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Best Plan of attack?

jeepin22
New Member

Best Plan of attack?

Hello All!

 

I'll start by saying I've been a voyeur for many years, reading and following posts here without registering. But I have decided its time to advance on my path!

 

I think I have a pretty solid plan to move forward with my rebuild, but I'm posting to see if there are any other better ideas, or to validate that I'm moving in the right direction.

 

I've seen plenty of posts asking for help, but it doesn't seem many people want to give specifics, which in this area can be really important. Take it easy on me, theres a Credit One card in there. Started two years ago @ 479, Currently pulling TU 641 EQ 635

 

No BK

 

100% Payment History

AAOA: 1yr 5mos

7 TU Inqs 8 EQ Inqs

 

Cards:

Credit One - $400

Cap1 Plat - $600 (started as secured so I'm pretty sure its not going to go any higher)

Cap1 QS1 - $750

Target Retail - $900

Merrick Visa - $1000

Fingerhut - $1800

 

Currently at 54% Utilization

 

One CU Sig loan - 3/2018 - $3975 balance

 

Two Collections (Had 5 as of two years ago when I started to rebuild, but I've gotten them paid down and removed)

$285 (2015) Have been fighting with CA about date of account open, it was gone for almost a year and then reappeared 4/2018

$810 (2013)

 

I'm the sole provider in the house, so I do sometimes have to rely on a few of my cards to get us through rough patches. I've been solely working on paying my balances down to get my utilization under control. 

 

What I am looking for direction on are:

The collections accounts - I have already established that I cannot pay for delete with either of them. Should I just get them paid off? Or let them roll off? (Yes I understand one of them is only $285, but it also has been added and removed from my report numerous times)

Utilization - What would be a good goal to keep my cards at? I'm stuck in the middle of getting rid of some of the smaller ones (CreditOne) as its one of my older accounts next to my Cap1's... From what I understand, 30% is the magic-ish number, but then I see alot of people that PIF every month. Is that more of a matter of letting 30% report, and then PIF to look good in the eyes of the CC issuer?

 

My bank's only solution to offer is "we'll set you up with a signature loan at 17.99APR and we'll pay off everything on your credit report, but then you have to close every account and open a card with us in 6 months" I don't see that as a healthy option right now, as I've worked hard to AT LEAST make every single payment on time, regardles of utilization. Any help or suggestions are definitely appreciated. I'm new, but I'm not new. If you know what I mean.

 

Thanks in advance!

3 REPLIES 3
Medic981
Valued Contributor

Re: Best Plan of attack?

Welcome @jeepin22 to the myFICO forums!

 

First off, TU 641 and EQ 635? Sounds like Credit Karma and Advantage Scores. For the most part worthless if they are Advantage Scores. You can go to creditchecktotal.com and sign up for a week trial for $1 and get your three FICO 8 scores and look at your credit files. Just be sure to cancel the trial before billing. You can sign up for the $1 trial as many times as you want to keep track of your FICO scores. A lot cheaper than a monthly subscription.

 

Secondly, you need a budget. A budget is your master plan on how to get where you want to go financially. If you need help with budgeting, google YNAB. Several MFers have suggested YNAB to help get a handle on a budget. I looked at the site and looks legit. I have been budgeting for years so it is a little basic for me but I like how they explain budgeting and how the site is set up. There is a monthly fee after the free trial so you will have to decide. 

 

Third point,  you need to start building emergency funds. I know it is difficult but your goal is to have a minimum of three months savings to be able to pay your fixed recurring bills like rent, car payment, utilities, transportation, food, and minimum CC balance payments. Also, you can use this fund for unexpected emergencies like auto repairs and the like. I like to say that relying on CCs for unexpected financial emergencies for cash is like relying on a handgun for an unexpected need for cash. Both are tools that can dangerous if you use them incorrectly. Rely on your emergency fund and not CCs for the unexpected.

 

Next, Credit One. It is a sub-prime card and has a purpose. My take on it is that it has served its purpose and you should close the account and save the high-interest rate and AFs associated with it. Your Credit One will stay on your credit file for up to 10 years after you close the account and count towards you Average Age of Accounts (AAoA) for that period.

