Fixing my credit and improving my score

[Donnyten]

Hello people. 

I'm looking to improve my credit. I'm 31 years of age and made a few bad choices when I turned 18. I was approved for a capital one and chase Bank credit card, both went unpaid and ended up in collections. I was younger and had a different name but was changed years ago.

 

As of today there are two items on my credit report. however I cannot see the past collections from those credit cards on my report. I'm not sure why they are not listed and whether or not they still affect me. Could anyone provide insight as to what's going on with that? Could it have been due to my name being changed?

When I apply for certain things say for financing an automobile, they report that I have no credit history. I am not really sure what that means and would like some insight one that as well.

I also read that if someone as me as an authorized user to their credit within a month or so that can help improve my score as well. If anyone has information as to whether or not this is true please let me know.

 

Thanks

[Clydesmom]

You need to order hard copies of all 3 credit reports directly from the bureaus and see exactly what is being reported, by whom and how.  

Your post is too vague to opine about what could be going on.

[Goody_Ouchless]

2 hours ago, Donnyten said:

Could it have been due to my name being changed?

When I apply for certain things say for financing an automobile, they report that I have no credit history.

Possibly name change - did it involve anything more "complicated" like SSN change? I ask because I knew a guy who tried to get a new identity.

Otherwise best bet is to get whatever credit card you can (Credit One got us on road to recovery with a card with $300 limit), use it and pay it off each month. That will start to establish a current credit history.

[Harry Seaward]

6 hours ago, Donnyten said:

I'm looking to improve my credit. I'm 31 years of age and made a few bad choices when I turned 18.

Negative info can remain on your report for no more than 7 years. If these accounts went to collections more than 7 years ago, that's why they aren't showing on your reports. And if you never had any other credit, this is why you are being told you have no credit history. 

Authorized User accounts are a good way to establish credit history and most credit card companies (Cap1, Chase, Synchrony and Discover for sure) report authorized users to the credit bureaus, but the credit bureaus have tightened up their guidelines for inserting authorized user accounts in credit reports. Basically you should share the same last name and address of the person adding you to their account. Otherwise the CRAs may not report the AU account.

Opening a secured card is a great way to start building your history without getting nailed with high interest and a bunch of fees. Most banks and credit unions offer secured cards.

And then there's the option of having someone cosign on a loan with you. 

 

[Coach Kim]

I agree with Harry. Your old collections are obsolete as well as any closed accounts over 7 years old. 

I always recommend when people are looking to clean up their credit to file a validation of name and address letter (which I give a template to my clients) before starting any disputes.

Your main focus now needs to be on building good credit. Unfortunately, you have to have credit in order to get more credit...so where do you start? As mentioned above, start with store credit as it is easiest to obtain. Since "Types of Credit" is a factor, you can get an installment loan by borrowing against money secured in a savings account but make sure the institution reports to the bureaus. My company also has secured credit cards available for as low as a $200 security. Although, if you use it...only use 10% of the amount allowed. That's not a lot but it's a start. 

This is my first day on this forum and I don't know what is allowed so reach out to me if you would like additional information and I'm happy to help!

[Harry Seaward]

3 hours ago, Coach Kim said:

Although, if you use it...only use 10% of the amount allowed.

You can use as much of the limit as you want without affecting your score, as long as the balance that is reported to the bureaus is around 10%.  And the only time the balance actually matters is when you're getting ready to apply for new credit.  That's when you want the balance that reports to the bureaus to be around 10%.  The way I do this is I have a credit monitoring service that shows me the day each account is updated (each account will likely update on different dates throughout the month).  I'm now in the habit of synchronizing my bill paying to coincide with 2 days before the update date.

[Donnyten]

Thanks for all the help.  Re:  name change- only the name was changed but not the SSN.

I managed to get a copy of my credit report for free and see two collections listed. Needless to say I need to pay them off and plan to negotiate with the two for something I can afford. So, when the two are paid off how long will it take for them to be taken off my report, or shown to have a zero balance/ paid off ? and will this even improve my score or keep it stagnant until I start building credit?

