I've been successfully laying low and paying cash for years, and now I'm just waiting for some charge-off drop-offs over the next year. I am overpaying to live in a corpo apartment and rent a storage unit West LA, when I could save $12k-$30k per year if I could rent a house with a garage from a private citizen for the next year. I have not had good luck with Realtors and private citizens willing to rent to me, citing "too many derogatory's," despite my income (gross is 5x rent) and willingness to pay their $8k deposits for their 2 bedroom no-AC, no-dishwasher "houses" with Pepto Bismol-colored 50s bathrooms. The opportunity cost is much more than $12k-$30k for me because I can use the money for preferred stock at work. Do I pay my penance to Lord Chase for another year, or is this worth opening a can of snakes with DV letters over?
You can roll the dice on a DVL, SOL is 4 years in CA. They can't come after you anymore (at least not successfully). Your biggest worry is a re-aging of the debts. Be sure you have printouts of your credit reports (now) that show the original and true DOFD so that if honest-Abe CA decides to play games, you're prepared.
Thanks for the quick reply, mindcrime! Good point. Just as a note for anyone else worried about the DOFD, my Transunion report I got from AnnualCreditReport.com clearly states "Last Payment Made" dates and estimated drop-off dates, so I didn't have to figure it out. The "See Your 3" reports from all three bureaus I bought from Experian for $32-and-change does not clearly state these--you have to look at the reporting and figure it out (not hard, but not as straightforward as the Transunion-only report I got from Transunion itself through AnnualCreditReport.com).
This seems like a good spot to mention that building credit the protected way - via a secured credit card - could help expedite the credit-building process. Approval essentially amounts to whether or not you can front a security deposit, and some cards (the Open Sky Secured Card, for example) don't even do a hard pull of your profile so there's no automatic knock to your score. FYI, this is a rarity but those cards do exist. Check before applying. Extending your credit line and improving your payments history are easy ways to show prospective renters, lenders and creditors that you're now willing to use credit responsibly. It doesn't solve the past issues, but it gets the ball rolling on building new credit. Remember, no credit isn't good credit; paying in cash is a good way to stay out of debt, but it won't make amends for past derogatories.
Good point Jason, I hadn't thought about the flip side of it all (building credit). While I haven't looked at it past what I've briefly read, the Open Sky seems like a great starter card without the worry of the hard pull. Changers -- through annualcreditreport.com you can get individual copies of your reports from each of the CRAs. Those are the best to go by, not the 3-in-1's....I've never liked them (personal experience of missing info). Once you have those report numbers you can get fresh pulls down the line to keep an eye on the CA's if you don't want to invest with a CMS just yet.
Thanks! I think most of us former credit-abusers make too many emotional decisions based on fear and shame, when I should have gotten a secured card the day the SOL was up. Lesson learned. So, follow-up question is... Does putting the maximum amount down for a secured card show markedly better results than doing the minimum? Does it automatically give you a higher limit when you go unsecured? Has anyone tried this?
Putting the max down gives you the best chance to get the max credit line. Generally, a secured credit card will extend your credit line between 60 and 70 percent of what your deposit is. So the easy math here is the more you put down, the more your credit line will be and the faster you can improve your credit utilization ratio. I guess now would be a good time to ask whether or not you are currently carrying a balance...
Update: Currently, my rent is 15% of my GROSS pay and my car is paid off. I decided to skip the secured card and apply for a regular cash rewards card at Navy Federal on a whim, and I got instant approval for $25k (APR isn't the greatest, however). I will admit there is no way this would have happened if I hadn't been working my tail off to get my income high while I was ignoring dealing with my credit. I am so glad I didn't apply for a secured card and get myself on the sub-prime spamming list. Score another for NFCU!
Approved for 25k? Have you pulled your own reports recently? https://www.annualcreditreport.com Those negatives may already be dropping with an approval like that...UNLESS, NFCU approval is based heavily on one's ability to pay and not their credit. Also APR means nothing if you don't expect to carry balances
Right - keep your balance at zero and your APR will follow. That's one heck of a credit line, congrats!
