How to rebuild credit with different types of credit and my scores quickly?
Please read this entirely then respond with your answer. I would like to know what is the best way I can improve my credit? I have all credit debt paid off and has been for 2 years now. I have no debt. I recently attempted to get a 0 secured credit card from bank of America but was denied. They also talked me into applying for a regular card from them and also was denied this took place in Jan 2010. So I have 2 inquires from BOA now. I applied last week for a Capital One unsecured credit card (1 inquiry) and was instantly approved. I will probably have the lowest limit which is 0 due to my past bad credit items. I will receive this card next week. I know to use under 30% of my debt to credit ratio. However I plan to only use 7% because this is what FICO recommends and you can achieve a higher score. I have read it is good to use a mix of credit such as revolving, installment and charge. After being approved for the Cap One card I decided to dispute two of my old negative accurate accounts on my credit reports with all 3 burearus. One has successfully been removed by Experian and transunion so far. So now I only have 3 negitive accounts on record these are listed below. I know to wait 60 days then dispute one or two items once again otherwise my reports will be flagged by the bureaus. I have quite a few thousand in the bank should I use some of this money to also get a CD secured loan from my bank or a credit union? Should I put a ,500 deposit down on a secured credit card from my local credit union? Should I apply for an American Express charge card (good/excellent credit is needed from what I have read)? Currently before trying with bank of America, applying for Capital One and having a negative account removed from my credit reports My FICO scores were in early January 2010 Transunion: 597 and Equifax: 648. Experian has no FICO score so I will never know it, the Vantagescore from what I have read is useless and not used by lenders or creditors. Also how much will my credit scores improve 1-2 years from now after using at least Capital One credit card or other forms of credit building methods? Be it charge or installment. Will I be in the 700+ score range? This is my goal to be at in 2 years or less. By 2013 all negative items should be off my reports the 7 year period if not disputed successfully.
Negitive items: 3
2 charge offs / bad debt closed
Remove by 09/2012
1 credit card
2- 90 day late payments
Held for one year then closed
Went over limit
Remove by 09/2012
Good accounts: 5
One open, never used. 4 closed
Longest account 5 years old
Goal FICO score: 700+ (2 years or less)
The card I am recieveing from capital one is unsecured NOT secured. The negitive accounts I have been closed for years and have NOT reported since 2005, 2007, 2008.
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August 14th, 2010 at 4:17 pm
First, stop applying for new credit lines. All those recent inquiries are not only taking a bite out of your score, you are likely to be turned down because you are applying for too many new lines of credit.
Instead, when you get that secured CapOne card, use it for small purchases and pay in full every month. Don’t worry about usage percentages. In 6 months that account will be included in your FICO score calculation. Then try applying for regular major credit card. No sense having multiple or large deposits for secured accounts. Use both cards and pay in full each month.
You need at least 24 months of consistent, on time payment history to offset those derogatory items and rebuild decent credit. There is no shortcut. It takes time.
By the way, disputing legitimate items on your credit report may not work out so well. If an item does fall thru the cracks and get removed, it is very likely to show back up when the creditor next updates.
Some people like to think you have to be something special to have an American Express card. It’s not really true. The cards are not as widely accepted as Visa, Mastercard, or even Discover. There really isn’t any prestige in having Amex over any other card.
August 14th, 2010 at 4:17 pm
The best and only way to rebuild your credit ever is not to try to rebuild it quickly. If you try to do anything to your credit quickly, it will get worse. To make it better, you have to try to do so slowly.