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Worried about my credit future- looking for input

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Member

Worried about my credit future- looking for input

Hi all,

First, I need to thank these forums for such useful advice over the years- although I haven't posted previously, I have read them religiously and used much of the advice I found here.

 

I will try to keep this short.  In 2014-2015, I had extensive medical bills and underwent treatment not covered by insurance.  At that time, my credit tanked.  We managed to pay off huge medical bills w/o going into collections, so I have no collections or judgements in my history ever.  However, I missed numerous credit card payments (several times at the 90 day late mark)- partially because of cash flow, and partially because honestly, that wasn't what was top priority in my life- getting better was.  I had one credit card (Discover) closed by them but suprisingly, they kept another one open with a small limit (for which I was so grateful).  We were never late on mortage or car payments during that time.   So, in early 2015, my credit scores were in the very low 500's across all three agencies.  

 

Flash forward to now (2020)- health is great, and after much hard work (and again, by advice gleaned from these forums) my credit scores are much better- ranging from 758 to 787 across the three agencies (FICO scores, not the ones you all call FAKO).  

 

Here is my current status:

Discover Card- currently has an 12,000 CL and has been opened for 27 years.  No late payments since May 2015.  They have given me unasked for CLI over the years (it was at a 3000 limit to start)

Chase Freedom Unlimited- currently has a 21,000 CL and has been opened for about 5 years.  Have always banked with them, and CLI were automatic over time- I think my limit started at 1,000.  I have no idea why they gave me a card with my then horrible credit score.

Chase Freedom- currently has a 7000 CL and it was just opened

Kohls Store Credit Card- 900 CL and has been open for about 4 years.

Mortgage- have had it for 29 years, no late payments ever, and it is about to be paid off in 7 months.

Car Loans- a closed/paid in full account from Toyota with no late payments ever, and a current Toyota Financial loan that will be done in 6 months- no late payments ever.

 

I have no credit card debt, and generally pay balances monthly- highest Utilization rate is around 5% at most at any given time.

I have also just taken an early retirement after a 35 year career as a social worker (I needed a break!) but got a great severance package from my employer (great for a social worker, at least), and have at least 2  years of living expenses in savings.  I am too young (56) for Medicare or Social Security, and honestly plan to do some consulting or something part time after I am done having some fun.   401K and Roth IRA and HSA all look good.  We don't live super extravagantly. 

 

The reason for this post is that I am TERRIFIED of ever having such a low credit score again.  Life was hard then and frankly, it was humiliating to be turned down for car loans or having to put deposits down on cell phones.    The reasons for my fears are this:

- once my mortage is paid off, which is my longest account and is the driving force of the AAOA being high, is that going to change my score significantly?  As in lower my score terribly?

- same with the car loan.  Granted, it is only 5 years, but it will be over.

- my mix of credit will change significantly as I have the 3 bank cards (is Discover a Bank Card?) and the store card, but no more installment loans in my "mix".   So that also worries me.

- As I am not working right now, will credit card issuers find that out and close all my accounts?  Will they not take into account my severance agreement as income or the fact that I have signficant savings with what will soon to be zero debt?

 

I hope this makes sense, and perhaps I am worrying for nothing.  But again- I can't go back to 2014-2015 again.  Ever.

 

Thank you in advance for any words of wisdom, suggestions, and honest feedback about if these fears/concerns are warranted, or I am just having some weird worry syndrome.  Sorry this was such a long post.  

 

 

 

 

 

Message 1 of 10
9 REPLIES 9
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Moderator Emeritus

Re: Worried about my credit future- looking for input

Worried too much Smiley Happy.  FWIW you're doing awesome!

 

Couple points on your post:

 

1) Loan mix: yeah you'll probably take a drop once your loans are paid/closed if you don't have any other open loans when we're talking FICO 8.  The accounts won't go away (10 more years on the report) but you could see a 25-30ish point drop potentially.  This can be pretty easily addressed by simply opening up a small loan, paying it forward down to $20 or whatever, and then just sitting on it for the full term.  Many lenders won't reset the date and you can cover that part of the scorecard easily as a result.  Search for SSL technique, or hell, even my own "reindeer games" terminology of it and you'll find dozens of threads on it.

