Jump to content

Sign in to follow this  
HoneyB123

Rebuilding with Low Income

Recommended Posts

I'm sharing my story because I think it can be particularly challenging to make progress rebuilding with low/fixed income, but it can be done. So to make a long story long...

I became disabled in 2009 and filed ch7 bk in 2012 (discharged 1/2013) and didn't start repairing until 2014 when I was able to get my student loans out of default with a consolidation loan. I could have applied to have them discharged due to disability, but the paperwork was onerous and I had them paid down to $1,000 or so. I figured I'd have at least one positive TL to rebuild with and I did, but the loans had been resold in default so I still had four delinquent TLs with 26 120+ lates.

  • I don't know if discharge would have taken away the negative TLs from the loan being in default, but if I were to do it all again I would find out before deciding. The lates associated with those accounts have been more damaging than my BK IMHO.
  • Although I learned here to always do things in writing/create a paper trail, that proved to be a mistake in approaching my lender about my defaulted student loans. ECMC ignored the content of my letter requesting a more affordable monthly payment and immediately used my updated address to garnish my disability benefits by 15% (about 5 times the amount of the payment I couldn't afford). I eventually got the money returned, but it was a nightmare couple of months that haunts me to this day. I recommend calling and giving as little personal information as possible until you get a repayment agreement that works for you.

In 2014 my reports showed my BK7, a civil judgement that was discharged in BK, at least 5 IIB cc accounts, 2 delinquent utilities from my previous address, and a medical collection. I rushed in a bit and disputed like crazy, which got rid of 4 of the IIB cc accounts, the delinquent utilities, and the medical collection.

  • I wasn't looking at my scores at the time (too afraid) but I have since learned that I probably should have left the IIB accounts alone as they were helping my AAOA.

After that, summer 2015, my FAKOs were in the low 600s. I wanted to start rebuilding, but I took the wrong approach and applied for cards I wanted instead of researching what cards I might be able to get. I was declined for Target and Amazon store cards. I made a little extra cash babysitting, but there was never enough extra to save up for a secured card, which was definitely a goal at the time. I was very pessimistic and didn't feel like I had options.

In Feb 2016 my BK7 was 3 years post discharge and I got a pre-approved offer for a CapOne Platinum card. I was so nervous that there was going to be a catch, but in March I got my first cc in 4 years with a $300 CL! I read up on CB, used the card for everything and PIF a couple of times a month and got a CLI to $800 after my 3rd statement, $1300 at the end of steps, and $3300 six months later. Just getting the card gave me the confidence to hatch a financial plan for the future and reading up on CB helped me do just that, so thank you everybody.

The top item on my list was to buy a more reliable car. I had a regular part-time babysitting job by now and saved up for a downpayment, but it was still a big challenge. I had paid cash for my clunker, so I had no auto credit history. My scores were on the rise (EQ 677, EX 627, TU 648), but my extra income was not considered because it was cash. My local CU wouldn't give me a loan without a cosigner and that wasn't an option for me. CapOne again came to my rescue! In May 2016 I was able to prequalify with CapOne Auto Finance and found a 2 year old CPO car still under warranty through their Auto Navigator website with a 6.5% APR.

After I bought the car an old disputed utility came back under a new CA. I see a lot of people ask DV or dispute and I was wondering if DV might be more effective, so I tried it. All the CA did was add a remark saying I disputed but they had done all FCRA required. They never responded to me directly. Once I saw the remark I disputed on EQ only and quickly the collection disappeared from all 3 reports. In the last year it has not come back again.

My next goal was to improve my credit enough to refinance my car at a lower rate within a year. From what I read here that meant I needed 2 more CCs. My dad put me on his Citi card as an AU in September. Then I read about Navy Federal eligibility and I joined in November. I was approved for the cash rewards Visa for $1200 and got a CLI to $7500 after the third statement. So one year after my $300 CL start I had $12K in available credit! My utilization was around 2% and my scores were up to EQ 689 EX 690 TU 686.

  • I have since learned that the AU cc doesn't count toward the 3 revolvers I need, but I was gun shy about applying for anything before the refi so I'm not sure I would've done things differently had I known that.

Another thing I did after buying the car was to find a different part-time job (on the books) so that all my income could be considered in my refi application. And I got MyFICO monitoring in the month before I applied to refinance just to make sure my scores were at their best. FWIW, the $2 reporting trick boosted me 20 points with EX and 10 points with EQ/TU.

I applied for the refi with NFCU and PenFed and I asked to apply for more than one product for each credit pull. NFCU approved the loan at 5.74% and a CLOC for $1500. PenFed approved the loan at 2.99% and a Power Cash Rewards Visa with a $4500 CL. I went with PenFed and opened a checking account there and got a CLOC for $500 the next day.

  • I joined PenFed when I was looking for my first car loan, but they didn't approve me because I couldn't prove my income. A lot of people here say not to join with a dirty EQ report, but I'm glad I did because they are really helping with my rebuilding. I may have to do without auto CLIs in the future, but I need the help now more.

My next financial step was to buy a new laptop with the Barclay Apple Rewards Visa 0% financing offer. I'm over 12 months aging on my oldest cc so I felt like I had a good chance of being approved. But I had a couple of instances of attempted ID theft over the last year and had frozen my reports for that reason. Even though I unfroze TU to app Barclay, they routed my app through their security department for ID verification. In theory this is great and I sent off copies of the requested documents right away, but it can take them weeks to verify documents. I did some research across other sites and it turns out this is business as usual for them if you are not approved instantly. I kept calling in, was told my docs were illegible, got a supervisor, was able to fax in scans, and was finally approved for $3,000. Since Barclay pulls TU, I apped Target and Amazon store cards on the same day and was approved for both! I don't plan on trying for anything else until 2/2018 when I will be 5 years post BK.