I now bank with bank of america so I'll see if they can offer a secured credit card. Question about building score with the card.  Say They gave me a card with 300 bucks limit.  Do I buy something worth 300 bux then pay it off immediately? or do I pay it off over time ? ( make monthly payments). 

Unfortunately No one will cosign me. I'll look more into the authorized user thing

[Harry Seaward]

6 hours ago, Donnyten said:

I managed to get a copy of my credit report for free and see two collections listed. Needless to say I need to pay them off and plan to negotiate with the two for something I can afford. So, when the two are paid off how long will it take for them to be taken off my report, or shown to have a zero balance/ paid off ? and will this even improve my score or keep it stagnant until I start building credit?

Unfortunately a collection is a collection. FICO scores collections based on the last time they were updated. The only advantage to a paid collection is the CA usually stops updating which will let your score improve over time. Unpaid collections are usually updated monthly so they keep your score from recovering. Before paying anything I would try really hard to get them to agree to remove the account from your reports in exchange for payment. They will probably not do this and almost certainly won't for anything less than 100% of the amount owed, so just be prepared for that. 

6 hours ago, Donnyten said:

I now bank with bank of america so I'll see if they can offer a secured credit card. Question about building score with the card.  Say They gave me a card with 300 bucks limit.  Do I buy something worth 300 bux then pay it off immediately? or do I pay it off over time ? ( make monthly payments).

What you're talking about with making payments over time is only good for installment loans (cars, house, etc).

The way credit cards work is you pay no interest on any amounts paid by the due date, so ideally you want to pay off everything you charged during the billing cycle (known as Pay In Full or PIF). And, as I said before, you want your lowest balance to be what gets reported, so figure out when the creditor reports and PIF just before that date, or the due date, which ever is earlier. 

Speaking of BofA, they used to have a 99/300 card. You would put up $99 and they would give a card with a $300 limit. IIRC, after 6 months or so of good payment history, they would increase the credit limit to $500 or $1,000 and refund/credit the $99 back to you. I would see if they still have that program. After a year of using that card and no additional derogatory accounts,  you should have no problem getting a no fee Cap1 card or a store card like Best Buy or Target with a $2,000-$3,000 limit. After another year, the sky is the limit, especially if your collections fall off during that time. 

 

[Donnyten]

I wish i would have known beforehand: re:paying a collection, that I needed to get in writing an agreement to remove the debt from my history. I say this because I felt the urge to settle one of two major debts on my report today, for half the amount owed, when I asked the rep if it would be taken off my report, she said " I think so, yes". SMH. In retrospect that was not good enough and I hope I didn't waste my time and money settling that debt if it will just stay on my report.

 

I also felt the urge to attempt to settle with Chase bank, and capitol one, two cards I screwed myself over with many years ago.  Is this a good idea though they are no longer on my report? or Is it a waste of time?

[Harry Seaward]

10 hours ago, Donnyten said:

I wish i would have known beforehand: re:paying a collection, that I needed to get in writing an agreement to remove the debt from my history. I say this because I felt the urge to settle one of two major debts on my report today, for half the amount owed, when I asked the rep if it would be taken off my report, she said " I think so, yes". SMH. In retrospect that was not good enough and I hope I didn't waste my time and money settling that debt if it will just stay on my report.

I wouldn't lose any sleep over it.  For 50%, they definitely wouldn't have agreed to delete the account.  (The rep was 'mistaken' in telling you the account will be deleted.)  And you can now use the other 50% to negotiate with another CA or creditor.

As I said before, though, they will update the account once more to report the last payment and $0 owed, and then not update it anymore, so it will finally start to age.  You might get lucky in a year or two and it will get deleted on its own or following a dispute by you.

How old are the collections that show on your report?  If they are close to the 7 year mark you might just let the other one be and let it fall off when 7 years rolls around.

 

10 hours ago, Donnyten said:

I also felt the urge to attempt to settle with Chase bank, and capitol one, two cards I screwed myself over with many years ago.  Is this a good idea though they are no longer on my report? or Is it a waste of time?

