Rebuilding advice

Anonymous · ‎10-31-2018

Hello all!

WARNING: LONG POST (but all the advice givers always ask for a detailed account of the advice seekers situation so here it is)

Wanted to take a minute and make a post concerning my current situation and ask for some guidance from the ones who have been in my shoes before and who can help me take my credit to the next level!

Current: I have been rebuilding my credit since becoming a member of the website and finding the forums. I have used the advice and education I have picked up here and it has been working. Here is a snapshot of my current profile:

Fico Score 8:

EQ: 652

TU: 595

EX: 631

Fico Score 9: Fico Score 9 Auto:

EQ: 689 697

TU: 585 592

EX: 581 603

(i'll explain why I included the different models below)

I currently have 3 credit cards.

Secured: Alabama One Credit Union

CL: 300.00

APR: unsure. I never carry a balance on this card.

Unsecured: Capital One Platinum

CL: 300.00

APR: 27.99% Never carry balance on this card.

Unsecured: PenFed Power Cash Rewards

CL: 10,000.00

APR: 17.99% Should recieve this week. Don't plan to ever carry balance on this card.

Cash Back: 1.5% (if I open checking it goes to 2%)

I currently have 1 vehicle loan:

Balance: 21,000.00 (Suntrust)

Status: Excellent Payment History. No lates ever.

Purchased: 2015

Other Loans:

I currently have 1 furniture loan:

Balance: 3780.93 (if paid over all 20 months)

Details: As opposed to some loans in this space, this is not viewed as a "consumer loan" or a revolving account like a CC. This account is viewed very simply as an installment account just like a truck or car loan. The store is a local store that was started by a friend of our family and he intentionally set the financing department up to report this way on purpose. All of the banks in town refer people who need to build credit to this store to purchase furniture. So no need to debate whether this type of loan was a good idea or not. I am keeping it for 6 months to allow it to report and help my score before I close it out.

Now, that is my current situation.

The reason I included my different scoring models is so that I can better ask my question and because PenFed uses the FICO 9 model so that was important to my question.

I am trying to have the best profile and credit mix I can without going overboard. My income ranges (self employed) from 7k a month - 12k a month. I am currently starting another business in another space and expect to earn another 10k a month minimum in that space (starting November) So my income is in a good spot. What is effecting me on my credit report on this site, in the way of denials is the fact that my profile is:

Per TU:

Score Change April 564 - Now 595 (Fico 8)

Good:

Fair Payment History

Fair Amount of New Credit

Very Good Amount of Debt

Very Good Credit Mix

Bad:

Poor Length of Credit History

Shows 1 late account and 5 collections

1st revolving open ended account was started 7 months ago

Reflecting only 2 accounts being paid as agreed (i don't understand this one tbh bc that's not accurate. maybe they are slow to update?)

Most recent collection occured 6 months ago.

Per EX:

Score change April 570 - Now 631 (Fico 8)

Good:

Very Good Payment History

Fair Amount of New Credit

Very Good Amount of Debt

Very Good Credit Mix

Bad:

Poor Length of Credit History

6 collections

2 accounts being paid as agreed

7 Inquiries

Oldest account opened 4 yrs & 9 months ago (truck loan)

AAoA 2 years & 7 months

Per EQ:

Score Change April 576 - Now 652 (Fico 8)

Good:

Very Good Payment History

Very Good Amount of Debt

Very Good Credit Mix

Fair Amount of New Credit

Bad:

Poor Length of Credit History

3 Collections

Short Credit History

Oldest Account 4 yrs & 9 months

AAoA 2 yrs & 7 months

2 accounts being paid as agreed

"Percent I have paid down on non-mortgage installment loans is too high" (% of Principal I have paid down is 48% - Truck Loan)

Ok, so just a few notes, as you can see (if you're still reading this thanks to those who are) there are several items that are the same on some reports and some that are different. I included all of these so that I can give you an accurate snapshot of my situation and a better idea of how to help me.

When it notes "too few accounts being paid as agreed" and states only 2 accounts being paid as agreed, that's because as of current, I only have 2 accounts that have reported so far other than the truck, the CU secured card and the Cap 1 unsecured card. The rest that are causing that note to appear would be old collections which I noted as well.

Here's where I'm at. I was approved for an auto loan with no POI from PenFed for 40k. I turned down the offer bc i decided to keep my truck and pay it off. Smarter move financially. BUT, I want to add one more installment account to my profile and possibly one more CC to profile. I am wanting to buy either a boat, or a side by side ATV for our family to enjoy. I realize these are toys, but they also are things that create life long memories when you use them as opposed to a new high end truck that just gets you to point a and b. So i want to buy one of those items for us. Lastly, I want to add one more credit card to my credit mix.

