Lost

[radfam]

Newbie here.  I feel so lost in how to recover and rebuild my credit.  I am an educated person, but a lot of what needs to be done doesn't make sense to me.  I don't know where to start on cleaning up my credit report.  I feel like I've been researching and researching but there is nothing consistent on how to repair my own credit.  I pulled my annual free reports in March and haven't had a clue where to begin.  Today, I pulled my scores from CCT and CK, so I have somewhat of a baseline (I think).  I know CK is Fako.  I can't tell with CCT based on mix review on this forum.  Spouse and I want to purchase a home by next summer, so that is the goal.  I guess my biggest question is, what do I do first?  Do I need to make the big 3 match with what is reported?  Should I focus on one report at a time? 

Factors that hurt my credit:  Late payment history (14 accounts), 1 Collection ($200 that opened in July 2013), high student loan debt ($109k, currently on IBR), previous CO on auto loan ($598).   

The obvious, get myself set up so late payements don't happen.  We currently rent and that payment is never late but also doesn't report in to credit bureaus.  I just don't know what to do next.  Any advice is appreciated.

[radfam]

Adding, I have one unsecured CC through Cap1.  $300 limit, currently on restricted as I had too many late payments.  $0 balance since 9/2016 but cannot use.

[Anonymous]

Triple Whammy of Credit Rebuilding

(must do all 3)

1. Get new credit accounts with non-predatory banks and show responsible usage by paying on time and not carrying balances (except for AZEO)
2. Work on removing negative accounts by negotiating with banks and collection agencies to pay off balances and delete tradelines or goodwill lates
3. Build an emergency savings fund of at least 6 months of living expenses and debt payments

Do all 3, at the same time.

Fixing your score likely won't qualify you for a good mortgage in a year, but worse if you have no savings getting a house is going to be a very dangerous prospect.

Work on your budget now.  Figure out what you can afford when the roof fails or the basement leaks or the air conditioner needs replacement or whatever of the million expenses homeowners have to be able to afford.  Figure out a payoff on your debt.  Once you get your scores higher, work on opening credit lines that you won't abuse but can put to good usage for cashback rewards (never paying interest, etc).

[Anonymous]

ABC pretty much nailed it. Remember to come here for advice and support for anything if you need it. CCT is an awesome tool in your arsenal, I'm not sure what you mean by mixed reviews just keep using the 1$ trials. Good luck and welcome. Dv

[Anonymous]

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@radfam wrote:

Adding, I have one unsecured CC through Cap1.  $300 limit, currently on restricted as I had too many late payments.  $0 balance since 9/2016 but cannot use.

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Credit check total gives you your true FICO scores. They are not FAKO scores like Credit Karma and other sites.

Now your scores are sort of a balancing act. Positive accounts pull your scores upward more and more over time, while negatives - collections, charge offs and late payments - pull your scores down, but less so as they get older.

Without positive accounts to pull your scores upward, removing derogatory item does very little for your scores. So what I would suggest is that you establish THREE credit card accounts (you already have one even if you can't use it), and ONE installment account. This is the formula that FICO wants to see. Student loans counts as installment accounts (as long as they are in good standing), so does a car loan and a personal loan. If you need to get an installment loan for scoring, open an account with SDFCU or Alliant CU and deposit $500 in saving and apply for a share secured loan. They approve everyone for these regardless of credit scores.

Next try applying for a second Capital One card. If your other card has been in good standing for 12 months or more thay should approve you for a second card.

Once you have that in hand, head on over to discover.com and apply for their secured card. Now you have your three/one accounts configuration you need to start building scores.

To maximize these cards for scoring you want to only allow one card to report a balance each month, and that should be less than ten percent of the cards limit.

Thats the positive side.

For the negative side you might want to list everything thats there and we can advise you better on how to proceed.

[Anonymous]

To stack on what @NormanFH said. you may want to first check Capital One and Discover's prequalification pages first and see if they offer anything.  Discover's prequalification is usually solid if they give you a single APR or a very small 3% range in APR.  CapitalOne's prequalification page is almost always accurate!

[radfam]

Thanks!  I have been looking on the boards at the recommendations on three CCs.  I did receive a PreQual in the mail two weeks ago for a Credit One CC.  Planning to look at some options.  I hadn't considered even checking for PreQual before, to be honest.  Before I started really deciding to get serious about cleaning up my report, the last CK pull I remember was 499.  I know, I know....Fako.  I just assumed with that, I shouldn't even apply bc I would likely be denied. 

[radfam]

Thank you Norman.  I do have an additional question.  Since my first Cap1 card is in "account restricted," should I try to get that off of restriction first?  It appears to be reporting in each month in good standing, with $0.  I can't utilize the credit at all but it does report on my account.  I guess to piggyback off of that, would applying for a 2nd card through them help?

Good info on the utilization on cards reporting per month.  I had been trying to figure out how to do that, so that helps a lot. 

[Anonymous]

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@radfam wrote:

Thanks!  I have been looking on the boards at the recommendations on three CCs.  I did receive a PreQual in the mail two weeks ago for a Credit One CC.  Planning to look at some options.  I hadn't considered even checking for PreQual before, to be honest.  Before I started really deciding to get serious about cleaning up my report, the last CK pull I remember was 499.  I know, I know....Fako.  I just assumed with that, I shouldn't even apply bc I would likely be denied. 

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I'd say avoid Credit One if at all possible. Open Sky isn't quite as bad as Credit One and Open Sky doesn't generate a HP. But before going for EITHER of those, I'd suggest checking the prequals on various major sites. Try for a Discover secured card if you feel like you won't qualify for an unsecured card. I like my Discover card because although it's secured, they start reviewing your account after 7 months to see if you qualify for it to be unsecured and they also offer cash back on purchases. Very few secured cards offer cash back, so it's worth getting.

[radfam]

Thank you!  I will look into that!