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408 credit score; 28 years old;terrible credit, finally trying to fix things

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Re: 408 credit score; 28 years old;terrible credit, finally trying to fix things

Congrats on progress. You are on your way. I don’t think your situation is a bleak as you think. In fact, looking at the numbers this is very manageable and you can come out of this paying everything in time. I will t repeat what others have said but I will say you are not going to need to consider bankruptcy. Do what you are planning already, work on settlements, and it will all get better.

I’m glad you dropped down the 401k. That is what you should do I. This situation to free up cash. When you are back on your feet (which will be soon) put it back up.

I’ve reduced 401k myself when my wife wasn’t working to 0% because we needed to eat and feed the kids etc. now it’s back up. No big deal.

Also, what I am about to say some financial folks may disagree with, but in emergency situations, and if allowed by your 401k plan, you can take a loan. For example, if you have 5k in your 401k, you may be able to take a loan out for 2k. However you need to be smart. First, paying back is from your paycheck in monthly after tax withdraws so that is less take home. But in the long run you can get the capital you need to pay all debts and then you pay yourself back into the 401k over time ( some up to 60 months) Final caution, if you quit or lose your job, you may need to pay it all back in a lump sum. All plans are different so you can check with benefit provider.

Again financial advisors say never do it unless an emergency and I think you can get out of this debt with budget and patience without it.

At the same time, for example, a 24 month loan of 2500 from your 401k being paid every two weeks is probably $50 a paycheck or so.

I had to do it for my family once and it will be paid off in 4 months (took out a 5 year). If you don’t plan on staying at your employer king term I wouldn’t do it. It is a nice safety net for emergencies.

I really think you are ok and can manage this. Your debt load is not as bad as many other people. I’ve the collections are paid/PFD/fall off , etc. you will see the gains but the score is not important. What is important is the feeling you have now of being in control and taking action.

Please keep us posted. You will be fine!
Starting Score: 652/644/654 (March 7) and spouse 649/647/602
Current Score: 725/719/719 (Aug 26h and my spouse is 722/700/714 (July 3)
Goal Score: 720


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Message 41 of 45
Established Member

Re: 408 credit score; 28 years old;terrible credit, finally trying to fix things

Welcome, and it's good you're a member here! I've been a long-timer lurker of these boards for many years and they helped me in my journey. I had excellent credit in my early twenties and two awesome jobs before the great recession, but BAM lost both my jobs and my scores tanked in 2010. I did the "cash diet" for many years following and opened a couple of secured cards that helped me rebuild. Fast forward 9 years later and I'm "back in" with the lenders who closed my accounts and was shocked to see how improved my scores have become with a.) responsibility b.) patience c.) time.

Time heals your credit when you demonstrate years of payment history, etc.. And while the process can be frustrating, you'd be surprised in some instances how quickly your credit improves after each baddie falls off. There's no judgment here, only support and guidance.

My advice would be to sit down, scrutinize every single derogatory item on your report, and draw up a plan of action. My biggest mistake was enlisting in a credit repair service for $99/month (hint: initials are "LL"), when all along I could have done all the leg-work myself. I am happy to help you with form letters, and recommend strategies to dispute any inaccuracies. Also, I've learned the power of other free resources that expedited the process when attempts for credit reporting corrections among the three bureaus were ignored.

As some have stated, start reaching out to some of smallest accounts that are either deliquent, late, charged-off, and show "good will" and intent to repay. As each derog falls off, you'll see a bump. Once you've risen your score, begin to build a relationship with Capital One (secured card that graduates -- my own experience) Discover secured (never had their secured card or any previous relationship, but they gave me a huge starting limit two months ago), and maybe CITI secured (never had one, but read they were a decent card for secured members). Patience is your friend. I'm also very proud of you for taking time to seek advice among those of us who've been there and done that --- we even have the tee-shirt, too! Cheers, my friend.
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Older existing cards: Capital Secured Platinum $1,302 (never graduated as C1 halted secured upgrades); US Bank secured $300 (never graduated to unsecured, but going to can before the annual fee).
Message 42 of 45
Senior Contributor

Re: 408 credit score; 28 years old;terrible credit, finally trying to fix things

Here's a surprise OP.  When you turn 29, and 30....your credit scores will be way higher than they are now.  Read the forums.  Take notes, follow advice and you're well on your way.  Don't beat yourself up about this!!!!  People MAKE MISTAKES.  What is most important here:  You're learning now and won't be repeating them in the future.

