cancel
Showing results for 
Search instead for 
Did you mean: 

How to improve bad credit that is due to 3 year old baddie

Auto Loans for ANY Credit Situation. Immediate Response.
Advertiser disclosure
Highlighted
New Visitor

How to improve bad credit that is due to 3 year old baddie

Hi everyone!

I have a sort of dilemma and was wondering if anyone on the forums could offer any insight. I am trying to help my boyfriend restore his credit. His score is in the mid 500s and he only has one baddie, a 3 year old Kohl's account that he stopped making payments on & that hasn't been sent to collections for some reason. His plan is to pay off the account, but will a pay for deletion help? Or is there a better way to go about this? We want to build a positive credit history in order to purchase a home in the near future and I'm not sure where to start with that being the only negative. Thank you in advance!

Message 1 of 5
4 REPLIES 4
Valued Contributor

Re: How to improve bad credit that is due to 3 year old baddie

Hi Velvet - welcome to the forums! 

 

I've never seen a successful PFD with Kohl's but I have seen successful Goodwill adjustments (deletions after payment) with them.   

 

Are there any other open / active accounts on BF's reports?   

 

Right now, the outstanding balance of the Kohl's chargeoff is factoring into his current utilization at over 100% because the credit limit is $0-- and if he has no other open revolving lines of credit,  the 100%+ util is seriously hurting his scores.    Additionally, if the account is being updated monthly by Kohl's, it is prevented from aging and always seen by FICO as 'new'.   Even if they are not updating monthly, so long as there is an outstanding balance, they can update whenever they want... and when / if they do,  it will further drop his scores.   

 

The fact that they haven't sent this to collections yet is good -- he should pay it off now (either in full or settle) so the account will officially close with a $0 balance and begin to age as no future updates of negative info occur.   As it ages, it will begin to hurt less, though it will continue to hurt for the entire time it remains on his reports.   You want to pay it before it gets sold to a collection agency -- otherwise, he could end up with a collection tradeline in addition to the charge-off -- so 2 derogatory items to deal with instead of one.   

 

After payment posts, and the account is updated,  you can begin a Goodwill campaign -- simply send letters to the Executive Offices requesting a deletion of the paid account from your credit reports as a gesture of goodwill. He can explain why he stopped paying - hardship? -- and / or swear that he's learned his lesson and trying to get back on track... blah blah sob story --  you can search the forums for 'Goodwill' for examples / tips.    Goodwills don't always work, but it's certainly worth a shot.  They also rarely work the first time; you may receive a rejection letter but don't give up, keep sending them out. 

 

If he has no open, revolving accounts -- get one.  A lack of revolving accounts is another FICO penalty.   He may have to start with a secured card but that's ok -- he can start with as low as a $200 limit and just make a $5 charge per month and pay it.  Once he starts showing a solid payment history and ages his new account for 6 months to a year,  his scores will rise despite the paid charge-off (assuming you are unable to get it removed)...     

 

Having only one negative is an easy fix...  you'll be ready for home-buying in no time.

Personal Aphorism:
"Forget What You Feel, Remember What You Deserve"


Starting FICO 8s | 09/2017: EX 641 ✦ EQ 634 ✦ TU 647
Current FICO 8s | 11/2019: EX 767 ✦ EQ 734 ✦ TU 757
Current FICO 9s | 11/2019: EX 768 ✦ EQ 775 ✦ TU 766
Highest FICO-8 Ever | 10/2018: 780 [on dirty report]

2019 Goal Score | 760s


My AAOA: 2.10 years not incl. AU / 3.1 years incl. AU
My AoOA: 6.10 years not incl. AU / 8.10 years incl. AU
Inquiries: EX 0/6 | 3/12 ✦ EQ 0/6 | 5/12 ✦ TU 0/6 | 1/12
Report Status: Clean

Tending my Garden til 6/2020


Without patience, we will learn less in life. We will see less. We will feel less. We will hear less. Ironically, rush and more usually mean less.
Message 2 of 5
New Visitor

Re: How to improve bad credit that is due to 3 year old baddie

Hi thornback!

