New and Needing some advice..Please Read

[betsym45]

Hi there,

I'm new to this forum so please excuse any missteps in my explanations.

My husband and I are looking at buying a house within the next year or so. I have very little credit as I have only had one credit card 3 years ago and it went to collections, for a balance of 400.00. (I worked for Dillard's and they made you get a credit card to get their discount.) I was young and dumb (still probably am) but I have since paid the amount off, not realizing that I could probably negotiate by paying and then having them take the collection off my credit report. All of the bills for my utilities (electricity, phone, and cable) have been in my name and I have never made late payments.

All of that to say, my credit score is horrific at 545. I was wondering what would be a good way to raise my score at this point. Most credit advice I have read states to pay off debt but I have no debt. No car payment, as the loan was in my parents name but I paid the bill, no house payment, no student loans, and no credit card debt as the only one was the one mentioned above. Should I call my utility companies and ask that they report my payments to the credit agencies? Should I apply for a credit card and make regular payments? Should I get a small loan from the bank and repay it slowly? I just really am at a loss as to how to rebuild my credit, and it seems that most with bad credit scores have had more than one thing reported on their credit score.

Thanks so much for your attention to this, and again I apologize if this is convoluted. Thank you,

[road2repair]

A large percentage of your FICO score is based on revolving accounts (credit cards) The conventional wisdom is that you need at least 3 credit cards to maximize the effect on your score and keep the utilization >$0 and < 1% A couple of secured cards would probably be a good place to start. I am sure someone can provide recommendations for some of the better secured cards, but you might want to check your bank and local credit unions as options.

[Demonico]

You are in a good spot if you only have the one collection showing especially where it is paid and old; it is likely to be easily removed. I would highly recommend reading some of the pinned topics. The more knowledge you have before you start the more effective your efforts will be. The "year or so" you mentioned isn't a super long time but it should be plenty with the right approach.

[shifter]

You need credit cards to boost your score.

 

Don't confuse credit cards with debt.

 

You need the cards but PIF every month to avoid paying any internet. Making payments over time doesn't help your score at all.

 

Also you need to work on getting that derog removed. Then you'd be great shape.

[Luminosity]

Hi there,

I'm new to this forum so please excuse any missteps in my explanations.

 

My husband and I are looking at buying a house within the next year or so. I have very little credit as I have only had one credit card 3 years ago and it went to collections, for a balance of 400.00. (I worked for Dillard's and they made you get a credit card to get their discount.) I was young and dumb (still probably am) but I have since paid the amount off, not realizing that I could probably negotiate by paying and then having them take the collection off my credit report. All of the bills for my utilities (electricity, phone, and cable) have been in my name and I have never made late payments.

 

All of that to say, my credit score is horrific at 545. I was wondering what would be a good way to raise my score at this point. Most credit advice I have read states to pay off debt but I have no debt. No car payment, as the loan was in my parents name but I paid the bill, no house payment, no student loans, and no credit card debt as the only one was the one mentioned above. Should I call my utility companies and ask that they report my payments to the credit agencies? Should I apply for a credit card and make regular payments? Should I get a small loan from the bank and repay it slowly? I just really am at a loss as to how to rebuild my credit, and it seems that most with bad credit scores have had more than one thing reported on their credit score.

 

Thanks so much for your attention to this, and again I apologize if this is convoluted. Thank you,

The best thing for you to do right now is to get a few credit cards reporting positively. You will probably only be able to acquire secured cards so look for ones without an annual fee, always pay in full and never late, and give it time. In the mean time you should read the newbie section on credit boards in its entirety before you start the credit repair process of trying to get that collection removed. Otherwise you may make some mistakes that can cost you months if not years of time until the problem is fixed.

[Second Chances]

You may also want to see about getting a small, shorter term personal loan from your bank, and paying it off. Although this will cost you some interest, it could your score. FICO scoring likes a mix of credit, and it should help to have one installment loan, as well as revolvers.

[betsym45]

Wow seriously thank you all so much for your help. This has been enlightening and I will definitely continue to read through these forums and blogs to repair my score. I really appreciate the feedback.

[Demonico]

I should add that when I started using credit again in Jan '11 it was almost exactly 18 months later when I bought my house and I only had 3 credit cards active. Everything else was 5+ years old and the biggest issues (2 judgments and a car repo) were paid off. Having them paid off didn't help my scores but did help when the underwriter was looking things over.