 

2) Defending your score: autopay minimum.  Absolutely awesome if you get distracted in life, and not that expensive.  Can save you from missed payments, has saved me from missed payments since I started using it.  You could autopay statement balance, but honestly I would rather have a small amount of interest than have a large payment be yanked out of my cash reserves... depending on your own setup, you could do either.

 

3) $0 income: no sweat, the lenders just have to make sure you can repay which is why everyone looks at your assets.  That little question of "do you own or rent?" for example, if you own = asset.  You'll be fine on this count, assuming you don't run out of money.  More generally lenders aren't looking to take accounts away from people.  I was at $0 income, took a late on a tradeline (that didn't have autopay), had maxxed out my HELOC, nobody blinked.  Most, not all, of the accounts that have been closed by credit grantor usually had some suspect behavior on them anecdotally... if you're not pushing boundaries there's no reason the algorithms will flag your account TBH.

 

Really from where you're at, it's more financial management than credit management which should be your focus.  You have a plan, just stick to it Smiley Happy.




        
Message 2 of 10
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Community Leader
Super Contributor

Re: Worried about my credit future- looking for input

Your post hits home for me. I'm rebuilding for an identical reason and during the same time period and I did the same thing. No medical bills, but I let my cards slide. Only difference is I waited until 2018 to start rebuilding. It's reassuring to see you bounce back the way you did as sometimes it feels like my wheels are just spinning.







Message 3 of 10
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Super Contributor

Re: Worried about my credit future- looking for input


@mcgbert wrote:

Hi all,

First, I need to thank these forums for such useful advice over the years- although I haven't posted previously, I have read them religiously and used much of the advice I found here.

 

I will try to keep this short.  In 2014-2015, I had extensive medical bills and underwent treatment not covered by insurance.  At that time, my credit tanked.  We managed to pay off huge medical bills w/o going into collections, so I have no collections or judgements in my history ever.  However, I missed numerous credit card payments (several times at the 90 day late mark)- partially because of cash flow, and partially because honestly, that wasn't what was top priority in my life- getting better was.  I had one credit card (Discover) closed by them but suprisingly, they kept another one open with a small limit (for which I was so grateful).  We were never late on mortage or car payments during that time.   So, in early 2015, my credit scores were in the very low 500's across all three agencies.  

 

Flash forward to now (2020)- health is great, and after much hard work (and again, by advice gleaned from these forums) my credit scores are much better- ranging from 758 to 787 across the three agencies (FICO scores, not the ones you all call FAKO).  

 

Here is my current status:

Discover Card- currently has an 12,000 CL and has been opened for 27 years.  No late payments since May 2015.  They have given me unasked for CLI over the years (it was at a 3000 limit to start)

Chase Freedom Unlimited- currently has a 21,000 CL and has been opened for about 5 years.  Have always banked with them, and CLI were automatic over time- I think my limit started at 1,000.  I have no idea why they gave me a card with my then horrible credit score.

Chase Freedom- currently has a 7000 CL and it was just opened

Kohls Store Credit Card- 900 CL and has been open for about 4 years.

Mortgage- have had it for 29 years, no late payments ever, and it is about to be paid off in 7 months.

Car Loans- a closed/paid in full account from Toyota with no late payments ever, and a current Toyota Financial loan that will be done in 6 months- no late payments ever.

 

I have no credit card debt, and generally pay balances monthly- highest Utilization rate is around 5% at most at any given time.

I have also just taken an early retirement after a 35 year career as a social worker (I needed a break!) but got a great severance package from my employer (great for a social worker, at least), and have at least 2  years of living expenses in savings.  I am too young (56) for Medicare or Social Security, and honestly plan to do some consulting or something part time after I am done having some fun.   401K and Roth IRA and HSA all look good.  We don't live super extravagantly. 

