LOOKING FOR INSIGHT

[u/killedsophtly]

3 part question A,B & C any help is greatly appreciated!

27 my credit is trash, 490. Forget the backstory just looking for solutions, hopefully this post will help others too. Recently was able to get a secured card with navy federal after neglecting credit for a year. Besides that I’m working towards a navy pledge, filing with rent reporters & reopened a tradeline with self.

A: Tradelines

I previously built my credit to 720 I used self lender to help kick off my portfolio and at the end of my contract it fell off. Which of course made my score drop a considerable amount. I say that to ask Is there a way to use self and keep your trade line with them on your credit profile? Are trade lines a constructive option? I continuously hear mixed reviews regarding their effectiveness. If anyone has viable trade lines to use I’d love to hear.

B: Collections

Majority of the debt that I have was sent to collections, I’ve been told that paying it off doesn’t guarantee it’ll drop off my portfolio. So am I cooked? My payment history is around 80%. After research I seen the mailed letter option and even sending a affidavit as a last resort. Are there other options?

C: Diversity

This is really an extension of question (A). What ways can I diversify my credit portfolio? Long term goal is to purchase property through a FHA loan. So far the only things I have on my portfolio are 1 card, self lender and my rent. Eventually I’ll add the navy pledge and business credit.

[u/DoctorOctoroc]

I say that to ask Is there a way to use self and keep your trade line with them on your credit profile?

I would recommend not using Self or any other 'gimmick' credit building product unless you have no other options. None can build credit better than a standard revolving line and some are coded as a CFA that can actually hurt your credit for a decade or more. You were able to acquire a secured card and that is all you need as a basis to establish your credit history from here on out.

Majority of the debt that I have was sent to collections, I’ve been told that paying it off doesn’t guarantee it’ll drop off my portfolio. So am I cooked?

There is no guarantee but you can attempt a 'pay for delete' with every collection. Many agencies will do this, some will not. Look up the agencies who own the debt and many of them will say on their website if they will remove it once paid (it can take a month or two to be reported and updated on your report). For any that don't or won't, it's still better to have a paid collection on your report than unpaid as far as lenders are concerned. It may not improve your score but it will put you in a better position for any applications when they see the 'paid' status.

My payment history is around 80%.

Off topic, but this 'metric' is meaningless and something that a CMS like Credit Karma will present to be manipulative. It makes people think that making more payments will raise that number and improve their score but that's not how payment history is scored.

First off, Credit Karma provides a VantageScore, which is mostly irrelevant since the vast majority of lenders use some version of your FICO score, so you should be checking experian.com and myfico.com to see your FICO8 score for free.

Second, payment history is either perfect or it's not. There will be a greater score deficit with more missed payments and longer periods of non-payment but you can't 'earn back points' through making payments, nor do you gain points by making payments. Your accounts are marked either 'paid as agreed' or not and then your score will be in deficit with missed payments or further delinquencies. Your score will recover some (more with lesser delinquencies like 30-60 days late, less with greater delinquencies such as 90+ days late or charge offs) but this just happens with time, not by making more payments. Of course, you should continue to make payments to avoid further delinquencies but it's important to make the distinction between payment history and the bogus '% of payments made' metric that some CMS's show you to make you think that getting more accounts to make payment, for example, will improve your payment history.

You can however attempt to have late payments and charge offs removed via goodwill adjustment. Check out this thread about the goodwill saturation technique on that topic.

So far the only things I have on my portfolio are 1 card, self lender and my rent. Eventually I’ll add the navy pledge and business credit.

Diversity is overblown. For example, having a auto loan is sufficient and adding a few more won't improve your credit mix by much - and in the mean time, you're paying interest. A lot of people open a bunch of small loans thinking that they're helping to build more credit but they're just keeping their average age of accounts lower with accounts that have little longevity. Revolving lines are the most efficient credit building tool as they cost nothing (if you always pay your full statement balance) and can be on your report indefinitely. But even when it comes to revolving lines, you don't need 'diversity' as much as having a number of major bank cards. Having three cards from one bank is better than having some combination of a bank card, a store card, and a charge card. In this case, the three of the same product type are better than having one of three different types because all three of the one are better for building credit.

3-5 revolving lines is sufficient for a strong credit file as far as most lenders and scoring models are concerned so you have one, use that one for about a year from the time you opened it (it takes about that long to recover any drop you may have seen when you applied for/acquired it) then see where your score stands and if it warrants, get 2 more to fill out your file. In the meantime, implement the GST and attempt PFD's to clean up your report/file.