Tracy Winters
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Before everything – ask for a CLI
You’ve had the Capital 1 for 2 years with no CLI? Before applying for a new credit card ask for a CLI. Most likely you’ll get one. You can start with customer service, but if you don’t get what you want bypass them and and email the EO directly. Ask for $3k and pc to the quicksilver as a starting point, and they will come back to you with a counter offer.
As to the late payment, it is dragging your credit score down. The good news is that a year from now its negative effect will diminish significantly so you should be able to see your credit goes up, along with the new higher CLI.
As to your question, secured vs conventional credit card, it won’t make too much difference. 3K-5K tied up in a secured card is a lot of money that isn’t working for you, and there are better ways to diversify your credit. For example, you can try a near by credit Union, or maybe a Walmart credit card (and get a free credit score from TU along with it).
Secured credit card should only be applied to as a first CC, if that’s the only card you can get. Certainly not a second or third CC.
Most likely – YES
Although a 120 days late payment is considered serious, as you’ve mentioned it’s the only black mark on your report. The fact that it is already 2 years old and the reason you’ve “earned” it also stand for you, showing that you DO behave responsibly, and this is what mortgage officers like to see.
From my experience you stand a good chance to get approved, but the only way to know for sure is, well to try…
If the first lender will not approve you, simply go to another one. By the way, it’s a good idea to shop anyway, even if the first lender approves you.
Please come back and tell everyone how did you do.
All the best…
It may help a bit
A second credit card would expand your history, which may help a bit to raise your score. But don’t get your hopes to high. It takes time – you will need at least 24 months of consistent, timely payment history to improve your score. Those timely payments are what actually build good credit.
Naturally, you will need to use both cards. Just having a card won’t help a bit, so use both credit cards for regular purchases, wait for the statements, and pay the balance in full every month. That will build your credit and avoid interest.
Just for your information, if the student loans are reported to the credit bureaus and appear on your credit report, they count in your credit as well. Any reported debt counts in your score.
Usually, Federal student loans are NOT reported unless you fail to pay. Private student loans are generally reported whether paid or not. The reason for this is that the government is helping you tp “hide” your debt load, so that you are not rejected for other loans because of high debt-to-income
With that information, it’s really hard to answer. How long have you had this Capital 1 CC? Do you have other installment loans such as a car loan, student loan or a mortgage? Are the any negatives on your credit report? Etc.
Not a bit
The only thing that builds credit is a stream of on-time payments. It takes at least 24 months of timely payment to build a reasonable credit score, and years to build excellent score.
When you prepay student loan (or any other installment loan) you stop making timely payment. While this doesn’t hurt your credit, it doesn’t help it either because it stops building it.
However, keep in mind that credit scores are just a small part of any lending decision. For example, your debt-to-income ratio may have a bigger impact on the potential creditor’s decision. So are your employment stability and many other factors.
If you’re looking for a technique to raise your credit score prior to applying for a car loan (or any other loan for that matter) than read this. The described technique will raise your score immediately while lowering your debt-to-income ratio. This will get you better terms at any lender.
Good luck.
It won’t hurt your score, but it won’t help it either
Paying off a car loan early in order to save money on interest payments makes perfect sense. However, it does nothing extra to your credit. In fact, on the long run it might even hurt it.
What build and improve your credit is a stream of timely payments. Installment loans such as car loan are great score builders. When you prepay car loan (or any other installment loan for that matter) you stop making on-time payment. While this in itself doesn’t hurt your credit, it stops building it.
With that being said, I’d go ahead and pay off that loan w/o worrying too much about my credit score. A good credit score is a nice thing to have, but saving money on interest payments should come higher on your priority.
Good luck.
They are all “correct”
The scores you get on myFico.com are different than the ones car dealers use. Even though they are all Fico scores, they use different formulas.
As a consumer – the only type of score you can get is a generic version of Fico called ‘ Standard’. There are two more common Fico versions:
- ‘Auto Enhanced‘ – used by car dealers.
