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Seeking advice on my credit rebuild plan

NewDayDawns
Established Member

Seeking advice on my credit rebuild plan

Hi,
I’d appreciate if I could get some advice/feedback on my credit rebuilding plan. I do apologize for the length, but I figure if you have all the relevant info (on history, current status, and future plans) you’ll have a full picture for advice.

 


 

1. History
    The short version is in 2017 I had a financial meltdown that started with my car engine basically blowing up and then unemployment and apartment eviction (although we reached an agreement that if I simply let them have the apartment back in good shape they wouldn't follow through with the filing). Ultimately I was just left trying to figure out how to survive so I wasn't worried about debts. Particularly once it started appearing as late payments (it never occurred to me that there's a difference in 30, 60, 90 ..., co as far as scores went).

 

    Also ultimately it took about 9 - 12 months to start recovering. By that time it was all charged off, and I was operating under the assumption that if I started paying then it would just lengthen the time it would stay on my report (and I really didn't want to be penalized for actually paying the debt off).

 

    So I just said I'm screwed for 7 years, so make the best of it till then. My understanding now, is that paying this will not reset the credit reporting fall off date, at least if it's paid in full. Still not entirely clear on whether a settlement for less than full or a payment plan would restart that clock though.

 

    Anyways now that I'm in a position where I can start to make headway on paying this and it would seem not be punished for it, I'm ready and willing to start taking this on. Hopefully, I can get some questions answered and some feedback.

 

 

 



2. Goals (not entirely clear as to whether these are realistic/achievable but need to aim for somthing so...)

    All of this assumes a perfect payment history from now on and a utilization rate both per account and 

    total kept below 5-10%
    1. In let’s say 6 months get my fico scores up to the 600’s
    2. By the end of next year get scores up to at least 680
    3. By the end of 2023 have the scores above 700
    4. Be in a position to get an auto loan within 2 years, if needed
    5. Be in a position within 2 years to start establishing credit for a llc I started with my brother, and that
        will launch by the end of this year. The business shouldn't actually need the credit but just in case.

 

 

 


3. Current credit status
    Scores (plus or minus a random number between 2 and 10 points all averaging out to 0):
    Fico 8 scores:
       Eq – 493
       Ex – 498
       Tu – 488
    additional scores from experian:
       Mortgage
          Fico Score 2: 584
       Auto Lending
          Fico auto score 2: 548
          Fico auto score 8: 516
       Credit card lending
          Fico bankcard score 2: 570
          Fico score 3: 564
          Fico Bankcard score 8: 503

 

    Score factors according to experian (negative and positive):
          (all balance info is plus or minus a random number between 50 and 200)
          (all dates for each account are plus or minus a random number between 2 and 6)
       Payment history (35%):
          Payment history is poor

          3 Late Payments 30+ days
          3 Late payments 60+ days
          0% Accounts always paid as agreed
          2 collections
          0 Derogatory public records
          3 years 4 months - time since most recent late payment

       Amount of debt (30%):
          Amount of debt is fair

          106% Revolving Utilization
          $850 Total balance on revolving and open-ended accounts
          2 accounts with balances (looking at the amounts that should the bank of america and discover accounts)

 

       Length of credit history (15%):
          length of credit history is good

          average age of accounts: 5 years 5 months
          age of oldest account 5 years 7 months (which I believe is bofa)

 

       Amount of new credit (10%):
          amount of new credit is very good (although this is quickly going to go down, details below)
          age of most recently opened account: 5 years
          Number of recent inquiries: 1 (capital one account that i was just approved for this month,
                                                                details below)

 

       Credit Mix (10%):
          credit mix is very good

          Revolving accounts: yes
          Bank-Issued Credit card accounts: yes
          Installment loans, including mortgages: no

 

 

       Quick view of what lenders see:
          Accounts Summary
             Open accounts 0
             Self-reported accounts 0
             Accounts ever late 5
             Closed accounts 3
             Collections 2

             Overall Credit Usage - 0%
             Credit used - $0
             Credit limit - $0

 

          Debt Summary
             Credit card and credit line debt - $0
             Self-reported account balance(s) - $0
             Loan debt - $0
             Collections debt - $1,317
             Total debt - $1,317


       Accounts:
          Statute of limitations note:
          I'm going to put the sol on each account, as I understand it in florida it's 5 years from the time of first delinquency. Which basically would have the sol run out in the next year. However with the exception of midland, on all of the notices sent by the collections/creditors they all put something to the effect of (paraphrased): "due to the age of this debt we cannot/will not sue you for it, any action you take can/will reset the sol"(/paraphrased). So I think even if it is still within sol I could present that to get the case dismissed, given that I never communicated with them or took any action in any way, shape, or form, so I'm not too worried about being sued.

