The 400 Club. How do I build from the ashes?

[USF813]

I would suggest getting a single secured credit card from a local credit union. They seem to be more willing than anyone to help people rebuilt. Notice I said SINGLE secured credit card. You will see people on these boards applying for everything under the sun. THAT is incredibly dangerous behavior and likely what got them into trouble to begin with. My Chap. 7 was discharged in 2009 and I lived off cash only until January of this year. I had nothing reporting except my mortgage. I now have two unsecured Visa cards with two of the three credit unions I bank with, plus my mortgage, and my scores are now reporting in the high 600s-mid 700s.

Once you've established a relationship with that ONE secured card, they will switch it to an unsecured. At that point, I think it's OK to go ahead and get another Visa or Mastercard, but I strongly believe no one needs more than two credit cards period. And once you have the cards, don't go jumping on the credit line increase bandwagon. Again, that is dangerous behavior. My combined limits are $4500 and I won't let it go above $6k.

Good luck and keep us posted on your recovery.

[Anonymous]

Yes that is my plan however i don't think i have a chance to get a secured card yet with my score being 481. Im planning on trying to wrote some good will letters to try to bump my score up enough to get a secured credit card. I don't know what else I could do! The problem is i don't have any open account reporting anything to anyone right now. Thats the biggest issue. I thought by paying off my debt my score would increase but i guess thats not the case due to the charge off's.

[Anonymous]

Here's how my credit story for the past 7 years or so, you can take the information and use it however it suits your needs

2005-Filed for BK.

2006-2007 got approved for discover walmart (500), HSBC bestbuy card (500),target card (300), GE Peach direct card (500), Capital one crd (500), Credit One card (500).

I lost my job when the recession hit, and defaulted on my cards.last default was in 3/2008

2009 approved for student loans which went into deferrrment until i graduated

2011 payment still deferred and went back to school again and got more loans

2012-the deferrements helped my credit score because it showed monthly payments for almost 3 years, I applied for a car loan, turned down by almost every lender until Nicholas Financial took a chance on me last may, and gave me a car loan. It was a 28% for 42 months. Have not missed a payment since than

In March of this year i applied to CareCaredit (GE) and approved for a 1k. last few weeks i applied for Walmart (GE) approved for 500, JC Penny (GE), approved for 200. Old Navy and Banana rep (GE) and approved for both 300 (but denied for GAP card). Applied for Chevron card (GE) and approved (300).  Applied for Amazon card (GE) and approved (600). Applied for MACY and Bloomingdales card  and approved (300 macy, 800 bloomingdale). Applied for Vic Secret  (commenity bank) and approved for 250. I put down a 200$ security deposit with Merrick bank and approved (they are great because they give yo ua free FICO score each month).

I tried applyin for other cards like Valero, Shell gas cards, got turned down. I have a total of 30 inquiries on my credit report per transunion, 13 per Experian and 25 per EQUIFAX. The majority of banks seem to be pulling transunion. From the 440 i started out with transunion, I am now at 627 per FICO08. I used all the cards mentioned above and charged 15-25 dollars here and there on them, paid them off in a few days will all have a 0 zero balance at the end of this month on all the cards except the care credit which will have a 550 balance (used it for a root canal) but i have interest free financing for 6 months on my purchase.

I also disputed several items (some were mine but charged off bac in 2007 like i said) and got 4 removed off EQ. 4 removed off Experian, and still waiting to hear back for my final investigation from Transunion.

I am going to let all my cards age at the moment for the next 2 years, not apply for credit until my last baddie falls off in MAY 2015 which will leave me with 5 months left on my car loan, 2 years or open accounts that have aged, and a bunch of INQ that will fall off (the INQ wont hurt your fico score after a year).

My advice, start with a SINGLE secured card, i recommend MERRICK because they give you credit line increases unlike CAP1 who is stingy, and DO NOT go with the FIRST PREMIER card, my understanding from what i have read is AMERICAN EXPRESS dispises that card and anyone that holds it. Chase also wont give that card any considreration.

Try opening up a fingerhut account. That's your best option after a secured card. It does help you paid off your account collections, however i would have told you never to pay on them and if you were going to, i would have had them send a PFD letter first to make sure they keep good on their word. PAID IN FULL is better than ACCOUNT SETTLED because it shows u paid the whole balance and not just a portion of it.

[USF813]

You'll never know until you ask! Do you have a credit union available to join? Also, do your parents have a credit card they could add you as an authorized user?

[sghosh5]

I think first progress gives a secured credit card regardless of any poor scores. You got pay off your collections/derogatory accounts though. First Progress is doing great for me so far. Reporting to all 3 credit bureaus every month. I have improved my scores a lot in last 4 months. Already got 2 unsecured credit cards from Cap One of 500 each. Not much but something to start with. 

[CreekNative]

An idea is a secured credit card, not a check card. I opened one with B of A and it converted into a regular credit card after a year of use. I didn't max it out, I used about 30% of it and paid it in full each month. The same year I bought a mobile phone that required a deposit due to my credit history, I also paid this in-full monthly. 2 years later,

I get offers from AMEX and Discover on a regular basis, but I already have 3 credit cards from different banks. This strategy worked for me. Good luck.