If these debts are beyond the SOL for reporting (7+ years ago), there is no credit score advantage to paying them.  They cannot show up ever again, even if they are sold/assigned to a different collection agency.  If you have a conscience and want to make good on your debts, or otherwise wish to get back into the good graces of Chase and Cap1, that's an entirely different story.

Just FYI, Cap1 is THE most forgiving creditor.  They will green-light you for the $300 limit no fee "Platinum" card 7 years after you defaulted on your last Cap1 card, whether you paid them back or not.  Cap1 is also good about regular credit limit increases as long as you never pay late and never go over your limit.

[fisthardcheese]

If something is not on your credit report, it does not exist as far as creditors are concerned.  You really need to know the SOL for credit card debt before you go doing something that would restart that clock, which has likely expired by now.

[Harry Seaward]

16 minutes ago, fisthardcheese said:

You really need to know the SOL for credit card debt before you go doing something that would restart that clock, which has likely expired by now.

Great point!  Be very careful when negotiating for less than the full amount owed.  If you make a partial payment or, in some cases, even acknowledge that you owe the debt, you could restart the collection SOL.  (The reporting SOL can never be restarted, however.)

[Donnyten]

Thanks. 

I paid the major collection on my report, the other one was just a $50 charge so I took care of that as well.

I paid a visit to Bank of America and got a secured credit card that I can use to build my credit with. They no longer had the 99/300 option available to me. With that said I had a question about utilization. The guy I spoke with told me the amount and cost of the purchases is irrelevant as long as you are paying in full and on time. That will help build a positive credit score over time. I'd like more opinions on this if possible. do I make small consecutive purchases and pay in full on time? A couple huge purchases? max out the card? Keep a certain amount on the card at all times? Also what if let's say I lost my job and didn't want to use the credit card just in case I wasn't able to make a payment  for a purchase . Will that negatively impact  my score  and history ? The guy said as long as I don't close the card I would be okay if that were to happen .Also would it help to apply for another secured card as well? This time I plan on being highly responsible since my goal is to build and maintain a positive score and history.. aside from loans what else can I do to improve my score and build a positive history? 

 

A few years back I did in-house financing for an automobile that has been paid off. I wasn't given a loan or anything but was able to make payments. This was not reported to any Bureau. Is it possible to potentially get the auto place to forward the information to the bureaus?

I considered paying the charged-off accounts just to be in good hands in case I really need their assistance in the future and also to be in good faith. 

Just trying to tie up some loose ends so I'm not indebted to anybody

[Harry Seaward]

What you use the card for is irrelevant as far as your credit score is concerned. Really, you could never use the card and just keep it at a $0 balance and get the same credit building effect.  I suggest people that are rebuilding pick one expense they have every month, like a water bill or gas for their car,  and shift that expense to the new card.  That way your monthly budget stays the same because you're not incurring additional monthly expenses you wouldn't normally have, and you get in the habit of using and paying credit cards. 

Congrats on the new credit! Give it 6 or 8 months and then try for an unsecured Cap1 Platinum.

[fisthardcheese]

I agree with Harry.  Just don't bother using the card, really.  Anything you may use it for should be paid back to $0 by the due date.  So being at $0 is all that matters.  Easy to keep it at $0 if it is never used.

Again, I would never pay off anything beyond the statute of limitations.  If it is OOS, then you are no longer indebted to them.  Stop worrying about those very old accounts.  If they are still on your credit reports and it has been at or beyond 7 years, then dispute them as being too old to report. They will be removed and your credit will improve by removing a balance owed.

Opening new accounts harms your credit score in the short term - but likely you won't notice it if you are starting in the toilet already.  If you want to open another secured card, that could help in 6 months if you continue to have a $0 balance.  The way to grow credit is to look at your balance owed on everything (anything showing an amount owed on your report) and compare that to the amount of credit you have available (your unused credit limits on your cards).  Getting a loan kills your debt to credit ratio because it will show a new debt (say $500) but your available credit is only the $300 limit on your secured card.  That puts you at 165% DtC ratio, when you want it to be under 10% for ideal credit.  So, I would not get any loans with the intent to build credit.  They don't work in the positive until they are fully paid off.

