I need advice on how to gain 40 points in a 2 months

[Anonymous]

Currently I am trying to rebuild my credit in order to get into a better auto loan.  I currently have an auto loan for 12,500 at 16% interest.  I have had the auto loan for about 7 months now and made every payment early.  When I got the car my score was about 475 and over the past 7 months my score has increased 100 points.  I really want to get out from under this interest and I would really like an automatic transmission.  I took it at the time because I didn't think I could even get an auto loan at all and I really needed a reliable car.  Yesterday I went to the dealership (Nissan) I got my car from and they told me if I could get my score up about 40 more points they could get me financing through NMAC and get me some extra rebates with a much lower interest rate (about 5%) on a better car, which is my ultimate goal.  This week I got approved for an unsecured card through capital one with a 300 dollar limit with 0 percent interest.  I am hoping that between the good car payments and this new line of credit, which I plan on charging 30% of the balance and then paying each month that I can get that score up to get the better car.

I am looking for some advice as to how to get the score up quickly.  I have 31 negative reports, all of which are student loans and medical bills.  My student loans became current a few months ago because I am a student again but the medical bills are in collections.  Should I pay off the accounts in collections?  I have heard this will not boost my score.  Also, I was thinking maybe another line of credit would help me get points faster?  Maybe a secured card from Bank of America? 

Another suggestion I have gotten is to open a savings account with a credit union.  WIll this increase my score?

My score does increase each month because of the car payments and I know credit rebuilding doesn't happen quickly, but does anyone have advice on how I could get this score up 40 points in 2 months so I can get the car I want?

Any advice is appreciated!

[junebug225]

I would try to PFD some of the medical collection if possible. That's going to my the quickest route to take.

 

[SunriseEarth]

Paying collections in and of itself won't improve your scores; the fact that it occured is what is evaluated in the score.   You would want to look into PFD to get these removed.   Feel free to search the board here for PFD examples.

Congrats on getting a new CC.   UTIL of your revolving credit makes up a large portion of your FICO score.   However, you don't need to leave a balance and pay interest on the CC to get payment history.   For FICO, optimal UTIL is <10% of your available credit (but more than zero).   So if the $300 CC is the only revolving line you have, you would want a balance of less than $30 to post at statement close.   You can use as much of you CL as you'd like, but pay it down to less than $30 before the statement closes.   You can pay that during the next statement period and avoid interest.   Rinse and repeat.  

You might consider adding another CC, but I would avoid any unnecessary HPs on your credit.   You might also look into the "shopping card trick"

As for a savings account with a CU, that won't boost your scores.  However, it can get you in with a CU and some CUs have products for those looking to rebuild their credit.  

[MarineVietVet]

---

@Anonymous wrote:

Currently I am trying to rebuild my credit in order to get into a better auto loan.  I currently have an auto loan for 12,500 at 16% interest.  I have had the auto loan for about 7 months now and made every payment early.  When I got the car my score was about 475 and over the past 7 months my score has increased 100 points.  I really want to get out from under this interest and I would really like an automatic transmission.  I took it at the time because I didn't think I could even get an auto loan at all and I really needed a reliable car.  Yesterday I went to the dealership (Nissan) I got my car from and they told me if I could get my score up about 40 more points they could get me financing through NMAC and get me some extra rebates with a much lower interest rate (about 5%) on a better car, which is my ultimate goal.  This week I got approved for an unsecured card through capital one with a 300 dollar limit with 0 percent interest.  I am hoping that between the good car payments and this new line of credit, which I plan on charging 30% of the balance and then paying each month that I can get that score up to get the better car.

I am looking for some advice as to how to get the score up quickly.  I have 31 negative reports, all of which are student loans and medical bills.  My student loans became current a few months ago because I am a student again but the medical bills are in collections.  Should I pay off the accounts in collections?  I have heard this will not boost my score.  Also, I was thinking maybe another line of credit would help me get points faster?  Maybe a secured card from Bank of America? 

Another suggestion I have gotten is to open a savings account with a credit union.  WIll this increase my score?

My score does increase each month because of the car payments and I know credit rebuilding doesn't happen quickly, but does anyone have advice on how I could get this score up 40 points in 2 months so I can get the car I want?

Any advice is appreciated!

---

Welcome to myFICO.

It might be better if you waited a little longer to get that new car. Don't put any more pressure on yourself by trying to do this in just two months. The car dealer is counting on you to hurry into the deal. They are not looking after your best interests!

I know it's frustrating to pay that high interest (I've paid plenty of it myself) but wait about six months or even longer to let your situation improve. Work on getting some of the negatives removed if possible and let time be your friend.

In any case good luck to you.

[korunner]

never pay off medical debt without asking for PFD. paying off will not increase your score (thought it is always right to pay debt you actually owe). tell them "this is ALL i can offer you" and typically they will budge. 

[js0319]

Are the student loans private or federal? 

If they are federal, you can request to rehabilitate the loans. This is a 9 month process where you catch up on any outstanding interest and fees in 9 payments, and your loans are updated to reflect positive payment history. However, this is not available with private loans. Depending on how many loans you have, you may be able to gain some points and positive trade line activity with this method. 

[Anonymous]

Your 2 month time frame is too short.

Adding the new credit card will also hurt your score within the next 6 months...so your more realistic goal would be 6 months for cleanup and your new card to mature.  

Your quickest way out of the hole would be PFD's

Even then, it is unlikely to get it done within 2 months as these things take time, negotiations and for them to get off their behind as well.

If you put a 2 month window on yourself, you'll end up negotating at a much higher price with collections

Patience is the key.  Clean up your credit as much as you can and THEN apply.  You will save on a lower car interest rate anyways.  In the 5 year outlook, getting your score higher before getting a 5 year auto loan will save you much more money than rushing out of a high interest loan to get into another relatively high interest loan.