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Rebuilding Advice Requested

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Valued Member

Rebuilding Advice Requested

I've been reading these myFICO boards, and I really appreciate all the input. Recently I have been rebuilding my credit, and I'm hoping for some feedback on taking the next steps. Here's my story....

 

For all my adult life, it seems I have just put my head in the sand when it comes to debts and credit. I never really believed in credit, but always managed to be in debt somehow. Now I have a new philosophy about credit and money. I see credit as a way to manage cash flow rather than just to get more money. I can  remember once having $1400 in accounts receivable and being dead broke -- stuck on the road with no gas in the tank and no recourse but to go to family. Not anymore. 

 

  • Derogatories before Aug 2019:
    • 6-year-old late payment 30/60/90 for a small bank loan -- paid
    • Two 6-year-old unpaid credit cards (1st Premier and Capital One), $500-$600 each
    • New Miramed medical collections. Nine separate accounts at $2000+ total
    • 2-3 small collections under $100 
    • $24000 in student loans (FedLoan x4), currently deferred after rehabilitation (I never paid much on them for 30+ years! Stupid.)
  • Aug 2019:  Able to put $1500 in savings
  • Aug 28, 2019: Went to Regions Bank to set up secure credit card. My Vantage per CK at the time was about 532. FICO was probably about the same, but I never checked it. My banker in small-town Tennessee was so nice! We set up the following
    • $750 secure credit card (She recommended $250 but I wanted more in case I should rent a car.)
    • $250 secure loan #1
    • $250 secure loan #2
    • $250 secure line of credit
  • She recommended I set up something with another bank to start showing good payment history. So I also set up:
    • OpenSky - $200 secured
    • Navy Federal Cash Rewards - $500 UNSECURED! (Thanks, Navy Federal!!!)
  • I did my own credit repair. Paid $1000 on the old credit cards. Capital One was removed and 1st Premier shows current/paid. Only one paid collection remains, plus the closed/paid bank loan and the closed/paid 1st Premier CC.
  • I'm now keeping my three credit cards at either $0 PIF or leaving just $5-10. 

RESULT: I am now showing EQ 734 and EX 732 -- in less than three months! Waiting for TU score.

 

My income is low (about $30,000 now and going up), but here are my goals, in priority order:

1) Purchase home

2) Purchase new/late model car

3) Navy Federal CLI increase to $25k (for the thrill of it!)

4) Great travel card, maybe Chase Sapphire

 

So finally, here are my questions:

  • Should I hold off on any credit card CLI or new card and lay low until trying to get home loan in May? (Hoping to remove 1st Premier in April.)
  • Navy Federal CC is just two months old. I'm hoping to hit 740-750 when the youngest accounts age to 4 months by end of year. Can I expect an AR by Navy sometime around Dec-Jan with a possible automatic CLI, and should I just leave it at until after home loan is accomplished?
  • Would getting a car loan at $250 or less per month damage my chances of getting a favorable home loan in May or June 2020?

Thanks very much in advance for reading and any advice. God bless all you fellow veterans!

 

 

Message 1 of 28
27 REPLIES 27
Community Leader
Senior Contributor

Re: Rebuilding Advice Requested

First off, congrats on a 200 point increase so quickly. That's fantastic! Second, all of your goals are good and achievable, but ideally you want to wait a year between a mortgage and your most recent credit HP. This allows for you to regain points when your youngest account reaches a year, and demonstrates a lack of credit seeking behavior. I would wait on anything that takes a hard pull - new accounts, loans, and some CLIs. If you can get a soft pull CLI, go for it. Otherwise, just keep doing what you're doing - you're doing great Smiley Happy



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 28
Senior Contributor

Re: Rebuilding Advice Requested

Congrats on all of your progress!

What was mentioned above - wait 6 months minimum, a year is way better, before attempting a mortgage.
The scoring algorithms that are used for mortgages are super, super sensitive to new accounts, and HPs.   In addition, look into AZEO when you get close to thinking of applying for a mortgage because those algorithms also like to see only one account (technically less than 30% of your accounts, 1 just to be safe) with a balance on it.

In addition - you only need one secured loan reporting to keep the "installment loan" credit mix happy, so if you need to cash out one of the ones you created a bit early, you'd be OK.


EQ: 795 | EX: 785 | TU: 783 | Accounts: 2/6 6/12 10/24
Happy practitioner of AZE6or7or8
Message 3 of 28
Valued Member

Re: Rebuilding Advice Requested

Thanks for the advice. My secure loans were only meant for six months, but I nearly have them paid off. There is $55 left on each one. So I plan to make a $45 payment on each this month and leave the remainder for December. That gives me four more on-time payments. I do have the four student loans accounts, and I think those will count as installment loans for the credit mix. 

 

I took a look at AZEO, and it turns out that I'm already doing that. The first month I just left $10 on one card and PIF on the other two. This month I did $5 on one and $0 on the other two. So I will keep doing intentionally what I was already doing anyway.

 

I"m tempted to try something else with my improved credit -- car loan, CLI, or new card -- but you're both right. I should hold off on any credit changes until I try for the mortgage. If I wait until May, that will be 8 months since the last hard pull and new credit account. Now I'm just concerned about being able to afford it. I probably should concentrate on increasing my income between now and then.