- ‘Factual’ – used for mortgage purposes.
Besides these versions, many financial institutions have their own credit grading system – grading for a home loan, car loan or credit card will be different. Furthermore – even within the same category – Chevy might have a different scoring system then ford.
They have all done their own proprietary analysis system to determine what kind of credit activity puts someone at a higher risk for default.
So you see – they are all “correct”. Also, keep in mind that credit scores are just a small part of any lending decision. In most cases what actually appears on your credit report is much more important, as well as other factors like your debt-to-income ratio etc.
For more information see understanding-fico-scores.html.
Credit Report errors like this are common
The 3 major credit bureaus are independent of each other. They do not share information, and each has its own separated report mechanism.
Many creditors report to just one or two credit bureaus, which may lead to further differences between credit reports.
Your creditor may have stopped reporting to Equifax before the account was closed, or it may be a simple honest error. Many such errors occur and can be easily corrected. All you need to do is file a dispute and the error will be fixed.
If the account is closed – file a dispute to Equifax. If it’s open, file a dispute to Experian & TransUnion.
You cannot remove it
Like so many, you are confusing between two completely separate notions: Credit Reporting time frame and Statute of Limitations.
Statute Of Limitations
The Statute of Limitations (SOL) is the time frame to bring lawsuit, and has absolutely nothing to do with credit reports. It is defined by state laws and varies between states.Credit Reporting Time Limit
The Fair Credit Reporting Act (FCRA) is a federal regulation that defines the time frame for reporting negative information to your credit report.Per the FCRA, most negative information can be reported to your credit report for a maximum of 7 years (some exceptions apply) from the date of first delinquency.
Because your credit report reflects your credit history, debts continue to appear on your credit report regardless of whether they are paid or not. Even debts which have been paid in full continue to appear on your credit report for the full time limit!
For this reason, there’s simply no way to remove a charge-off from your credit report if it’s accurate. Only the passage of time can assure its removal.
Especially in the case of credit card charge-offs, even Pay For Delete Agreement won’t do you any good because the collection company can only remove the collection account from your credit report, but the original charge off which is reported by the credit card company will remain on your report.
No credit card company will agree to remove a charge off that is accurately reported. You’ll simply have to waited and let it age off your report.
Disputing can sometimes be a double-edge sword!
If you have a long payment history on this account or 2 or 3 years or longer and had only one 90+ day late payment during the course of the loan, then removing the account from your credit report can actually LOWER your score!
Payment history (length of payment history specifically) is a key component in your FICO score. I’ve seen instances where people have successfully disputed and managed to delete a charged-off account or vehicle repossession where they had 3-4 years of great payment history prior to that delinquency – and their FICO has dropped 40 or 50 points or more!
You are better off with a long payment history plus one old delinquency than without the account. In any case, most mortgage companies allow you to write a “letter of explanation” to the underwriter giving your account of what happened.
BTW, you’re in the top 10% of people in this category, because most people NEVER pay off delinquent accounts. The fact that the loan was paid in full w/o it going to collection or having a court issue a judgment will stand up for you when the mortgage company considers your application.
In fact, I’ve never seen anyone get denied for having 2 or 3 late payments on an account UNLESS it’s a mortgage account.
If you have a good mortgage broker or loan officer he should have access to a software tool called CreditXpert. This tool allows you to simulate how your score will change w/o that one late payment. I doubt it will have much impact’ if any. You can also try this FICO Score Estimator, powered by FICO®.
Finally, if your lender or bank is telling you that the loan ill be denied because of this one account – simply find another lender!
Good luck!
It’s a common minor technical issue
It simply means that Capital One refused you credit card application because they can’t access your credit reports, and there for don’t know if it’s safe to lend you money.
There are several possible reasons for this:
- Your SSN, birth date, name and/or address may have been entered incorrectly on you applicatioin form. In that case simply correct the information and re-apply.
