New Member. Please help!

[Anonymous]

I am working to rebuild my credit, and particularly my Trans Union profile. I have 4 collection accounts, 3 from cellphone carriers (Sprint, Verizon, ATT) and one Best Buy Citi Bank credit card. 

How should I go about these collections? All 4 are showing on my Trans Union profile. Pay them, forget about them and build new credit???

I have an auto loan (still owe $20,000. Been paying on it since 2015) 4 student loans that are in deferrment. 1 secured CC with a $3,000 limit (I've had since August 2018 and its in good standing, been paid on time every month.)

I haven't applied for any credit in over 30 months, I have 2 inquiries on my Transunion report.

I have a closed CC with Navy Federal, which they kept on their books and never sent to collections. I am paying it back in full. Does anyone know if I can qualify for some of their other secured products while I pay this debt off with them? I would like to use these products to help me rebuild and manage my finances.

NFCU nRewards Secured Card 

NFCU Share Pledge Loan

NFCU PFM program

Auto loan is also with Navy Federal, and has been paid on time the last 2 years straight.  

Odds of approval?

My current scores are in the 550s range. I believe the scores are low because the utilization on my secured card is high at the moment. I have made arrangements to pay it down. 

Any advice on a strategy of what I should do to effectively rebuild my credit profile?

[SouthJamaica]

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@Anonymous wrote:

I am working to rebuild my credit, and particularly my Trans Union profile. I have 4 collection accounts, 3 from cellphone carriers (Sprint, Verizon, ATT) and one Best Buy Citi Bank credit card. 

How should I go about these collections? All 4 are showing on my Trans Union profile. Pay them, forget about them and build new credit???

I have an auto loan (still owe $20,000. Been paying on it since 2015) 4 student loans that are in deferrment. 1 secured CC with a $3,000 limit (I've had since August 2018 and its in good standing, been paid on time every month.)

I haven't applied for any credit in over 30 months, I have 2 inquiries on my Transunion report.

I have a closed CC with Navy Federal, which they kept on their books and never sent to collections. I am paying it back in full. Does anyone know if I can qualify for some of their other secured products while I pay this debt off with them? I would like to use these products to help me rebuild and manage my finances.

NFCU nRewards Secured Card 

NFCU Share Pledge Loan

NFCU PFM program

Auto loan is also with Navy Federal, and has been paid on time the last 2 years straight.  

Odds of approval?

My current scores are in the 550s range. I believe the scores are low because the utilization on my secured card is high at the moment. I have made arrangements to pay it down. 

Any advice on a strategy of what I should do to effectively rebuild my credit profile?

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Yes you should " Pay them, forget about them and build new credit??? " Try to negotiate "pay-for-deletes", but if you can't, just pay them off.

[Anonymous]

Hi Billionaire.  The trouble is with the word "should."  You may mean "what's the most cost-effective strategy to raise my scores?"  The word should also is freighted with moral associations, so that may affect how people respond to you, if they feel it is morally wrong not pay all one's debts.

Can you clarify exactly what you meant?

If you were not asking for moral advice but purely the strategy most likely to serve your own interest, we'd need to know three things:

(1)  How old are these collections?

(2)  Do you have a need for credit in the near future?  (Example: buying a house.)  If so, what is the need and when?

(3)  Would paying these collections be an expensive undertaking for you?

If for example the collections are 5 years old and you don't have an urgent need for credit in the next few years, then waiting for two years for them to fall off may be the right solution. 

It is quite possible to get new credit cards without paying off old discharged debts.

[Anonymous]

Thank you. I see the tone of the other reply. I will be mindful of wording things as to not offend anyones personal morals! I was purely asking about strategy, what actionable steps do I take to yield results?

I don't have an immediate need for credit. Just want to know its in good standing and that its there when i get ready for it. 

Do you have any insights about the secured products at Navy Federal?

The Verizon collection 6 years old, and the other 3 are all from 2015 when I was no longer working a steady check. 

Paying these all  monthly would be an uncomfortable financial undertaking, but I could sacrifice and struggle where possible to make it happen.

Thank you @creditguyindixie for your helpful response. 

[Anonymous]

Here's the decision tree I would recommend for most people.

