My Story: Any Suggestions For Credit Help?

For just about anything you want to get off your chest about credit cards.
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GettingAhead
 
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My Story: Any Suggestions For Credit Help?

Postby GettingAhead » Mon Oct 06, 2014 12:40 am

After reading some posts on this forum, I suddenly realized someone out there might be able to help me with my situation. I will try not to write a novel, but I'm new to understanding credit and I'm eager to learn. I feel like, by sharing my story, someone might be able to help me with my troubles and offer some advice on getting ahead and improving my credit.

A few years ago, I jacked up my credit score with a few late payments on a personal loan through my bank. I recently decided to buck up, be responsible, and take control of my credit (actively try to make it better). As of last month, my credit score through TU was only 655. While not great, I saw room for improvement. I went to FingerHut (my limit is currently $800). I have not missed a payment -or made a late payment- and, when I enrolled in school this past fall, I thought it would be smart to see if I was eligible for a student credit card. After being declined from a few of the common creditors, I applied for a Journey MC through Capital One (I was declined by Discover). I was approved with a credit limit of $300. Yippie! I thought I was on the right path. Then, unfortunately, this month, when I checked CreditKarma, I learned my credit score fell to 577. I feel very defeated.

Here's what I did: I charged $1,115 dollars, and paid it off as soon as I charged something (I figured the more I used it in a month -if it stayed paid off- the better off I would be). When the end of the month came, I had a balance (which I immediately paid off) and, per CreditKarma, I ended up 33% overall utilization (including what I'm actively paying on FingerHut). I am floored to see that something I thought was supposed to improve my credit actually made it worse. Why? I'm not quite sure. Perhaps, it is because my oldest account is only 1 year and 10 months and the new card changed my average account length to only 11 months?

Long story short, I'm a 25 year old student, and I'm hoping to greatly improve my credit score in the next two years before I graduate. I would like to purchase a vehicle when I finish school, and would like to have the credit to buy a reliable car. Plus, it would be nice to simply have good credit. Is there anything I can do -or any suggestions you could make- to make this goal a reality? How can I make my credit score better? Perhaps, Capital One wasn't the way to go... I'm new to credit, and am having troubles getting the swing of things. Obviously, I did not think getting my first credit card would sink my credit score almost 100 points.

A few more details per CreditKarma: I have only ever had 6 accounts. 4 are still open. My average account age is 11 months. My longest open account is 1 year and 10 months. According to CreditKarma, I have an "A" for Payment History, an "A" for Derogatory Marks, a "C" for Credit Inquires, a "D" for Total Accounts, and a "B" for Credit Utilization. I do have an "F" for Account Age, and somehow, my overall grade is an "F." I don't understand -or know- how to improve my score (let alone meet my goal of having good credit in two years time). Can anyone offer me any advice? I am trying to be responsible and work on my credit while I'm in school, and take charge to actively improve my credit, but it seems my tactics are failing miserably.

I'm open to any tips or suggestions!! Should I stop using the Journey card altogether, or keep doing what I'm doing? Should I get a different card in a few months? Is wishing for a 700+ credit score by the time I graduate a fantasy? I just... I don't know how I can improve my score besides making all of my payments through FingerHut and Capital One on time or stop using credit altogether. Please help.


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Vattené
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Postby Vattené » Mon Oct 06, 2014 10:25 am

Point of clarification: when you say your TU credit score was 655 was this also through Credit Karma? You should be aware Credit Karma pulls from TU but doesn't use a version of FICO, so if this earlier score WASN'T from CK they really aren't comparable at all.
-Vattené
FICO-8:
EX - 809 (11/16) | TU - 803 (11/16)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now

OldMan
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Postby OldMan » Mon Oct 06, 2014 10:33 am

It sounds like you have a very "thin" file. Opening new lines of credit, will eventually improve your score, but will initially depress it due to the hit to AAoA dropping. For best Fico scoring, you only want one credit card reporting a balance of <10%.

Don't pay attention to most of what you see on CK, as it's pretty useless. (i.e. # of account/mix) CK is a useful tool to monitor activity on your reports, but not much good for anything else.

Your best option for now, is to give it time. Good credit takes time, and as your current accounts age, your score will improve.
My Wallet:
Discover IT - $4000;
AMEX BCE $12000;
Citi Double Cash - $6600;
CHASE AARP Visa - $5000;
Banana Republic $1200;
NFM - $20,000;
Sears (Citi) MC - $6000;

takeshi
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Postby takeshi » Mon Oct 06, 2014 11:56 am

GettingAhead wrote:A few years ago, I jacked up my credit score with a few late payments on a personal loan through my bank.