Somebody with some experience building their credit and getting it to a good spot, can you help me decide if these would be good items to add? I've read that having 2 or more installment accounts in excellent standing is a great spot to be in ( a boat or atv would put me at 2 installments) and i've read that 3-5 CC is the best place to be in that respect. Currently I have 3.

I am considering doing the installment loan via PenFed since they are so great and since the approved me for the car loan (which I rejected) I think they would approve me for the boat or atv loan as well no issue there.

And the other card I'm considering is with a local outdoor store offered through Synchrony. However, I am concerned that I will get denied for this card bc I hear that synchrony is very sensitive and fickle about who they extend credit to. The reason I am interested in this card in particular though is that it is the only other card I can think of that makes sense bc I would acutally get use and benefit from it.

So, after reading my novel, could anybody offer me some advice on whether or not to add the boat or atv loan as a final installment for a while and whether or not to app for the synchrony card or even better maybe you know another good card i should try for instead?

NOTE: All of these apps have been done in a short period of time, and after I obtain one more CC and one more Installment loan, it's back to the garden and not apping anyting for probably a year or more. I won't need anthying else. So don't worry about me stacking up too many inquiries. I've seen people with tons of them. I have less than 10. Score will go back up after time. Not a big worry to me.

I THINK, not sure, that adding these two types of accounts would set me up good for a bit with amount of new credit and number of accounts and credit mix. Would add valuable credit history as I held on and paid the accounts on time and over time.

Any help with next steps would be greatly appreciated.

One final note: I HATE debt. I am only working on building my credit so that I can have an excellent profile in the event that down the road I should need to finance anything. The plan for me is to get these accounts open, use them, set them up and in 5 years pay everything down to zero, including mortgage, leave the cards open and have a great credit profile in the event I should need one. So don't worry about me taking on too much debt and all that. I am trying to be very strategic about this in order to reach my ultimate mid range and long term goal of being debt free with an excellent credit profile.

Thanks for your time and advice!

Anonymous · ‎11-01-2018

You already have a pretty good mix for types of credit. You have 3 credit cards and one installment loan. That is supposedly the best mix. Pay all the cards off before the statement cuts - except ONE. Let it report a small balance (less than 9% of the credit limit) but pay it off before the due date to avoid interest.

Honestly - what is probably hurting you the most is the collections on each report. You need to try to get those off. Contact creditors and as for PFD (pay for delete) especially if they are old accounts..... If they have been paid - try sending goodwill letters to get them removed. (look up the saturation method) Same with the late payments - again send goodwill letters to try to get removed.

If you want the boat or ATV that is one thing.... but I don't honestly think another installment loan is going to help you as much as trying to get the Baddies off the reports. I'd try to clean up some of that first...then you can get a better interest rate for the loan when you are ready. (maybe before the furniture is close to pay off)

Anonymous · ‎11-01-2018

Thanks for the reply and for readin gmy whole post! As far as the baddies, there is a LOT of advice that says if applying for a mortgage in the next 12 months or less do NOT pay off old accounts. Reason being from what I understand is that when you do this, it causes them to update with time of recent activity and dings your reports big time. I am a realtor and have seen some nightmares where people thought they were doing the right thing by paying those off (and they were doing the right thing by paying their debts) but when they apped for the mortgage it sunk the deal due to the accounts updating and causing the scores to drop major.

My fiance and I are going to be applying for a construction loan/mortgage in the next 6-12 months so I'm not sure I want to chance paying off the baddies at current. That being said, I do want to pay off the things that are on there (less than about 3500.00 no big deal now) but I'm not sure that the best thing is to do that now. I was going to wait til after we secure a mortgage to get that done.

As far as mix goes, thanks for your comments on that. I have been trying to figure out the magic number of CC's and Loans that determine the best mix. Sounds like I'm good to go as far as mix is concerned. I actually just got approved yesterday for a NFCU credit card as well. So that is the last card I am going to app for a long time. I don't need/want anymore.

When it comes to a boat or atv, I definitely want one for our family to enjoy. We have decided to app for a side by side atv at the moment. Currently combing these boards for info on these types of apps. not a ton of info but will keep looking.

Thank you so much for your response. This is how i've managed to up my score. AND it just jumped 15 points today!!

Thanks again!

Anonymous · ‎11-01-2018

When I was cleaning up mine prior to house purchase - the Loan Officer told me to get the stuff paid off - it was better to have an old collection paid than not paid out there. However YMMV. I started working with a Loan Officer a little over a year prior to getting my mortgage. He did pull my report (so I did take a couple point hit) but he told me exactly what the underwriter wanted to see and helped me get there. When I pulled the report again a year later - it was exactly what they wanted and I flew through just fine. Find a REALLY good/helpful LO and take their advice - was the best thing I did and made things go very smoothly when it was time.

good luck with the mortgage! Also - you can get great help in the Mortgage forum as well. There are several realtors and LO's on that site that give great advice!