Where do I go from here?

[Mommaonamission]

It’s a long post but, where do I go from here? I am not sure what to do next. Do I just pay everything off and only charge a small account to one or two cards and pay them off every month or is there more to it? My goal is to buy a house. Hopefully by next summer. I, unfortunately, listened to Credit Karma before I did more research and opened more cards than I probably should have and charged a bunch but, I will have all the balances back at zero in 2-3 months at most.

 

Here is what I am doing: paying all current credit balances to zero with no more charging, paying down student loans currently in deferment. I am thinking of closing the First Premier card and opening a self lender account (to get a better mix) but, am not sure if closing a paid card will hurt my score. 

 

This is where I am sitting at:

Scores

Wells Fargo Fico 9 score: 626

Fico 8 scores pulled from premium Experian subscription:

Experian- 657 Equifax- 643 Transunion: 661 Fico 8: 657

Collections

LVNV/Resurgent: $518 paid just waiting to be deleted from credit report

IC Systems: $253, waiting on a response from debt verification letter, if that doesn't work I am asking for a PFD

What Is Reporting

Fingerhut: $73.06 out of $600 limit since Feb 2020

Capital One (authorized user, no card): $555 out of $9,500 limit since Nov 2014

Capital One (Walmart store card): $193.24 out of $300 since May 2020

Credit One $258.50 out of $300 since May 2020

First Premier: 270.83 out of $300 since Jan 2020

Synchrony Bank: $0 out of $1800 since Feb 2020 (never used)

Student Loans

Went through rehab and now in deferment due to being in school, no longer taking out more loans. Total: $39107.18

 

I also have some transferred closed student loans showing up on Equifax and Transuion as 120 days late with zero balances that I do not know what to do with. 

 

• FICO Score

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[cv91915]

Welcome!

 

This isn't something you don't know, but those two collections are killing your scores.  Glad to see that one is about to fall, but the big score increase comes when you go from 1 -> 0 major derogatories.

 

Card-wise, you could be in a worse spot.  I'd pay this one off and then close it ASAP, taking great care to ensure you monitor the account for another couple of cycles for any trailing interest that may post.  We've seen too many people who missed that last part.

 

10 hours ago, Mommaonamission said:

First Premier: 270.83 out of $300 since Jan 2020

There is NO NEED to pay interest to have great credit scores.  Use the cards when they're useful and PIF every month, noting that Fingerhut is never useful.

 

Mortgages use different FICO scores than the ones you cited.  Here's a good resource:

 

 

[TheChosenOne]

11 hours ago, Mommaonamission said:

It’s a long post but, where do I go from here? I am not sure what to do next. Do I just pay everything off and only charge a small account to one or two cards and pay them off every month or is there more to it? My goal is to buy a house. Hopefully by next summer. I, unfortunately, listened to Credit Karma before I did more research and opened more cards than I probably should have and charged a bunch but, I will have all the balances back at zero in 2-3 months at most.

 

Here is what I am doing: paying all current credit balances to zero with no more charging, paying down student loans currently in deferment. I am thinking of closing the First Premier card and opening a self lender account (to get a better mix) but, am not sure if closing a paid card will hurt my score. 

 

This is where I am sitting at:

Scores

Wells Fargo Fico 9 score: 626

Fico 8 scores pulled from premium Experian subscription:

Experian- 657 Equifax- 643 Transunion: 661 Fico 8: 657

Collections

LVNV/Resurgent: $518 paid just waiting to be deleted from credit report

IC Systems: $253, waiting on a response from debt verification letter, if that doesn't work I am asking for a PFD

What Is Reporting

Fingerhut: $73.06 out of $600 limit since Feb 2020

Capital One (authorized user, no card): $555 out of $9,500 limit since Nov 2014

Capital One (Walmart store card): $193.24 out of $300 since May 2020

Credit One $258.50 out of $300 since May 2020

First Premier: 270.83 out of $300 since Jan 2020

Synchrony Bank: $0 out of $1800 since Feb 2020 (never used)

Student Loans

Went through rehab and now in deferment due to being in school, no longer taking out more loans. Total: $39107.18

 

I also have some transferred closed student loans showing up on Equifax and Transuion as 120 days late with zero balances that I do not know what to do with. 

 

• FICO Score

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Your wally world card, the first premier and credit one cards are reporting almost maxed and that utilization is probably dragging your score down a good 15 points I'd guess. I'd pay those down below 20% as this would only be a couple hundred dollars.

 

Looks like you accepted every credit card you could while rebuilding. While this seems like the logical approach, the toy $300 limits severely lower your average credit line. I would close any low limit cards with any fees unless you just paid an annual fee. The low limits are also going to look bad during a manual review if you apply for any more credit cards. They're going to see toy limits and think that's what you're used to working with so that's what they'll give you.

 

The better approach would have been secured cards, either from a CU or discover, citibank, etc. But I realize you might not have been aware.

[centex]

Beyond the card-by-card high utilization, you are ALSO getting dinged for almost every card HAVING a balance. 

 

Those are small balances, for the most part, and you should get them paid down ASAP.  You can also ditch any card that you have to pay a monthly or annual fee for that has such low balances.  Save annual fees for cards down the road where you actually get some value out OF the card.  There is zero value derived from a fee with CreditOne or FirstPremier...

