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Advice on rebuilding score & credit

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Advice on rebuilding score & credit

Hello,

 

I've read a lot on these forums and wanted to get advice on how to approach my credit situation. I have some baddies on my reports due to irresponsibility following a move six years ago and starting a business in 2017. I live in NYC where credit scores are golden in renting an apartment, so I'm starting the process of rebuilding both prepping for a move and for future financial health. Can you advise on the best approach for raising score in the next 2-3 months and tackling debt, now that I'm in a position to pay off and get back on track?

 

Short term goal (by May): increase score approx. 40 points for apartment approval

Long term goal: no debt, better financial health. I'd love to be back above 700.

 

AAoA: 9.9 years, 15.5 years oldest account

2 charge offs: BOA and Macy's CC (both under $500), both charged off in 2017

1 collections account: Credit One from 2017  ($550). They will take off in December if I pay in full *oddly, when this account recently went from CO to collections, it increased one of my scores by 20 points*

Utilization: 85%

positive accounts: 2 open cc's ($7k total limit) and 3 student loans that have history of all on time payments

All historical late payments are on the 3 accounts in CO or Collections.

 

Current scores: Experian-- 630, Transunion-- 643

 

I think the best bet for me is paying off considerable balance on my open cards to get utilization down (could easily get down to 30%). Also wondering if it's better to pay a big chunk down on both my open accounts, or only pay off one. I have also heard very different things about paying charge offs...which are being reported each month and still show 116% utilization on the limit. I'm worried in the short term it will reduce my score though, which is counter productive to my immediate needs in bumping my score. But also think getting that out of mind and reducing utilization could be helpful overall.

 

I'd love any advice for how this might effect score, and help rebuild credit over time. Any estimate for what kind of jump I might see in a short time based on my situation? I'd love to raise by 40 points in the short term, though getting back on track long term is obviously a bigger goal, so I hope to pay off every debt in the next 10 months. If anyone's been in a similar situation, would love to hear how you handled that worked.

 

 

8 REPLIES 8
Super Contributor

Re: Advice on rebuilding score & credit

This thread is ideally situated for our Rebuilding Forum.  Would you like someone to ask a moderator to move it there?

Message 2 of 9
Member

Re: Advice on rebuilding score & credit

Apologies for that. Yes, OK for it to be moved there, moderators.

Message 3 of 9
Valued Contributor

Re: Advice on rebuilding score & credit

Hi jmb - -welcome to the forums.   My comments are in bluish-purple... 

 

 


@jmb37 wrote:

 

Short term goal (by May): increase score approx. 40 points for apartment approval -- doable if you pay off your outstanding balances.

Long term goal: no debt, better financial health. I'd love to be back above 700. -- absolutely possible. 

 

AAoA: 9.9 years, 15.5 years oldest account -- this is fantastic.

 

2 charge offs: BOA and Macy's CC (both under $500), both charged off in 2017:

  • Pay these asap.   Right now, you are showing 100+% util on these cards with an outstanding balance against a $0 credit limit -- that's a big hit to your scores, not to mention any additional dinging of your scores due to updating of the account from the creditor.  Once you pay it, the account will officially close and the balance will be reported as $0.  This will eliminate the over-utilization and prevent monthly or sporadic updates, allowing the derogatory to age and hurt a bit less over time.  In the short term, the elimination of the utilization will improve your scores.  Point gains differ depending on profile and how this over-utilzation factors in with your open revolving credit -- but you should not see any decreases from paying, only positive improvement. 

 

1 collections account: Credit One from 2017  ($550). They will take off in December if I pay in full *oddly, when this account recently went from CO to collections, it increased one of my scores by 20 points*

  • (1) Not odd at all that your scores increased when this account was moved to collections.  I would assume CreditOne sold the account - which means they updated the outstanding balance on their tradeline to $0 and closed the account - eliminating the high utilization and negative updating.  I also assume the original CreditOne tradeline is still listed on your reports (closed, charge-off, $0 balance)?  If so, after you pay it through the collection agency, you can begin a Goodwill campaign to CreditOne.   Quite a few folks have had luck with having their derogatory Credit One accounts removed after payment.  You can research Goodwills on the forums for more info. 
  • (2) If the collections account is willing to delete after payment, then pay it.   