- Your credit reports may be too “thin”, meaning that your recorded credit history is shorter than 12 months. In this case the credit bureaus report your information as “missing or unavailable”. You will need to wait until you have 12 month of recorded information and re-apply.
- You may have no credit history at all because you haven’t used credit yet. In that case you’ll need to start building credit history.
- There may be error(s) on your credit reports. If this is the case you need to pull your reports and check them
Whenever you are denied credit because of your credit, you have a right to receive a free credit report from the credit bureau(s) whose details were uses on top of your free annual credit reports. Since you were denied credit because your “credit bureau information is missing or unavailable”, use you privilege and pull your free credit reports from all 3 relevant credit bureau and get down to the bottom of the problem.
See credit-bureau-information-is-missing-or-unavailable for more information.
I’d keep them open
I tend to recommend against closing credit cards, especially the older ones. Older credit cards give ‘depth’ to your credit report, which counts in your credit score as well – the older your credit report is, the higher your score will be. While it’s true that closed credit cards continue to appear on your credit report for a long time, they don’t count in your credit score as open credit cards do.
I many cases, closing a credit card results in a credit score drop.
There are, however a few more considerations:
- Do they have annual fee? – If they do, then the fee may not be worth the benefits to your score.
- Do they have rewards? – I would NEVER close my low-limit City CC because it give my around $250 rewards annually!
- Do you carry balances? – In that case you should take advantage of the low 4% APR CC you’ve mentioned. Personally, I’d never cancel a 4% APR CC (depending whether or not it has annual fee).
- How good are you in handling all those cards? – If you cant handle all of them, that’s another thing to consider.
As you can see, it all depends on the type of card you have, meaning the combination of annual fee, limit and rewards.
Hope this helps.
Only if you’re doing a FHA loan
Since the 3 major credit bureaus are private and the services they supply to lenders and creditors do no relay on government services in any way, consumers’ credit standing will remain unaffected by the government shutdown.
The majority of people who plan to take a home loan will also remain unaffected, again because most creditors are private. If however you’re doing a FHA loan – you may certainly suffer a temporarily delay or holdback in the loan approval procedures.
Freddie Mac and Fannie Mae, the government-controlled mortgage companies, have stated that their operations would be unaffected by the shutdown.
On the other hand, HUD (U.S. department of Housing and Urban Development) have stated that although they WILL continue to process single family loans during the shutdown, they anticipate slow rate of closing process due to the limited number of FHA staff available to approve & underwrite home loans.Your best course of action is to interact directly with your mortgage professional regarding your loan application.
Hope this helps.
Pay it off
It’s very logical that they refused your pay-for-delete for $80. According to the The Fair Credit Reporting Act (FCRA), deleting an account from their report to the credit bureaus is illegal. By doing so, they risk their relationship with the credit bureaus.
It’s not that PFD agreements aren’t practiced. Some collection agencies will agree, others won’t. But no collection agency will risk their relationship with the credit bureaus for $80!
Those that are willing to risk it will probably only consider PFD for a minimum $1000 – $1500.
As for your question – Pay it off. It’s only $80! It should have never gone to collection in the first place! The damage you’ll do to your credit will (or already have) cost you much more than those $80.
Not that paying off will raise your score. It won’t. But a paid account will look much better to potential creditors when the review your account.
For more information on pay for delete see pay-for-delete.html.
There’s no instant fix
Usually what happens after loan modification is that a Partial Payment Arrangement Made status appears up on your credit report. Unfortunately, Partial Payment Arrangements are considered a negative by the FICO formula, which is why your credit score was adversely affected.
There’s no instant fix for this. The only thing you CAN do is re-build your credit by making timely payments and avoiding any other negatives. You’ll need at least 24 months of consistent, on time payment history to improve your score and get it back to where it was.
More about mortgage modifications here.
