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Credit scores and credit improvement

SouthernRose79
New Visitor

Credit scores and credit improvement

Okay, I've been working on my credit for a few years now. I managed to get my credit to where I am finally able to get a few credits, albeit credit cards for bad credit. So far my credit scores are improving but I obviously still a long way to do, so...work in progress.

 

Here's what has me frustrated and confused: I pay more than the minimum on my credit cards. I even paid two of them down to zero. But when I pay off the balance and have zero debt, my credit score takes a hit. I don't understand how or why paying off my credit cards is having such an adverse and deleterious effect on my credit score, plus according to main page, the FICO Secore version credit scores I need to get other credit cards, buy a house or buy a car is nowhere near the FICO credit score 8 that is displayed on my home page when I log in.

 

I don't know what to do to raise the other scores. I've reviewed my credit reports, disputed a lot of items and got them removed. Several inquiries have since been deleted. I did file Ch. 7 back in 2012 and I know that's going to come off my credit in two more years, along with a lot of collection debt that accrued while I was in the hospital. My FICO Score 8 is in the lower 600's and I want to buy a house at some point.

I'm not sure what else to do except to keep doing what I've been doing.

 

Any advice would be welcome and appreciated.

Thanks in advance

5 REPLIES 5
OmarGB9
Community Leader
Super Contributor

Re: Credit scores and credit improvement

Hello and welcome!

 

So FICO actually penalizes you for showing no balances on any cards. They like to see a little debt to be able to gauge how well you manage your credit. I know it doesn't make sense, but they want to see if you get into debt, is it a minimal amount (under 8.9% of credit limit) and can you pay it back within a reasonable amount of time. So what we usually recommend is to implement AZEO (All Zero Except One), which means pay all of your credit cards down to zero balance except for one card prior to their respective statements being cut/cycle ending. That one card you're supposed to leave a balance on should ideally have a balance under 8.9% of its limit as I mentioned above. For example if your one card you want to leave the small balance on had a limit of $1,000, then you'd need to let it report a balance of less than $89. It works best when you have at least 3 open credit cards (NOT charge cards like Amex Platinum/Gold/Green).

 

Also, it also helps to have 3 credit cards and 1 installment loan. The installment loan can be any open non-revolving account. It can be a personal loan, student loan, auto loan, mortgage, etc. This is the best way to maximize FICO scores.

 

Your BK from 2012 will hold you back a bit until it falls off, but you should still be able to reach 700 eventually. Are there any other baddies (negative items) on your reports? Charge offs, collections, repos, tax liens, etc.? These would also suppress your scores.


Last App: 04/05/2021
Penfed Signature Loan

Currently rebuilding as of 04/11/2019.

Starting FICO 8 Scores:




Current FICO 8 scores:


Message 2 of 6
SouthernRose79
New Visitor

Re: Credit scores and credit improvement

I have a lot of collection debt but it started falling off my credit as of January 2019 and has been falling off ever since. I have had some new collection items since then. 

 

I wanted to move, so I worked on my credit, rental history and income. I applied for an apartment, but my application was declined. I asked the leasing agent what I could do to improve my chances so I could reapply. So he pointed out several collection items that I needed to pay and told me that paying those specific items would turn into an approval.

 

So I did. I mean, I came home later that day and looked up the contact information of the collection agencies. I reached out to them the next day and offered to settle the debts. They all were open to settlement and I was able to settle about four of the five collection items the leasing agent told me to pay. I wasn't able to settle the one debt because they refused to settle and insist on payment in full.

 

So I do all that and call the leasing agent to see what my options are. I am rocked on my heels when I am informed that none of made any difference and that there was no way to determine what collection debts needed to be paid to get an approval. So now I'm just odd man out and I've settled these debts for nothing.

Message 3 of 6
ComeBackLady
Established Contributor

Re: Credit scores and credit improvement


@SouthernRose79 wrote:

I have a lot of collection debt but it started falling off my credit as of January 2019 and has been falling off ever since. I have had some new collection items since then. 

 

I wanted to move, so I worked on my credit, rental history and income. I applied for an apartment, but my application was declined. I asked the leasing agent what I could do to improve my chances so I could reapply. So he pointed out several collection items that I needed to pay and told me that paying those specific items would turn into an approval.

