Fiance's old credit mistake hurt her credit - solutions?

[Anonymous]

So my fiance and I are looking to purchase a house together this upcoming year. 

I have maintained good credit over the years, currntly sitting at 775 EX FICO, whereas she has been struggling to improve her score over the past year (she was in upper 580s in the summer).

We paid off all of her outstanding revolving balances and she got it up to roughly 630, and she purchased a new car after graduating college and landing a good engineering job. Now her student loans are showing up on the report (as 12 seperate accounts (???), even though she is paying one large balance).

Anyway....what is REALLY hurting her credit is that she had a trio of consumer credit card accounts that got severely delinquent about 3 years ago, one of them hitting the dreaded 120 day mark. She had moved and didnt update her address with USPS and did not get CC notices that she had something like $40 and $70 balances on on a victoria secret and The Buckle credit cards (both of which had under $150 credit limits).

Sure enough, these are looking they are killing her scores, even though she paid them off in full as soon as she realized they were overdue. She now has $0 of revolving debt and her new car and student loans as secured and federal loan debt, all with perfect payments for the past 3 years but only hits in the 660s 3 years later.

Bottom line question is whether or not we just have to suck it up and wait out the entire 7 years for those delinqunicies to clear off for her to be able to get decent credit again, even though the delinquent accounts were for peanuts. Ive made her well aware of how badly of a screw up it was to let those go. Now Im wondering if $110 of delinquent debt really has "capped" her credit for 7 years.

Ive read that things can never be "expunged" from a report, unless they are erroneous, but with such small amounts is that still the case?

Thanks for any advice

[SoulMaster]

#1.  It's counter intuitive, but if she has no revolving debt reporting that's part of what's lowering her scores... if she has a couple of accounts, let them report balances of <10% before paying them off, then PIF.

#2.  Are the $110 of old debts paid off?  If yes, you can write to each of the OCs and ask for Goodwill deletions, if they do it, those accounts are gone (expunged) forever. (You can do the same if they went to collection agencies).

#3.  Next time, before paying them off, ask them for a Paid For Deletion (PFD).  Basically you're saying, "I'll pay this, but only if you delete the tradeline from my CRs".

Anyhow, if there are only 3 baddies, I'd go w/ #2, and if they said no, I'd escalate again and again until I got someone who was willing to overlook the bads and delete the stinkin' lines.

To answer your bottom line question:  Not at all.  See above.

-SM

P.S.  Welcome to the forums!  (and don't give her too hard a time!  We've all made stupid mistakes!)

[Anonymous]

Thanks so much for your thoughtful reply and advice!

I've done a little research regarding goodwill deletions (now that I know such a thing exists and what it's called!). Sounds as if it's going to take a little persistence and letter writing. Is it true that the GW letters should be addressed to individuals from the bank, and if so, what's the best way to obtain names/addresses?

Also, any ideas as to why her student loans are showing up as 12 distinct accounts on her CR when she is paying off a single balance?

[laz98]

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@Anonymous wrote:

Also, any ideas as to why her student loans are showing up as 12 distinct accounts on her CR when she is paying off a single balance?

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Most student loans will show up this way.  Each disbursement is usually listed as if it were a separate loan.

[SoulMaster]

I'm not the master of GWs.  I just sent off my first batch yesterday... they all went to the addresses listed on the CRs.  From what I can see, that's a good starting point before escalation.

-SM

[Booner72]

Those student loans are going to rock her world when they start aging - so be happy about them.

My EX score has all my old student loans (Dropped of EQ and EX) and my score is 50+ higher than the others bc of them.

I know this isn't my business, but I noticed you mentioned the lecture you gave her on the importance of good credit.   She already feels like HELL that she has crappy credit and you have good credit.  She doesn't need to hear it from you.   Also, maybe you should invite her read/join the forum here and learn about GW letters so she can do them herself.  It will help her low-credit-esteem to rebuild. 

Good Luck.

[RobertEG]

You paint a picture of her financial status and potential earnings, having graduated, now being much different and much improved over the point in time when the old derogs occured.  In my opinion, she could possibly use that to her advantage in formulating GW requests.

I would look at her prior credtors, being capitalists that they are, as possibly being receptive to GW if they see it to their advantage.

Old problems that no longer apply, and new conditions that make her a desirable customer, might feed to their desire to want her future business.

The "new, better, and richer me," and "I will feed future money to you" pitch.  I would use those in a GW letter.......  a sales pitch of why grant of GW would be to THEIR advantage.

[Anonymous]

Once again, a hearty thanks goes out for everyone's insightful replies! I am glad I decided to join the forums and post up.

My fiancé's finances couldn't be more different than they were 3 years ago, so the idea of using that leverage in a GW letter is great advice. I will have to sit down with her and draft up some mailings with this in mind. It's also why it seems so unthinkable that these paltry sums are causing such credit distress. It would be nice if the balances and overdue payments were somehow weighted by their actual balance versus income. Regardless, the point made about taking it easy on her hit home, as I do feel a bit guilty for coming down a bit hard on her for this. I suppose I should be thankful my parents instilled fiscal responsibility in me from a young age, a trait which her parents definitely don't display.

With regards to the multiple loan accounts with her student debt, it seems that some of the commentary here runs counter to the MyFICO report. On the report, the high number of accounts is actually listed as a detriment to her overall score (it's listed along with her delinquent payments as negative indicators). Due to this, I figured that requesting consolidation of those loans would be in her best interest, as interestingly enough, the last credit report we pulled (while she was still enrolled and the loans were deferred) showed only a single large balance and one account. It all seems a bit confusing it would change just because the payoff has begun.

[laz98]

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@Anonymous wrote:

With regards to the multiple loan accounts with her student debt, it seems that some of the commentary here runs counter to the MyFICO report. On the report, the high number of accounts is actually listed as a detriment to her overall score (it's listed along with her delinquent payments as negative indicators). Due to this, I figured that requesting consolidation of those loans would be in her best interest, as interestingly enough, the last credit report we pulled (while she was still enrolled and the loans were deferred) showed only a single large balance and one account. It all seems a bit confusing it would change just because the payoff has begun.

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Yes, FICO does like to ding you for having "too many accounts with balances".  Most of us with student loans do get punished for that, unfortunately

You said the last credit report you pulled showed only one account.......You only checked one CRA, correct?  Do you know how the other 2 are reporting her loans?  It does seem strange that they would suddenly split them up.  Are they all still with the same lender?  They might have started selling chunks of them off, as they often do.

[SanFranMatt]

I was in a similar position in 2007.  My fiance (girlfriend at the time) had bad credit from low-dollar accounts that went bad, and she didn't have any open credit cards.  I had perfect credit with no late payments of any kind.  I added her as an Authorized User to my older credit cards so that she had some positive history, and that bumped up her score immediately.  I also wrote to the creditors asking for goodwill.  Macy's deleted her from 2 of her reports (but not Transunion).  Unfortunately, she still has 150 day lates from Wells Fargo in late 2005, as well as a Charge-off from Credit One Bank in 2006.  We've been patiently waiting for those to fall off, but they haven't budged with the goodwill letters.

I'd recommend adding her as an Authorized User on your accounts because that's guaranteed to help her out (without hurting your score).  Also, send goodwill letters/emails/faxes as much as you can.