You start by taking a stab at the the three questions I asked earlier and get at least tentative/provisional answers for them:

          Age of the derogs?

          What really crucial credit needs might I have and when?  (Next several years)

          Finanical burden for payoff

(1)  Start by looking at the financial burden.  It's either huge, borderline, or easy.  If it is easy, then try to negotiate Pay For Delete Agreements and you're done.  If it is borderline or huge, then move on to the next decision.

(2)  Look at the scenario of waiting till all the derogs fall of your reports.  This will take 7 years (from when each one occured).  If this is basically doable (remember you can acquire secured credit cards in the meantime) then it probably makes sense.  Remember that some derogs (typically lates) can be removed earlier with luck via the Goodwill Letter Saturation Technique.  Ideally I would wait on employing the GWLST until you have a few credit cards with very low utilization and 25 months of no derogs of any kind.

The problem is when a person feels like paying collections and chargeoffs and other closed accounts with balances could be a big burden, but yet has a huge credit need that will materialize way before the derogs would fall off (typically buying a house).  In that case you should check in with the folks in the Rebuilding or Financial rooms and try to see if there is a way to pay off debt (via budgets, etc.) in time to improve your credit profile before the house purchase.

[Anonymous]

@creditguyindixie 

I just now saw your response from March. I am back to this thread to post an update and get advice on next steps. Since I made my post in March 2019 this is where I am at now:

I was able to obtain new credit in June 2019

Citi Bank $2,500, Walmart MC $500, Discover $500. Still have the Secured card for $3,000. Have no lates. 

For some reason all year I carried maxed out balances on all of these cards (*I say for some reason because I had the money to pay them off all year but didn't). Irresponsible, I know. 

2 weeks ago I decided to pay them all off to $1 to enter 2020 debt free. I have done so, and just waiitng for the new utilization to post in the bureaus. 

To help with my rebuilding credit my SO added his $15,000 AU Navy Federal tradeline opened 7/2019 and a $16,900 AU Chase Preferred tradeline added 12/2019 (hasn't hit my file yet) Since these account are new and not aged will they help me or hurt me, and should I get them taken off?

My auto loan with NFCU is now down to $16,350, and working to pay it off. 

Other questions I have:

If you carry maxed balances on your credit cards for several months at a time, but then pay every card down to $1 is there a way for the lender to know that multiple months you carried a maxed out balance?

*I know on your credit report it will show the all time high limit of credit that you have used, but wonder if they will know for how many months you carried high/maxed balances?

Second question: Walmart MC Jan. 2020 statement came out and said I owed interest charges of $4.34 on the $1 balance. $4.34 was the total amount due. So I sent the payment in, and it took my amount owed down to $0. What happened to the $1 that was the remaining balance I left from when I paid the card down? Also, since I have now paid it down to $0 will that cause me to lose points? Should I charge something? (*I charged $20 just to keep something on the card, I'm gonna pay it back off though- is this the right approach?)

What to do with this scenario for my cards? I don't want to use them at all anymore- because I don't want to have to pay them back! I do, however, want to build credit and have high limit cards....Keeping my utilization to $1 is the strategy I thought I could use...but now not show. How can I responsibly grow my credit?

I also want the Platinum AMEX card- I travel worldwide every year, and am motivated by this. (Long term goal? End of 2020, or can it come sooner if I maintain strict discipline?)

Final question. I have been gardening all year, no inquires. Going into 2020 100% debt free, with no lates. After my utilization reports to all bureaus should I call in and request a credit limit increases on the cards I have, or should I apply for new credit elsewhere? And if so, with who?

Please help me come up with a strategy for 2020. I am really focused on having excellent credit with high limits and willing to be responsible and disciplined.

Thanks!

Ps. 

Re This:

(1)  Start by looking at the financial burden.  It's either huge, borderline, or easy.  If it is easy, then try to negotiate Pay For Delete Agreements and you're done.  If it is borderline or huge, then move on to the next decision.

I did the pay for deletes and got these off of my credit. I am showing 0 judgements and 0 collections on Trans Union and Experian. Still have to get off one on Equifax

[Anonymous]

Re This:

I have a closed CC with Navy Federal, which they kept on their books and never sent to collections. I am paying it back in full. Does anyone know if I can qualify for some of their other secured products while I pay this debt off with them? I would like to use these products to help me rebuild and manage my finances.

