It's been a year since I discovered these forums, so I thought I'd write out my encouraging tale for others just starting this journey.
I'm still in the middle of rebuilding, but things are SO MUCH better than they were 12 months ago, when I had FICO 8 scores in the mid-500s. Now they are 656 (TU) and 668 (EX and EQ). A year ago, I had a drastic financial disaster but it was limited to one card that I couldn't pay. (With a HUGE balance.) I was able to settle for a lesser amount (no charge off, no collection). But I was also left with a 90-day-late. And, I ought to mention, my income is low (it was about 17K a year ago, now is 25K). I had a lot going against me!
I started off by getting on a low-interest payment plan for some closed credit cards (which are still in good standing). This left me saddled with high util which I can't pay off yet because of low income. In the months after I started my rebuild, I was able to get a secured card (Green Dot) and then Walmart and Overstock store cards. In Feb I was miraculously approved for a Discover It card. I wanted to apply for everything in sight, but thanks to the folks here I learned my lesson sooner rather than later and just checked prequal sites a lot (and was refused a lot). Things started getting better in the middle of the year when I got in with Navy Fed (yay Navy). Now I just wait and garden and plan...
Some takeaways from my first year:
- It's so hard to be patient. I'm the worst at it. Hang around these forums, soak up the info, make plans, write notes, keep yourself occupied (and educated!) as you wait for things to improve. They WILL improve.
- Stop applying for cards or loans when you are getting refusals. Less is more. Quit while you're ahead! You'll deeply regret it later when things are starting to pick up (and they will pick up sooner than you think!) because you'll either have all these crap cards or a lot of wasted inquiries.
- myFICO is a wonderful place because it encourages healthy attitudes about credit (pay in full! Lower utilization! etc). You can unlearn bad habits and avoid disasters in the future. For the longest time, I only felt guilt, shame, and dread when I thought about my credit. Now I'm a credit geek and am enjoying this without the guilt! It's totally fun. Soak up the healthy attitudes and habits here and they will follow you for the rest of your life.
- Even with black marks on your credit, you can still get ahead. Look at all the people here with BKs, charge-offs, late payments, and high utilization. We still get afforded a second chance. We have to be more careful before applying, but all is not lost. I still have high util (it's slowly going down but still very much there) and was approved for Discover, Navy Fed, some good store cards (Walmart, Shell) and have pre-approvals for Citi and AMEX. It just takes time...
- Things can change suddenly when you least expect it. A few months after my credit rebuild journey, I could only get a preapproval for Discover's secured card. Then my FICO went up a few points and voila! Preapproved for unsecured Discover IT (at a low 600 score with low income and high util!). After months of no preapprovals, suddenly preapprovals. Be patient. That next big "breakthrough" could be around the corner.