 

Utilization: 85%

  • This is a problem.  You could be losing 40+ points from high util alone.  You need to get this paid down -- if you keep util at less than 8.9%, you'll maximize your fico scores. 

 

positive accounts: 2 open cc's ($7k total limit) and 3 student loans that have history of all on time payments - Great - keep it going.

 

All historical late payments are on the 3 accounts in CO or Collections: 

  • Get them paid, let them age.  Hopefully, the collection and Credit One CO can be removed.  That will leave you with the BOA and Macy's (which you will likely have to live with till they fall off) -- as they age, your scores will improve but they will hurt for the full 7 years. 

 

Current scores: Experian-- 630, Transunion-- 643 --- just making sure these are FICO scores -- where are you getting them? Where's Equifax? 

 

I think the best bet for me is paying off considerable balance on my open cards to get utilization down (could easily get down to 30%).  Yes. Below 8.9% is better. 

 

Also wondering if it's better to pay a big chunk down on both my open accounts, or only pay off one.   -- Balances / Limits? 

 

I have also heard very different things about paying charge offs...which are being reported each month and still show 116% utilization on the limit. I'm worried in the short term it will reduce my score though, which is counter productive to my immediate needs in bumping my score. But also think getting that out of mind and reducing utilization could be helpful overall. -- Already explained above.  

 

I'd love any advice for how this might effect score, and help rebuild credit over time. Any estimate for what kind of jump I might see in a short time based on my situation? I'd love to raise by 40 points in the short term, though getting back on track long term is obviously a bigger goal, so I hope to pay off every debt in the next 10 months. If anyone's been in a similar situation, would love to hear how you handled that worked.   

  • Your biggest concern is the paydown of util.  Do that and you'll see your 40 points.  The lower your overall util, the better your scores will be.  Ideal:  Total util at less than 8.9%;  Individual card util at less than 28.9% of its respective limit. 

 

 


Good Luck!

Personal Aphorism:
"Forget What You Feel, Remember What You Deserve"


Starting FICO 8s | 09/2017: EX 641 ✦ EQ 634 ✦ TU 647
Current FICO 8s | 01/2020: EX 767 ✦ EQ 742 ✦ TU 757
Current FICO 9s | 01/2019: EX 774 ✦ EQ 776 ✦ TU 766
Highest FICO-8 Ever | 10/2018: 780 [on dirty report]

2020 Goal Score | 790s


My AAoA: 2.11 years not incl. AU / 3.2 years incl. AU
My AoOA: 6.11 years not incl. AU / 8.11 years incl. AU
Inquiries: EX 0/6 | 3/12 ✦ EQ 0/6 | 4/12 ✦ TU 0/6 | 1/12
Report Status: Clean

Tending my Garden til 6/2020


Without patience, we will learn less in life. We will see less. We will feel less. We will hear less. Ironically, rush and more usually mean less.
Message 4 of 9
Super Contributor

Re: Advice on rebuilding score & credit


@jmb37 wrote:

Hello,

 

I've read a lot on these forums and wanted to get advice on how to approach my credit situation. I have some baddies on my reports due to irresponsibility following a move six years ago and starting a business in 2017. I live in NYC where credit scores are golden in renting an apartment, so I'm starting the process of rebuilding both prepping for a move and for future financial health. Can you advise on the best approach for raising score in the next 2-3 months and tackling debt, now that I'm in a position to pay off and get back on track?

 

Short term goal (by May): increase score approx. 40 points for apartment approval

Long term goal: no debt, better financial health. I'd love to be back above 700.

 

AAoA: 9.9 years, 15.5 years oldest account

2 charge offs: BOA and Macy's CC (both under $500), both charged off in 2017

1 collections account: Credit One from 2017  ($550). They will take off in December if I pay in full *oddly, when this account recently went from CO to collections, it increased one of my scores by 20 points*

Utilization: 85%

positive accounts: 2 open cc's ($7k total limit) and 3 student loans that have history of all on time payments

All historical late payments are on the 3 accounts in CO or Collections.