 

The reason for this post is that I am TERRIFIED of ever having such a low credit score again.  Life was hard then and frankly, it was humiliating to be turned down for car loans or having to put deposits down on cell phones.    The reasons for my fears are this:

- once my mortage is paid off, which is my longest account and is the driving force of the AAOA being high, is that going to change my score significantly?  As in lower my score terribly?

- same with the car loan.  Granted, it is only 5 years, but it will be over.

- my mix of credit will change significantly as I have the 3 bank cards (is Discover a Bank Card?) and the store card, but no more installment loans in my "mix".   So that also worries me.

- As I am not working right now, will credit card issuers find that out and close all my accounts?  Will they not take into account my severance agreement as income or the fact that I have signficant savings with what will soon to be zero debt?

 

I hope this makes sense, and perhaps I am worrying for nothing.  But again- I can't go back to 2014-2015 again.  Ever.

 

Thank you in advance for any words of wisdom, suggestions, and honest feedback about if these fears/concerns are warranted, or I am just having some weird worry syndrome.  Sorry this was such a long post.  

 

 

 

 

 


I don't see a problem.

 

Just keep on doing what you're doing.

 

Of course your severance pay is income.


Total revolving limits 654000 (575000 reporting)

Message 4 of 10
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Senior Contributor

Re: Worried about my credit future- looking for input

I asked my mil if they lost any cards or cld after fil retired 13 years ago up until now and she said everything is still the same.  No telling what their scores are now being all they probably have on their credit reports are the two cards.  BoA and WF have treated them well since the 1980's-1990's. I mean it's obvious their income has changed cause they're closing in on 80.  Their cards are in the upper 20k range too so I would imagine +History speaks volumes.

”MY TAKE HOME PAY DON’T TAKE ME HOME”
Message 5 of 10
Highlighted
Member

Re: Worried about my credit future- looking for input

Thank you so much for your detailed and thoughtful reply.  It was really helpful to hear another perspective, and I appreciate it.  I will definitely research and consider the personal loan (reindeer games- love that) closer to when I will be done paying my mortgage and car.    And yes!  Autopay has been a savior for me- great advice for everyone trying to rebuild.

 

Take care!

 

Message 6 of 10
Highlighted
Member

Re: Worried about my credit future- looking for input

I hope you are doing well medically now!   You can bounce back- really what I learned from this is that time is your friend.  Initally wanted to see everything become better in 6 months (wishful thinking) but as I am sure you know, it doesn't work that way.    I know the "spinning wheels" feeling all too well- hated the months when absolutely nothing changed on my score.   Hang in there, it DOES get better, and I wish you health and the best of luck on your journey.

Message 7 of 10
Highlighted
Member

Re: Worried about my credit future- looking for input

Thank you!  Yeah, not sure why I thought the severance package wouldn't be income- I was having one of those "worry about everything" moments when I posted.  Appreciate your response. 

Message 8 of 10
Highlighted
Member

Re: Worried about my credit future- looking for input

Very thoughtful of you  to ask your family about this situation- much appreciated.    Folks on this forum are ridiculously helpful and genuine.  Thanks again!

Message 9 of 10
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Community Leader
Senior Contributor

Re: Worried about my credit future- looking for input

I can echo what  said regarding retirement. My mother retired about 16 years ago. My father opted to keep working because he enjoyed it and it kept him busy. He finally retired three years ago this coming May. They have social security income, and considerable assets/investments, and maintain a very comfortable lifestyle with plenty of travel. Reportable income has dropped from $240k-ish to SSI and their investments. Credit has not been affected one bit. Near or at 850 scores, decades of responsible behavior, and in the case of Amex, my dad's relationship with them dating back to 1972, mean that the banks he holds cards with (Amex, Chase, WF) are happy to maintain his $200k+ of lines open despite the reportable income drop. Many factors go into it, not simply income, and a drop in income most definitely does not automatically equate to a loss of access to credit.


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TCL $85,100| Agg. Util under 5%
Message 10 of 10
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