[Anonymous]

Hey! Iconic! Don't give up when you first get going. Don't worry about those 7 yrs! I had a score of low 500's in May 2010. Today, my REAL score for a mortgage refinance is 809, 800, and 769!!! So, persistence is the key. Consistency. And, a plan. Set up auto-pays in your bank account to cover all payments you have. On time. Always. That's the first step. Make sure you have low-interest or no-interest cards...if you have any.

Then.... I disputed and disputed and disputed! Each objectionable item. One- by-one they disappeared. About 12-15 items! At one point, I hired an independent company to do it for me. It cost about $50 a month, and it made me FEEL encouraged. Meanwhile, I also worked on it myself (even though they tell you not to.) I also followed the steps that these other people are telling you to do. As the items come off, you will feel excited. The score will inch up. Then, it will JUMP up.

LOCK your credit by calling or emailing each bureau so that no hard inquiries can happen. My experience is that these affect the score much more than is reported.

You can do this. You've made the biggest step. The rest is an intriguing challenge. A game of wits. Remember, your value as a person is NOT measured by your credit score. I do believe it is a nice testimony of our personal integrity and responsibility as you build it...like a Lego house, one piece at a time.

Breathe and relax. Persistence and some good help will pay off. Start living very smartly and frugally. Listen to Clark Howard, Dave Ramsey and size Orman. Read Rich Dad, Poor Dad. You can become a Financial master. Go to older, successful people and ask them how they became financially secure.
Get their best advice and USE it.

Take this as a challenge...a wall to climb. Pay no attention to the 7yr thing.

Write again if you have more questions. : )

[Anonymous]

My husband and I were in the same position we got into a lot of credit card debt with a lot of charge offs. Before any of this happened we had perfect credit and then we found ourselves sitting in the 500's. The first thing I did was dispute all negative things on our credit reports. The creditors have 30 days to respond to the dispute if they don't then it has to come off of your credit report. In doing this we were able to get one thing negative showing wiped away from our credit report. Now you say well that was only one thing but it is one less negative on our report with that happening we started to see our score slowly climb back up. The other thing is always make sure you pay all of your bills on time from here on out. Have a budget calendar and write out on it what bills you are going to pay what week has helped us tremendously. The other thing we did is we did not get a secured credit card because I didn't feel comfortable with that. But through myfico I found the First Premier Credit Card that is for poor or good credit. You initially have to pay a 95.00 fee to get the card, But they report to the credit bureau every month. Which some cards do not do this and if they don't it doesn't help your credit. Make small purchases on it like gas or food something you have the money for and you would normally just pay cash. Then pay it off in a couple of days after being on there don't wait until or credit card statement comes in. My husband has had his card a little over a year and he went from high 500's to now high 600's almost to 700. For myself I got my card in December of 2012 and my credit is now mid 600's. Unfortunately circumstances happen people get sick or whatever and the last thing to get paid is the credit cards. Be proud of yourself that the debt is all paid off. It takes a while for your credit score to come back up but it will slowly over time. The hardest thing to do is to rebuild your credit but once you start seeing progress you get excited. I hope this helps

[apriestl]

I know how hard it is to try and recover from bad credit woes!  It is so easy to take a credit score down and much harder to build it!  My best advice is never give up!!  I am still working on getting out of the 500 club myself.  I also screwed up my credit young and had charge-offs galore and a couple judgments.  It has been almost 7 years and I am still in credit hell.  What took me two months to create has taken me almost a decade to fix.  I never filed bankruptcy.  I probably would have had my life back long ago if I had.  However, instead I just paid when I could to settle accounts AFTER each was validated.  Sometimes, they couldn't prove it so the debt was null.

As time goes on you are able to get things removed easier.  Do this by sending validation letters to each CA.  If they can't provide proof that you owe, they have to take it off your credit report.  I personally have had ZERO luck with GW letters.  I keep getting the same answer across the board "since the information we reported was accurate, we can't change it..  I haven't had much luck with PFD either though some have.  I guess it depends on the creditors you owe.

Capital One secured card is relatively easy to get.  Open Sky doesn't do a credit check so your score won't matter.  Either way, you have to get some positives reporting.

Goodluck!

[Anonymous]

Scores recover quickly from paying off those collections.  What you experienced is the recognition that the accounts are back currently active (they had the old charge-off dates as the most recent active date prior).  Therefore, they are currently paid charge-offs instead of old unpaid charge-offs.  Your score will recover from this and rise higher than they could have had you not paid them off, but it's discouraging in the interim.  To rebuild, though, you do have to have current, timely paid credit.  Do what the other writer suggested in getting a secured revolving account, but don't stop there.  You can't get a decent score unless you also have different types of credit.  You'll need an installment account, even if you have to get a co-signer.  If you own a car without debt, borrow against it for 12 or 24 months, put the loan money into the same bank as security for the loan, then add a little to it so that the bank can autodraft the money from your account for the monthly payments.  Voila! An installment loan with perfect credit.  Remain patient, though, because the new accounts will lower your score until they are not new and are shown to be paid on time for more than six month.  Good luck!