       0 open accounts

       3 closed accounts:
          - Bank of america
             53 potentially negative months
             $550 - closed
             opened 2016
             credit limit - $500 was a partially secured card (I believe it was 125 or so secured)
             dofd (I think that's how you all shorten date of first delinquency) - May 2017
             sol - May 2021
             fall off - May 2024
             They've reported it as a charge off every month since Jul 2017

 

          - Discover
             46 potential negative months
             $300 - closed
             opened 2016
             credit limit - $300 was a fully secured card
             dofd - Dec 2017
             sol - Dec 2022
             fall off - dec 2024
             They've reported it as a charge off every month since jun 2018

 

          - jpmcb (chase card)
             12 potentialy negative months
             $3900 - closed
             opened - 2016
             credit limit - $3500 unsecured
             dofd - Oct 2017
             sol - Oct 2022
             fall off - Oct 2024
             They reported it as a charge off until Aug 2018 and haven't updated since

       2 collection accounts (total balance 1317):
          - Portfolio Recover Assoc (for capital one)
             (I wanna say this was a $250 or 300 card I can't remember if it was secured)
             collection opened 2019
             account type - debt buyer
             paid off: 0%
             current balance - 450 original balance 450
             balance updated last month
             dofd - sometime in 2017 (I don't have the exact date)
             sol - sometime in 2022
             fall off - sometime in 2024

 

          - Midland funding (for citibank)
             (I believe this was a $500 unsecured card)
             collection opened (June 2018)
             account type - debt buyer
             paid off: 0%
             current balance - 867 original balance 867
             balance updated - this month
             dofd: again sometime in 2017 (I don't have the exact date)
             sol - sometime in 2022
             fall off - sometime in 2024

 

       2 inquiries:
          1 for capital one that will fall off in 2 years
          1 for an apartment that will fall off next summer

 

       0 public records

 

 

 



4. Actions I’ve already taken to start the rebuild.
    1. This May I successfully disputed a collection around $350 that was never mine raising my ex score by 21 points in mid june.

 

    2. I opened a kikoff account around oct 2 or 3 - $500 revolving with a current balance of $20 for a utilization of 4%.
       Reasoning - no hard pull,
                           -  should lower my utilization rate,
                           - establishes an open account
                           - will show perfect payment history

         Drawback - apparently doesn't report to transunion,
                            - will lower average account age
                            - Essentially a $2/month fee

          Results - since I opened it this month has not reported yet.

 

    3. Given that both discover and capital one promised no hard pull to see prequalification I applied at both around oct 7,
          Denied by discover, I don't have the letter in front of me, but the gist was I believe I still owe the charge off from them.

 

          I was approved at capital one for 2 unsecured cards one with no annual fee and one with as well as a secured card. I applied for the unsecured no af card and was approved for a $300 limit and have set them as the payment for my auto insurance on the 1st of every month and then just pay everything but a $1 or 2 that first week. Other than that the card is going into a drawer.