If those are on your reports (maybe not since CK says you're good on this?) then those are you biggest problems and you need to look into what you can do about them.

GettingAhead wrote:As of last month, my credit score through TU was only 655

GettingAhead wrote:Then, unfortunately, this month, when I checked CreditKarma, I learned my credit score fell to 577. I feel very defeated.

Where did the first score come from? The CK score doesn't really mean much.

GettingAhead wrote:When the end of the month came, I had a balance (which I immediately paid off) and, per CreditKarma, I ended up 33% overall utilization (including what I'm actively paying on FingerHut). I am floored to see that something I thought was supposed to improve my credit actually made it worse. Why?

Why do you think that would help your credit? Exceeding 30% does not help. 30% is the generally recommended max -- as in "do not exceed". Ideal is much lower.

GettingAhead wrote:A few more details per CreditKarma

CK's a dubious resource but it's not entirely incorrect on all matters. I'd recommend starting with this as it shows how the various factors impact your FICO and it's from a reputable source (myFICO -- not the myFICO forums which aren't highly regarded around here):
http://www.myfico.com/crediteducation/whatsinyourscore.aspx

Payment History is the biggest slice and there has the biggest impact. That's why you need to look into your derogs first as they are dragging down your payment history no matter how much positive payment history you've built up since then.

Utilization (Amounts Owed) is the next biggest slice and that's why exceeding 30% didn't help your score. Luckily, you can adjust utilization from month to month and your score can rebound from whatever hit it took from the increased utilization.

AAoA (Length of Credit History) just takes time to build. CK's info is useless in this area since it only factors in open accounts. In other words, CK is giving you AAoOA while FICO considers AAoA. The latter includes your closed accounts that are still on your reports.

New Credit is basically impacted by hard pulls.

Types of Credit refers to the variety of credit in your profile. That said, don't go out seeking installments just for scoring purposes.

tl;dr - Your problems are basically the lates (if on your reports) and your thin profile. You're going to take hits while you build your profile as you can't add accounts without taking hard pulls and reducing your AAoA. However, with responsible time and usage you'll get there. However, your derogs will hold you back if you can't get rid of them. The effect will eventually taper off over the years and diminish when they fall off but you'll probably experience slow growth until then. Again, I recommend seeing what you can do about them.

Make sure you're keeping an eye on all 3 reports and not just TU via CK.

takeshi
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Postby takeshi » Mon Oct 06, 2014 12:07 pm

(accidental dupe)

GettingAhead
 
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Postby GettingAhead » Mon Oct 06, 2014 7:28 pm

Thanks very much for the advice so far! I really appreciate it.

I have only used CreditKarma for my credit score (the original score and the current score both came from this site). Any advice for some other good resources? Also, I only know my TU score -I haven't looked at the other two as of yet. So, if I understand correctly, the best option for me at this time is simply to use the card as little as possible, and to not apply for any additional credit in the near future? My credit report does have the late payment from four years ago (I looked) and there were three late payments total -will these ever fall off my credit?

Patience sounds like the best way for my credit score to improve... I'll stick the card in the back of the sock drawer for now, and hope my score starts rising soon. Thanks to everyone for the suggestions and advice thus far, it's very helpful. Sometimes, the learning curve feels steep, but the knowledge and guidance you all have offered goes a long way!

MemberSince99
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Postby MemberSince99 » Wed Oct 08, 2014 6:46 am

The best advice I can offer you is to garden, vigorously.

Berk
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Postby Berk » Thu Oct 09, 2014 7:16 pm

A quick bio - when I was your age I got my first credit card. By 30 I had ruined my credit. I settled with all but two of my creditors and ended up defaulting on those. I used cash for the next 10 years. At 40 I got a Capital One card with a $50 annual fee and an initial credit limit of $750. My Transunion credit score was 640. That was how I started to rebuild. Got a Discover in 2009 and my credit score took off. Now, 10 years later still not where I want it to be but I am getting there. You will get there too. It will take time and wise utilization.
Fico Scores 05/25/2015
Equifax 766
TransUnion 788
Experian 797

Over $140,000 in credit across 12 cards.



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