My ultimate long-term financial goal is to buy a house, a very modest house. After my disability I moved to a much more affordable city, so I feel like this is possible. I don't want to even apply until all those old student loan lates fall off my reports in June 2018, which is fine because I have a lot of saving to do. I've found some downpayment assistance plans and pre-purchase educational workshops in my area, but a year ago this would have seemed utterly impossible.

When you lose everything, financial stability seems at the same time more important and harder to reach. With my part-time job and disability benefits my income is less than $30K per year, but I have been able to make progress. I have lessened my anxiety considerably by making myself tend to these matters, but I remember how hard it was for me to order that first report, make that first dispute, call for that first recon. I just wanted to show things can work out for those of us with limited resources too. :wave:

Edited by HoneyB123

Share this post


Link to post
Share on other sites

Nice job!

 

Financial stability is definitely key to good credit long term. You are correct, financial stability does not equate to high income.

 

https://creditboards.com/forums/index.php?showtopic=542925&page=1

 

Thank you!

 

I must admit I had been here learning better credit practices before my BK, but I never saw my disability coming. We can each have the rug pulled out from under us. Now that it's happened though, I can never see myself signing on to financial responsibilities that seem even remotely unmanageable.

Edited by HoneyB123

Share this post


Link to post
Share on other sites

Very inspiring! And wishing you an even better 2018 and beyond.

 

Sent from my SM-T217S using Tapatalk

Share this post


Link to post
Share on other sites

It was a very nice read. Thank you for sharing.

How were they able to garnish with the SSD? Im assuming the Disability is Federal.

Share this post


Link to post
Share on other sites

Good job! Good credit is particularly valuable when living with a lower income. It can reduce a lot of the costs that eat people up when they can least afford it. Car loans, insurance, even decent apartments are all more expensive with poor credit. So keep up the good work. Used wisely, good credit can stretch your income where it counts.

 

And best of all, you don't need to spend much or carry debt to have great credit, but it does require attention and planning.

Share this post


Link to post
Share on other sites

Very inspiring! And wishing you an even better 2018 and beyond.

 

Sent from my SM-T217S using Tapatalk

 

Thank you so much!

Share this post


Link to post
Share on other sites

It was a very nice read. Thank you for sharing.

How were they able to garnish with the SSD? Im assuming the Disability is Federal.

 

Your social security benefits can be garnished or "offset" when you owe the government money, as in taxes or a federal student loan. I had to end up contacting ECMC's CEO's office and basically shamed them into returning the funds and even then they wouldn't work with me on a lower payment. I was told my only option was to discharge the entire debt due to disability and they ceased garnishment for a few months to let me file the paperwork, however in the meantime congress changed the law and allowed consolidation out of default and I was able to do that and apply for income based repayment. It was such an ordeal!

Share this post


Link to post
Share on other sites

 

What an inspirational post, HoneyB123! Wishing you all the best!

 

Thank you!!

 

 

You're welcome! I've been there and was completely unprepared for it. Lessons learned!

Share this post


Link to post
Share on other sites

UPDATE: I can't figure out how to post the screen grab, but my EQ FICO 09 went from 674 to 783 today!!

 

Obviously this was years in the making, but a 109 point bump is thrilling any way you slice it. I was 5 years post BK7 as of February, but I think the big difference is my bad student loans finally fell off my report. I long suspected they were more damaging to my score than the bankruptcy and had been disputing the accounts for years. Initially they weren't set to come off until 2019, but disputing the DOFD worked and now all four of them (with 10+ 120 day lates each) are gone. Hallelujah!

 

Share this post


Link to post
Share on other sites

Awesome. I just hit 617 on FICO8 this AM (my thread is somewhere in this topic) and was 'elated'. Still have a ways to go, but beats what I started at when I started to tackle my credit in November.

Share this post


Link to post
Share on other sites

 

UPDATE: I can't figure out how to post the screen grab, but my EQ FICO 09 went from 674 to 783 today!!

 

Obviously this was years in the making, but a 109 point bump is thrilling any way you slice it. I was 5 years post BK7 as of February, but I think the big difference is my bad student loans finally fell off my report. I long suspected they were more damaging to my score than the bankruptcy and had been disputing the accounts for years. Initially they weren't set to come off until 2019, but disputing the DOFD worked and now all four of them (with 10+ 120 day lates each) are gone. Hallelujah!

 

Congrats

Awesome. I just hit 617 on FICO8 this AM (my thread is somewhere in this topic) and was 'elated'. Still have a ways to go, but beats what I started at when I started to tackle my credit in November.

Congrats

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  




  • Today's Birthdays

    1. MB82x
      MB82x
      Age: 38
    2. kforde
      kforde
      Age: 35
    3. tachynurse
      tachynurse
      Age: 37
  • Member Statistics

    • Total Members
      177,976
    • Most Online
      2,046

    Newest Member
    mobaby
    Joined

About Us

Since 2003, creditboards.com has helped thousands of people repair their credit, force abusive collection agents to follow the law, ensure proper reporting by credit reporting agencies, and provided financial education to help avoid the pitfalls that can lead to negative tradelines.
×
×
  • Create New...

Important Information

Guidelines