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Light at the end of the tunnel?

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Light at the end of the tunnel?

I've been very, very guilty in the past of burying my head in the sand and hoping all of my financial issues would just go away.  It's taken me many years to realize that magical thinking is not, in fact, useful to resolve issues.

 
I have less than $4k in credit card debt remaining, which is in the process of being paid back to Cap One via Greenpath.  The account is closed and will be paid off by mid-January, and then the only card that I have remaining (which is in good standing) is a secured Discover It.
 
Because I paid my open collections via Greenpath, they show as 0 balances but all are still reflected on my credit report. I regret using a debt management company to pay off the collections on my behalf but at the time, I was still doing what I could to keep my head buried in the sand and didn't want to communicate with the collections companies. After spending a fair amount of time on the Forums, I realize now I could have managed the process myself, in the same amount of time, and maybe received a few PFDs. 
 
Last November, my property taxes went up 120%.  That made my mortgage payment unaffordable for the few months it took me to successfully appeal the property tax increase.  My mortgage servicer at the time, Caliber, approved me for a HAMP loan modification and I completed the trial period this Spring.  They sold the loan to a new servicer at the end of the trial payment period, and now my mortgage is showing 120 days late (during the trial payment period) with both mortgage companies--although PennyMac, the new servicer, said that in about 45 days or so the data should more accurately reflected with CAs, assuming I make the new payments on time.  I saw my Equifax score drop 32 points the other day when Penny Mac started reporting my mortgage.  No movement from the other two agencies yet.  I've reached out to Caliber to see whether they would update the trial payment period to reflect those three months as current as I was making the trial payments, but it's been crickets so far.
 
My student loans are in good standing. 
 
My car loan is with Exeter and while there were a few 30 days late hits a few years ago, I've been paying on time for at least the past two years.
 
I've started using a budgeting app, YNAB, that makes a lot of sense to me and it's been hugely helpful in getting me to actually look at and manage my income and outflow.  I used to dread even looking at the balance of my bank accounts, but now I feel like I have better control.
 
I guess the only reason I am posting a message here is because I am trying to see the light at the end of the tunnel.   None of my scores are above 560.  I know it takes time and I love reading about the successes that others have had.  But given that I have one credit card with a very low CL ($200); the lates on my car loan a couple of years ago; the PIF collections sitting on my reports; and the negative reporting from both mortgage servicers (again, Penny Mac should update that within the next month or so), how does my score realistically improve?  Just time, yes?  Is there anything else I can be doing to get the scores to go up more quickly? 
 
Appreciate and welcome any insights.  Thanks--
Message 1 of 17
16 REPLIES 16
Community Leader
Senior Contributor

Re: Light at the end of the tunnel?

Time will be a healer for sure with respect to the lates on your car - after two years, most of the sting of a 30-late is gone. Your collections being paid also helps - once paid, they no longer update and begin to age away which allows for recovery of points over time. Keeping your current card paid as agreed is big, as it gives you a recurring positive tradeline. Ideally you’ll let no more than 7% report on your card. With your low limit, that’s $14 at statement cut. Don’t let it report less than $10 though - keep it at $10-14 each month. Use it all you like but have it in that range on the due date.

Next, open a second card - I recommend OpenSky since there is no credit check involved. Use it for lunch once a month and pay it off. Let that one report zero each month. This will help your score as well. In 6 months, check the prequals for CapOne and see if you can get a third card. Allow that to report zero each month too (use it as you would the OpenSky card).

This will put you into what’s called AZEO, all zero except one - by having less than half your cards report a balance (which requires 3 cards), plus having your mortgage as an installment loan, you’ll pick up the bonus points for credit diversity and the scoring boost for AZEO, which has been proven to add points to your score.

Meanwhile, read this thread:

https://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/The-Saturation-Technique-Best-GW-adjustment-...

This will guide you on trying to remove as many of the negative entries on your report as possible. You may be able to remove some of them this way and give yourself another boost. Beyond this, just keep your reported card utilization at or under 7%, don’t open any more cards, pay on time, and your scores will rise.