 

Forgive yourself, only then can you move forward in a positive light.  I recently found a p/t 'job' from home that nets me a ton of $$ each months.  I've paid of $6700 worth of debt in just a few months.  You CAN do it also.

Message 43 of 45
New Contributor

Re: 408 credit score; 28 years old;terrible credit, finally trying to fix things

I agree with all of the contributors before me . In the last 6 months I have been learning patience and disipline and my scores have jump from 500 to 600 without any credit repair . The advice here has been amazing. I have considered credit repair but really agree that the pay for delete doesn't work if rarely .....

 

The cards in my signature below have all been attained this year and now i'm gardening for about a year to continue to grow the score. I pay the balances in full so I don't pay any interest on these subprime cards and I will keep the ones with no annual fee to grow my positive history .

 

I hope this inspires you or anyone will to read this and I will also continue to learn for others successes...

 

Good Luck 

 

1hotcat 



Starting Scores:




Starting Score: 500
Current Score: 598
Goal Score: 650


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The 1st stone looks just like a stone until one day you realize that you put one on top of the other and now it's a skyscraper .  

Message 44 of 45
Established Contributor

Re: 408 credit score; 28 years old;terrible credit, finally trying to fix things

I think you're off to a good start by coming to these forums for advice.  There is a lot of help here.

 

First of all, if things haven't changed (and I don't believe they have), you're in a state that is on your side when it comes to debt/collections/reporting.

 

In Texas, the Texas Finance Code trumps a lot of things.   For example:
Any of those collection agencies that are reporting collection accounts to your reports, must be bonded and licensed in the state of Texas to do so.    There are some good example letters around here somewhere, you can put Texas Finance Code Letters in the search bar.  If they are not bonded and/or licensed in the state of TX to collect in the State of TX, then they will have to remove their reporting and send it back to the original creditor.  If you know that it is your debt, then as soon as the collection agency pulls it, then pay the Original Creditor directly and usually that will keep it from popping up on your reports again, otherwise, there is a good possibility that they will send it to a CA who is qualified to collect in TX.

 

There is really no time frame for debt validation under the Texas Finance Code which means that, if they can not validate that the debt is yours, they have to pull it from reporting. (If you know the debt is yours, you should still pay it, just not to that collection agency, once they pull it for not being able to validate,  send the Original Creditor a letter and payment and in your letter, explain that you are not  in anyway admitting that it's your debt, but that you just want to be done with the headache that it causes.

 

I agree 100% with the others about getting your credit reports and going through them with a fine tooth comb. Any mistakes that you can easily prove are errors, dispute them.

 

Start sending letters to the collection agencies who are reporting the smallest debts, the ones you are able to pay now, if they are yours.  In your first correspondence, ask for proof of their bond and license to collect in TX.  There are sample letters that you can use for this.  Keep these correspondece simple and to the point.  Mail them Certified, return receipt and keep your stubs in a safe place.

 

I would imagine the reason these collections are hurting you so much still, is because the Collection Agencies are probably updating every month or every month or two.  Just when your score might go up a point or two for time, they will update and tank it again.  Real frustrating, but it's their strategy unfortunately.

 

Look into the Texas Finance Code and double check these codes, it has been 3 or 4 years since I helped someone else and at that time, all of the above was accurate.  Good Luck



Most recent Inquiry: AUG 25, 2018. Now back to the Garden.
Message 45 of 45
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