 

          Reasoning - no hard pull for prequalification and only 1 hard pull for actual approval,
                              - no security deposit no annual fee,
                              - should improve utilization %,
                              - should help repair relationship with them for the future,
                              - will show perfect payment history,
                              - establishes an open account,
                              - I believe reports to all 3 credit agencies

 

          Drawback - Will lower account age

          Results - score dropped by 1 point for the hp
                         - $300 unsecured no af card with capital one
                         - too early to see the score impact

 

    4. Oct 9 - I opened a self lender account $35/month for 24 months
          Reasoning - I don't have any installment accounts,
                              - I don't qualify to join navy federal,
                              - Within 3 months will be able to get a secured card with them that I will transfer the
                                 $2/month kikoff payment to keeping that at a 2% utilization, other than that it's also
                                 going into a drawer
                              - I believe I can basically send all the payments to the secured card once I have it, so it
                                 should improve utilization %
                              - apparently reports to all 3
                              - Ultimately should report as both an installment and a revovling so a 2 for 1 deal

 

          Drawback - The card will lower account age, not certain if the installment loan also does that.
                             - There's some minor fees involved

          Results - Installment loan created
                        - Paid the first payment the day I opened the account and it showed next payment as in dec -
                          previously had been nov, so I'm wondering if I just do 1 payment at a time if I can basically
                          do a more expensive version of the ssl if I simply have them do 1 payment at a time instead of
                          1 big payment
                        - too early to see the score impact

 

 


5. Future plans
    1. At some point this week go to my local credit union and open an account, just to start establishing a relationship. Also look at opening one with penfed as I may need a national cu in the future if I relocate.

 

    2. Next week see if the first of self's 3 month’s of on time payments towards the secured card updates to show the first month as being paid (I don't know if that's time locked or if it's simply that they say it takes 5 business days to fully process payments). If it does then I will do 2 more payments and see in 1 more week if that would allow me to open that card this month. Also this would allow me to see if doing 1 payment at a time just pushes the due date out appropriately (hopefully allowing me to just do 20 some odd payments but not reduce the term). In addition hopefully I can just put all the payments towards the credit line on the secured card.

 

    3. Continue to increase my emergency savings, so by the end of the year I should have 3 months living expenses.

 

    4. Start tackling these accounts next month, by saving the entire amount, then contacting them trying a pfd if
         pif or for the collections a pfd/settlement offer and then paying it off.

 

          1. first on the hitblock would be discover, I will just try to do a pfd/pif but if rejected then just pif primarily because I think they have one of the best secured card deals so I'd like to just one time take the hit on the new accounts so the age can all basically juststart increasing, instead of spreading that out over say 2 years of just constantly lowering the age.

 

          2. Once paid and reports are updated see if I can get another account with them with no hp for prequalification.

 

          3. Pay either bank of america or start on the collections accounts

 

          4. By feb or mar 2022 have only the chase one left as that's the largest, although about a year ago they did send me an approximately $900 settlement offer. But given that I do want to maintain the option of having a relationship with them later would it be better to simply pif. However pif would probably not happen till next summer.

 

          5. I believe I probably need 3-5 revolving lines reporting to all 3 cras for the best results so I'd like to
               open 2 more secured cards. Reason being to be able to get bigger lines of credit to help utilization, and to
               have 2 more reporting accounts.
               The first would be opensky as there's not a hp although there is an annual fee.
               The second being discover once the account's been pif.

 

 

 


 

6. Specific questions
    1. does pay in full/partial payments on charged off debt restart the 7 year credit report fall off date?

    2. statute of limitations - given that again with the exception of Midland all of the accounts/creditors stated in writing that effectively the debt was past the sol (even though I think they're mistaken) would those letters actually stand in court. And yes I understand that as a legal question if you're not a lawyer you can't give legal advice, and even then I think I would have to be your client to get specific legal advice.

 

    3. For all of the accounts do I need to get a settlement offer in writing even if I'm doing a pif just to ensure no confusion/have a paper trail down the road. I suppose I do actually need to validate the debt so I get official balances though.

 

    4. Given that I want to rebuild a relationship with these banks should I pif or attempt to settle or does it matter at this point for specific banks, meaning once you default they simply have a policy of never doing business with me again? I believe most of these debts did send settlement offers between 40-60% (however I never responded as I didn't want to reset sol or (now I believe I was mistaken with this part) reset the reporting clock and be effectively punished for paying it off.

 

    5. In what order, and how should I tackle these accounts (settle/pif/try pfd, particularly the collections, as my understanding is the debt was actually sold to them)?

 

    6. Are my goals reasonable/achievable? Obviously it takes however long it takes, but I’d like to know if my expectations are entirely off.