You’re in the best forum on the internet for rebuilding, and it isn’t even close. Follow the wisdom you find here, read as much as you can, and there’s no way you can not improve your finances. Good luck and ask away on anything that you want clarified, and welcome to MyFICO!


Rose Gold NPSL | BCP | Delta Gold | Hilton Surpass | Hilton Honors | IT Cash | IT Chrome | Quicksilver | Target | VS | Home Depot | Lowes | Firestone | Wayfair | Overstock | Kohl’s

5/24, 1/24, 76445/24, who cares #HappyWithAmex





Entering the garden 5/27/2019, staying until 2020
(Lol so much for that grand plan...)
Message 2 of 17
Senior Contributor

Re: Light at the end of the tunnel?

ImTheDevil pretty much covered everything I was going to say.

I would recommend getting secured cards if you can qualify.  I used Opensky because no one else would let me in, but eventually started going for USBank, Citibank, and Discover secureds, because they graduate.  You can check to see if you're prequalified with Citi. (Edited, because you already have Disco... reading comprehension fail on my part - d'oh).

I think that going for goodwills and building up positive tradeline time is all you really have at the moment.  It's an annoying slog, I know, but patience is a virtue.

And welcome, from another YNAB user.  It really did change my financial life when I started using it.   When I started on my FICO journey, I had scores in the 540s.   My mishaps were older than yours, so I was able to recover a little faster.   Keeping control of my finances was really the most important piece.


EQ: 798 | EX: 774 | TU: 771 | Accounts: 1/6 4/12 8/24
Message 3 of 17
Member

Re: Light at the end of the tunnel?

This is awesome! Thank you very much.  I will apply for OpenSky and use it as you recommend.  And will ensure I stay at 7% on the Discover card balance.  And I appreciate the link you sent--wondering whether that will work for accounts I've already paid off? Can't hurt to try!

Message 4 of 17
Member

Re: Light at the end of the tunnel?

Thank you!  YNAB has been life-changing, honestly.  It's the only budgeting app that made sense to me, so I use it consistently and I'm far more willing to take on the financial monster I've created.  And thank you for sharing your starting score--hopefully, with better choices and behavior, my scores will look more like yours in time. I look forward to more ease in life without this stuff always hanging overhead.  

Message 5 of 17
Community Leader
Senior Contributor

Re: Light at the end of the tunnel?

That goodwill process is intended for collections that are already paid and closed, so it’s tailor-made for your situation. I hope it works with your collections.

Just to reiterate, use your card all you want within the limits of what you can pay down each month. You can make multiple payments each month with Disco too, so use it and just get it down by the due date.

The 7% figure comes in this way - there are known scoring thresholds for utilization. They are at 8.9%, 28.9%, 48.9%, 68.9%, and 88.9%. Crossing each of those will change your score by 10-15 points (score increases by falling below one, score decreases when crossing above). By paying down to 7%, you ensure that once interest is added, you don’t rise back up over the 8.9% breakpoint.

These rules apply to overall utilization. With just the one card, that means it’ll follow your Disco usage. When you get more cards, just divide the total dollars in use by the total of your limits to find your aggregate usage. That’ll be the number you want to keep under these thresholds.

Using a spreadsheet to track your cards is something that will help you as you add more cards. In mine, I track each card by usage, limit, percentages, due dates, dates for limit increases, rewards values, amount due, and I have tables that calculate how much to pay each card down to achieve each threshold of utilization. Might be overkill, but I’m an engineer so therefore, numbers - I like seeing it all right in front of me. You can make yours as basic or as elaborate as you like, but please make one. It’ll help immeasurably as you move forward.


Rose Gold NPSL | BCP | Delta Gold | Hilton Surpass | Hilton Honors | IT Cash | IT Chrome | Quicksilver | Target | VS | Home Depot | Lowes | Firestone | Wayfair | Overstock | Kohl’s

5/24, 1/24, 76445/24, who cares #HappyWithAmex





Entering the garden 5/27/2019, staying until 2020
(Lol so much for that grand plan...)
Message 6 of 17
Community Leader
Senior Contributor

Re: Light at the end of the tunnel?

