Rebuilding My Credit: Out with the Old in the New!

[Brickbybrick]

Firstly, God bless all of you helpful individuals on this forum that spend their time to help others, it is truly a beautiful thing. I recently turned 27 years old and started realizing all the mistakes I made in my early age. Long story short my credit has become bad and I just want to figure out the best route as I simply want to be able to do the things you can do with good credit, car on low APR and just feel better about myself in general. 

My situation is the following:

TU: 574

EQ: 578

Both went down 32 points as I was switching banks and had no money so I came close to maxing out my cards, which are the following:

Capital One QuickSilver $500 Limit

Merrick Bank $550 Limit

Credit One Bank $600 Limit

Collections: Sept 16, 2013 (Reported Apr 15, 2017)  Cach LLC Collection Agency  $385 balance per Credit Report

                    Nov 30, 2015 (Reported Last March 18, 2017) Convergent Outsourcing   $2,856

                    July 29, 2014 (Reported Sep 11, 2015) Midland Funding LLC $797

                    May 27, 2014 (Reported Apr 08,2017) Portfolio Recovery $1,080 Balance

                    Feb 11, 2015 (Reported Jan 16, 2017) Alltran ED $1,992

Currently I am paying off ALL credit cards down under 30% Utilization. I want to bring a $0 balance for the Credit One card now that I have better cards that don't charge so many fees and annual charges. I want to replace it with the Capital One Platinum. I have had the Credit One card for 6-7 months and have not gotten a better line of credit. Of my collections which should I pay off first, I also have student loans that I'm working down. I really want to get this figured out, I do a LOT of research but still is confusing. Ready to write my wrongs and move on from all the anxiety. Thank you very much in advance! God Bless.

[Anonymous]

Right now your biggest jump will come from having two cards report $0 And one card report less than 10%. If you can't get all the way down to 10 having two pif and one reporting 30% will give a little boost. Try to set up your mind now that you never want to pay interest. The CCs are only extensions of your bank account. It took me a long time to figure that out, but when I did (thanks to this forum) my score started really climbing.

For the collections, if any of them are within the SOL then save up the money and call them with a lump sum offer to stop from being sued. Only work one at a time when you have the money to negotiate. Getting caught sending 5 collections money on a payment plan will end up derailing your progress and costing you more time and money. If none are in SOL just work them from smallest balance to largest as you have the money.

A third option is an installment loan on your account if you don't have a car payment or student loans. Most banks/CUs will let you buy a CD to secure one then loan you the money.

[Brickbybrick]

Thank you for the reply, it's much much appreciated! I can pay all three cards down and I will do that tonight. Also I believe none are SOL, so just pay smallest of largest. I read even if you pay it doesn't help, that didn't sound right anyway, but seems to be incorrect information.

[Brickbybrick]

Lastly when paying off collections I should ask for it to be removed off my report and not settle, pay it in its entirety?

[medicgrrl]

You can ask for pay for deletes on the collections, but don't be discouraged if any of them say no.  Paying them off will still help your score in the long run.  By having unpaid collections, every month the scoring system interprets that as currently being late.  Once all of the collections are paid, the scoring system will start interpreting that as past lates.  Ex., if everything was paid off in April, in June the scoring system would see that as the last time you were past due was 2 months ago instead of currently late.  As time progresses your scores will improve.

As far as the PFD's, research Midland because I think they will automatically delete after it's paid due to the DOFD on that account being over 2 years.  The only way you will see a big score improvement is if all the collections are deleted.  Collections, CO's and major derogs are a little different than just having a 30 day late payment.  Scoring looks at it as an all or nothing thing.  By having some deleted and some reporting, the scoring system still recognizes that you have major derogs.  Don't get side tracked by that.  Work to pay them all off and start that clock ticking of not being "currently late"

Best wishes on your rebuild!

[rmduhon]

Ehere are you getting your scores from?

[Chris2]

I was once in a very similar situation (see my starting score below), and I am now 27. There is absolutely a chance of having them delete the entry in exchange for payment; I've done it. It took a lot of talking, and to several people, but they eventually agreed. Clearly, you'd need the cash handy to negotiate. My advice is to not give in too soon. It just takes talking to the right person to get it done. 

It also couldn't hurt to dispute the entries to the credit bureaus. The worst that would happen is they don't delete it. Having your cards paid off will help some, but you still have the nasty colelctions. I would take the advice of the others and tackle one of these problems at a time. Aside from the collections, you'd be amazed at how much good payment habits will improve your score. This isn't a quick process, and will really require some focus on the long game. 

Best of luck.

[forestgreenrover]

Congratulations on getting pointed in the right direction! There's some really sound advice here, the only thing I'd add is you've mentioned your interest in the Cap1 Platinum? Personally, I would be inclined against it for a couple of reasons, depending upon when you were planning to app for it. 

1. You already have the QS, which IMO is a better card. 

2. I'm not sure you'd get a SL that much greater, if at all, than the limits you already have on your current three cards, given your scores. 

3. Cutting off CreditOne is pretty much universally accepted as a good thing, and for good reason, I'm just not sure that your plan of "replacing" it with another card that will likely be limited to a low ceiling is the best way to go. Plenty of folks have noted that while Cap1 is great for rebuilders (and they are), they also have a tendency to keep TL's more or less locked into the profile that you had when you opened the line. 

4. Following on from #3, if you do indeed open a Platinum, probably the best thing you could do with it down the road would be PC'ing into your QS. Which is great, however, that's also a blueprint to essentially close a line that's yet to be opened. 

5. As you probably already know, Cap1 will pull all three reports, which IMO is a price too steep to pay for too little payoff depending upon where you are with INQ's. Thus far into my rebuild, I'm treating my HP's like gold dust, and it hasn't done me wrong. Of course, depending on your credit goals, it may be less important to you than other borrowers, just saying that as a general rule it will usually never hurt to keep the powder dry.

[Brickbybrick]

Hi guys, blown away by all of your generosity! Thank you for your time. So what I gather is:

1. Bring CCs down to $0 balance which I will have done by tomorrow .
2. Smallest to largest, ask for pay for deletes on collections.

So quick additions to my story, Credit One card is my oldest card but I really don't like the way it is with the high costs. I now have better cards IMO. So go ahead and cancel it anyway, because 6 months isnt much, right? 

Also NOT replace it with the Capital One Platinum? 

Also what is PCing and HP? Bless you all, thanks again. I am so excited to move on in life, I just needed to know how. Thank you for that. 

[rmduhon]

Don't let all of your cards report a zero balance or you'll be penalized. Let one report a low balance (less than 9% if you are planning on applying for new credit). PC is Product Change, HP is Hard Pull