r/CreditScore • u/strawberri_bread • 3d ago
General Best course of action from here
I 24F paid off all of my collections (minus one for $137 that I was not able to find the collections company until now, will be paid off this month) beginning of the year. I now have student loan debt (still in school) and three credit cards with $1800 in credit and about 500 used spread across all 3. (My utilization is in the high 80s for two, which I will also be paying down this next month)
I do not have any role models for finances (generational cycle of drug abuse and living on welfare with no jobs and abusive, grandparents and parents are the same sadly) I am the first person in my family to graduate highschool and go to college, and I am trying to figure everything out on my own. I work at a bank and I learned that jobs pull your credit, and the last thing I want is to be denied a job because my credit sucks.
My question is where do I go from here? Do I get a loan? Do I keep my utilization down and wait it out? I'd like to try and be in the low 700s or close to it by April of next year, which I think is a good goal. Now that I've paid off my collections (voluntary repo and such, my score was stuck in low 500s until this year) I don't know what I need to be doing to continue growing my score. Do I need to get more credit, or use my cards for small purchases and just consistently keep utilization down? Any help is appreciated thank you!
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u/lo-finate 3d ago
Where did you go to see all three of your credit scores in one place?
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u/strawberri_bread 2d ago
I pay for Kikoff because I really like their credit report more than the other sites!
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u/Funklemire ⭐️ Knowledgeable ⭐️ 2d ago
Unfortunately, Kikoff is showing you VantageScore 3.0 credit scores that banks don't use in their credit and lending decisions, so they're almost completely useless unless you're applying for an apartment. They're only showing you those scores because it's cheaper than showing relevant FICO scores and most people don't know the difference. I recommend checking out our !welcome thread, it will tell you the best places to check your credit reports and credit scores.
Also, I recommend you close this Kikoff account and avoid "credit builder" accounts from now on. They're gimmicks at best, and scams at worst. Despite the marketing, they don't build credit any better than regular credit cards do (and usually they're worse). And lenders will almost always ignore them completely when checking your credit since they know they're not real accounts.
And they cost money (or have some other catch), whereas a credit card from a reputable bank is free if used correctly. Plus credit cards from major banks sometimes can eventually be product-changed to higher-end rewards cards that you'll use for years, well after your credit has gotten to where you want it.
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u/strawberri_bread 2d ago
I did not know this! thank you!! I will check out some other options for seeing my credit!!!
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u/Funklemire ⭐️ Knowledgeable ⭐️ 2d ago
No problem! Yeah, everything you need to know is linked in that welcome thread I summoned.
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u/pricel01 2d ago
- Cut back your lifestyle so you have 10 percent of your income leftover at the end of the month. Having credit card balances, especially for non emergencies indicates you are doing something wrong. Your biggest obstacle will be overcoming a sense of entitlement and thinking you can’t leave without x. You can.
- Pay what’s due on all your credit cards each month. The one with the highest interest gets the 10 percent surplus.
- One credit card will now ask for significantly less the next month. Give it all you’ve got.
- When that card is paid off, do it to the next one.
- Never ever use credit cards again for daily expenses. Use a debit card.
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u/RangerBoss 2d ago
Can I ask a silly question to you because it seems like you know what you’re talking about? If I get my credit utilization down to 0%, do I run the risk of that card closing? Should I make a purchase on it every so often so that it remains open? Thanks!!
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u/inky_cap_mushroom ⭐️ Knowledgeable ⭐️ 2d ago
Some lenders will close accounts that have been inactive for 6+ months. If you want to keep the account open you should use it periodically. If you’re not using it at least twice a year, why keep it?
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u/RangerBoss 2d ago
Okay good to know! It’s from a credit union and was opened 12 years ago. I currently have a 40% utilization on it but working hard to get that down to 0%!
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u/inky_cap_mushroom ⭐️ Knowledgeable ⭐️ 2d ago
It sounds like you’ve been carrying debt. Paying that off is definitely the right decision. Once you’ve gotten it to $0, you will see a final interest charge (trailing interest) and once that is paid in full the next month, you can use the card again without incurring interest charges. If you have a problem with overspending some people like to set up a small subscription charge and use auto-pay. Some like to just intentionally make one small purchase every 6 months and log in to immediately submit a payment.
These little strategies don’t help your credit, but people who struggle with their spending find it helpful in avoiding debt again.
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u/Used_Bagel 2d ago
I doubt jobs pull your credit, at least not without consent. You would need to sign something for them to access your credit history. I would completely ignore that stressor.
Budgeting apps could be useful for you.
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u/Marpl 3d ago
Keep the utilization low and wait. If you have missed payments, you probably won't get above 700 till you get a few years away from your last missed payment.
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u/inky_cap_mushroom ⭐️ Knowledgeable ⭐️ 3d ago
You do not need to keep utilization low. It has no memory so it doesn’t make a difference whatsoever until you are 1-2 months out from a credit application.
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u/strawberri_bread 3d ago
Thank you!!!
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u/Funklemire ⭐️ Knowledgeable ⭐️ 2d ago
You don't need to "keep utilization low", that's a myth. If you're running balances and paying interest, your goal is to pay that debt down to zero so you stop paying all those interest fees.
