Starting Credit Repair, Need Advice!

[Anonymous]

Unfortunately, I am starting my interest in credit a little late here. I'm 24 with an average credit age of 3.5 yrs. My oldest credit history is due to my student loans (5.5yrs) which currently sit at about $36k. The rest (esp. the credit cards) were created by my mother who then maxed all of the cards out and I am now having to deal with this myself since the accounts are obviously in my name.

Now with using CreditKarma, my TU reads 568 with my EQ at 569. Hopefully, the following information gives you insight into what makes up the scores.

My yearly salary is around $55,000

AMEX: $1016/$1,000 SL

BoA: $635/$700

SYNC/BELK Store: $171/$250

Util at 93% -> $1822/$1950

Student Loans

U.S. Dept - 33.6k (In Good Standing)

Sallie Mae - 2.9k (In Good Standing)

1 Late from AMEX

2 Late (Delinquancy) from Salie Mae

No CO or any other Deragatory Marks

5 Total Accounts Open

1 HP from Rental in 2017

For my start in repairing, I used the Score simulator on CK to decide. Apparantly if I pay down the utilization by at least 1,000, my score will increase by around 83 points. Bringing my score around 650. Additionally, I was playing on using My Jewlers Club to increase my overall CL by $5k. After this, I would like to secure another line of credit possibly with a $2-5k CL from Best Buy or Barclays in order to purchase an iMac (which I have the cash for) and diligently paying it off.

Is this a good plan? Can anyone provide any supplemental advice or tips? Or what I should focus on?

[Anonymous]

In your shoes, I would forego the Mac and use that money to pay your cards down. Hold off on an expensive purchase and get your utilization per card down under 29.8%. Ideally you’d follow the AZEO method with only one card showing a small balance and the rest with none (All Zero Except One). That AmEx in particular sits above the limit - don’t get them riled up - pay that down with a big chunk, and then work the others down as well. If you want the improvement to come as smoothly as possible, pay the debts off. Overall utilization is a factor that the jewelry LOC would help, but individual utilization also matters and being above 90% is the same as being maxed out in the eyes of lenders. That needs to be done first. Throw the cards in a drawer for a few months, pay the balances down, and see where your scores end up before a big purchase.

[Anonymous]

If I were you, after playing with numbers, I’d pay off the two smaller cards completely, leaving them at zero. Using your idea of a Mac purchase and calling it $1200 since that seems like a pretty solid price for one, that would be $806, leaving you roughly $400 to pay on AmEx. That’d put AmEx at about 60% and the other two at zero. Then keep throwing money each check at the AmEx to get it down to $275 or so, so you’re under 29.8% on that card.

Meantime, try goodwill letters to see if you can get your lates removed, and the combination of that and the pay-down will drastically improve your scores.

[Anonymous]

Thank you very much for the message! I completely agree with you. I was trying to say that I'll be paying off the AMEX in full this Friday in one single chunk. Additionally, I will probably half the util on the BoA.

After this and the Jewlers Card, I was then wanting to acquire the mac. As I need a desperate upgrade for freelance work and I think that instead of buying it with cash, I could kill two birds with one stone and buy it via credit to help mine build.

[xaximus]

@Adzenys - ImTheDevil gave some great advise. One thing I would emphasize though is that, once you pay down your cards, try not to use them or PIF. You dont want to get hit by CLD's for overuse or over-utilization. Once you pay down the cards, you should see a decent bump- 50-100 on the high end. Give it a few months to show that you are responsible before applying for new CC's. Take your time is the best thing once you pay everything off.

Good luck.

[Anonymous]

Thank you as well for your message! I'll heed to both of your suggestions. I'll perhaps take the upcoming months to eradicate the existing debts in total and instill good behavior. I'll pay for the computer with cash instead of opening up another line of credit.