 

So I did. I mean, I came home later that day and looked up the contact information of the collection agencies. I reached out to them the next day and offered to settle the debts. They all were open to settlement and I was able to settle about four of the five collection items the leasing agent told me to pay. I wasn't able to settle the one debt because they refused to settle and insist on payment in full.

 

So I do all that and call the leasing agent to see what my options are. I am rocked on my heels when I am informed that none of made any difference and that there was no way to determine what collection debts needed to be paid to get an approval. So now I'm just odd man out and I've settled these debts for nothing.


Yes. It's so frustrating. The places like WalletHub push to have us pay the CA's. But just paying them doesn't get the neggie off of our CR's. I have read in a few places, including here, I think, that we want to PFR pay for removal, deletion. 

That said, now that some are gone but one, re approach the Rental Office. When my finances were not great, I was able to get a rental with POI and paying a higher deposit. 

Having any CA's will bring your score down. Even when my very high dollar amount CA over $2K was removed after much rigmarole to prove that my insurance had actually paid them ages before they sent it to collections, that only impacted improved my CS a few points, 5 maybe, because there were still 2 others there. Having them mattered for my score. Getting the other one removed I think impacted more because it reduced my aggregate Utilization. 🙏🏻 

Good luck 🍀 with getting a rental soon. 🙏🏻🤞🏻And welcome to the Forum Community. Lots of amazing help and education here. 

Starting Score: June 2020: 502
Current Score: EX: May 15 - 687, EQ: APR 2021 – 668, MAY 2021 – 726, APR 26 - TU: 673
May 15 - TU: 697

Goal Score: Good: 670 by May ✅. By JUN 675✅,
Come on 680 across all 3 ✅, 690’s by JUN. Over 700 in 2021, ideally 725plus, 805 LT
Inquiries: 30/0, 60/1, 90/6, 12/13
TCL: JUN 2020 $700, MAY 2021 $13,051
AAoA 1 YR 6 Months AoYA 7 weeks
2021 Goal Cards: NAFs and $5K CL’s


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Message 4 of 6
SouthernRose79
New Visitor

Re: Credit scores and credit improvement

I was excited about possibly moving to a new place. But now...I'm no longer interested. I think I'm probably going to just sign a new lease where I am and just forget about it. If apartments are going to focus on one thing to disqualify me from renting, then I can just stay where I am and not worry about it. 

 

I just wanted something to actually go my way for a change because it never does. So I'm not all that surprised that it didn't work out for me because nothing ever does. I'm starting to feel like credit doesn't even matter, that it's a waste of time to bother with it. I'm not even willing to make payments on that last collection item because what's the point? It won't make any difference.

Message 5 of 6
OmarGB9
Community Leader
Super Contributor

Re: Credit scores and credit improvement


@SouthernRose79 wrote:

I was excited about possibly moving to a new place. But now...I'm no longer interested. I think I'm probably going to just sign a new lease where I am and just forget about it. If apartments are going to focus on one thing to disqualify me from renting, then I can just stay where I am and not worry about it. 

 

I just wanted something to actually go my way for a change because it never does. So I'm not all that surprised that it didn't work out for me because nothing ever does. I'm starting to feel like credit doesn't even matter, that it's a waste of time to bother with it. I'm not even willing to make payments on that last collection item because what's the point? It won't make any difference.


Don't let this setback get you down! I know what the apartment place did to you was shady and straight up lying, but paying collections still helps to an extent. A paid collection will always look better upon manual review than an unpaid one. Plus, you avoid the possibility of legal action/wage garnishment/bank levy if the CA decided to sue you and wins down the road. But yes, for future reference, always try to get a Pay for Delete (PFD) whenever possible prior to payment. Some CAs simply don't do it, though, unfortunately, and if that's the case, paying will still help in the long term. What you can do on the ones you already paid is try and go on a GW (goodwill) campaign and send them lots of letters kindly asking for removal of their collection since they've already been paid. This would be asking them for a favor, and so they're not required to grant it, but it's a last resort and you've got nothing to lose by trying.


Last App: 04/05/2021
Penfed Signature Loan

Currently rebuilding as of 04/11/2019.

Starting FICO 8 Scores:




Current FICO 8 scores:


Message 6 of 6
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