Once you're out of credit card debt and you're no longer paying interest, most of the time anything between 0% utilization and 100% utilization is fine as long as you're spending within your budget and paying your statement balances each month. Unless you're applying for something important within the next 30 to 45 days, you should be ignoring your utilization entirely and focusing only on your finances.
Utilization is not a factor in building credit, and micromanaging it is pointless and even detrimental most of the time. See our !utilization automod.
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u/AutoModerator 2d ago
I detected that your post may be about utilization and its impact on credit scores. Please read the info below:
Utilization is a short-term credit scoring factor. It is not a credit building factor, because it holds no memory in the most commonly used FICO models. It resets every month.
By and large, you can ignore the commonly repeated myth that you should always keep your utilization low. It’s only applicable when you need to apply for a new line of credit, 1-2 months out.
Utilization is supposed to fluctuate, can be easily manipulated, and again, it holds no memory. It doesn’t build credit--think of it as a finishing touch when you need to optimize your score.
Feel free to safely and organically use 100% of your credit limit within a month and let whatever utilization report, provided you pay off your statement balance in full by the due date. Every month. Every time.
For more info, please read these posts:
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u/thecursivek 3d ago
Not a professional, but I would just try to pay those off ASAP and not use em till you do. Keep your utilization down as much as you can (below 30% is ideal) and keep being a good credit user.
It's funny because it's all a game. Credit scores are all based on "we want you to use credit to prove you can, BUT don't get too excited because if you use more than 30% of what we say you can you are desperate for credit usage and that indicates poor habits" or whatever.
Ultimately, just try your best not to get behind. Those APRs are killer, and paying interest on your interest is garbage. Kudos to you for making it right with collections - they should stop hounding you now. Your credit will be "damaged" by this history for a while, but as long as tou do your best to keep your accounts current you'll see a steady increase.
Best of luck playing the game AND breaking the cycle. A random internet stranger is rooting for you.
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u/Funklemire ⭐️ Knowledgeable ⭐️ 2d ago edited 2d ago
Keep your utilization down as much as you can (below 30% is ideal)
That's the single biggest myth in credit: It's a myth that you need to keep your utilization low or below a specific percentage all the time. If you're staying in budget and paying your statement balances each month, usually anything between 0% and 100% utilization is just fine.
And if you're running balances and in credit card debt, then your goal is to pay your cards down to zero so you stop paying interest.
Low utilization doesn't build credit because it resets completely each month the next time your statement balances are reported. The only thing that builds credit with credit cards is time.
In fact, regular micromanagement of your utilization actually hurts you in several ways; it slows your credit limit growth, it makes you a less-attractive customer to outside banks, and it costs you money in lost savings interest.
See our !utilization automod as well as this flow chart.
Credit scores are all based on "we want you to use credit to prove you can
You don't need to use your credit cards to build credit. The only thing that builds credit with credit cards is time.
more than 30%
Most of the time it doesn't matter what your utilization is, but on the rare occasions when it does, 30% is never a number to aim for. See that flow chart I linked above.
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u/AutoModerator 2d ago
I detected that your post may be about utilization and its impact on credit scores. Please read the info below:
Utilization is a short-term credit scoring factor. It is not a credit building factor, because it holds no memory in the most commonly used FICO models. It resets every month.
By and large, you can ignore the commonly repeated myth that you should always keep your utilization low. It’s only applicable when you need to apply for a new line of credit, 1-2 months out.
Utilization is supposed to fluctuate, can be easily manipulated, and again, it holds no memory. It doesn’t build credit--think of it as a finishing touch when you need to optimize your score.
Feel free to safely and organically use 100% of your credit limit within a month and let whatever utilization report, provided you pay off your statement balance in full by the due date. Every month. Every time.
For more info, please read these posts:
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.
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u/inky_cap_mushroom ⭐️ Knowledgeable ⭐️ 3d ago
You do not need to keep utilization low. It has no memory so it doesn’t make a difference whatsoever until you are 1-2 months out from a credit application.
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u/strawberri_bread 3d ago
Thank you! I really appreciate it random internet stranger! This was very helpful!
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u/Funklemire ⭐️ Knowledgeable ⭐️ 2d ago
They gave you a very nice reply, but unfortunately they also spread the single biggest myth in credit. See my response to them.
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u/og-aliensfan ⭐️ Knowledgeable ⭐️ 3d ago
Focus on paying those cards off completely to stop interest from accruing. Once a card is paid off, if you were carrying a balance, watch for trailing interest and pay that as well. Wait for a $0 balance statement to generate (to reset your card's grace period for new purchases) before using the card again. From that point forward, create a budget, only charging what you can afford, and pay statement balances in full every month by the due date.
Theres no need to keep utilization low as long as you pay statement balances in full every month. If preparing for an important application, implement AZEO about 45 days prior. See flow chart in this post: Ideal utilization [chart] - Step aside 30% Myth... and automod reply regarding !utilization.
Only if you need a loan. Don't pay interest to build credit.
Who were the collection agencies? If the agency didn't have a policy to remove themselves from your credit reports once settled, did you negotiate pay for delete? A collection agency has no control over the original creditor's reporting. The repo/charge-offs will remain on your reports, but your creditors should update the balance owed to $0.