Just getting started here....

[Anonymous]

GM to all,

It's been a rough year, and I find myself here now, and have a few questions. 

Last summer, I took a job 6 hours away that was a promotion and ultimately a big riase, although it was a bumpy ride and I ended up leaning heavily on credit during the move, and am now over my head. While everything was current, I was robbing Peter to pay Paul.  I do have one 30 day late on a line of credit I have back in May...I just forgot it, and it wasn't on automatic payment, now it is. Starting the DMP, my scores were in the 610-620 range (I was playing ostrich about checking them, so can't give you exact numbers) which was GREATLY influenced by high utilization and that one late payment in May, 2018. Total on the DMP is about $54K.

To that end, I am in the set-up process of a DMP with Greenpath.  About 1/3 of the proposals have been accepted, 2 wwere rejected (but this is ok....I'm better without them on the plan) and several are still pending.  They are sending my first payment to my creditors on October 29.  The set up process has been miserable, but there is a light at the end of the tunnel. I know some of you will say this was financial suicide, but knowing accounts would be closed on the plan, I pre-emptively closed them myself before starting so they would at least report as "closed by consumer" rather than by grantor. I also have a few open but zero balance cards:  Chase Amazon Visa ($3K limit) , Indigo Bank ($300 limit) , Peebles store card, ($750 limit), American Airlines ($2K limit)  and Care Credit ($3100 limit).  I have student loans that are in deferrment, but that will be changing shortly. I have the option to do basically as much overtime as I want over the next 2-3 months, and I plan to do so.

During the set-up the Greenpath expert mentioned that there are modifcation loans for my mortgage if I wanted to cosnider that.  I have a VA mortgage thru US Bank that is fixed at 4.25% and is current.  My payment is higher than I'd like but manageable.  In reading here, it seems that I might want to avoid the modification programs at all costs....they seem to be wolves in sheeps clothing. 

Currently, I have USAA Credit Expert which gives me 3B scores every month, and it's $13.95/month.  My next report isn't avaiable until Oct 31, and the last report was run Oct 1 before I started closing accounts. 

My significant other lives with me, but he is on disability with a very limited income and does not contribute financially to the household...maybe some groveries.  He does a lot of things here that do save money...the yard work, and smaller household projects when he is able to from a health perspective.  He is unaware of all of this with Greenpath, and I intend for it to stay that way.

Questions:

I see how people track their scores on the bottom of their posts.  When I looked at the products available here, I'd be paying much more for the membership than if I just stayed with the USAA Credit Expert.  I also have Credit Karma.  Are there any better options for tracking my scores over time? 

I am planning to open a Self Lender account in probably November once all of my Greenpath proposals are accepted/modified.  I am also looking at an OpenSky account.  Are there others I should consider, or are these necessary?

Does anyone have any info about loan modifcations for VA mortgages that don't cause major drama? 

I own my car outright, and it is is good shape and runs well, but has 183K miles on it.  After reading about it here, I looked into Cap-1 Auto Navigator, and went through the process, but got a response that they had no offers available for me right now, and would send a letter.  This is not an urgent need but since it's a soft pull, I wanted to check....with this many miles and no financial safety net should something major go wrong, I wanted to see if I had any options.  There are participating dealers in my area.  Now, I do have my EXP credit report frozen...is this maybe why they can't do anything?  My car is fine, but I also know that my scores which were already not great are about to take a major nose dive, and I was trying to see if I'd have any options if something does happen to the car.

Most of my Christmas shopping is already done, so no major expenses coming up any time soon unless something happens to car or house. I do have a health savings account at work that is also a bit of a cushion financially for unexpected healthcare expenses.  I need to gather a bit more information on this.

I am VERY stressed about having basically no emergency cushion, and my retirement portfolio is in ridiculous shape...I am 52 and have less than $30K in a work 401K, and am contributing enough to get the maximum match from my employer, but no more.  I am living paycheck to paycheck.  My sense is that one of my first priorities is to get an emergency fund started ASAP and once I have at least 3 months expenses, then increase my 401.   My next step is to run my USAA Credit Expert report again after October 31 and make sure things are reporting correctly, and get accurate starting scores and then add them to my post here so I can track over time.

Is there anything else I should consider doing? 

Thank you.

[Anonymous]

Hi Just1,

I can’t speak to everything in your post, but please know I do understand the stresses and difficulties in being in financial uncertainty. You are not alone!

The things I can give advice to:

- re: the selflender loan: you don’t need this. You have a current mortgage as well as student loans, so this will cost you money to have open (albeit a minimal amount) without any score boosts.

- re: opening more credit cards: you have a minimum of 3 cards remaining open. I would refrain from opening any other new cards right now. 3 will be enough to optimize your score (use search phrase AZEO to optimize score). Open sky is nice because it doesn’t require any credit check, but is a secured credit card so requires a down payment- it sounds like this is money better used in the moment for you right now..

Personally, I would keep my mortgage as is without any modifications. You could do a cap one credit card preapproval; I think it’s likely you would get approved for even a low-limit card, which would put you on their preapproval list for a car loan as a back up plan. Put all the hours in for OT that you can! You can funnel that money into your current debt or an emergency fund, your call.

I hope others chime in on the pieces I’m less schooled in! Wish you the best of luck!

[Medic981]

Welcome to the myFICO forums!

Ultimately, what a person needs to improve their FICO scores and build credit are three open credit cards (secured or unsecured) in good standing and one open installment loan in good standing such as a car, home, student, personal, share secured, or credit building loan. This combination is what the myFICO score theorists here have determined is what you need for optimal credit building and FICO score. You can have more CCs and more installment loans, however, this will not increase your FICO scores.