 

You stated "Yes I understand one of them is only $285, but it also has been added and removed from my report numerous times" This sounds like you have disputed the account and it was removed because the creditor could not verify the account within 30 days and then the creditor got around to verifying the account and it was updated and placed back on your credit report (CR). If this is the case, STOP! Never dispute accurate and correctly reporting negative information on your CR. This allows the original creditor (OC) or collection agency (CA) the chance to update you CR which in turn can cause your FICO scores to drop due to the fact that older negative information tends to lessen its impact on FICO scores over time. When an OC or CA updates or confirms a negative account (not re-age an account which is illegal) that impacts your FICO scores as fresh derogatory.

 

I suggest you work on building your emergency fund and when you get a month of funds built up you then worry about using half of that money to start to pay off your remaining outstanding debts. Again build up your emergency fund to a month worth or more and only use half of it to pay off your charge-off or collections debt. If the OC or CA will not PFD then PIF and start a goodwill (GW) letter writing campaign to have your CR adjusted to remove the derogatory information. You do not want to settle a debt for less than owed because that does not create much goodwill feelings from the OC or CA. The CA can remove their derogatory collection account but not the OCs derogatory. Only the OC can do this. 

  

Ultimately, what a person needs to improve their FICO scores and build credit are three open credit cards (secured or unsecured) in good standing and one open installment loan in good standing such as a car, home, student, personal, share secured, or credit building loan. This combination is what the myFICO score theorists here have determined is what you need for optimal credit building and FICO score. You can have more CCs and more installment loans, however, this will not increase your FICO scores.

Next, (this is only important if you are attempting to purchase a large ticket item like a home or car) is paying in full all of the credit card balances each month, before the posting date, except one. This is called the All Zero Except One (AZEO) method. The one credit card you allow to post a balance needs to be less than 8.9% of the credit limit of the card. So using one card each month to buy lunch, letting it report and then paying in full will maximize FICO scoring. Keeping your utilization of your cards below 28.9% both individually and collectively will prevent you from incurring a FICO scoring penalty.

An installment loan will have its greatest impact on your FICO score when the amount owed is at 8.9% or less of the original amount owed which is usually in the final months before the loan is paid in full. If you don't have an installment loan you can check into SelfLender or a Share Secured Loan at a Credit Union.

 

Your CU sounds like they are jealous and only wants to help you with a consolidation loan by making you cancel your cards and going with their card. I am sure their goal is to keep you from going back into debt once they have paid your balances. That is a choice you will have to make. I personally would keep working to pay down the debt.

Keep in mind, building credit is a marathon, not a sprint. It involves demonstrating to a potential creditor that a person can handle credit responsibly. If you have open, active accounts that are being paid on time and pay all of your bills on time all the time, apply for credit only when you actually need it and use credit cards sparingly maintaining low credit utilization, then you’re going to earn and maintain great credit scores. It would be impossible for you not to do so. This is the fastest way to build good, solid credit. 

 

I hope this is specific enough for you and perhaps other MFers will chime in with additional advice or correct any misgivings that I have offered you. 

 

Good luck and best wishes.







Your FICO credit scores are not just numbers, it’s a skill.
Message 2 of 4
jeepin22
New Member

Re: Best Plan of attack?


@Medic981 wrote:

@Welcome @jeepin22 to the myFICO forums!

 

First off, TU 641 and EQ 635? Sounds like Credit Karma and Advantage Scores. For the most part worthless if they are Advantage Scores. You can go to creditchecktotal.com and sign up for a week trial for $1 and get your three FICO 8 scores and look at your credit files. Just be sure to cancel the trial before billing. You can sign up for the $1 trial as many times as you want to keep track of your FICO scores. A lot cheaper than a monthly subscription.

 

Secondly, you need a budget. A budget is your master plan on how to get where you want to go financially. If you need help with budgeting, google YNAB. Several MFers have suggested YNAB to help get a handle on a budget. I looked at the site and looks legit. I have been budgeting for years so it is a little basic for me but I like how they explain budgeting and how the site is set up. There is a monthly fee after the free trial so you will have to decide. 