I also never worry about being in "bad standing" with a couple banks.  There are plenty of other banks that will take your money and issue credit cards to you once your credit is built back up.

[Harry Seaward]

40 minutes ago, fisthardcheese said:

If it is OOS, then you are no longer indebted to them.

 If it was a legitimate debt to begin with, you still owe the debt until it's paid. The only thing that changes is they cannot sue you if it's beyond the SOL.

44 minutes ago, fisthardcheese said:

Getting a loan kills your debt to credit ratio because it will show a new debt (say $500) but your available credit is only the $300 limit on your secured card.

I don't believe this is correct.  Utilization is 30% of your credit score. If installment loans were counted toward utilization, no one with a mortgage would have "good" credit until the last 7 or 8 years of a 30 year mortgage.

My score dropped about 10 points when I got a car loan. I figure 5 of that was the inquiry and the other 5 was the hit on my overall age. My score bounced back and then some within 6 months. 

59 minutes ago, fisthardcheese said:

I also never worry about being in "bad standing" with a couple banks.  There are plenty of other banks that will take your money and issue credit cards to you once your credit is built back up.

I think OP's motivation is karma or just doing "the right thing". Nothing wrong with that. 

[Donnyten]

Thanks for the replies again. Though it wouldn't have made a difference to my score or history ( im assuming) I went on ahead and contacted Chase and Cap 1, both which did not have any open accounts on file ( not new news), they referred me to the collection agencies that had my data.  Both agencies said the accounts fell off/ were no longer open and that I did not have any debts. So I guess that's that.... with that said, this may be a silly question but, restarting of SOL does not apply since I dont have accounts with the agencies correct?>

[Harry Seaward]

11 minutes ago, Donnyten said:

restarting of SOL does not apply since I dont have accounts with the agencies correct?

Correct. Go forth and prosper.

[Donnyten]

awesome

 

This may have been answered in one form or another, but would it be advantageous/ disadvantageous to me if I were to apply for another secured card?   does it look better to have multiple streams of credit open or does it not really matter? At this point I've paid off all of my debts so I guess all thats needed is time and wise spending. I dont plan on using that card for anything if I can manage unless its a dire emergency, whatever to build my credit at this point.... whatever can help accelerate the process as well as far as my score is concerned

[Harry Seaward]

The average age of your credit file is a part of your score. Say you have just one account for 2 years and then you open another one. At that point your average age will be 1 year. 

Now say you open 2 accounts now and then in 2 years open a third. Your average age at that point will be 1.5 years instead of just the 1 in the first scenario. 

Granted the actual credit score difference will probably only be 5 or 10 points between the two scenarios, but it is something.

The other thing that factors in is the mix of different types of accounts. The more variety between regular bank credit cards, store cards, car loans, mortgage, etc, the higher your score potential. To apply this to your situation, I would get a second secured card now and then in a year or so get a store or gas card. Then in another year get a car loan or buy a house if your budget permits. 

[Donnyten]

Good to know.  

 

Good news also, those two collections that were paid off have been removed from all three bureaus. Score increased by 30 points. Score is still extremely low in the mid 500s but its a start.

 

I also applied for another cap one secured card 1 week ago. I guess from here on out i'll need to be patient.

[Donnyten]

Wait a minute. A collection was taken off my transunion report and now transunion reports my score is 4. Wtf?

[Harry Seaward]

What all shows on each of your reports?  Where are you getting your "score" from?  If it's not directly from myfico.com (or a partner like Discover Card that gives your access to FICO), don't bother thinking what you're seeing has any meaning.

[fisthardcheese]

On 11/14/2017 at 2:24 PM, Harry Seaward said:

I don't believe this is correct.  Utilization is 30% of your credit score. If installment loans were counted toward utilization, no one with a mortgage would have "good" credit until the last 7 or 8 years of a 30 year mortgage.

I think you are correct.  There is no hit on usage for an installment loan like I was thinking.