Thanks for the welcome! He does not have any other active/open accounts besides the Kohl's account. It seems that his only option at this time is a secured card. Do you have any suggestions on where to open a secured account? 

Message 3 of 5
Contributor

Re: How to improve bad credit that is due to 3 year old baddie

Hi!

 

I would recommend the Discover IT secured. You get 2% cash back at restaurants and gas stations and 1% cash back for everything else. Once approved, your boyfriend would just need to fund his account (anywhere from $200-$2500).

 

After 8 months, Discover begins reviewing the account to see if it's eligible to be graduated to an unsecured product.

 

As a 2nd or 3rd option, I would recommend a Citi or Capital One secured card.


8/1/2018 FICO Scores:

7/12/2019 FICO Scores:
Message 4 of 5
Valued Contributor

Re: How to improve bad credit that is due to 3 year old baddie


@velvet29 wrote:

Hi thornback!

Thanks for the welcome! He does not have any other active/open accounts besides the Kohl's account. It seems that his only option at this time is a secured card. Do you have any suggestions on where to open a secured account? 


Once he pays that Kolh's account and it updates to a $0 balance, he should receive a nice little score boost for going from 100%+ utilization down to 0%.  You also get a FICO score boost when you add the first, open revolving account -- and then another boost when that new account reports a balance for the first time (so long as the balance isn't too high -- keep it below 8.9% of the credit limit and never let it report $0 - there is a penalty for having all cards at 0%) -- Note: the boost only comes with the first card - all subsequent cards will come with a temporary new account penalty so take it slow...

 

@DebtJoe's secured card suggestions are great and I am in total agreement.  I, personally, feel Discover is the best secured card on the market right now because it offers many of the same cash-back perks as their unsecured versions and it will eventually unsecure so it will grow with him as his credit matures.   

 

IF, for some reason, he is unable to get approved for Disco or Cap One, then I'd suggest - rather than continuing to app for secured cards with other banks and wasting multiple hard inquiries - that he get the OpenSky secured card.  OpenSky is a good choice for those unable to get approved for bankcard secured cards as no credit check is required and they are non-predatory with no extra / hidden fees although they do have an anuual fee - i believe it's $35 -- but other than that, it's a solid builder card that reports to all 3 bureaus.  He can keep the OpenSky for 6 months, then re-app for Disco.  OpenSky will never unsecure so once he's able to qualify for something better, he can close it and get his security deposit back.  I don't think he'll have any trouble getting approved for either Disco or Cap One though -- but keep OpenSky in mind, just in case.   Also -- keep in mind that the credit limit does not matter when it comes to FICO scoring -- a $200 limit is treated the same as a $20K limit --- all that matters as it pertains to FICO is how you utilize the credit available,  so don't feel as though you have to tie up a large sum of money for the deposit. 

 

Last thing -- and you may already know / be doing this, but I'm going to throw it out there anyway ---  make sure you are monitoring FICO scores.   Free sites like Credit Karma, Wallet Hub, ect. are great for monitoring changes to your reports, but the scores provided are not FICO, they are Vantgage 3 scores and this model responds differently to changes to your credit than FICO.  Lenders use FICO scores to make credit decisions so those are the ones with which you want to concern yourself.  

 

 

   

Personal Aphorism:
"Forget What You Feel, Remember What You Deserve"


Starting FICO 8s | 09/2017: EX 641 ✦ EQ 634 ✦ TU 647
Current FICO 8s | 11/2019: EX 767 ✦ EQ 734 ✦ TU 757
Current FICO 9s | 11/2019: EX 768 ✦ EQ 775 ✦ TU 766
Highest FICO-8 Ever | 10/2018: 780 [on dirty report]

2019 Goal Score | 760s


My AAOA: 2.10 years not incl. AU / 3.1 years incl. AU
My AoOA: 6.10 years not incl. AU / 8.10 years incl. AU
Inquiries: EX 0/6 | 3/12 ✦ EQ 0/6 | 5/12 ✦ TU 0/6 | 1/12
Report Status: Clean

Tending my Garden til 6/2020


Without patience, we will learn less in life. We will see less. We will feel less. We will hear less. Ironically, rush and more usually mean less.
Message 5 of 5
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.