!

Sorry that you went through that. Time to draw a line in the sand and move up in scores.

The credit limit of a CC doesn't matter, so as long as balances report less than 10% each month on your report. I say that because your focus should be getting out of debt and saving for the future. However, you might want to add a store card to round the credit mix to improve your scores, assuming you have no other CCs.

I'd also pull your other two credit reports here to see your scores. One score might be higher than the other.

After you pull your reports, post any negative info in these forums; people here are truly interested in helping you. They can advise you on what to do and what not to do based on your situation. Read, read, and read also. Start attacking one thing at a time and you'll be on your way in no time.

Also try to bring in more income. Start saving for the future and get out of debt. Try a business again. I started one 11 years ago with 200 bucks to help pay for school and still am reaping the rewards today.

[CRecovery]

llecs, I have started a savings and am trying to contribute something to my savings every paycheck, this task isn't easy considering I'm supporting a family of four. I understand having the card at 10% or below when it reports does anyone know when Cap 1 reports - Is it the same time every month or does it go by your due date? As far as the store cards - I know of Sears and JC Penny - what others are there and who would you recommend, considering the FICO score? I do plan on pulling my other reports to start to work on those as well. Should I also pull my husbands CR's & FICO scores and work on them at the same time? Until after April 15th, I can not get another job - I work in a CPA office and am working 55 hours plus 2 hours of travel six days a week. I do have a few friends that I prepare taxes for and they pay me - that additional money will be going straight to the savings account! I know I not only need to save for an emergency fund and retirement but to have money for deposits to move out of my family member's house. Thanks for the advice - I do appreciate it.

Message Edited by CRecovery on 03-05-2008 08:15 AM

[llecs]

You'll recover, no doubt about it.

I don't know when CapOne reports. Maybe others could comment. But usually CCs report on the day your statement cuts. Ideally, you need to be happy with your balance on the statment date.

Store cards...I have Macys, Bloomies, and Target, and I like all three. I only used them twice in the last 6 months, but they seem good. Others may include Wal-Mart, Best Buy, Circuit City, Gap, Old Navy, etc. The favorite here seems to be Target.

Before applying, though, try to repair your credit. Advice is great in these forums. This will cause your scores to rise and improve odds during applying.

Per your DH, its up to you if you want to pull those too. It does get expensive. Personally, pulling before repair gives you a map or guide from which to work from. You could always work off the free copies from annualcreditreport.com so you can see what is good and what is bad. Don't pay for those scores because they are not FICO scores.

And having side jobs is good. I did the same as you did. Prepared 1040s for folks using TurboTax (if they only knew). Also did corp returns 1120s, 940s, 941s, etc. Great for cash this time of year!

Some here may cringe when I mention this, but I recently started to listen to Dave Ramsey on-line, but his radio show is most everywhere. Dave is anti-credit. On principle I agree with him, but in the short term, having good credit is important for a great lower mortgage rate if you can't pay in cash for that home. But he has some excellent pointers on getting out of debt and saving money.

[CRecovery]

Thanks for the great info - I know the "Road to Recovery" will be long and hard - but it will be worth it in the end.

Leona