 

    7. With regards to secured cards how easy is it to increase the credit limit by depositing more money? Do they do a hp every time you look to deposit more to increase the cl? Basically would it be better to simply get the account with say 300-500 dollars or wait to open it at their max limit?

 

    8. Anything else I should be asking/considering that I'm not?

 

Thanks for reading and any advice/answers you may have.

 

19 REPLIES 19
FireMedic1
Super Contributor

Re: Seeking advice on my credit rebuild plan

Lets try this. List your open accounts with Creditor/Credit Limit/Balance

Then the baddies with status. Creditor/Balance/Charge off, closed,ect and DoFD

Collections and who are they with and amount.

Welcome to the forums.

 






Homeowner since Sept 2020. My posts are JMHO. My siggy is not to brag. Just sharing my experiences after BK from learning here from rebuild to recovery from the @ 540's.
Message 2 of 20
NewDayDawns
Established Member

Re: Seeking advice on my credit rebuild plan

 

Open accounts:

revolving:

None are reporting

kikoff  cl: 500  balance: 20

capital one: cl 300 balance: 0

installment loan:

self - I believe the loan amount is for 724, have paid 35 not counting fees


baddies:

Bank of America

charged off

balance - 550

dofd - May 2017

 

Discover

charged off

balance - 300

dofd - Dec 2017

 

Chase

charged off

balance - 3900

dofd - Oct 2017

 


Collections:

Portfolio Recover Associates

balance - 450

dofd - sometime in 2017

 

Midland funding

balance - 867

dofd - sometime in 2017

Message 3 of 20
collics
Established Contributor

Re: Seeking advice on my credit rebuild plan

Welcome to the Forums. 

The knowledge here is amazing and you'll be back on your feet before you know it.

BK 7 Discharged May 2014

FICO8s Dec 2019

FICO8s Dec 2 2021



Message 4 of 20
SoonerSoldier33
Frequent Contributor

Re: Seeking advice on my credit rebuild plan


@NewDayDawns wrote:

 

Open accounts:

revolving:

None are reporting

kikoff  cl: 500  balance: 20

capital one: cl 300 balance: 0

installment loan:

self - I believe the loan amount is for 724, have paid 35 not counting fees


baddies:

Bank of America

charged off

balance - 550

dofd - May 2017

 

Discover

charged off

balance - 300

dofd - Dec 2017

 

Chase

charged off

balance - 3900

dofd - Oct 2017

 


Collections:

Portfolio Recover Associates

balance - 450

dofd - sometime in 2017

 

Midland funding

balance - 867

dofd - sometime in 2017


Ok, so you're in better shape than you might think here. PRA and Midland will both PFD. Call them, work out a settlement you can afford, and pay them. Those collections will be gone in about a month after you pay them. As for the COs, they'll remain on your reports even after they're paid, but the balances will stop affecting your utilization, and you can see some score increases as you pay them. Same thing applies. As you are financially able start calling them, and negotiate settlement agreements to have them considered 'settled in full' in exchange for your payment. Paid in full vs settled for less has absolutely no score effect. You just want the balances reporting $0. You'll most likely get better deals with cash in hand for lump sum payments, but payment plans will work too if you need to go that route. One note about Chase: They have the 'elephant never forgets' memory of the credit world. If you settle for less with them, they'll remember internally that you still 'owe' them money, and may never do credit business with you again unless you pay them in full. Just something to consider when you get around to working out a deal with Chase. When you get all your COs reporting a $0 balance, and the 2 collections deleted, you may be surprised where your scores sit. Then you can effectively rebuild from there.






Team Garden Club as of Oct 2021
Message 5 of 20
NewDayDawns
Established Member

Re: Seeking advice on my credit rebuild plan

Thanks,

 

Given that both Midland and PRA will delete, do the original creditors ever find out that I either settled or pif? I'm assuming for capital one, which is who pra bought the debt from, isn't going to hold anything against me given that they already gave me an unsecured card.

So I suppose it's more of a question for midland (citi debt which was a gas card, I don't know if that makes a difference). Would citi find out what the final deal was, or even if they do, for that matter do they actually care?

