I am brand new to this website and found it while trying to answer some of my questions regarding repairing and rebuilding my credit scores. When I was younger, I made some mistakes with credit cards. I ended up piling up so much debt that I ended up filing for bankruptcy. Since that time, I have had a perfect credit history by paying all credit card bills on time, and for much of the time since then, I have paid off all of my credit cards in full. I also paid off a $5000 auto loan since that time. The bankruptcy should have fallen off in December of 2012 as it has been 10 years now. Unfortunately, I did have a more recent situation that has hurt my credit scores significantly. During the summer of 2010 I hired a contractor to do a lot of upgrades to my house. The short version is I did not do my due diligence to ensure they were legit. I ended up being scammed. Not only did they take all of the money that I had for labor ($7,500 is what I had saved up and they got every penny of that), they also had me charge up an additional $7,500 on credit cards for supplies that were needed and this guy stole a lot of those items from my garage. This $15,000 total was already a difficult lesson learned, but he also ended up completely destroying every room in my home, making it completely unlivable. I even needed to shower at a local Lifetime Fitness. Anyways, I was way upside down on the mortgage already due to the housing market. I owed about $145,000 but in the condition the contractor left the home, the bank estimated it around $35,000. The police and a lawyer said I should not waste my time or money trying to deal with this guy because he is a con artist and does this to many people and even though I will likely win in court, I will never see a penny from this guy. He fled the state too. Due to this situation, I needed to move into a livable place where I can sleep and shower. I was not able to pay for rent at a new place while paying for my mortgage so I did not pay mortgage while going through a short sale. I did not pay from 10/10 through 5/11 and I sold it in 5/11. This is 8 late payments and a short sale on my credit reports. The three ways the short sale is listed on my credit reports include: account paid for less than full balance, settled less than full balance, account legally paid in full for less than full balance. My credit scores as of 5/3/12 were Equafax 650, Transunion 682, Experian 680. These should have been higher but I still had some high balances. I plan to use Annual Credit Report again in May or June of 2013 to compare the scores and notes. A few days ago I called to confirm all of my info for my current credit cards. Here is the main information and I will list the cards in order from highest APR to lowest APR. 1) Menards 24.99 APR, $2400 credit line 2) Citibank Simplicity Mastercard 21.99 APR, $1000 credit line 3) Kohls 21.9 APR, $600 credit line 4) Discover Open Road 13.24, APR $5000 credit line 5) Citibank Thank You Mastercard 11.99 APR, $6900 credit line 6) Capitol One Visa Platinum 4.99 APR FIXED, $4000 credit line. I am super excited that I have had that 4.99 FIXED APR for a few years now and I always ask to make sure this is forever and the customer service people make it sound like it is and they usually say they have never seen a card with such a low APR now days. I wonder if this was a mistake. Otherwise, my new theory is Capitol One may have given this card to those who had a bankruptcy which included one of their cards in the recent past. I am sure those people are considered high risk and they were probably hoping I would eventually make at least one mistake, even if an innocent one, so they can jack the APR way up. Well, I have never made a mistake and always make my payments on time so the 4.99 remains. I have many questions but my main ones to start off include: 1) I know to keep all of my credit cards open as closing them will likely lower my credit score because I will have a worse ratio of balance to credit available. However, are there any cards I should close once I reach a credit score I am happy with? The Simplicity card has terrible rewards. I may see if I can move that $1000 balance over to the Thank You card and then close the Simplicity card once the 0% APR promo expires in 12/13. Also, what are some cards I should try to get as my score improves? I am interested in better APR as my main goal, but rewards like cash back, gift cards, and maybe miles are appealing. I also am highly interested in the Costco American Express card but I understand excellent credit is needed for that one 2) Is there anything people suggest as far as the contractor incident and what I can do regarding my credit score? Because of this unique situation and because I have had perfect credit for the past ten years excluding this situation, is there anything I can do to make that affect my credit less? Are there any other credit repair tips for me? 3) What are some suggestions to help rebuild my credit? I make at least the minimum payment every month for all cards. Currently I owe about $13,000 and my total credit limit is about $20,000. I know I need to continue to aggressively pay off my credit cards and get them down to about 25% or less of my total credit line. Every six months try to lower APR and increase credit limit. Should I focus more on lowering APR or increasing credit limit at this point and is trying to improve all of my APRs and credit limits every 6 months too frequent? I do understand such inquiries may ding my credit score a little but if this is a big deal, I can pull back to once every year instead. I will continue to read things on this website including the forum, credit card suggestions and so on. However, I wanted to get my story out here so people can comment if they have information, tips, and advice that may help me specifically.