And like calyx, my scores were in the toilet when I came here. Through the techniques here such as goodwill, PFD, early exclusion, etc, I’ve improved. I still have a couple baddies in there that have to age away, and I need to bring my utilization down, but life happens (my wife has been sick for almost 9 years and we still don’t know why, despite exhausting all the local health options and going from our home in NY to the Cleveland Clinic seven times since last Halloween - still undiagnosed), and coping with all the related expenses. Point is, even with extenuating circumstances, diligence and time, along with knowledge, can fix it all. I’ve gone from two store cards and $800 in unsecured credit 18 months ago, to the cards in my signature, including five Amex cards, and $30k in total credit, just by following what’s contained in this forum, and I’m in better control than I ever was. It does work.


Rose Gold NPSL | BCP | Delta Gold | Hilton Surpass | Hilton Honors | IT Cash | IT Chrome | Quicksilver | Target | VS | Home Depot | Lowes | Firestone | Wayfair | Overstock | Kohl’s

5/24, 1/24, 76445/24, who cares #HappyWithAmex





Entering the garden 5/27/2019, staying until 2020
(Lol so much for that grand plan...)
Message 7 of 17
Senior Contributor

Re: Light at the end of the tunnel?


@ca8y24 wrote:

Thank you!  YNAB has been life-changing, honestly.  It's the only budgeting app that made sense to me, so I use it consistently and I'm far more willing to take on the financial monster I've created.  And thank you for sharing your starting score--hopefully, with better choices and behavior, my scores will look more like yours in time. I look forward to more ease in life without this stuff always hanging overhead.  


I tried SO many different budgeting systems and schemes (computers to ledgers and different programs), and I was so happy when I found YNAB - it just works super well for me.  I recommend it to others, but the caveat is that anything that you're willing to stick with is the best system.

I used to keep my starting score (542, actually) in my sig, but I felt bad, because I was getting PMs from people asking how I had gotten a higher score so fast, and your credit journey is so personal and can easily be so different from everyone else's.  I felt like I was not helping since not everyone had 6 year old bad tradelines, a lack of credit, fraudulent accounts that were easily removed, collection agencies that were willing to goodwill remove derogatory info, etc.    Just know that while it's really irritating to have to wait out some things, in the long run, as long as you work with your finances and make smart choices, you'll be OK.

I've been using YNAB for ~18 months.  My credit scores have gone from the mid500s to high700s, my spending has reduced dramatically, and my net worth is up 90% (I was wasting a lot of money).   My biggest "frustration" (for lack of a better word) is that I didn't find YNAB 10 years ago.   But that's OK - better late than never, right?.

 


EQ: 798 | EX: 774 | TU: 771 | Accounts: 1/6 4/12 8/24
Message 8 of 17
Member

Re: Light at the end of the tunnel?

Aha--I thought the GW letters were PFD by a different name.  I get it now.  Then I will start writing and sending those out!

 

And thanks for the additional info on utilization, and suggesting a spreadsheet to track cards--that's a terrific idea.  Definitely learning that tracking data is an important compenent to getting things back on track.

 

Very much appreciate the time you've taken to respond and provide guidance. It's obvious from reading all of the different threads that there are a lot of very helpful people here.

Message 9 of 17
Community Leader
Senior Contributor

Re: Light at the end of the tunnel?

^^^ agreed with all of that. You’ve had a great turnaround @calyx, and hopefully OP will have similar luck with the goodwills and turn things quickly as well.


Rose Gold NPSL | BCP | Delta Gold | Hilton Surpass | Hilton Honors | IT Cash | IT Chrome | Quicksilver | Target | VS | Home Depot | Lowes | Firestone | Wayfair | Overstock | Kohl’s

5/24, 1/24, 76445/24, who cares #HappyWithAmex





Entering the garden 5/27/2019, staying until 2020
(Lol so much for that grand plan...)
Message 10 of 17
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