Need advice on how to help my score

[Chris679]

I have 3 CCs and one line of credit on my checking account all are 0 balance, 20 months old.  Also, my car loan is 16 months old with $8500 left at 9.75% apr.  I have 4 negative items (all paid) from 6-7 years ago that I am in the process of disputing, if not they will be off by next summer.  All current accounts have perfect payment history.  My current scores are 650-700 range.  I have a couple of questions if anyone can help: 

1. If I refinance my car loan to get a lower interest rate, will it be considered a new account and hurt my already low AAoA?

2. Since all of my accounts are so new anyway, would it be OK for me to just bite the bullet and open some accounts that will help later on?

3. Would opening a charge-type account help me by having different account-types or is my line of credit doing that already?

4. What would be a good charge account to open?

5. How old does an account have to be before the scoring stops counting it as new?

It has taken me two years to get out of the world of "bad" credit and into the realm of "OK" credit.  Now up on the horizon is see something up ahead...what could be?  I can't believe my eyes, I think it's "good" credit!

Thanks,

Chris

[Jazzzy]

Hi Chris, and welcome to the forums. I'll take a stab at your questions.

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@Chris679 wrote:

I have 3 CCs and one line of credit on my checking account all are 0 balance, 20 months old.  Also, my car loan is 16 months old with $8500 left at 9.75% apr.  I have 4 negative items (all paid) from 6-7 years ago that I am in the process of disputing, if not they will be off by next summer.  All current accounts have perfect payment history.  My current scores are 650-700 range.  I have a couple of questions if anyone can help: 

1. If I refinance my car loan to get a lower interest rate, will it be considered a new account and hurt my already low AAoA? Yes...but if it gives you a lower interest rate, it's worth it. Don't let your FICO score cost you money by keeping a loan that you could refinance at a lower rate.

2. Since all of my accounts are so new anyway, would it be OK for me to just bite the bullet and open some accounts that will help later on? I certainly think so. Everyone is so afraid to lower their average age, yet, it's those accounts that will eventually give you a good, strong history. The only caution I would give is to do your car refinance first, then add tradelines and let them age. Also, wait until you see how far you get in your credit repair. There is no rush to apply for new cards right now, so...when you do...make sure your reports are as clear as possible.

3. Would opening a charge-type account help me by having different account-types or is my line of credit doing that already? I haven't seen evidence that having a charge card helps your FICO scores.

4. What would be a good charge account to open? I don't have one, but for me it would be AmEx.

5. How old does an account have to be before the scoring stops counting it as new? My understanding is that FICO doesn't consider it as new after 1 year. I believe it starts hurting your score less after 6 months.

It has taken me two years to get out of the world of "bad" credit and into the realm of "OK" credit.  Now up on the horizon is see something up ahead...what could be?  I can't believe my eyes, I think it's "good" credit! Sounds as if you are working hard to make this happen. For the derogatory accounts that stay on your reports, start writing them goodwill (GW) letters. Read about them, especially in the Rebuilding Your Credit forum.

Thanks,

Chris

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[Chris679]

Goodwill letters to the creditors themselves?

Also, excellent point on question 1.  I think it's easy to forget that the whole point of doing all of this is to save yourself money on interest rates or be able to get credit in the first place.

My plan is to take care of the negative items, then refinance and open up one or two cards that are better than my current high rate/low reward cards.  At that point I'll sit back and wait for everything to settle down. Another year from now or so I should be set up nicely for a house loan, another car loan (Mustang!) or both.

Thanks,

Chris

[tbone74]

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@Chris679 wrote:

Goodwill letters to the creditors themselves?

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Yes, to the creditors / CA themselves.  Whom ever is listed on your CR...  unless they're a Medical collection...then there's a whole other avenue (search HIPAA) depending on if the Medical collection was paid or not.  I researched the company and started writing GW letters directed to the CEO / President.  I'm not sure this is the most beneficial person the address them to, only time will tell.  

[smallfry]

Have you checked to see how much you can save if you knock off 2-4% off that car loan? Not much I would think but check it out. As for how long "new" accounts hurt 24-30 months. It won't cost you many points but I think amount of new credit goes from very good to great somewhere between 2-3 years with no new accounts. What do your reports say about that? I think you're doing fine and once those negatives drop you should be in the low to mid 700's no problem so long as you do not decrease your AAofA. You want to get to 3 years minimum and adding new accounts you will stall that process.