 

Current scores: Experian-- 630, Transunion-- 643

 

I think the best bet for me is paying off considerable balance on my open cards to get utilization down (could easily get down to 30%). Also wondering if it's better to pay a big chunk down on both my open accounts, or only pay off one. I have also heard very different things about paying charge offs...which are being reported each month and still show 116% utilization on the limit. I'm worried in the short term it will reduce my score though, which is counter productive to my immediate needs in bumping my score. But also think getting that out of mind and reducing utilization could be helpful overall.

 

I'd love any advice for how this might effect score, and help rebuild credit over time. Any estimate for what kind of jump I might see in a short time based on my situation? I'd love to raise by 40 points in the short term, though getting back on track long term is obviously a bigger goal, so I hope to pay off every debt in the next 10 months. If anyone's been in a similar situation, would love to hear how you handled that worked.

 

 


1. Your first priority should be to pay off, and try to get removed, all 3 of the negatives.

2. If you can't get them removed after paying them off, then keep hammering away with verification letters to the bureaus.

3. You should try to get utilization on each credit card to 28% or less.

4. Once you have both cards at 28% or less then you can pay off one of them, each month letting one report a balance, and one not.


Total revolving limits 639500 (558000 reporting)
Message 5 of 9
Member

Re: Advice on rebuilding score & credit


@thornback wrote:

Hi jmb - -welcome to the forums.   My comments are in bluish-purple... 

Thank you so much. This is extremely helpful, and it's so nice to get a response without judgement here. A lot of great advice, that I'll certainly take. A few answers below in blue.

 


@jmb37 wrote:

 

Short term goal (by May): increase score approx. 40 points for apartment approval -- doable if you pay off your outstanding balances.

Long term goal: no debt, better financial health. I'd love to be back above 700. -- absolutely possible. 

 

AAoA: 9.9 years, 15.5 years oldest account -- this is fantastic.

 

2 charge offs: BOA and Macy's CC (both under $500), both charged off in 2017:

  • Pay these asap.   Right now, you are showing 100+% util on these cards with an outstanding balance against a $0 credit limit -- that's a big hit to your scores, not to mention any additional dinging of your scores due to updating of the account from the creditor.  Once you pay it, the account will officially close and the balance will be reported as $0.  This will eliminate the over-utilization and prevent monthly or sporadic updates, allowing the derogatory to age and hurt a bit less over time.  In the short term, the elimination of the utilization will improve your scores.  Point gains differ depending on profile and how this over-utilzation factors in with your open revolving credit -- but you should not see any decreases from paying, only positive improvement. 

 

1 collections account: Credit One from 2017  ($550). They will take off in December if I pay in full *oddly, when this account recently went from CO to collections, it increased one of my scores by 20 points*

  • (1) Not odd at all that your scores increased when this account was moved to collections.  I would assume CreditOne sold the account - which means they updated the outstanding balance on their tradeline to $0 and closed the account - eliminating the high utilization and negative updating.  I also assume the original CreditOne tradeline is still listed on your reports (closed, charge-off, $0 balance)?  If so, after you pay it through the collection agency, you can begin a Goodwill campaign to CreditOne.   Quite a few folks have had luck with having their derogatory Credit One accounts removed after payment.  You can research Goodwills on the forums for more info. 
  • (2) If the collections account is willing to delete after payment, then pay it.   

 

Utilization: 85%

  • This is a problem.  You could be losing 40+ points from high util alone.  You need to get this paid down -- if you keep util at less than 8.9%, you'll maximize your fico scores. 

 

positive accounts: 2 open cc's ($7k total limit) and 3 student loans that have history of all on time payments - Great - keep it going.

 

All historical late payments are on the 3 accounts in CO or Collections: 

  • Get them paid, let them age.  Hopefully, the collection and Credit One CO can be removed.  That will leave you with the BOA and Macy's (which you will likely have to live with till they fall off) -- as they age, your scores will improve but they will hurt for the full 7 years. 

 

Current scores: Experian-- 630, Transunion-- 643 --- just making sure these are FICO scores -- where are you getting them? Where's Equifax?  Yes, FICO scores! I don't have Equifax handy right now.

