Credit Card History Affecting my Credit Score

[Anonymous]

So I've been reading threads on MyFico for a while, as well as a few articles and just learning over the course of my own credit improvement journey in an effort to better understand what causes a FICO score to rise or drop. I believe I have a good understanding of the basics. But I have a couple cards in my history that I was curious whether they are hurting or helping my score.

When I was in college I was offered a student card with a $300 CL when I opened my student checking account. I'm not proud of this, but I immediately went to the mall, maxed the card out and threw it in the trash after leaving the last store. I don't know what I was thinking when I did this but I basically forgot about it after that. The creditors finally caught up to me a year later and I paid was what owed(about $590 by then.) The card was opened in March of 2010 and according to CreditKarma, it was closed on August 1st, 2018(I couldn't verify this from any other source, Experian and TU don't show a date closed on their credit monitoring sites for some reason.)

Now I can assume based on the history that this card reflects negatively on my account. It is set to be 7 years since the date closed next month and I was curious, would a card that old have any real effect on my credit score or will I not see any real change when it falls off given its age?

My 2nd card is much more recent. I signed up for a Credit One account just under 4 years ago in an effort to rebuild my credit. For the most part I thought I did okay but I had 3 late payments early on(two 30-59 days late, one 60-89 days late) as well as a 4th late payment last year when I switched banks and forgot to switch my bill-pay(91.11%[41/45] On-Time Payments.) This account was just recently closed in good standing to save money on the fees since I have gotten better cards with better perks and no AF. Do you think this account would have a net positive or negative effect on my score, or is it not that simple?

I appreciate any insight as I try to better understand what is contributing to my score.

[Trudy]

There are several Guru's and I hope they chime in and may be able to provide specifics. 

Generally, your late payments will impact you for 7 years as you know.  From what I've read in forums 30 days may have no affect after 1 year but 60 days can impact longer (not sure how long) and 90 days the full 7 years and a major point impact.  The 7 years is not related to date closed or even account standings but date of deliquency reported. Sounds like your student card may have exceeded  7 years based on the March 2010 open date and your statement of "immediately went to mall" and  "..a year later...I paid"???.

If the account was turned over to collections that's a different issue for which I couldn't comment.  Good luck on your journey.

[JBJBJB1]

Hi:

There is so little information there. Car payments, mortgage payments, and student loans also affect your score.  Also, Credit Karma is not a reliable credit score, as most lenders don't use them.  The calculation is different.  You may have a much lower "real" score on FICO.    Note also, usually banks use a different scoring method altogether when they are financing someone.  For instance, they take income into consideration, which is not used by MyFICO or Credit Karma.

Closing accounts does hurt your credit history (age of accounts). I have an old,  crappy capital one card I keep open (2010), but I simply make one charge every month or so, and pay it off immediately in the app so it keeps reporting..  

90 day late payments are the kiss of death, 60 are pretty bad too, however, as these age, they will start to lose effect.  As such, you may be stuck in the high 600's for a while.   I have some late payments too, but after about a year and a half I was able to inch into the 700-720 range. 

When your late payments fall off, that should help. 

When my home depot card (closed 2010, paid charge off after collection), fell off of my credit report, I had a temporary drop of 10 points and 4.  After a month, my Trans Union, which was 659 leapt up 71 points, while my other scores in the low 700's rebounded from thier minimum drop. 

My recommendation:

Check MyFICO to get your real score so you can see what you are dealing with

Keep paying stuff on time - make a goal for one year of no late payments, then two years of no late payments

Use the "AZEO" method - all zero except one card, which ideally should be under 10%.

If you have higher utilizations on your CC's, see if you can get your available credt increased to lower the utilizations (without a hard pull)  Capital one is an easy one to increase after 5 months of on time payments

Don't close any accounts

Don't open any more CC's unless absolutely necessary

Get the app for your CC's on your phone so you can pay in "real time" when you charge something

Keep using your cards so they will not close on you and so they will keep reporting to the credit bureaus

[Anonymous]

Thank you both for your insight. I realize CK is not a good source for credit information. I typically use the credit monitoring provided directly by Experian and Transunion, but they don't show a date closed for that account for some reason. I know the only real way to know the exact information on my CR is to pull the actual report, but my credit profile has been rather fluid the last couple years that I have found it best to bank those pulls in case something really unexpected pops up and I can look in to it.

I had a feeling the answer would be that it is much more complicated than I'd like it to be and it appears that is the case. I'm almost wondering if I should dispute the CC account from 2010 on the basis that it is likely at or over 7 years from the date of last activity. I know I paid the balance in late July/early August of 2011. So if it isn't 7 years old then it will be next month. 

I appreciate the tips. I do stick to AZEO for the most part. Last month my utilization was 1%($14/$2600) and I'll likely let it report similar results going forward. One interesting thing mentioned was that a 90-day late payment is the kiss of death. Well, since I never made a single payment on the CC from 2010, I'm guessing there were quite a few 90-day+ lates in there before that finally charged off the account. I may have to pull a report to find out.

I'm guessing that one 60+ day late from 2015 is gonna haunt me for a while. Hypothetically(And I know there are other factors involved in this such as AAoA, Inqs, Etc.), in a scenario where you have a few late payments, I wonder if it would almost be beneficial to add a few cards to sort of drown out the late payments with on-time ones to boost the average. I'm not likely going to app for any more cards until 2019, but I almost wonder if I would have benefitted by doing that a couple years ago when my AAoA was almost 0.

