Help with plan of attack

[Anonymous]

I'm working on rebuilding my credit after some mistakes. I'm 28 and looking to work towards buying a home by 30 but first, I need to clean up my credit.

Here are my FICO 8 Scores (today):

Experian  611

TransUnion 600

EquiFax 598 

Here are my current closed accounts:

Account Name Account Type Date Opened Payment Status Account Status Balance Original Creditor
CAINE & WEINER Collection 12/1/2014 Paid Closed $0 PROGRESSIVE
CREDIT ONE BANK NA Credit 9/1/2015 Paid Closed $0
ENHANCED RECOVERY CO L Collection 9/1/2015 Paid Closed $0 CENTURYTEL
BK OF AMER Credit 10/1/2008 Paid Closed $301.00 
JEFFERSON CAPITAL SYST Collection 8/1/2016 Late Closed $449.00 Verizon
PHILADELPHIA FED CR UN Charge Off 12/1/2011 Late Closed $629.00 
CAPITALONE Credit 11/01/2013" Paid Closed $648.00 
CAPITALONE Credit 2/1/2013 Paid Closed $740.00 
AD ASTRA RECOVERY SERV Collection 12/1/2016 Late Closed $1,305.00 SPEEDYCASH.COM 92-KS

Most recent missed payment was 6 months ago. I have 3 accounts listed with bad payment history.

1. Which accounts should I attack first? 
2. I don't have any open credit cards right now, I was thinking about openning a Discover Secured Card to start. Does the cerdit limit matter? Should I start with $500?
3. Should I aim to open up to 3 cards (secured) to help with open lines of credit?
4. Are there any other actions I need to do to start this journey?

Thank you

[Anonymous]

In the process of rebuilding myself but yes, you definitely need to have at least three accounts in your portfolio.  I think you should try to get that first before start tacking the collections.  That way the accounts can age along with the time it takes for you to work it out with the collection agencies.

As far as with accont to attack first, I think you should search this forum for other posters' post about those CA to see which one is willing to PFD and start with that first.  

Remember, credit is important but saving is more important.  You don't want to spend all your emergency savings on paying off those collections and leave yourself vulnerable in case of emergency.

BOL!!!

[Adkins]

I highly recommend reading ABCD2199s Rebuilding Thread here in the forum. The information is pretty solid and is a good starting point. 

[Anonymous]

Thanks, Adkins!

My program is called the Triple Whammy.  If you can't do all 3 steps, don't bother because you'll be right back where you started in a number of years (my data proves this point):

1. Immediately start an emergency savings account with 10% of your income.  This is BEFORE expenses like rent, utilities, new iPhone, HULU, etc.
2. You need to start building credit ASAP.  Discover Secured is a GREAT rebuilder card, but you really want 3 credit cards from decent banks.  Avoid store cards for now, look for secured card options from decent banks, without annual or monthly fees.  If you have no student loans, do the Alliant SSL Technique in my 11 rules thread in my signature. Do that IMMEDIATELY before anything else.
3. You want to work on the derogatories.

You do all 3 things at once.  Build emergency savings, expand credit, manage credit wisely (AZEO Method in my link is MANDATORY for rebuilders.  MANDATORY!), and work on derogatories.

The reality is that with a lot of derogatories, some will stick, and having a profile with even 1-2 bad accounts can be just as bad to FICO as having 30 negative accounts.  I'd say start on the emergency savings 10% next paycheck, and then do Alliant SSL (if you have no loans) and the Discover Secured.  If you only have $500 to use, do Alliant first, then cash out the $460 and use $200 of that for Discover and $260 towards other secured cards/emergency savings.

Make it a plan that if you can't put 10% of your paycheck towards emergency savings one pay period that you penalize yourself by cutting off cable or fancy iPhone unlimited plan or Netflix or something.  Keep trimming your spending -- it's a 2 year process and you need to cut off all the useless spend you've been doing. If you can't put 10% of you paycheck away every pay period, you're overspending or underearning.  You need to fix that NOW before you can rebuild safely and properly and "quickly".  That 10% should be forever, until you've got 6-12 months of savings equal to your income in that time frame.  So if you make $2500 a month take-home, you will save 10% until you're at a minimum of $15,000 in emergency savings and I would prefer to see $30,000 because you will never have financial anxiety again knowing if you lose your job for a year or get injured, everything can get paid.

I also highly, highly, highly suggest you do a "reverse budget" every month.  I do even though I'm a thrifty spender, I still find $100-$200 a month in mistakes when I do my reverse budget.

Once you have your Alliant SSL + Discover Secured + 10% emergency fund started, we can work on the baddies.

[Anonymous]

Thanks for the help everyone!

I altered my payroll to send 10% to my savings account.

I already have two active loans (Student Loan @ $15,460.00 and Car Loan @ $14,238.00) both with good payment history. Since I have those loans open, I shouldn't do the Alliant SSL, right?

It looks like I qualify for the Discover Secured Card.  What other cards should I target?

Once I get those cards open, should I start with the baddies that seem amicable to PFD?

Thanks again!

[Anonymous]

Fantastic!  Make sure that 10% is in an savings account that earns a competitive interest rate -- and also make sure you don't dip into it for "fake" emergencies.  Lots of us have done that before :/

As for the Discover, YES.  That's the absolute best secured card in the world because it frequently graduates at 7 months (mine did) and you can ramp up the secured limit to $2500 by making future deposits before it graduates.  I made mine $2500 so it would be a higher limit card at graduation, and it did in fact graduate at 7 months.

Since you have two auto loans, the Alliant SSL is useless for now.  But 3-4 months before you pay off the second of those loans, get the SSL if you don't plan on new loans before those are paid off -- paying off ALL loans to $0 can drop your score 20-30 points (or more).

As for PFD, your best bet is the following:

1. Use the search bar for your original creditor and collection agency first to see if there's any recent data on either.
2. Attack medical collections by first visiting (not just calling) the original hospital, clinic or doctor's office.  Ask if you qualify for "charity care" for the old bill.  If so, they will claw back the collection and maybe even zero it out for you.  If not, ask another person.  Sometimes you have to ask 2-3 people before finding an answer.  If THAT doesn't work, ask if they can claw back the collection so you can pay them directly.  If that happens, you can dispute the collection or it may just fall off.
3. Attack utility bill/cell phone collections by calling the original creditor and asking if they'll recall the collection so that you can pay them directly once they do.  Usually an easy thing to pay without a PFD.
4. Any other collectors, send out a bunch of letters asking if they would write you back with an offer to pay in exchange for "removal of all tradelines and an agreement not to sell, transfer or assign this debt to anyone else if you pay it."  You may be able to PFD for a negotiated lower balance, or you may have to pay in full to get PFD.  If they say no, move on to another collection agency and try again in a month.  Also I have heard that Credit One will delete chargeoffs if they've been paid in full and are over 2 years old, maybe call and ask them?

You should also calculate the SOL for lawsuits in your jurisdiction and see which debts are within SOL -- may want to hold off negotiating PFD if they can sue you for the full amount!

[Anonymous]

Sounds like a plan. Thanks again. I'll post updates as I get started