[Mommaonamission]

4 hours ago, TheChosenOne said:

Your wally world card, the first premier and credit one cards are reporting almost maxed and that utilization is probably dragging your score down a good 15 points I'd guess. I'd pay those down below 20% as this would only be a couple hundred dollars.

 

Looks like you accepted every credit card you could while rebuilding. While this seems like the logical approach, the toy $300 limits severely lower your average credit line. I would close any low limit cards with any fees unless you just paid an annual fee. The low limits are also going to look bad during a manual review if you apply for any more credit cards. They're going to see toy limits and think that's what you're used to working with so that's what they'll give you.

 

The better approach would have been secured cards, either from a CU or discover, citibank, etc. But I realize you might not have been aware.

Will paying off and closing the First Premier and Credit One with their high fees and opening a higher limit secure card like $1,000 hurt my score? I don't mind it going down for a month or two if it will jump back higher after a few months. Or would closing the card and adding an account like SelfLender do better for me?

[TheChosenOne]

13 hours ago, Mommaonamission said:

Will paying off and closing the First Premier and Credit One with their high fees and opening a higher limit secure card like $1,000 hurt my score? I don't mind it going down for a month or two if it will jump back higher after a few months. Or would closing the card and adding an account like SelfLender do better for me?

 

I don't have any experience with selflender but I do have a discover secured that has no annual fee or any fees in fact it has cash back and they let you add on to the secured amount over time and they report every month as a normal credit card. I'm up to $2k on my secured card. 

 

IIRC, the new account will ding your credit for a few months, but after 3 months and definitely after 6 months it shouldn't have any negative effect on your score at all. I always try to keep in mind the average age of accounts needs to be as close to 2+ years as possible. That way lenders can't fall back on the "too many inquiries" or "too many new accounts" as a cop out to not approve you.

 

To be honest, at this point I wouldn't bother to open anything else and go ahead and pay off the high utilization cards and let everything age until you go to get your home if you want to get it soon. Like I said, if the annual fee is coming up definitely close the first premier bank and credit one cards. They'll still stay as positive accounts on your reports for the next 10 years.

[cv91915]

Self Lender does installment loans for 12-24 months.

 

Revolving accounts are MUCH more important than installments, and the impact of an installment loan essentially vanishes the minute the account is paid off.

 

Also, if you already have an open car loan, mortgage, or other installment loan reporting, adding another open installment loan will do little more than ding your AAoA, which will hurt your scores.

 

 

[Kat58]

6 hours ago, cv91915 said:

Self Lender does installment loans for 12-24 months.

 

Revolving accounts are MUCH more important than installments, and the impact of an installment loan essentially vanishes the minute the account is paid off.

 

Also, if you already have an open car loan, mortgage, or other installment loan reporting, adding another open installment loan will do little more than ding your AAoA, which will hurt your scores.

 

 

 

[TheChosenOne]

7 hours ago, cv91915 said:

Self Lender does installment loans for 12-24 months.

 

Revolving accounts are MUCH more important than installments, and the impact of an installment loan essentially vanishes the minute the account is paid off.

 

Also, if you already have an open car loan, mortgage, or other installment loan reporting, adding another open installment loan will do little more than ding your AAoA, which will hurt your scores.

 

 

Also what I would be worried about is how SL reports. Does it actually say "self lender" on the tradeline? I doubt it because that would be obvious to any underwriter. It seems a bit scammy to me but I could be wrong. When you deal with underwriters who deal with thousands of loans and have seen everything, they know what a tradeline is I would think. Especially when you deal with banks or CUs who have the most capital and can't afford to have this information when determining risk assessment. You have to remember, if they have hundreds of millions in capital to lend, they're probably going to be able to afford software and underwriters that aren't going to fall for tricks. But I could be wrong...

[cv91915]

58 minutes ago, TheChosenOne said:

Also what I would be worried about is how SL reports. Does it actually say "self lender" on the tradeline? I doubt it because that would be obvious to any underwriter. It seems a bit scammy to me but I could be wrong. When you deal with underwriters who deal with thousands of loans and have seen everything, they know what a tradeline is I would think. Especially when you deal with banks or CUs who have the most capital and can't afford to have this information when determining risk assessment. You have to remember, if they have hundreds of millions in capital to lend, they're probably going to be able to afford software and underwriters that aren't going to fall for tricks. But I could be wrong...

People often forget that a credit score is only one factor in credit decisioning.  

 

Especially if your credit isn't perfect, it's common for a human to review the contents of your report in order to approve or deny a credit application.

 

Certain trade lines scream, "You wouldn't believe what a mess this report USED to be!"

 

The house may be standing, but it doesn't take a very close inspection with human eyes to know that there's a story there. 

 

 

 

 

[TheChosenOne]

1 hour ago, cv91915 said:

People often forget that a credit score is only one factor in credit decisioning.  

 

Especially if your credit isn't perfect, it's common for a human to review the contents of your report in order to approve or deny a credit application.

 

Certain trade lines scream, "You wouldn't believe what a mess this report USED to be!"

 

The house may be standing, but it doesn't take a very close inspection with human eyes to know that there's a story there. 

 

 

 

 

I agree which is why I kinda cringe myself at the fact that I have 2 first premier tradelines. Oh well. What can you do, right? live and learn and learn some more..