 

I think the best bet for me is paying off considerable balance on my open cards to get utilization down (could easily get down to 30%).  Yes. Below 8.9% is better. 

 

Also wondering if it's better to pay a big chunk down on both my open accounts, or only pay off one.   -- Balances / Limits?  Balance is about $6,200 out of $7,000 total available limt.

 

I have also heard very different things about paying charge offs...which are being reported each month and still show 116% utilization on the limit. I'm worried in the short term it will reduce my score though, which is counter productive to my immediate needs in bumping my score. But also think getting that out of mind and reducing utilization could be helpful overall. -- Already explained above.  

 

I'd love any advice for how this might effect score, and help rebuild credit over time. Any estimate for what kind of jump I might see in a short time based on my situation? I'd love to raise by 40 points in the short term, though getting back on track long term is obviously a bigger goal, so I hope to pay off every debt in the next 10 months. If anyone's been in a similar situation, would love to hear how you handled that worked.   

  • Your biggest concern is the paydown of util.  Do that and you'll see your 40 points.  The lower your overall util, the better your scores will be.  Ideal:  Total util at less than 8.9%;  Individual card util at less than 28.9% of its respective limit. 

 

 


Good Luck!


 

Message 6 of 9
Valued Contributor

Re: Advice on rebuilding score & credit



@jmb37 wrote:

@thornback wrote:

Hi jmb - -welcome to the forums.   My comments are in bluish-purple... 

Thank you so much. This is extremely helpful, and it's so nice to get a response without judgement here. A lot of great advice, that I'll certainly take. A few answers below in blue.

You're very welcome --no judgment here - just about all of us have been there. Smiley Wink

Current scores: Experian-- 630, Transunion-- 643 --- just making sure these are FICO scores -- where are you getting them? Where's Equifax?  Yes, FICO scores! I don't have Equifax handy right now.

 


Excellent. --You're not in that bad of shape scorewise.  The age of your accounts is helping you tremendously.

@jmb37 wrote:

 

Also wondering if it's better to pay a big chunk down on both my open accounts, or only pay off one.   -- Balances / Limits?  Balance is about $6,200 out of $7,000 total available limt.

 



Ok-- so both cards are near max then?

 

General Rule of Thumb:  You want each card balance to be less than 28.9% of its limit.   So assuming both are above 28%, pay a large chunk of both to get them down to below that amount, if able.   If you need time to get them down below 28.9%, then calculate the utilization for each card   (balance / limit) and work your way down below following scoring thresholds  (red is too high): 

 

  • 88.9%, 68.9%, 48.9%, 28.9%, 8.9%

Each percentage threshold above is a paydown goal,  as you pass them, you should see a small boost in score.  So first, get each card below 88.9%.  then aim to get each below 68.9%... and so on.   When you hit below 28.9% - you're golden.    You may also find that creating a solid paydown budget will help you stay on track and paydown faster (everyone's different but it helps me out).   


Personal Aphorism:
"Forget What You Feel, Remember What You Deserve"


Starting FICO 8s | 09/2017: EX 641 ✦ EQ 634 ✦ TU 647
Current FICO 8s | 01/2020: EX 767 ✦ EQ 742 ✦ TU 757
Current FICO 9s | 01/2019: EX 774 ✦ EQ 776 ✦ TU 766
Highest FICO-8 Ever | 10/2018: 780 [on dirty report]

2020 Goal Score | 790s


My AAoA: 2.11 years not incl. AU / 3.2 years incl. AU
My AoOA: 6.11 years not incl. AU / 8.11 years incl. AU
Inquiries: EX 0/6 | 3/12 ✦ EQ 0/6 | 4/12 ✦ TU 0/6 | 1/12
Report Status: Clean

Tending my Garden til 6/2020


Without patience, we will learn less in life. We will see less. We will feel less. We will hear less. Ironically, rush and more usually mean less.
Message 7 of 9
Established Contributor

Re: Advice on rebuilding score & credit


@thornback wrote:

Hi jmb - -welcome to the forums.   My comments are in bluish-purple... 