 

Third point,  you need to start building emergency funds. I know it is difficult but your goal is to have a minimum of three months savings to be able to pay your fixed recurring bills like rent, car payment, utilities, transportation, food, and minimum CC balance payments. Also, you can use this fund for unexpected emergencies like auto repairs and the like. I like to say that relying on CCs for unexpected financial emergencies for cash is like relying on a handgun for an unexpected need for cash. Both are tools that can dangerous if you use them incorrectly. Rely on your emergency fund and not CCs for the unexpected.

 

Next, Credit One. It is a sub-prime card and has a purpose. My take on it is that it has served its purpose and you should close the account and save the high-interest rate and AFs associated with it. Your Credit One will stay on your credit file for up to 10 years after you close the account and count towards you Average Age of Accounts (AAoA) for that period.

 

You stated "Yes I understand one of them is only $285, but it also has been added and removed from my report numerous times" This sounds like you have disputed the account and it was removed because the creditor could not verify the account within 30 days and then the creditor got around to verifying the account and it was updated and placed back on your credit report (CR). If this is the case, STOP! Never dispute accurate and correctly reporting negative information on your CR. This allows the original creditor (OC) or collection agency (CA) the chance to update you CR which in turn can cause your FICO scores to drop due to the fact that older negative information tends to lessen its impact on FICO scores over time. When an OC or CA updates or confirms a negative account (not re-age an account which is illegal) that impacts your FICO scores as fresh derogatory.

 

I suggest you work on building your emergency fund and when you get a month of funds built up you then worry about using half of that money to start to pay off your remaining outstanding debts. Again build up your emergency fund to a month worth or more and only use half of it to pay off your charge-off or collections debt. If the OC or CA will not PFD then PIF and start a goodwill (GW) letter writing campaign to have your CR adjusted to remove the derogatory information. You do not want to settle a debt for less than owed because that does not create much goodwill feelings from the OC or CA. The CA can remove their derogatory collection account but not the OCs derogatory. Only the OC can do this. 

  

Ultimately, what a person needs to improve their FICO scores and build credit are three open credit cards (secured or unsecured) in good standing and one open installment loan in good standing such as a car, home, student, personal, share secured, or credit building loan. This combination is what the myFICO score theorists here have determined is what you need for optimal credit building and FICO score. You can have more CCs and more installment loans, however, this will not increase your FICO scores.

Next, (this is only important if you are attempting to purchase a large ticket item like a home or car) is paying in full all of the credit card balances each month, before the posting date, except one. This is called the All Zero Except One (AZEO) method. The one credit card you allow to post a balance needs to be less than 8.9% of the credit limit of the card. So using one card each month to buy lunch, letting it report and then paying in full will maximize FICO scoring. Keeping your utilization of your cards below 28.9% both individually and collectively will prevent you from incurring a FICO scoring penalty.

An installment loan will have its greatest impact on your FICO score when the amount owed is at 8.9% or less of the original amount owed which is usually in the final months before the loan is paid in full. If you don't have an installment loan you can check into SelfLender or a Share Secured Loan at a Credit Union.

 

Your CU sounds like they are jealous and only wants to help you with a consolidation loan by making you cancel your cards and going with their card. I am sure their goal is to keep you from going back into debt once they have paid your balances. That is a choice you will have to make. I personally would keep working to pay down the debt.

Keep in mind, building credit is a marathon, not a sprint. It involves demonstrating to a potential creditor that a person can handle credit responsibly. If you have open, active accounts that are being paid on time and pay all of your bills on time all the time, apply for credit only when you actually need it and use credit cards sparingly maintaining low credit utilization, then you’re going to earn and maintain great credit scores. It would be impossible for you not to do so. This is the fastest way to build good, solid credit. 

 

I hope this is specific enough for you and perhaps other MFers will chime in with additional advice or correct any misgivings that I have offered you. 

 

Good luck and best wishes.


 

Thanks for the reply Medic.

 

So I went and did the creditchecktotal.com, that was a good piece of advice, so thank you for sharing that one.