[Anonymous]

There are really only two classifications of payment history.  "Perfect" and "Poor."  Missing just 1 payment takes you away from perfect and throws you in the poor category.  It's really all or nothing when it comes to payment history.  A lone 30 day late payment may be an exception, as a dirty scorecard may not be assigned for a single minor infraction.  When you're talking 60+ days late and multiple lates, that's poor payment history.

CK fluff software will have you believe from showing you percentages of on-time payments that a number like 99% is fantastic.  It doesn't matter if it's 99% on-time payments, 90%, 70%, etc.  Anything not 100% is bad.  95% is no better than 85% in terms of scoring.  If you have a late payment from 2015, it's impact will go away in 2022. 

You may want to hit up the rebuilding forum and check out GW campaigns, as it is possible to get negative items removed early by asking.

As for your credit cards, it sounds like your record is 0-2 in terms of managing them properly.  I'd suggest stepping back and taking a look at that and determining if credit cards are the right thing for you.  Unless you are able to pay for something in cash today, you shouldn't be putting it on a CC.  Doing so is risky and can get you in trouble.  Unless you're comfortable setting up autopay for your full statement balance on your CC(s), my advice would honestly be to stay away from them all together.

[JBJBJB1]

Indeed, your late payment should only report up to 7 years and 6 months from the last 30 day late payment.  if it is still reporting you should challenge it.

My home depot card reported chargeoffs for like 4 years after I had already paid it off - JERKS. 

Your 1% on one credit card is likely too low. Try, say 6% and see if it goes up a bit (on one of your lower balance cards).  

One 60 day late won't kill you, but if there are other late payments reported it compounds it.  It will impede you from going to the "next level" 740+ for a bit.  But low 700's is doable sooner.

Also, note that, if your FICO score is 686, if you wait a year and make payments on time, you will likely hit the low 700's anyway - so maybe you should just wait it out.   686 isn't "bad", it is average or slighly above average.  You are doing just fine!  

I think you should get a one month perscription to My FICO and look at your credit score an profile there. 

When I finally decided to be a grown up and pay attention to my credit, joining My FICO was by far the most instructive. 

CK is nonsense.  

I agree with the above person in that you should not open any more credit cards.  THE BEST GOOD CREDIT RECIPE IS TIME!

[Anonymous]

I appreciate the information. I mistakenly thought payment history was calculated as a percentage. I'm curious why it's sometimes seems rather difficult to get accurate info on what your REAL scores are and how they're calculated.

Regarding my credit card history, I realize I didn't provide the full picture. I have 4 credit cards, not including the ones I have closed. Both cards I'm referring to have been closed and one is from 7 years ago. I would agree that in my early 20's I shouldn't have had credit cards. But since 2015, between 6 cards I have had one missed payment. It was on my CreditOne card which didn't have an auto-pay function. It was the only bill I paid through billpay when I switched banks and therefore forgot the auto pay wouldn't go through. Lesson learned. All cards are set to auto pay except one which I purposely allow to carry a small(usually $15-$20) balance for the AZEO method I've been advised to use. My utilization month-to-month stays around 1-3%.

I'm not saying I'm the most responsible credit card user in the world. Actually, I'd say I'm not really a credit card user at all. I have them to establish history. Most of my charges go on my debit card unless there's some obvious benefit to using the CC(bonus offers, miles, etc.) In which I usually then apply a payment to the CC equal to the charge.

My concern is that these late payments are gonna hold me back from getting good terms on my upcoming car leases and mortgage in 2019 and 2020. So I'm trying to better understand how these scores are composed in an effort to maximize my scores when I need them for the things that really matter.

I've tried the Goodwill adjustment route a couple times with no luck. It seems these letters being successful is more the exception than the rule. Maybe I need to revisit them. But I've found more success obtaining lines of credit(CC's, Installment Loans, etc.) and using the advice from these forums to manage them properly. Doing that, along with allowing some of my prior bad history to fall off has seemed to be the right formula so far. I've seen a 100+ point boost in the last year and a half going this route. My suspicion is that my scores will plateau going forward and based on the responses I've received, it appears that is more of a probability than a possibility. But I'll keep at it and maybe I'll be surprised.

[Anonymous]

Thanks. I keep saying I'm going to sign up for the actual MyFico credit monitoring but then convince myself the free services are just fine. I'm beginning to learn the error of my ways.

[Anonymous]

Some people like myFICO a whole lot.  Other people (like me, BBS, etc.) are happy to get FICO scores through free or ultra low cost tools.  There is no single right answer.

[Anonymous]

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@Anonymous
I appreciate the information. I mistakenly thought payment history was calculated as a percentage. I'm curious why it's sometimes seems rather difficult to get accurate info on what your REAL scores are and how they're calculated.

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All scores are real, even those from the VS 3.0 model.  By "real" I imagine you're just referring to genuine FICO scores.  They aren't all that hard to come by; a large number of lenders now provide them with their products.  There are also some places you can go to for free FICO scores as well as really low cost sources like $1 Credit Check Total trial memberships.