IMO, Discover it Secured is one of the best-secured CCs for poor credit, bad credit, and no credit applicants—and one of the best gas CCs you can get with bad credit. Disco offers 2% cash back at restaurants and gas stations (one up to $1,000 in combined purchases each quarter) and 1% cash back on other purchases. You’ll need an up-front security deposit of at least $200 to apply for the Discover it Secured Card.

Capital One Secured CC requires a refundable security deposit of $49, $99 or $200 based on your creditworthiness. Make the minimum required security deposit and you'll get an initial credit line of $200. Plus, deposit more money before your account opens to get a higher credit line. Get access to a higher credit line after making your first 5 monthly payments on time.

Bank of America's BankAmericard Secured CC is designed to help establish, strengthen or rebuild credit for an annual fee of $39. A minimum refundable security deposit of $300 is required to open this account. Your maximum credit limit will be determined by the amount of the security deposit you provide, your income and your ability to pay the credit line established. If you provide a deposit that exceeds the calculated maximum amount based on your ability to pay, a will be returned to you for the difference. BoA periodically reviews your account and, based on your overall credit history (including your account with us and other credit cards and loans), you may qualify to have your security deposit returned. Not all customers will qualify.

The OpenSky Secured Visa CC certainly has the edge over other easy cards to get, as it does not even require a credit check. All you need is a security deposit of at least $200, your Social Security number and proof that you are above 18 years of age -- and you’re approved.

Next, (this is only important if you are attempting to purchase a large ticket item like a home or car) is paying in full all of the credit card balances each month, before the posting date, except one. This is called the All Zero Except One (AZEO) method. The one credit card you allow to post a balance needs to be less than 8.9% of the credit limit of the card. So using one card each month to buy lunch, letting it report and then paying in full will maximize FICO scoring. Keeping your utilization of your cards below 28.9% both individually and collectively will prevent you from incurring a FICO scoring penalty.

An installment loan will have its greatest impact on your FICO score when the amount owed is at 8.9% or less of the original amount owed which is usually in the final months before the loan is paid in full. If you don't have an installment loan you can check into Self Lender or a Share Secured Loan at a Credit Union.

Keep in mind, building credit is a marathon, not a sprint. It involves demonstrating to a potential creditor that you can handle credit responsibly. If you have open, active credit accounts that are being paid on time and pay all of your bills on time every time, apply for credit only when you actually need it and use credit cards sparingly maintaining low credit utilization, then you’re going to earn and maintain great credit scores. It would be impossible for you not to do so. This is the fastest way you can build good, solid credit.

[josedcolon70]

Hey starfish,

Thanks for sharing your story. Keep you head up. Sounds like you've been in the military, because of the VA loan and USAA. Take care of those two and they will take care of you - especially USAA.

A couple of thoughts, it's $40 a month but consider a paid myFICO membership as an investment to track your progress.

Dave Ramsey would tell you to stop putting any money into retirement until you're out of the hole - consider it. He would also tell you to put $1k away as fast as you can, before you start paying things off; then work on the rest of the emergency plan. He would also tell you to sell so much stuff you don't really need, that the kids will think they're next.

I will not recommend Self-lender or Open Sky, but if you really want a secured credit card, use USAA instead.

I also want to say, slow down...breathe!

I'm almost 50 and have been there, more than once, but NO MORE! Feel free to hit me up if you want to chat. I have some suggestions.

[Anonymous]

---

@josedcolon70 wrote:
Hey starfish,

Thanks for sharing your story. Keep you head up. Sounds like you've been in the military, because of the VA loan and USAA. Take care of those two and they will take care of you - especially USAA.

A couple of thoughts, it's $40 a month but consider a paid myFICO membership as an investment to track your progress.

Dave Ramsey would tell you to stop putting any money into retirement until you're out of the hole - consider it. He would also tell you to put $1k away as fast as you can, before you start paying things off; then work on the rest of the emergency plan. He would also tell you to sell so much stuff you don't really need, that the kids will think they're next.

I will not recommend Self-lender or Open Sky, but if you really want a secured credit card, use USAA instead.

I also want to say, slow down...breathe!

I'm almost 50 and have been there, more than once, but NO MORE! Feel free to hit me up if you want to chat. I have some suggestions.

---

This is all solid straightforward advice. 

[Anonymous]

Some good, some bad this week....

The Good:

I am selling stuff....found a little gold mine in college text books.  I'm able to sell most back to the tune of close to $300, although it will take a few weeks for it all to hit my Paypal account.  I'm also making a "donations" pile of stuff that I can't sell for Goodwill and I use "It's Deductible" for that for taxes.

I signed up to be a mystery shopper for a little extra income.  Thus far, two of my assignments have been paying asisgnments that didn't cost me anything except my time.  I am pending asisgnemtn as a mystery shopper at an oil change place.  They reimburse for the oil change (so it's free for me) and then I also get paid $5, so that's good.  

I will maximize work overtime this week, too. 

Open season health insurance is coming up, and there may be a less expensive plan available.

The Bad:

I didn't win the lottery.

I applied for a Cap-1 card.  Rejected, even for the secured card. .  Kind of a slap in the face, and not sure why.  I'm waiting for the letter.  Hopefully nothing major will happen with my car.  If I were to find a bright spot for this, I will make it a point to telework more, because I guess that's good from the perspective of saving gas. 

I'm still waiting for the Greenpath program to be finalized.  Still waiting on the most stressful creditor responses, Amex and Discover personal loan. Hopefully this week I will at least know what needs to be done to modify the plan.  This has been VERY stressful.  Many have accepted, but not all.

I don't know why Ramsey would say to stop retirement savings.  I work for the government and have matching savings.  But I did lower my TSP deductions from 5% TSP/2%ROTH to 1%/1% and decided I will do that until my borthday, which is the end of January.  

Thanks!