This is all assuming that the debt was actually sold to those 2 given that they're both listed as debt buyers, and neither citi nor capital one have been reporting the account for at least the last 6 months, that I know of, as that's when when I started checking my credit again.

Message 6 of 20
AmericanSkin
Established Member

Re: Seeking advice on my credit rebuild plan


@NewDayDawns wrote:

Thanks,

 

Given that both Midland and PRA will delete, do the original creditors ever find out that I either settled or pif? I'm assuming for capital one, which is who pra bought the debt from, isn't going to hold anything against me given that they already gave me an unsecured card.

So I suppose it's more of a question for midland (citi debt which was a gas card, I don't know if that makes a difference). Would citi find out what the final deal was, or even if they do, for that matter do they actually care?

This is all assuming that the debt was actually sold to those 2 given that they're both listed as debt buyers, and neither citi nor capital one have been reporting the account for at least the last 6 months, that I know of, as that's when when I started checking my credit again.


The original creditors will report the settlement status, but the balance will reflect as $0 regardless and your delinquency will cease updating monthly as an overdue balance, which will allow the account to age and eventually decrease negative impact over time. Given that they're CC amounts, that will immediately give you a lower UTIL and possibly give you an immediate small bump (I recently did this with an installment account which gave me a minor decrease in score because it had no effect on UTIL but effectively stopped the chain of negative reporting). Either way, it's a good thing to show the zero balance. 

Message 7 of 20
FireMedic1
Super Contributor

Re: Seeking advice on my credit rebuild plan

On your reports. Does the Citi gas card and Cap1 have any balance showing? If its $0 balance they sold the accounts and got paid. Cap1 is very forgiving. Theres no set time when you'll graduate. Its a YMMV thing. Best part is Midland and PRA will be gone. If there is $0 balance on the CO's its no longer affecting your overall util %'s any longer. No more updating. The CO will go bye bye in time.

AMN






Homeowner since Sept 2020. My posts are JMHO. My siggy is not to brag. Just sharing my experiences after BK from learning here from rebuild to recovery from the @ 540's.
Message 8 of 20
NewDayDawns
Established Member

Re: Seeking advice on my credit rebuild plan

I suppose that's what's somewhat confusing, they were reporting them as chargeoff's way back but sometime between 2018/19 (when I finally just assumed I'd have to just live with it for 7 years and stopped checking my credit) and april of this year they were removed from all my reports with only the entries for midland and pra showing.  I'm not certain how they got removed but I am happy to simply let sleeping dogs lie as it were, and not question it.

 

To be clear and concise citi and capital one are not reporting anything on my reports.

 

edit - 

Also for some reason the last month chase reported was Aug 2018 and I'm assuming that's why the reports say my utilization is only  around $900 which is what the discover and bofa reporting balances add up to. 

 

second edit:

That reporting balance is also why I was considering just paying discover and then bofa first and then deal with the collections and last but not least chase.  But since apparently cap one doesn't care I'm thinking now just starting a settlement process with pra.  Offering say 200-300 and see what happens.  Also if citi won't find out then perhaps look to settle with midland next. then discover pif and bofa pif.

Message 9 of 20
HowDoesThisAllWork
Frequent Contributor

Re: Seeking advice on my credit rebuild plan

@NewDayDawns 

 

I am gonna make a suggestion, and I really hope that you receive this message in the same manner as I am sending it:  K.I.S.S.  In other words, keep it simple, silly!  You are really over-thinking this (and, for full disclosure, I am an overthinker as well....so, talent recognizes talent here!)

 

You have three charged off accounts and you have two accounts in collections.

 

THAT IS IT!  Let's focus on the very simple sentence above.

 

Now, this is where I generally recommend that you look at your three credit reports via annualcreditreport.com.

 

It really seems like you have done that here.  If not, then please do so.

 

The goal here is to see what the credit world sees so that we know that we are dealing with everything (but, keep in mind that a credit report is a snapshot of your financial life at a specific moment in time and that it might not have EVERYTHING....yet).  Due to COVID-19, we are now allowed to look at our Credit Reports every seven days.  So, I would encourage you to take another look....for at least another month - or so - just to make sure that things do not change (and if things should change...which I do not foresee in your case....then we are aware).