 

And I should celebrate my success. If all goes well, I should easily be over 750 between now and next May. If somehow it shoots up by Jan 1st, I may come back and revisit this question. I mean, if I make 780 or 790 in the next few months, I might have something to work wihth

Message 4 of 28
Community Leader
Senior Contributor

Re: Rebuilding Advice Requested


@GoHerd1 wrote:

Thanks for the advice. My secure loans were only meant for six months, but I nearly have them paid off. There is $55 left on each one. So I plan to make a $45 payment on each this month and leave the remainder for December. That gives me four more on-time payments. I do have the four student loans accounts, and I think those will count as installment loans for the credit mix. 

I would just pay them off and be done with them. Your student loans cover the installment requirement for credit mix, so pay these two off and have two fewer bills to pay, as well as two closed-in-good-standing accounts that will stay as such on your reports for up to ten more years.

 

I took a look at AZEO, and it turns out that I'm already doing that. The first month I just left $10 on one card and PIF on the other two. This month I did $5 on one and $0 on the other two. So I will keep doing intentionally what I was already doing anyway.

 

Perfect.

 

I"m tempted to try something else with my improved credit -- car loan, CLI, or new card -- but you're both right. I should hold off on any credit changes until I try for the mortgage. If I wait until May, that will be 8 months since the last hard pull and new credit account. Now I'm just concerned about being able to afford it. I probably should concentrate on increasing my income between now and then.

 

If you can push back four more months, so that your youngest account reaches a year, that's a 15-20 point gain in the pocket. But I do understand that with a purchase as big as a house, if the time is right, you do it. If you can wait for that though, your scores will be that much better.

 

And I should celebrate my success. If all goes well, I should easily be over 750 between now and next May. If somehow it shoots up by Jan 1st, I may come back and revisit this question. I mean, if I make 780 or 790 in the next few months, I might have something to work wihth

 

I hope that works out for you - all the best in your push for a home Smiley Happy


 



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 5 of 28
Super Contributor

Re: Rebuilding Advice Requested

Oops. Missed the student loan line. Carry on. Smiley Sad





My posts are JMHO. My siggy is not to brag at all. Just sharing my experiences after learning here from rebuild to recovery after BK DC @ 540's. And to show fellow members what can be accomplished when you do it right and play the FICO Credit Game.
Message 6 of 28
Senior Contributor

Re: Rebuilding Advice Requested

I agree with @ImTheDevil - pay off the secured loans.  You have student loans so you don't need the extra installments.
Don't be fooled by "number" or percentage of payments - that doesn't really matter.   You just have to keep utilization low and not miss any payments and let your accounts age.


EQ: 795 | EX: 785 | TU: 783 | Accounts: 2/6 6/12 10/24
Happy practitioner of AZE6or7or8
Message 7 of 28
Super Contributor

Re: Rebuilding Advice Requested


@calyx wrote:

I agree with @ImTheDevil - pay off the secured loans.  You have student loans so you don't need the extra installments.
Don't be fooled by "number" or percentage of payments - that doesn't really matter.   You just have to keep utilization low and not miss any payments and let your accounts age.


@calyx  Glad you caught the student loans. Missed it and edited my post. Duh!





My posts are JMHO. My siggy is not to brag at all. Just sharing my experiences after learning here from rebuild to recovery after BK DC @ 540's. And to show fellow members what can be accomplished when you do it right and play the FICO Credit Game.
Message 8 of 28
Senior Contributor

Re: Rebuilding Advice Requested


@FireMedic1 wrote:

@calyx wrote:

I agree with @ImTheDevil - pay off the secured loans.  You have student loans so you don't need the extra installments.
Don't be fooled by "number" or percentage of payments - that doesn't really matter.   You just have to keep utilization low and not miss any payments and let your accounts age.


@calyx  Glad you caught the student loans. Missed it and edited my post. Duh!


@FireMedic1 You know I love me some student loans Smiley Wink  (I mean, I don't really...)


EQ: 795 | EX: 785 | TU: 783 | Accounts: 2/6 6/12 10/24
Happy practitioner of AZE6or7or8
Message 9 of 28
Super Contributor

Re: Rebuilding Advice Requested


@calyx wrote:

@FireMedic1 wrote:

@calyx wrote:

I agree with @ImTheDevil - pay off the secured loans.  You have student loans so you don't need the extra installments.
Don't be fooled by "number" or percentage of payments - that doesn't really matter.   You just have to keep utilization low and not miss any payments and let your accounts age.


@calyx  Glad you caught the student loans. Missed it and edited my post. Duh!


@FireMedic1 You know I love me some student loans Smiley Wink  (I mean, I don't really...)


@calyxYour my go to for those things. They didnt have all these ways to get them right in the 80's. Get a loan, pay it, or else back then. LOL!





My posts are JMHO. My siggy is not to brag at all. Just sharing my experiences after learning here from rebuild to recovery after BK DC @ 540's. And to show fellow members what can be accomplished when you do it right and play the FICO Credit Game.
Message 10 of 28
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