 

 


@jmb37 wrote:

 

Short term goal (by May): increase score approx. 40 points for apartment approval -- doable if you pay off your outstanding balances.

Long term goal: no debt, better financial health. I'd love to be back above 700. -- absolutely possible. 

 

AAoA: 9.9 years, 15.5 years oldest account -- this is fantastic.

 

2 charge offs: BOA and Macy's CC (both under $500), both charged off in 2017:

  • Pay these asap.   Right now, you are showing 100+% util on these cards with an outstanding balance against a $0 credit limit -- that's a big hit to your scores, not to mention any additional dinging of your scores due to updating of the account from the creditor.  Once you pay it, the account will officially close and the balance will be reported as $0.  This will eliminate the over-utilization and prevent monthly or sporadic updates, allowing the derogatory to age and hurt a bit less over time.  In the short term, the elimination of the utilization will improve your scores.  Point gains differ depending on profile and how this over-utilzation factors in with your open revolving credit -- but you should not see any decreases from paying, only positive improvement. 

 

1 collections account: Credit One from 2017  ($550). They will take off in December if I pay in full *oddly, when this account recently went from CO to collections, it increased one of my scores by 20 points*

  • (1) Not odd at all that your scores increased when this account was moved to collections.  I would assume CreditOne sold the account - which means they updated the outstanding balance on their tradeline to $0 and closed the account - eliminating the high utilization and negative updating.  I also assume the original CreditOne tradeline is still listed on your reports (closed, charge-off, $0 balance)?  If so, after you pay it through the collection agency, you can begin a Goodwill campaign to CreditOne.   Quite a few folks have had luck with having their derogatory Credit One accounts removed after payment.  You can research Goodwills on the forums for more info. 
  • (2) If the collections account is willing to delete after payment, then pay it.   

 

Utilization: 85%

  • This is a problem.  You could be losing 40+ points from high util alone.  You need to get this paid down -- if you keep util at less than 8.9%, you'll maximize your fico scores. 

 

positive accounts: 2 open cc's ($7k total limit) and 3 student loans that have history of all on time payments - Great - keep it going.

 

All historical late payments are on the 3 accounts in CO or Collections: 

  • Get them paid, let them age.  Hopefully, the collection and Credit One CO can be removed.  That will leave you with the BOA and Macy's (which you will likely have to live with till they fall off) -- as they age, your scores will improve but they will hurt for the full 7 years. 

 

Current scores: Experian-- 630, Transunion-- 643 --- just making sure these are FICO scores -- where are you getting them? Where's Equifax? 

 

I think the best bet for me is paying off considerable balance on my open cards to get utilization down (could easily get down to 30%).  Yes. Below 8.9% is better. 

 

Also wondering if it's better to pay a big chunk down on both my open accounts, or only pay off one.   -- Balances / Limits? 

 

I have also heard very different things about paying charge offs...which are being reported each month and still show 116% utilization on the limit. I'm worried in the short term it will reduce my score though, which is counter productive to my immediate needs in bumping my score. But also think getting that out of mind and reducing utilization could be helpful overall. -- Already explained above.  

 

I'd love any advice for how this might effect score, and help rebuild credit over time. Any estimate for what kind of jump I might see in a short time based on my situation? I'd love to raise by 40 points in the short term, though getting back on track long term is obviously a bigger goal, so I hope to pay off every debt in the next 10 months. If anyone's been in a similar situation, would love to hear how you handled that worked.   

  • Your biggest concern is the paydown of util.  Do that and you'll see your 40 points.  The lower your overall util, the better your scores will be.  Ideal:  Total util at less than 8.9%;  Individual card util at less than 28.9% of its respective limit. 

 

 


Good Luck!


+1 to what tmr said. Can't get any better advice than that!



Starting Score: Nov 3, 2018: EX 597 TU 599 EQ 616
Current Score: December 1, 2019: EX 690 TU 706 EQ 699
Goal Score: Dec 31, 2019: EX 700 TU 700 EQ 700

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Message 8 of 9
Member

Re: Advice on rebuilding score & credit

Thank you! Any other advice or someone’s who’s been in a similar situarion is welcome.
Message 9 of 9
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