Hello all,
Thank you all in advance for any helpful input you could offer.
I apologize in advance for the longer post, but I think it's important to give the appropriate background information.
I have spent the better part of the last year getting out of this whole I put myself into. I lost my job a few years ago and fell behind on bills. Not having the knowledge I do now about credit and finances I let many of those debts fall into collections. I recently started a new career and am making a healthy living.
I was able to salvage a few CC and use them daily for all expenses. Everything is paid off at the end of the billing cycle and I keep all of them reporting zero balances except for one each month; the one balance is generally 3% to 9% of the available balance. I have the means to pay off all my remaining debt immediately if that is the best course of action.
After spending hours reading various posts in these forums I have some knowledge about how to proceed, but would like some expert guidance from people about how to finish my rebuild.
Please see below for what my credit report looks:
Credit Cards:
CO Quiksilver $0 Balance $6,300 Limit/ 9 years old
Discover $700 Balance $8,900 Limit/ 5 years, 2 months old
Amex Optima $0 Balance $1,700 Limit/ 5 months old
CO Platinum $0 Balance $500 Limit/ 5 months old
CO Walmart $0 Balance $300 Limit/ 1 month old/ AU Account
CO Platinum $0 Balance $500 Limit/ 2 months old/ AU Account
Open Auto Leases
Honda Financial $16,288 balance never late/ 3 months old
Honda Financial $9,980 balance never late/ 1 year, 4 month old
Closed/ Negative/ Chargeoffs
Amex $0 Balance $5,000 Limit/ Paid in full after charge off/ last charge off report 6/11/20
Credit one $0 Balance $950 Limit/ Paid off through Midland funding/ last charge off report 3/9/18
Chase $0 Balance $3,200 Limit/ Settled for less than amount/ last charge off report 6/24/20
Merrick $2,159 Balance $2,000 Limit/ Charge off reports monthly
Nordstrom $1,769 Balance $2,000 Limit/ Charge off reports monthly
Lending Club $4,988 Balance of $7,000 loan/ last charge off report 6/30/2018
Service CU $1,112 Balance from closed checking acct/ Closed 1/2018/ Charge off reports monthly
Student Loan Debt
~ $50,000 of current loans that I pay monthly
I have a 93% on time payment history
6 year 7 mo credit age
2 hard inquiries
I think the charge offs and late payments are what is holding me back. I don't think there is any way to fix the late payments, just be on time going forward. Do I just pay the old charge off accounts? Ask for a pay for delete? Not sure of the best way to handle these.
The last denial I received for a new CC stated reasons of:
Serious delinquency
Proportion of balances to credit limits on bank/ national revolving or other revolving accounts is too high
Proportion of loan balances to loan amounts is too high
Credit Score as of 12/1/20
VantageScore: 664
Experian FICO Score: 645
I would like to make it to the 700s as soon as I can.
Thank you all for taking the time to read, and any feedback or advice you have to offer.
Hi and Welcome to the forums!
So, for your credit to recover from the derogatories you will need to pay the outstanding balances. If they remain outstanding, the creditor may continue to update with a new negatative notation each month or periodically which will keep your scores supressed. Once paid, the account will be updated to reflect a $0 balance and future updates will cease, allowing the accounts to age and hurt less - though they will continue to hurt your scores for as long as they remain on your reports. Outstanding balances also factor into your overall credit utilization - which further negatively affects your scores. Reducing the balances to $0 will reduce your utilization and most likely lead to immediate score increases -- the amount of score increase depends on the difference between your current total credit util (total balance/total credit limit) and new total util after payment. I'm too lazy to to do the math right now, tbh - but charge-offs with balances are considered maxed out accounts at 100% utilization because the credit limit is, effectively, $0.
@jwgolub wrote:
Closed/ Negative/ Chargeoffs
Amex $0 Balance $5,000 Limit/ Paid in full after charge off/ last charge off report 6/11/20
^^Did they offer you the Optima card after payment to reestablish a relationship?
Credit one $0 Balance $950 Limit/ Paid off through Midland funding/ last charge off report 3/9/18
^^Credit One is known to be pretty receptive to Goodwills - so you should begin a Goodwill campaign to request this charge-off be removed from your reports.
Chase $0 Balance $3,200 Limit/ Settled for less than amount/ last charge off report 6/24/20
^^Not very receptive to Goodwills- but it never hurts to try.
Merrick $2,159 Balance $2,000 Limit/ Charge off reports monthly
^^PFD's (pay for delete) work best with collection agencies but not so much with original creditors - but you can still attempt to negotiate payment in exchange for deletion. If they refuse, pay it -- you may be able to settle for a lesser amount - and then begin a Goodwill campaign to have it removed.
Nordstrom $1,769 Balance $2,000 Limit/ Charge off reports monthly
^^Unlikely to accept a PFD - but you can try and if not, pay and begin a Goodwill for removal.
Lending Club $4,988 Balance of $7,000 loan/ last charge off report 6/30/2018
^^Offer a PFD- If no, then see if you can negotiate a settlement and begin a Goodwill after payment.
Service CU $1,112 Balance from closed checking acct/ Closed 1/2018/ Charge off reports monthly
^^Offer a PFD- If no, then see if you can negotiate a settlement and begin a Goodwill after payment.
Getting all of the above paid off is your very first step so you can eliminate that portion of your credit utilization (which may result in immediate score increases) and prevent further negative updating (which will result in score increases over time as the derogatories age). If none of the PFD offers are accepted, then a Goodwill campaign after payment is your next step to strive for the removal of delinquent accounts. Goodwills are letters sent to the original creditor requesting removal of a derogatory from your reports as an act of good faith. In a Goodwill letter, you basically explain that your delinquent debt was due to financial hardship and that you are trying to recover. You've paid your debt owed and would like a second-chance - opportunity to fully recover from that hardship.
Goodwills do not always work the first time, and sometimes they do not work at all - but they are absolutely worth trying, especially since these are so recent (and 2018 is considered very recent) and will remain on your reports for the next several years. Many have had multiple successes with Goodwills in getting their reports cleaned up - the key is to stay committed and not take "no" for an answer. You should also begin a Goodwill Campaign to attempt removal of any late payments noted on active/good standing accounts. Late payments will also keep your scores suppressed for the entire time they remain on your reports, so they are worth the effort to have removed sooner.
Take some time to read through this thread on the Goodwill Saturation Technique:
Please don't hesitate to ask more questions -- Good Luck!
