Starting My Road to Recovery

[Anonymous]

I am 22 years of age and my credit history is very young. I did not give proper attention but I am about changing that from this point forward.

My current Fico scores are:

EX 570

EQ 577

TU 568

I've only had one revolving CC  account Comenity/Victoria Secret opened in 2016 which I didn't manage very well but paid to 0 balance and closed it in January 2019. There are several 30 and 60 day lates in the history of that account.

I have (2) student Fed loans, with balances of approximately 1,500 and 2,500. These also have a history of lates up to 120 days when I was struggling to maintain gainful employment. They are current now and I am making payments each month as agreed.

I have an 72 month auto loan with Santander Consumer with approximately a 10,900 balance on original 14,500 loan. This account I have paid religiously and never had a late payment. However, given that I had such a thin file, it has an interest rate of 19%.

I made some attempts to purchase another car or refinance my existing car but I went into that blind not understanding what my true Fico credit score and reports looked like.

As a result I have the following inquiries in the last 12 months:

EX 2

TU 4

EX 3

That's the current footprint of my situation as I start my credit recovery/building process.

My short term goal would be to improve my credit file sufficient enough to either refinance my current vehicle or switch to something else given the high interest rate I am currently at. 

In speaking with another member here (which is why I have joined), I believe it would be a benefit to acquire a CC revolving account again though I would expect any such approval would require security deposit given my current scores. The member also suggested that I have 3 accounts but that will take some time as I do not have alot of extra funds to be able to use for secured deposits.

Any advice others might be able to share from their experiences given my situation is welcomed, like which companies to look at. I would prefer secured accounts that will graduate rather than those that would not have such an option. 

[Jannelo]

Did you go on Capital One's site and see if you pre-qualify for one of their credit cards?   Also, you can go on their site and see if you pre-qualify for refinancing your auto loan.  All soft pulls.  No hard pull.  I got two credit cards with them, one with a FICO score in the 520s and one later in the 580s, and the a car loan with interest rates offered between 6.29 and 6.99, depending on loan length, with credit scores between 580 something and 598.

I would definitely check and see what you pre-qualify for.  At the  least, maybe an offer of a secured credit card and/or will show you where you stand creditwise as far as offers or lack of offers.

[calyx]

I would recommend Discover for a secured card, as they can graduate relatively quickly and seem to be more generous than others with CLIs and are one of the few secured cards that give you a benefit (1-2% cashback).  You can also check to see if you are prequalified (not guaranteed, but still better than nothing!) on their site.

Citi, USBank, NFCU (if you qualify), Amazon are all options that graduate as well.
I would also look into a local credit union to see if they have secured cards (that will graduate).  For those that DO graduate, make sure that they graduate into something you'll want to use in the future or can be product changed into something you want.   Credit issuers change benefits all the time, but it doesn't hurt to try to stick with those that might give you even longer history (vs getting something that ends up bucketed or useless for you).

[Anonymous]

Thanks to both of you for your suggestions!

I checked the prequal page for Capital One and I was offered a Platinum account unsecured.

I did the same for Discover and was offered a secured card.

I am going to start with applying with Capital One and see if an unsecured account is approved. 

I also utilized the myfico score simulator and it at least estimates I could see a pretty sizable jump in my scores if I will at least get started with a single revolving account in addition to the auto loan and student loans I now have seeing that I don't have any active revolving accounts.

So thankful to have found this community of help.

[Jnbmom]

I would take the discover secured, it will unsecure and you would be building a relationship with them.

[Anonymous]

At 22 you are young enough that you can rebuild and have a long, positive credit life. Just remember that good credit takes time to build, like the foundation of a house. Get into the habit of making good financial decisions and you will build a strong foundation. Bad money-managing will lead to a weak foundation that will not stand the test of time. As you build the base of your credit profile you will find it easier to obtain better cards. Use your credit cards like debit cards, meaning don’t buy things that you can’t immediately pay for in cash. Use your cards to get points, etc, but pay them off to zero before each statement date ( look up the AZEO method if you are not familiar with it). Have a written budget, have a written budget, have a written budget!

Oh yeah, have a written budget! GL!

[dytch2220]

Congrats on making the decision to rebuild! I'm also rebuilding so take my advice with a grain of salt, however, I'd recommend opening a savings account with Navy FCU. You may not need to wait to get a much better rate. I opened a savings and applied for an auto refinance which dropped my interest rate from 22.259% to 7.09%. This was with the credit scores in my current signature (poor) and some recent inquiries.

[satio]

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@Jnbmom wrote:

I would take the discover secured, it will unsecure and you would be building a relationship with them.

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I agree with this as have seen others have it unsecure in a short time.

[calyx]

+1 on the Discover secured.
With good management, it will quickly graduate, and Discover is fairly generous with soft-pull CLIs.
CapitalOne is known to "bucket" their cards, which means that they will not grow beyond where you were first qualified/approved.
Since you are fairly young, you have a great opportunity to get some nicely age accounts, and I'd hate for you to be stuck with a low limit card that won't grow just to keep an account aging (not that Disco is guaranteed forever, but we have to work with what we have now )