Rebuilding credit

[zooyork]

I have a couple questions in regard to building my credit moving forward. First, I would like to give you a background on my good credit.

Currently, I have two credit cards:

1.) First Premier:$350 limit - owned for 2 years. Perfect payment history.

2.) Capital One:$500 limit - owned for 1 year. Perfect payment history.

Last week, I did something a bit stupid and applied for financing through Citi Financial at a furniture store. I was approved for $6,500 and I assume the card is on it's way.

I rarely use either credit card and try to maintain a 30% or less balance on each.

In 2006, I decided to buy a house on contract. I don't know if I got extremely lucky or shot myself in the foot by doing this. The lucky part is that I only pay a fixed 6% interest and had to pay a small down payment. The bad part is this account is not being reported to any CRA's by our third party firm.

Finally, during the process of buying the house I started a relationship with a local credit union. I switched my auto loan over and also took out a $1500

unsecured loan that a family friend co-signed on. The loan has since been paid off.

So to summarize, my current credit consists of 2 credit cards and an auto loan. My TC report says I could improve by having more "revolving debt experience".

I am not sure what to do? How do I go about obtaining more revolving debt? Is there any way I can get the firm to which I make house payments to report this credit history?

Here are my current FAKO(?) scores: TU 644, EX 570, EQ 571

Thanks in advance for any advice on this matter!

[MaxedOut]

Would need to know if you have negative credit history at all or is it all positive? I am assuming there are a few negs in there as the fakos would be much higher if not. Can you give us a background on what kind of negatives are showing?

[zooyork]

Hi MaxedOut - Thanks for replying! I do have current collection accounts on my credit report and they are as follows:

NCO-FIN/NA on behalf of Direct TV - $204

NCO-MedClr on behalf of hospital - $220

AAC on behalf of SWBell $337

FCO on behalf apartment complex - $703

FCO on behalf apartment complex - $553

GMAC charge off - $6593

I dont have any documentation for my collection accounts and plan to call the CRA's this week to get the DOFD and/or account details if possible. Most of the debt occurred in 2000-2003 in Texas but I now live in Kansas.

Does this help? Let me know if you need more information. Thanks!

[MaxedOut]

Taking care of those collection accounts would be the best thing to do. My girlfriends score went up like crazy after getting her 1 and only collection account removed (see my signature). Once you get those removed, you should be in great shape. The current accounts you have are just fine to build credit while you are dealing with the collections and the limits will most likely increase once your score gets better. Even if they do not, at least you would qualify for better quality credit cards due to a much cleaner report.

As far as getting the home loan reported, I am not sure about that.Perhaps someone else can touch on that. Maybe once you get the collections taken care of you can look into refinancing with a company you know will report?

[Ravenous Wolf]

Finally, during the process of buying the house I started a relationship with a local credit union.

Try building relationships with as many credit unions as you can... Now that you are building a good record and actually have a history to prove it, you don't need those bad credit card outfits that will give you the big chorizo the first chance they get...

Credit unions ought to be the places to cultivate relationships with now that you are getting on your own two feet...

This web site will show you all the credit unions in your immediate area...

www.creditunionaccess.com

At one time I had memberships with five credit unions and I had some great terms for loans and credit cards...

[Magdalen77]

At one time I had memberships with five credit unions and I had some great terms for loans and credit cards...

Did you have accounts with serious money in them at all of them?? The reason I'm asking is that I just joined my employee CU and it has a great MM account that you only need $500 in to get 3.9-4.0%. The other two that I'd be eligible for based on my area don't have such great rates for such a low balance, so I'd basically be putting money in accounts only earning like 1%. Still better than my local bank which offers 0.30%, but it kind of makes me grumpy to earn 1% when I could earn 4. Then again, if you found it effective in getting great rates for loans and credit cards, it might be worth losing the interest on a couple hundred dollars.

You're the experienced one with this. What's your thoughts???

[Ravenous Wolf]

At the time I wasn't a prime customer and nor did I have much in spare cash... All of my credit scores were in the low 600's... And I wasn't aware of any of great deals...

But I did get credit cards for a single digit interest rates and I got excellent rates for installment loans...

My biggest mistake was that I should have closed out the department store cards that were bending me over with their high interest... I always had them maxed out because as soon as I began making several payments, I would then max out the available credit...

[Magdalen77]

At the time I wasn't a prime customer and nor did I have much in spare cash... All of my credit scores were in the low 600's... And I wasn't aware of any of great deals...

But I did get credit cards for a single digit interest rates and I got excellent rates for installment loans...

My biggest mistake was that I should have closed out the department store cards that were bending me over with their high interest... I always had them maxed out because as soon as I began making several payments, I would then max out the available credit...

That's what all these CU's have going for them 9.9% or lower interest rates, no over-limit fees, no late fees or other screw you stuff that other credit card companies get you for. Their interest rates for loans for even used cards are like 5-6%. All pretty good deals. I need to think about this. I also need not to have my money is so many places that I forget (more likely than you know with me).

[Stylingal]

1. Definitely take care of the baddies.

2. In the meantime, I would add Crown Jewelers to your report - buy something for approx $60 (gives you 3 mth reporting) and 6 months after it's paid off, buy something else again $25 this time (or cl may decrease to $500).

3. I would also apply for Kay Jewelers, Jarod & JR - search the forums to understand how the 3 work, and if you'll be approved. You only have to use 1 of the cards every 2 yrs to keep them reporting - Once again I would recc buying something inexpensive for approx $60 to "create" some payment history. Then buy someone a gift card at xmas time to create some more history.

4. You could also apply the same strategies above to the furniture card, tho I don't know if you can find something for under $100...

That should give you 4 additional credit lines, not including the furniture card. Once the "baddies" are off, your score will raise nicely, plus you'll have 5 additional TL's that can sit and just age nicely. With your new score, check out what credit cards you'll be eligible for and apply. I'd look into cards that can be converted easily by the providers such as Chase, Citi and Amex Delta. Once you get your credit cards, close your Crown Jewelers acct (unless you want to keep spending $25+ every 7-9 months).

Whatever decisions you make, try to think "long term" as you'll want to keep most of these new TL's open for years to come, as the positive reporting and acct history will enrich your overall profile.

Tip: Try to have your current and future cards consistently report a balance of 1-9% monthly. You can spend up to the full limits, but make sure balance is paid down to less than 10% before mthly report.

HTH