Advice on ReBuilding credit.
Hello,
I been reading the forum for advice and I finally decided to make a post.
My scores were as follows:
Year and a half ago got laid off and defaulted on multiple cards / loans.
Finally getting the hand of it. Have total of around 42 + k in debt , but 18 k in charged off accounts. Got my experian to 520 early March for a new car loan at 16 % apr. Have a decent paying job at 70 k a year
TransUnion: 510 (FICO8) in Dec 2023. Currently at 525
Equifax : 490(FICO8) in Dec 2023. Currently at 520
Experian : 450 (FICO8) in Dec 2023. Currently at 509
Have a milestone $700 , cap 1 plat secured $1000, a random store card for $300.
I also have citizens line of credit for a wholesale grocery chain for $1000 but I dont see that on any credit report.
I am looking for advice on raising credit lines, how long should I wait for a refinance at a better rate and when should I wait to get better credit cards. I always pay statement balances
I'd be wary of Affirm. Plenty of bad stories floating around about them.
Welcome! Plenty of good advice and those who are more than willing to help across this forum.
I agree with @JoeRockhead
Taking into account the amount of debt you have, I'd recommend making sure all of your neccessities in life are taken care of and taking anything leftover to chip away at any open debt you have, and get it low, and try to keep it there if at all possible - AZEO is a great way to go. Once you're at that point I'd use any credit cards you have very sparingly. If you're able to, definitely work on those charged off accounts. They're going to be hurting your UTI for a long time, assuming they happened a year and a half ago.
I actually started with much lower scores than where you're at (I think about 390s was my bottom in 2019 when all of defaults and COs occured due to losing work - as well as the following years of pandemic making it extremely hard to get back on that horse). Instead of focusing on getting credit in the beginning (assumed everyone would turn me down) I focused on paying everything that was owed. I cut all my uneeded expenses out, and lived a very boring life, but I managed to save and pay off all collections for deletion, and then moved on to charge offs. Each one I knocked out felt like a huge accomplishment. It took quite some time, but I dug myself out of the debt hole and the rising score came with it while getting some starter cards, and always paying them off either in full before statement, or in full every paycheck, or when I had some extra money.
Best of luck!
@Friendlyfranknbeans wrote:Credit one gives out credit cards like candy. The limits are low but they do report to all 3 bureaus. Most cards have an annual fee.
"Affirm buy now pay later" seems to be another way to boost your score. Buy something cheap and pay it off after 1-2 months.
try "BrightWay" from one main financial. They'll give you a Low credit line but will raise it after 6 payments.
fingerhut if they're still around, although it's not a credit card they do report to all 3.
Your car rate is good for those scores. Yeah it's not low by any means but if you refinance now you'll only get 1-2% off that rate... don't expect the 6-7%. - not worth the hard pull. Wait a year.
Trying to avoid annual fee cards, because seems like a waste. I don't mind waiting and have fairly low expenses for my income. I already got the milestone card which has that terrible fee schedule next year. Will likely be looking to close it before next years fee hits.
I have pre approval for the brightway card but again the annual fee. It looks like a better card which I feel I shouldve got instead of the milestone but a bit too late for that now haha.
for affirm - i defaulted on one of their loans and do not think i can get another from them for a while.
Yeah I think the car rate isn't that bad considering my scores, just wanted to squeeze out a smaller rate so my current strategy of paying an extra 500 on it will help accrue less interest and more principal payment.
@JoeRockhead wrote:Welcome to the forum. You may not like what I have to say but, with your current scores, and debt, seeking out more credit isn't the answer right now. You should be concentrating on only using the credit cards you do have as if they were debit cards. Keep your reported utilization low, practice AZE0, and work on eliminating the outstanding debt you have. Most importantly, allowing the passage of time on your derogatories to do it's thing. Once you can get your Fico 8 scores to 600+, then, maybe would be time to look at expanding your credit.
Affirm accounts are scored more harshly than other loans, so I'd recommend staying away from them completely if at all possible.
Thanks for the welcome @JoeRockhead . I may not like it but if its the better option for a quicker recovery / repair I will do that. I was currently keeping my utilization at 40 ~ since I still have the platinum secured card and was hoping to get the automatic credit line increased in a few months.
For eliminating the outstanding debt I have I am currently doing payment plans on 4 of the charged off accounts. I should be on track to clear those debts with settlements before end of year.
I actually called yesterday and negotiated a lower settlement offer for 800 on a debt of 1600, I am hoping I will be able to get better settlement offers for those other charged off accounts as well.
@GreyvyTrain wrote:Welcome! Plenty of good advice and those who are more than willing to help across this forum.
I agree with @JoeRockhead
Taking into account the amount of debt you have, I'd recommend making sure all of your neccessities in life are taken care of and taking anything leftover to chip away at any open debt you have, and get it low, and try to keep it there if at all possible - AZEO is a great way to go. Once you're at that point I'd use any credit cards you have very sparingly. If you're able to, definitely work on those charged off accounts. They're going to be hurting your UTI for a long time, assuming they happened a year and a half ago.
I actually started with much lower scores than where you're at (I think about 390s was my bottom in 2019 when all of defaults and COs occured due to losing work - as well as the following years of pandemic making it extremely hard to get back on that horse). Instead of focusing on getting credit in the beginning (assumed everyone would turn me down) I focused on paying everything that was owed. I cut all my uneeded expenses out, and lived a very boring life, but I managed to save and pay off all collections for deletion, and then moved on to charge offs. Each one I knocked out felt like a huge accomplishment. It took quite some time, but I dug myself out of the debt hole and the rising score came with it while getting some starter cards, and always paying them off either in full before statement, or in full every paycheck, or when I had some extra money.
Best of luck!
Thanks for the welcome @GreyvyTrain , I will be reading more on this forum and looking forward to sharing my journey!
Yes I have started a budget which I can hopefully adhere to more, I have reduced many bills down and am currently in the process of reviewing any extra spending I am making to try to save a bit more.
My debt at the moment is the 24 k car loan , and 18 k in charged off accounts. I am hoping to get these charged off accounts settled by end of year and the car loan is on track to be paid in the next 2 years. The likely hood that I can save up to pay the car loan off within 2 years increase the moment I am no longer paying off charged off accounts ha.
Any advice on paying less in interest for the car loan.
If you can settle all the CO's that will help. Wont change too much. Scores in the 500's its hard to go any higher until the debt is paid down and time will age the baddies. Clear up the past for abetter future.
I think @JoeRockhead gave you what you needed to hear.
I wouldn't worry about any new credit in the near future. Pay off your debts (if possible, maybe settle for less?) age your accounts, let time heal the wounds, build up savings account.
Any card you will be approved for will likely be high AF/cost card not giving any benefit. The cards you have are enough. Refinancing the car is out of the question any time soon unless you have a co-signer.
After 6mo-1year, or 600+ scores as Joe said, you can start checking some prequals Also there are secured cards out there that graduate, like Discover, if you didn't burn them. I'd stray away from the high AF cards.
I wouldn't be overly hopeful your current cards will grow, but instead focus on using them to build positive history.