Actual scores are showing: EX 620 // TU 615 // EQ 608

 

Huge difference than Credit Karma, which I was aware that their scoring method is different, and is rarely accurate for what most lenders pull.

 

At this point I'm going to try to keep on paying down my balances, and try to take care of my CA's. I've been getting a lot better as far as budget goes over the past 6-8 months. Our budget conisists paying every bill that will be due before next pay day, and the rest goes towards household things and what-not. I think I'm going to tighten it up a little more though, going to be rough with the holidays coming... She's a mad shopper.

 

Back to my OP, the account that has disappeared and reappeared. I had disputed it a year ago, because I misjudged the DOFD and thought it should have rolled off. One thing that I can see not only on CK but on creditchecktotal as well, is that I have a recent collection that is hurting my score. And I know it is, because when this account for $285 popped back up in April this year, my score dropped 48 points on CK. I need to know what I can do about getting the date to show accurately. When I contact the CA, they will point blank tell me the DOFD was 10/2013... But cannot explain why it appears now on my CR as a NEW account, dated for 4/2018. All they will tell me is that CA's buy and sell accounts from the OC, and this can affect the date. But why THE **** do I get penalized because they are jacking around my account? If this were to have happened amid trying to get a mortgage, it would have instantly shut it down.. solely based on the fact that it "appears" I've had an account go to collections within the past 12 months. WHICH I HAVENT. I haven't acknowledged, paid, arranged payments, nothing. Ever. What can I really do with it? I'm definitely not going to just pay it if they arent going to update the date. Thats crap.

Message 3 of 4
Medic981
Valued Contributor

Re: Best Plan of attack?

First off, if you are speaking with the CA over the phone, STOP! Next time you speak with them state that you will continue any further communication with them concerning this debt by U.S. Mail only. CAs know better than to commit mail fraud when trying to collect a debt and will most likely not make empty threats in writing as that is a violation of the FCRA.

 

The original account DOFD is 10/13. A CA CAN NOT legally change this date. That is called re-aging the account. Is the collection account dated 4/18? If the CA started its attempt to collect the debt, of course, the CA wants the account to be 4/18 as gives them more time to harass you into paying the debt. The CA has to use the OCs original DOFD. It is a violation of the FCRA to re-age the account. 

 

What is the statute of limitations in your state for the OC or CA to file a lawsuit to collect the debt? If it is five years or less you are beyond the time the OC or a CA from being able to threaten to sue you in court to recover the debt. At this point, it becomes "zombie debt" or a debt which will not die because CAs are paying literally pennies on the dollar for the debt hoping to get some money out of it. CAs can attempt to collect on zombie debt but unlike zombies, they have no teeth to compel you to pay the debt. Zombie CAs can and do attempt to collect on zombie debts well after derogatories have fallen off your CR.

 

So I am a zombie CAs and buy your zombie debt of $285 dollars with thousands of other zombie accounts. I buy the debt in hopes that for every two to three cents I spend I will get a 50 cents in return. So I purchase your debt for $8.55. I call you daily, send you letters, make your worry until I get you to pay $142 to settle the $285 collection account. Not a bad payday for the CA. 

 

Did the CA send you a dunning notice? You have 30 days to send a debt validation letter by CMRRR to the CA after you have received the dunning notice. The CA must cease all collection efforts and remove the collection account from your CR until such time as they can validate the debt. This should also validate the DOFD with the OC. As I understand it, most zombie debt collectors receive a spreadsheet with your contact information, the account number and amount owed. This being the case it is difficult for the zombie CA to validate the debt and must cease collection efforts until such time as they can actually validate it.

 

If it has been more than 30 days since you received the dunning notice, I would contact the CFPB and file a complaint to have them investigate the DOFD with the CA. 

 

Once you have settled the with the CA that they can not through legal action force you to pay the debt and have decided you do not want to either PIF or settle the debt,  I would send them a cease and desist letter to the CA to stop them from attempting to contact you.

 






Your FICO credit scores are not just numbers, it’s a skill.
Message 4 of 4
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