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Best way to rebuild credit?

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Best way to rebuild credit?

Hello,

 

I am new to working on credit and want to make sure I'm doing the best steps to get my credit up.

 

My Credit Karma scores are 629 and 652 (I know these aren't the most accurate).

 

My debt is: 

$165,000 home loan

$70,000 student loan

 

$100 on a $300 limit secure card

$600 on a $1500 limit Wayfair (store) card

$575 in collections 

and a bankruptcy from 2015

 

Everything is paid on time. What's the best way to get my credit score up?

 

Edited to add: I have a lot of hard pulls from 2019 when I purchased my home. 

9 REPLIES 9
Moderator

Re: Best way to rebuild credit?

First off I would try to get the PFD on those collections and if thats not possible just settle them so they can age back in time and quit keeping your Fico depressed with monthly updates. Second you need one more open revolver to drive a rebuild at minimum. I would also make sure only one card reports a small amount (less than 9% of its CL) to the CRAs each month to get your max possible Fico from revolvers. As that BK ages back in time your Fico will gain points but until it is totally gone its the elephant in the room. Welcome to the board.

 

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/PFD-Q-amp-A-Examples-and-PFD-Success-Stories/...

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/PFD-Example-Letter/td-p/4519

"If there's a lack of money in your life, understand that feeling worried, envious, jealous, disappointed, discouraged, doubtful or fearful about money can never bring more money to you, because those feelings come from a lack of gratitude for the money you have."

"Reactions are powerful creators because they contain every element needed to manifest—they're a combination of thought, belief, and feeling in action. Positive reactions create more positive things, and negative reactions create more negative things. If you can respond to negative situations calmly and lightly, instead of with emotional turbulence, what happens next in your life will be so much better."

- Rhonda Byrne

Message 2 of 10
New Visitor

Re: Best way to rebuild credit?

Thanks for your response. What is PFD? Do you think it's worth the pull to apply for another secured card at this time? Or would paying off my current cards have the safe effect? 

Message 3 of 10
Moderator

Re: Best way to rebuild credit?


@helloannie wrote:

Thanks for your response. What is PFD? Do you think it's worth the pull to apply for another secured card at this time? Or would paying off my current cards have the safe effect? 


PFD is pay for delete. Doing both will boost your Fico but for now get your balance paid first.

"If there's a lack of money in your life, understand that feeling worried, envious, jealous, disappointed, discouraged, doubtful or fearful about money can never bring more money to you, because those feelings come from a lack of gratitude for the money you have."

"Reactions are powerful creators because they contain every element needed to manifest—they're a combination of thought, belief, and feeling in action. Positive reactions create more positive things, and negative reactions create more negative things. If you can respond to negative situations calmly and lightly, instead of with emotional turbulence, what happens next in your life will be so much better."

- Rhonda Byrne

Message 4 of 10

Re: Best way to rebuild credit?

Pay off your CC debt and apply for another revolver or atleast several, but you wont be approved with that amount of utilization.  There should be no reason why you're almost 40% util on your revolving cards tbh.

 

Pay down revolving debt, pay for delete on your collections, apply for more revolvers.

 

Heres what *I* would do to rebuild.

1. Be an AU of a long good standing tradeline with no missed payments.

2. Get MyJewelers or similar with a 5k TL

3. Pay off my revolving debt asap, the secured card and wayfair.

4. Pay For Delete on collections, or goodwill.

5. Wait til everything reports on CR then apply for new revolving, preferrably non secured and look for preapprovals

6. Slowly add more revolvers 

 

Message 5 of 10
Contributor

Re: Best way to rebuild credit?

Who are the collections with???

Begin of Journey ( 9/2018) EX 508 TU 506 EQ 498






Message 6 of 10
New Visitor

Re: Best way to rebuild credit?


@jons998877 wrote:

Who are the collections with???


National Credit Systems: $255

Account Resolution Corporation: $320

Message 7 of 10
New Visitor

Re: Best way to rebuild credit?


@StartingFromScratch wrote:

Pay off your CC debt and apply for another revolver or atleast several, but you wont be approved with that amount of utilization.  There should be no reason why you're almost 40% util on your revolving cards tbh.

 

Pay down revolving debt, pay for delete on your collections, apply for more revolvers.

 

Heres what *I* would do to rebuild.