 

As has been suggested by others, I would first attack the two collections.

 

As you have identified the two CAs (and for which Original Creditor each is....) we have a good starting point (andI am making the assumption here that you have this information - both for Collections and for Charge Offs - from your Credit Reports).  There are two things to ask ourselves here (generally speaking, when it comes to Collections Accounts):

 

1. who actually owns the debt?

2. assuming the Collections Agency, does it do a PfD (and, if yes, are there any "conditions" for said PfD)?

 

To the first question, there are two potential situations when a Collections Agency is involved:

 

1.  The CA purchased the debt from the OC and, as such, is the legal owner of said debt.

2.  The CA has been authorized by the OC to attempt to collect on OCs behalf but CA does *NOT* own said debt....the OC still does.

 

If you are confident that the CA owns said debts, then we can look at #2 - will the CA in question do a PfD?

 

Here is a link that will help address that question:

 

Collection Agencies that do Paid for Delete 

 

I know from this forum that both CAs involved do indeed entertain a PfD.  So, I would suggest contacting each and when you are ready make an agreement with each and as a part of the negotiation you make it clear that you will pay in return for the CA deleting the CA account from all three CRAs.  SUPER IMPORTANT to make this clear from the start.  Please do not 'tack that on to the conversation two weeks later'!  Make it clear from the start.  Most CAs will not e-mail you or put in writing that they will do a PfD.  You just have to operate under good faith that you will hold up your end of the agreement and that they will hold up their end of the agreement.

 

So, once the two CAs are removed from your three Credit Reports, you can attack the three Charge Offs.

 

I would first tackle the Discover CO.  Then I would tackle the BofA CO.  Whether you pay each off in one lump sum or make payments what you will see is the Balance drop from $300 and $500, respectively down to $0.  That is HUGE.

 

In general, once you pay a Charged-Off account and the "Balance" field is reported as $0, the OC is no longer allowed to modify the "Date Updated" field.  Which is important.  The fact that the "Date Updated" field has been updated each week / month is suppressing your score.  Once the "Balance" field reports as $0 and the "Date Updated" field is stagnant, then the sting of the CO lessens over time.  Sure, you dont have a lot of time left (roughly two years) but every little bit helps, right?

 

Once the Discover and BofA Charge Offs are history, then focus on the Chase card.  Once this CO shows a "Balance" field with a $0 and the "Date Updated" field is no longer being updated weekly/monthly, then things will really look better for you.

 

Why?

 

The Collections accounts moved your credit profile into the Dirty Scorecard arena.  The Collections are a "Public Record".  In the Dirty Scorecard arena, there are two types of segmenters: Public Record and Delinquent.

 

Once those are gone, you have the Charge Offs.

 

A charge off (which is actually an accounting tool for the creditor....it is the delinquent payments that lead to the charge off that hurt your FICO) will also move your credit profile into the Dirty Scorecard arena.  However, a Charge off is a "Delinquent".  So, still Dirty Scorecard, just the other side.

 

While you have the Charge Off and they report a balance, that balance actually hurts your "Credit Utilization" (which accounts for 30% of your FICO Scores).  Additionally, you have the late payments - which hit your "Payment History" (which accounts for 35% of your FICO Scores).  Typically, a charge off for a credit card happens after six consequtive missed payments.  And, a 60-day late (or more) counts as a Major Derogatory (which is what moves you into the Dirty Scorecard arena).

 

So, let's worry about the challenges that are adversely affecting your FICO right now.  Namely, the collections and the charge offs.  Let's not worry about AAoA and AoYRA and Credit Mix (read: having an installment loan along with the perfect number of revolver accounts) the like at this moment in time.  Do we EVENTUALLY need/want to do that?  Heck yes!  I would suggest, though, that now is not the time for that kinda thing.

 

Make sense?

 

 

FICO8 Scores as of 2021 JULY 21:


FICO Auto 2/4/5 Scores as of 2021 JULY 21:


FICO Bankcard 2/4/5 Scores as of 2021 JULY 21:


FICO Mortgage 2/4/5 Scores as of 2021 JULY 21:


Starting Score: Exp 699
Current Score: Exp 699
Goal Score: Exp 750


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