Trotsky - first off, welcome to the forum and we hope you find some really useful bits in here. That said, I'll do my best to answer the questions you posted. Also, my sympathies on the contractor issue that's incredibly unfortunate. 1.) Hang on to that CapOne 4.99 card dearly, and NEVER falter on that payment (as it sounds like you've done a great job of late doing) since you don't want that APR to move. I'd make that card a priority to keep, but I wouldn't ditch the Simplicity card since there's no annual fee and thus it's essentially free to own. If you feel strongly about ditching a card (which wouldn't be a huge killer because you have five other cards open) I would drop the Kohl's card unless you make a lot of purchases through them. That APR is pretty steep and losing that weak credit line wouldn't do much to affect your overall credit limit. 2.) As far as the contracting situation goes, you could try to negotiate a paid in full report w/ the CA/OC - whoever owns the collection. In this case it sounds like a longshot, and you would have to begin the negotiation w/ your own payment plan offer. (So, you would have to begin paying these back, which of course makes it harder to pay back credit card balances.) But the only way to improve those in any significant way is to get them "paid in full" which, in the case of a short sale, isn't likely. Unfortunately that's all I could come up with - do others in the forum have suggestions? 3.) You've got the right idea in regards to paying down your credit utilization. "Aggressive" is the right word for it; just keep paying back as much as you can, and try to spend as little as possible with your cards to keep paying down your balances. And I know you mentioned wanting to rid yourself of a card or two, but I honestly wouldn't make that a priority since it'll lower your overall credit line. (Which is basically the opposite of what you're really trying to do right now.) I would write/call the credit card issuers to see how much they can increase your credit limit w/o a full pull of your report (so as not to ding your score there); a greater credit line means less credit utilization, which can mean a better credit score and - later on - more leverage to ask for lower APR's.
Thank you Jason for sharing your insight. That 4.99 fixed rate seemed too good to be true, and I will definitely continue to make that card my top priority to never make a late payment. I understand that there is really no reason to close a credit card that does not have an annual fee because all credit helps to improve my credit score. The only reason I got the Simplicity Card was to get the 0% APR for 18 months but my credit line is only $1000. So, after the 0% APR is over, I may ask Citibank if I can move that $1000 credit line to my Thank You card and then close the Simplicity Card. This way I keep the same credit available among my cards, while eliminating a card that will not have any perks (and it will have a high APR).The Kohls Card has a nice advantage to it, and that is the 10%-30% deals card members receive, along other perks. For that reason alone, I plan to keep the card and just pay it off in full every month as I have been. I never allow a balance to remain on my Kohls or Menards card due to those high APRs. I will also continue to pay off about $1000 per month on my credit card balances, while trying to limit my new charges. I am also considering picking up an extra side job in addition to my full time job, to help to pay off my credit cards faster. At my current rate, it will take about 2 full years to pay off all of my cards, and that is frustrating to me. Even if my side job is donating plasma twice per week, that will add $300 of income per month for me. I will remember to make sure to request that all future requests for APR decreases and/or credit line increases will be a soft pull if possible. As far as the short sale issues; this May will mark 2 years since the short sale already. At this point I can ask if there is a specific amount I can pay to have my credit reports reflect "paid in full", but as you stated, this will then lower the amount I can pay towards my credit cards and it is unlikely they will negotiate a short sale as paid in full anyway. It is my understanding that a short sale can affect a credit score for 7 years, while remaining on the report for 10? I have also heard that people with a short sale can typically purchase a home again in 2-3 years or so after the short sale. I am not looking for a home right now. If this is all true, then it may not make much sense to pay money to U.S. Bank for my short sale that was completed almost 2 years ago. I am definitely open to other suggestions and insights regarding any of this information. Thanks again!