On 11/24/2017 at 11:41 AM, Donnyten said:

Wait a minute. A collection was taken off my transunion report and now transunion reports my score is 4. Wtf?

It is likely because - as silly as this sounds - that collection account was giving you a better "length of credit" score because it was older.  Now that it is gone, your credit is all very new or non-existent yet.  As you clean credit by removing old bads and adding new goods, your score will be all over the place in the short term.  What matters now is basically at the 6-month and 1-year marks from now.  You should see some good improvement with stable, positive credit during that time.

[Donnyten]

39 minutes ago, MichelleDwurff said:

Hi, just wondering did you fin a way to improve your credit score?

Yes I did.  score started off in the mid 500s.  i settled all of my debts and requested collectors to take the stuff off my report,  also challenged everything on my report afterwards to help expedite the process. when this happened my score dropped to 4.  4???  i thought was so weird, but was because i no longer had anything on my report, no established credit and was basically like i was starting new again. first thing i did was get two secured credit cards, one through my bank ( bank of america), and one through capital one. the bank of america card has a 300 dollar limit and the capital one had a 200 dollar limit. your free to deposit as much as you want but thats how much i put on both cards.   

from here i made sure to use the card every month only spending at most max of about 10-15 bucks on each card, and paying off my balances a week before the end of each due date.   magically my score then jumped to around 650 ish i think.  i kept using the card, and each month my score would increase by 4 or 5 points.  not too bad. but hit a major roadblock when my car died on the road one day and needed a tow and did not have money for it.  i was forced to use nearly half of my capitol one card, 87 dollars for the tow, and did not make any payments before they reported to the buearu that i owed 87 dollars which, i suppose is bad because of debt to credit ratio? or credit utilization? ( dont know if these go hand in hand) so my score dropped by 10 points from 664 i think to 654, of course i panicked a bit.    but i paid off that entire balance in one felt swoop before my due date and to my surprised my credit score jumped by some odd +20 something points.   it was actually unbelievable.   then i guess bank of america reported to the bureau currently owed, which was around 10 bucks out of 300 dollar limit, and my score jumped again by another odd 5-10 points. i dont remember by how much exactly my score dropped, and was raised again but thats a close enough approximation and now my score is 700. I'm very thankful of this forum and through patience and due diligence my score continues to raise each month.    by the way, not only did my score jump by 20+ points after paying the 87 buck capitol one balance, but they also increased my credit limit by 200 bucks. so now my capitol one limit is 500 dollars

i think the keys are to, pay off any debt that you have FIRST, if you cant pay it in full, settle, and negotiate the settlement further with debt collectors, get it in writing as this is very important that they will remove the negative remarks from your credit report. I would do this first with physical money that you have rather than getting a credit card and using that money to pay off debt.

I also had a few credit inquiries on my report, hard inquiries from times i MAY HAVE inquired about a vehicle purchase.   called the bureaus and debated them all and had them remove them from my report.

next, get one secured card. I wouldn't have gone with bank of america honestly, mainly due to annual fee and high interest rate.  but im stuck with it now.  eventually, a month or two later, i got a capitol one card.   your score will jump a bit just by the banks reporting that you have a new line of credit alone.

then from here, dont use too much of the money from your cards.   i used them to say put 15 bucks of gas in the tank of my car, and i left the card alone for the rest of the month, used another to make a light purchase at wal mart, then left the card alone.. make sure you pay that back BEFORE time.. NOT ON TIME.  BUT, its important you give it time for the banks to report what you owe FIRST, just dont wait too long to pay off the balances. you can buy anything you want, but what has worked for me is not to use the card to much and to keep balances relatively low in respect to your security deposit. keep your credit utilization fairly low relative to your credit limit

stay out of debt,  i dont have any loans, dont plan on taking out loans,  sure may help improve credit and establish a history or whatever but that just opens up the door to more potential debt..   i only rely on money i physically have. building up my score and history in case of DIRE emergencies or i want to buy a home one day.. who knows..  just want good credit.

 

good luck