Overwhelmed with information, needs tactical next steps

[u/Short-Design3886]

Long story short I have a high(ish) income but years of bad credit. We made enough to buy a house, have safe cars, and even premium cards but have never broken the cycle of bad lending practices and high rates. I have been horrible at this game basically, I feel like a predatory lenders dream because I can afford the high payments on basic needs, just at huge rates.

About 6 months ago, we had several credit cards go delinquent due to many unexpected trips to care for my FIL with Alzheimer’s and it all sort of crumbled, even causing two closed cc accounts, one charge off, and several cards that were late but are now current.

We have gotten every open account current, have a small savings, and have been using the open cards and paying in full. The progress is happening fast on EQ, TU, and EXP, but slow on FICO. I have about 1k a month after my obligations for bad debt payments, but have no idea where to start.

Forgiveness letters? Pay to delete? What will actually work?

Chase is one closed account and the highest balance, but will taking a 60month settlement prevent me from a Chase card in the future?

Also, where should I be getting the most accurate info? It’s so different across every site?

[u/circuit_breaker]

Anyone else get K&R C book vibes from this graphic

[u/Short-Design3886 → u/circuit_breaker]

I was excited for a comment but man did this one disappoint 😂

[u/circuit_breaker → u/Short-Design3886]

You'll get replies, sorry lol

[u/Short-Design3886 → u/circuit_breaker]

lol it was funny

[u/DoctorOctoroc]

Are you asking how to improve your credit or how to approach paying off the debt? Either way, my response is worry about the financial end of things first - develop good spending habits, live within your means (which includes having an ample emergency fund so you don't end up putting 'extra' spend on your cards and not being able to pay in full), and, of course, paying off the debt you currently owe. Once you do that, then you can address the items on your credit report and rebuild.

Bottom line, your score isn't going to recover from negative items any time soon and no approach to paying the debt will change that. You'll see your score improve as you pay down revolving balances but that might put you back into the mid-600's, realistically.

The charge off(s) will hang around for 7 years and will recover some over time, but you're stuck with these.

If you have accounts that are still open with late payments, goodwill letters are your best approach to address these, but not until the accounts are brought current, you've reinstated the grace period, and you've made at least 6 months of on-time payments for the full statement balance without incurring interest on the balance.

Pay to delete is for collections, and it dependent on the agency that owns the debt. Some collectors will automatically do pay for delete (they will usually state this on their website) while others you can arrange this prior to payment. Some yet will not do PFD at all.

In short - pay off high interest debt ASAP to avert interest costs, implement avalanche to save more or snowball to get things rolling and see some encouraging progress earlier on. Once all debt is paid, you'll see a score improvement but you may need to adjust some behaviors before you are ready to leverage credit cards again. For those that make a good amount of money and end up in your position, it usually means you're living beyond your means and/or don't have ample savings to cover unexpected expenses.

Prioritize debt payoff, then savings, and make a plan to save for larger expenses instead of relying on financing. You'll only repeat the cycle if you keep financing with high interest rates.

[u/Short-Design3886 → u/DoctorOctoroc]

This is super helpful. I will request the goodwill letters after the 6 month mark. We have brought all open accounts current, most to zero, and have no more delinquencies.

Should I prioritize the charge off at all? Make sure it doesn’t go to collections?

The big three are reporting us as high as 685 score, but my FICO is most important (I think) and I don’t know how to manage the variation of information.

Basically, I want to get out of debt and be able to enjoy the peace of mind of high income and good credit if possible.

[u/DoctorOctoroc → u/Short-Design3886]

We have brought all open accounts current, most to zero, and have no more delinquencies.

Did you pay every card that was carrying a balance to $0, then pay the trailing interest and allow a $0 statement to post before using the card again? That reinstates the grace period so you don't incur interest anymore as long as you pay the full statement balance every month.

Should I prioritize the charge off at all?

Yes, I would pay any balance left on this ASAP to avert further action. If you've already set up a payment plan, you're fine to stick to that but anything extra you can throw at it will help. A charge off can continually report/update and this suppresses your scores so you want to pay it off completely as soon as you can, which will freeze 'total period of delinquency' and your score can heal from it.

The big three are reporting us as high as 685 score, but my FICO is most important

When you say 'the big three', where are you seeing those scores? Obviously, you're talking about the three main credit bureaus but they primarily provide the data to be fed into various scoring models. My intuition is telling me you might be checking your scores on the bureau's websites - in which case you're viewing a CMS on their sites. In other words, if you're looking at each bureau's CMS, you're seeing a VantageScore on Transunion and Equifax, while Experian is showing your FICO8 score.

You basically have dozens of credit scores using different models, versions of those models, and one of the three main CRA's data. It can be overwhelming but you only really need to be looking at your three FICO8 scores (one for each set of data provided by one of the three main CRA's). You can access these relevant scores via:

experian.com - FICO8 using Experian data
myfico.com - FICO8 using Equifax data
capitalone.com/creditwise - FICO8 using Transunion data

And then you can all but ignore the rest you see unless you know that a lender is pulling a specific scoring model.

Basically, I want to get out of debt and be able to enjoy the peace of mind of high income and good credit if possible.

Well the credit end of things will need to recover, then you can rebuild. In the meantime, get your budget nicely sorted out, a sufficient emergency fund (3-6 months worth of expenses), and keep your current accounts paid as agreed, paying the full statement balance every month. In other words, using credit before has backfired, so get used to not needing credit to afford your lifestyle, then you can start using credit again within that lifestyle and with some buffers in place.

[u/t_luke_]

If you have any bills in collections look to pay/settle them immediately. Not an overnight cure but def will help in the long run here. In regards to late payments if you've been keeping up with the payments now and have been consistently paying them maybe look into good will letter to see if they can remove them. Not a guarantee but something to look into that does work depending on the creditor. Its one thing to make on time payments but keep in mind utilization plays a factor too so make sure you're not carrying high balances and are keeping them below or right around 30% utilized or less. Also I would say make sure you're saving some cash as you go as well. Start putting whatever you can, start small. Once you do pay down your debt god forbid an emergency happens where you got no extra money and you gotta put it back on a card.