1. Be an AU of a long good standing tradeline with no missed payments.

2. Get MyJewelers or similar with a 5k TL

3. Pay off my revolving debt asap, the secured card and wayfair.

4. Pay For Delete on collections, or goodwill.

5. Wait til everything reports on CR then apply for new revolving, preferrably non secured and look for preapprovals

6. Slowly add more revolvers 

 


1. What is AU? Authorized user? I don't have anyone I could ask to do that.

2. What is My Jewelers?

3. Revolving debt will be paid off by end of Feb.

4. Collections will be paid/setttled by end of Feb. What is goodwill?

Thank you!

Message 8 of 10
Contributor

Re: Best way to rebuild credit?

Well the first thing I would attack is the collections, try like heck to get them deleted, if not just pay them off so they are not reporting each month, let them age so it stops depressing your scores...

Begin of Journey ( 9/2018) EX 508 TU 506 EQ 498






Message 9 of 10
Established Contributor

Re: Best way to rebuild credit?

1 - Call National Credit Systems and Account Resolution Corporation and offer a pay for delete. Per prior threads on this board, they will both do it. If they say they can't put it in writing, that is probably true, especially for NCS (they are known for this), but they will follow through on a verbal agreement. If you want to negotiate, I'd start out offering about 40% of what you owe, but with the amounts you're dealing with, you should be prepared to pay 100% if necessary. It is by far worth that to get them removed from your credit.

 

2 - Pay down your debts on the secured card and on Wayfair - for credit scoring purposes, under 9% utilization is best and over 30% is scary. Over 50% is VERY scary. You don't need to wait to get your bill in the mail. You can figure out what day of the month your statement cuts, and pay about three days before that, or you can make multiple payments per month in most cases. All that matters for your credit score is your balance at the time your monthly statement cuts.

 

3 - Your other loans (mortgage and student loans) seem fine/positive to me.

 

4 - I don't know much about bankruptcy but that is probably something you'll just have to wait out. It has less effect over time. You should be aware of which lenders, if any, your bankruptcy burned; for example, if you burned Amex, you probably will be waiting a while to be able to get another Amex cards. Different lenders are more or less sensitive to this.

 

5 - I think you'd benefit from either a car loan or a Self Lender loan. If you don't need, or can't afford, a car right now, look up Self Lender. It mimics a car loan (secured personal loan) for credit purposes. It's not a loan where you actually get money.  You pay each month, and at the end, you get back most of what you paid in. You lose some due to interest. It's like the worst savings account in the world, but meanwhile, it reports positive each month.

 

6 - After those steps, you should be in a pretty good position to start building vs merely fixing. Check prequalification sites for cards (Discover, Citi, Amex etc). If you aren't getting many prequalifications, you probably will at that point be able to get a Discover secured card. Discover secured is the king of secured cards, because it gives cash back the same as the unsecured version, and it can unsecure after 7 statements. But you also will probably be on the edge of being able to get some unsecured non-predatory cards, such as Amex Delta Blue or Cap One QuickSilver. If you shop much on Amazon, get an Amazon card (the Chase Visa if you're feeling brave, or else, the Sync Store Card like I have).

 

7 - Let things build for a while and you should be in pretty good shape; again, I don't know much about bankruptcy, but I would think with that as the only thing on your record and the positive stuff, you will very soon be in the realm of good credit.

 

Good luck!


FICO 8 scores are deceptively high. My profile is young with a lot of new accounts and even more inquiries from 2019. The Barclay AU card is not on TransUnion; and, Equifax has some old positive accounts from 2011 that are not on the other two. That is the reason for the variation in scores. No derogs. Over 5/24 until fall 2021.
Cards

Authorized user / Corporate / Auto loan

Closed but still on reports: ExxonMobil, $950, 10/08-02/11 (Equifax only) | Citi secured, $200, 045/19-09/19 | Capital One secured, $300, 04/19-08/19 | My Jewelers Club, $5,000, 05/19-08/19 | Green Dot Primor, $300, 05/19-08/19 | Self Lender secured $500 loan, 04/19-01/20 | Unsecured personal loan from Coastal, $1,000, 06/19-08/19.

Goals: Late 2020 - Ducks Unlimited card; scores in high 700s with inquiries aging. Long-term goal - Prime rate mortgage; able to qualify for most standard credit products.
Message 10 of 10
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