I have finally paid off all my delinquent credit card debts. My credit rating is pretty crappy though. But I now have a secure job, and am now ready to re-open some of the closed accounts (if it's even possible), and also hopefully reinstate the original credit-limits on them. But there's that pesky issue of my credit rating standing in the way. What is my best strategy to get my credit back on track?
posted by anonymous to work & money (13 answers total)
First some background (sorry this is so long):
I'm 31 years old, never went to college, and did not establish any sort of credit history until early 2001 (it's irrelevant to this discussion why this was the case, when I applied for my very first Capital One secured Visa card with a limit of $200. After only 6-8 months of diligently using and paying off this card on time, CapOne offered me the opportunity to apply for an unsecured Platinum Visa card. They accepted my application, and I was ecstatic to have a second creditcard, this time with a $1000 limit. About 6-8 months later, CapOne raised the limit on that card to $2000 (without me asking). Around the same time, i applied for a USAA Gold Mastercard, and was immediately approved for a $2000 limit, as well. A $500 limit Macy's card, and $1350 limit SearsCard followed shortly after.
And then...the floor fell out from under my life. First, the company I was working for suddenly went under. Not too far after that, my fiancee dumped me (after cheating on me with a close friend of mine), sending me into a horrible downward spiral of debilitating clinical depression which sapped all motivation for me to want to do much of anything in my life--phone calls went unanswered/unreturned, and envelopes from bill collectors piled up, unopened. Just around the time when the money from my savings nearly dried up, I stupidly (in retrospect) decided to attempt to start a company with a few friends of mine, because we were all in similar financial straits, but thought that our collective talents and contacts would get the train back on the rails. Needless to say, it never really did. I was living off my credit cards, only making enough money to make rent and basic utilities every month. Despite my working 17 hour days for nearly 2 years (and reading every issue of Inc. magazine and Fortune Small Business for inspiration), hoping that the company would finally take off, I had maxed out every ounce of credit I had, and had no way ot paying the debts off. So this is not a stereotypical case of financial irresponsibility. I have always lived a relatively spartan life, and am not the kind of person who needs to be constantly buying material things in order to be happy.
Most of these accounts were chronically late and/or unpaid for months on end, for a period of about a year and a half. CapOne ended up lowering the limit on the unsecured Visa back down to $1000 before ultimately closing the account. The same happened with the USAA and Macy's cards. The interest and late fees, of course, continued to pile up. Thankfully I never used the SearsCard, so that's the only account which has always been in good standing, even to this day. And although they threatened me many times, thankfully none of these accounts have been reported to the CRAs as having ever gone into collections. I *did* have a T-Mobile cellular account that actually did go to collections (and which I eventually paid off), but it doesn't seem to have been reported to the CRAs, for some reason.
In July of 2004, My life began to turn around for the better. I lucked out with finding a very prestigious, secure job (basically *the* job which I have been working so damned hard all my life to get). I immediately began chipping away at the debts on these accounts. As I have been earning more money at this job, I have been able to pay off these accounts in larger and larger amounts every month. I guess CapOne took notice of this, and last summer, sent me an offer for a new unsecured Platinum Visa card, which I applied for and was accepted, but with only a $500 limit.
A few months ago, I bit the bullet and decided to pay off the remaning balances in one large fell swoop (including the new CapOne card). So I am now officially debt free! Now the problem is that i only have $2000 of effective credit line to my name now (though $1350 of that is on the SearsCard, which doesn't do me any good if I need to buy a plane ticket or book a hotel), and since I'm much more financially secure now, I would like to get that line raised, if only for the sake of the future.
Would it be a good idea (or even possible) to request that these closed accounts be re-opened with at least the original creditline reinstated? What would be the best way of even doing this? Or do/should I start from square one and re-apply for new credit card accounts? I'm afraid of hurting my already pathetic credit score by re-applying for a bunch of new accounts, especially if all I can get approved for are $250-$500 credit lines.
As of Feb 18, My FICO scores are: 634/TransUnion, 643/Equifax, 665/Equifax. The report shows 19 consecutive months of timely payments.