To clarify something -
Your delinquent loans were removed after rehab? Correct?
Did the new, clean loan tradelines begin reporting? If so, were they backdated properly to reflect the original loan open dates?
FICO scoring is not arbitrary, btw. Your score dropped due to changes in your profile; it's just a matter of figuring out why those changes caused a decrease in score. The good thing is that you no longer have those loan delinquencies and that, in and of itself, is of great benefit. Removal of derogs sometimes have negative scoring impacts generally due to age-related factors and/or scorecard segmentation; but the benefit of them being removed outweighs the decreased score in every way. Rebuilding should have a primary focus on reports being as clean as possible as opposed to being hyper-focused on scores -- higher scores will come with time.
@Anonymous wrote:
I’ve always maintained that credit scoring is completely arbitrary and made up. Despite that, I still try to play the stupid game so I can be more “credit worthy” to achieve my goals for myself and my family, and I have been working hard at it since my bankruptcy 2 years ago with positive results.
Today, however I received an alert that my credit score dropped 29 points. The only change to my file is that my student loans are now completely rehabbed and out of default. I am now automatically in loan deferment as I am a half time student (and full time Dad to my 5 month old and full tome employee).
It’s as if paying these accounts to a current status and removing delinquent accounts from my file is hurting me which makes absolutely zero sense.
This seems to be just another way that wealth is redistributed upward. Want to get a car, a home, or anything else that you need for your families livelihood? Better be paying interest to the lenders then.
Never mind the fact that all 3 of my cards are current on payments, my utilization is improving, and every day my BK is further in the rear view mirror. Screw that hard work and let’s penalize this guy for not being more profitable.
All venting aside, my primary intent behind this this thread is to seek advice. How can I turn this around if I’m being penalized for doing the right things?
I know that my utilization is my biggest problem. My fiancée and I are still reeling from our sons NICU stay in August and I refuse to touch our contingency savings to improve that right away. That would use roughly 25% of our safety net which is a terrifying prospect for a new family with an infant.
Savings is liquid and guaranteed to be there if anything happens, as where I can pay my credit cards in full today and then immediately have my available credit taken away.
The plan at this time is to use my upcoming yearly short term incentive bonus to pay my credit cards off and pad my savings a bit more.
My numbers:
Experian 614
Equifax. 599
Transunion 619
Cards:
Credit One - $1,592 balance / $2,200 limit
Capital one - $0 balance / $750 limit
Merrick Bank. $1,017 balance/ $1,200 limit
Any advice would be much appreciated.
I can't speak on student loans at all or bankruptcies in detail but although your bankruptcy is aging it still has an impact. Time will heal that. Unfortunately derogs; lates, bankruptcy, collections, etc will hurt for a period of time, longer than most think it should. It's the penalty associated with the mistakes we make. If you can't get derogs removed than you'll have to wait it out or serve your time so to speak.
What you can do to improve your scores is reduce your utilization. Your overall or aggregate UTL is 63%. That's pretty high and aggregate weighs heavier than individual. You want to get this below 9%. But if all other things remain equal you would see a score increase once you get that below 49%. More once below 29% and the sweet spot is below 9%. Doing so will obviously also reduce your individual card utilization.
Credit One is at 73% and Merrick at 85%, high. The same thresholds apply to individual utilization and you would see some increase when crossing each.
<89%
<69%
<49%
<29%
<9%
Crossing each threshold on individual should result in an increase. That's the action you can take that will greatly help your scores. Everything else is time.
Yes, some see it as a game but if it is, it is one that must be played unless you can finance your life without involving lenders. Learning the "strategies" can help you win the game.
Good Luck.
To reverse that thinking a bit Trudy is right; effectively you are paying too much interest to score well though to be fair a BK is supposed to hurt.
If you have no other lates on your file then you probably switched scorecards and that plus open loans going into deferment is probably another penalty if those were your only ones.
I don’t agree with keeping a big safety net when one is paying 20% interest: those cards listed aren’t going to take themselves away their fee structure keeps them open even if you aren’t using them and personally I use my cards when the poop hits the air circulation device anyway though again trying to be fair my financial risk assessment probably comes out to a /shrug with no dependents and good if sporadic income.
Anyway there is always a cause and effect when it comes to credit scoring: your recent changes, higher revolving debt, not being able to pay your loan obligations hence deferment (what they see, your own personal reasons don’t matter it’s just the data that is looked at) and you now look like a somewhat worse risk hence the score drop.
End of the day finances > FICO so do whatever it takes to keep you where you need to be financially and don’t worry about the score side of it.
If you have no other lates on your file then you probably switched scorecards and that plus open loans going into deferment is probably another penalty if those were your only ones.
I don’t agree with keeping a big safety net when one is paying 20% interest: those cards listed aren’t going to take themselves away their fee structure keeps them open even if you aren’t using them and personally I use my cards when the poop hits the air circulation device anyway though again trying to be fair my financial risk assessment probably comes out to a /shrug with no dependents and good if sporadic income.
Anyway there is always a cause and effect when it comes to credit scoring: your recent changes, higher revolving debt, not being able to pay your loan obligations hence deferment (what they see, your own personal reasons don’t matter it’s just the data that is looked at) and you now look like a somewhat worse risk hence the score drop.
End of the day finances > FICO so do whatever it takes to keep you where you need to be financially and don’t worry about the score side of it.
@Anonymous wrote:
Savings is liquid and guaranteed to be there if anything happens, as where I can pay my credit cards in full today and then immediately have my available credit taken away.
You are renting money at a high interest rate. And even if you just make the minimum (or so) payments on your credit cards, you can still be balance chased and have that credit taken away.