NFCU nRewards Secured Card 

NFCU Share Pledge Loan

NFCU PFM program

This was the whole purpose for me wanting to get my credit in order. 

I have paid off the closed CC in full (did not settle. Paid back every single last penny), and was able to reopen my checking and savings account. What are my next steps with them to start gaining credit with them again? 

Can I go for the cash rewards card again? Or is there something else I need to do first? (Secured loan or secured credit card)?

[FireMedic1]

---

@Anonymous wrote:

@creditguyindixie 

I just now saw your response from March. I am back to this thread to post an update and get advice on next steps. Since I made my post in March 2019 this is where I am at now:

I was able to obtain new credit in June 2019

Citi Bank $2,500, Walmart MC $500, Discover $500. Still have the Secured card for $3,000. Have no lates. 

For some reason all year I carried maxed out balances on all of these cards (*I say for some reason because I had the money to pay them off all year but didn't). Irresponsible, I know. 

2 weeks ago I decided to pay them all off to $1 to enter 2020 debt free. I have done so, and just waiitng for the new utilization to post in the bureaus. Congrats!

To help with my rebuilding credit my SO added his $15,000 AU Navy Federal tradeline opened 7/2019 and a $16,900 AU Chase Preferred tradeline added 12/2019 (hasn't hit my file yet) Since these account are new and not aged will they help me or hurt me, and should I get them taken off?

My auto loan with NFCU is now down to $16,350, and working to pay it off. 

Other questions I have:

If you carry maxed balances on your credit cards for several months at a time, but then pay every card down to $1 is there a way for the lender to know that multiple months you carried a maxed out balance?

*I know on your credit report it will show the all time high limit of credit that you have used, but wonder if they will know for how many months you carried high/maxed balances? Oh they know. Your lucky they didnt balance chase you. Dont make that a habit again. Thats walking on thin ice.

Second question: Walmart MC Jan. 2020 statement came out and said I owed interest charges of $4.34 on the $1 balance. $4.34 was the total amount due. So I sent the payment in, and it took my amount owed down to $0. What happened to the $1 that was the remaining balance I left from when I paid the card down? Also, since I have now paid it down to $0 will that cause me to lose points? Should I charge something? (*I charged $20 just to keep something on the card, I'm gonna pay it back off though- is this the right approach?) You want to have 1 card report a balance of <8.9% and not all showing zero. You'll get dinged for that. But since your AU on those other cards. Their balance reflects on you 2. So if theres a high balance. Get off the cards ASAP.

What to do with this scenario for my cards? I don't want to use them at all anymore- because I don't want to have to pay them back! I do, however, want to build credit and have high limit cards....Keeping my utilization to $1 is the strategy I thought I could use...but now not show. How can I responsibly grow my credit?

I also want the Platinum AMEX card- I travel worldwide every year, and am motivated by this. (Long term goal? End of 2020, or can it come sooner if I maintain strict discipline?)

Final question. I have been gardening all year, no inquires. Going into 2020 100% debt free, with no lates. After my utilization reports to all bureaus should I call in and request a credit limit increases on the cards I have, or should I apply for new credit elsewhere? And if so, with who?

Please help me come up with a strategy for 2020. I am really focused on having excellent credit with high limits and willing to be responsible and disciplined.

Thanks!

Ps. 

Re This:

(1)  Start by looking at the financial burden.  It's either huge, borderline, or easy.  If it is easy, then try to negotiate Pay For Delete Agreements and you're done.  If it is borderline or huge, then move on to the next decision.

I did the pay for deletes and got these off of my credit. I am showing 0 judgements and 0 collections on Trans Union and Experian. Still have to get off one on Equifax

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Its simple to handle cards. Before you had cards you probably used your ATM card. When funds got low. You stopped using it so you wouldnt have NSF fees. With CC's. Same applies. Dont charge what you cant pay fro come statement date time. You earn your rewards. Have 1 card report a balance and then PIF before due date. You aviod interest and gain rewards for using the card. Thats about it. It isnt hard. Its a game. If you dont use the cards. You risk creditors closing them. Play the game.