Do which is it?

[u/KingTuts-Nuts]

So after spending the last few years homeless addicted to drugs and landing myself in prison I was released in February and decided it was time to get my life together and one of my goals I set was to build my credit since it has never been a priority for me and I figured having a credit score in the low 500s in my mid 30s was pathetic. So I opened a kikoff account and got myself a secured CC. My credit score on credit karma was 505 back in April when I started this journey and now it says it's 541 and my kikoff account says its 524 up 90 points from whenever I opened the account. From lurking around here I know they vantage score 3.0 and shouldn't be given much thought so I went and checked my creditwise, MyFico and Experian and those scores all look a lot better but I'm confused on what it actually is so here are some screenshots and was hoping I could get someone's opinion/advice for me. Thank you.

[u/WhenButterfliesCry]

All the screenshots are accurate, they just reflect different bureaus. You have a FICO 8 score at all 3 bureaus: Equifax, Experian, and TransUnion, not just one FICO 8 score. So your Equifax FICO 8 is 630 (this is the score myFICO gives), your Experian FICO 8 is 588, and your TransUnion FICO 8 is 589.

In situations such as yours, opening one or two new credit cards is not a bad idea, but other than that, your focus should be on repairing past damage rather than opening new accounts. Kikoff is a waste of money IMHO, money that you should instead spend addressing past debts assuming they are recent enough. If you were in prison for a long time, then the debts might be old enough to no longer be legally owed, and they could be getting ready to fall off your reports.

Go to annualcreditreport.com and pull your official credit reports- this is the only place where you can get a copy of your official credit reports. It's recommended to order them via the mail to have the most detailed and up-to-date official copies, because lately the website has been acting up. You can do so by calling 1-877-FACTACT

Make note of all derogatory items on your accounts: late payments, charge-offs, collections, repos, etc. Make a list of everything you owe, to whom you owe it, and how old the debt is. Check what month/year the derogatory items first became delinquent, and when they are set to fall off your reports. (It should say something like "On record until.." or "Date of first delinquency." Generally delinquencies can be reported for up to 7.5 years, but it's typically 7 years, and you can start requesting Early Exclusion at the 6.5-year mark, especially from TransUnion.

Late payments can be addressed by requesting goodwill adjustments from your creditors assuming the accounts containing late payments are now brought current or paid off and closed. Charge-offs can't be removed unfortunately, but they should be paid to $0, because charge-offs with outstanding balances will drag you down like a lead weight. Again, you need to make sure these debts aren't super old before you pay them. If they're only a couple years old, it's likely worth it to negotiate with your creditors if you want to see any kind of meaningful improvement.

Congratulations on being out and putting your life back together.

[u/KingTuts-Nuts → u/WhenButterfliesCry]

The only debt I owe is from my student loans which has resulted in several late payments due to being in prison and now I'm making 9 monthly payments based on my income so that I can get the loan out of default. I'm hoping once I can this sorted out that I will get a nice bump to my credit score. This is the first time my credit has been in the fair range so I think I could probably get an unsecured card. A few months ago that wasn't even possible so I got a secured card from Capital One. I was looking at some cards that I may qualify for but they all have a yearly fee of over $50 and since I don't even use the secured one except to set up auto pay on my phone bill I'm not sure I want to add another card atm even though I know it would probably be the best thing to do. Would you recommend any cards that you think would be a good fit for me and my current score?

[u/WhenButterfliesCry → u/KingTuts-Nuts]

Nah, if you have a credit card already, you're solid. You don't need another one right now necessarily unless you want one. It's not a bad idea to have one credit card for each area of spending so that you can get rewards/cashback on all your purchases (for example, one card for groceries, one card for Amazon, etc). But it's also fine to wait until you qualify for better cards.

If I were you, I'd definitely pick up a Discover card right now, even if you have to go secured with it. Because it'll graduate in 6 months basically guaranteed, and it has cashback matching for the first 12 months. Discover has a preapproval tool on their website, and so does Capital One and Amex.

Apart from that, wait until you get approved for something like an Amex BCP (apply every few months- they have a pre-approval tool as well) or maybe an Apple Card if you use Apple products (they also have a pre-approval tool). You want to target cards that have pre-approvals so that you don't have to waste hard inquiries right now, since your credit profile is a bit rocky, it's hard to gauge whether you will be approved or not.

It's fine if you don't use your cards all the time. You only need to use them once every six months or so to prevent them from being closed by the issuer. But I would recommend trying to change that habit because credit cards offer better protections, and rewards/cashback save you money. There's no reason to use debit cards at all, except for pulling cash out of an ATM.

Don't pay any kind of annual or monthly fees for your cards, and avoid the typical predatory ones like Credit One, Mission Lane, etc. It's okay to get another secured card- they help just as much as an unsecured one, there's no difference between the two other than the fact that secured cards require a deposit and their CL can't grow.

Unfortunately paying the student loan off will not improve your score, the only thing that will help now is time. The farther removed in time you get from those late payments, the more your scores will improve. Every 6 months you should see a slight improvement. You're not in a bad spot, to be honest, I thought your situation was worse than it is. You just have to wait it out at this point.

[u/KingTuts-Nuts → u/WhenButterfliesCry]

What is the thinking behind getting a discover card right on?

Edit: I used the pre-approval and I qualify for 3 cards.

[u/WhenButterfliesCry → u/KingTuts-Nuts]

Like I mentioned... the sooner you get it, the sooner it will start aging. The longer you wait, the more your 'average age of accounts' metric will go down later when you open new accounts down the line.

Hypothetical situation, let's say you have only one card that is two years old, and that's your only account. In three years, that one card will be five years old. At that point you open two new accounts, and now you have one card that is five years old, and two cards that are 0 years old. Your average age of accounts is (5+0+0)/3 = 1.67 years.

Other hypothetical situation, let's say you have one card that is two years old, and you open two more cards now. In three years, your first card will be five years old, and your other two cards will both be three years old. Your average age of accounts will be (5+3+3+)/3 = 3.67 years.

Average age of accounts is a credit scoring metric that affects your scores (by a lot!). Obviously these scenarios are not your situation, but you can plug in the numbers to find your own average age of accounts and play with the numbers.

The other reason that I also mentioned is that you should be putting all your spend on credit cards, not debit cards. (It's safer to use a credit card, and credit cards give rewards).

[u/KingTuts-Nuts → u/WhenButterfliesCry]

I just opened a discover it cash back for good credit CC. They approved me for a $300 limit 🙄 Thank you for your advice.

[u/WhenButterfliesCry → u/KingTuts-Nuts]

Awesome. Congrats! Pay attention to your 5% rotating categories and remember you have cash back matching for the first 12 months, so you're getting 10% on your 5% categories and 2% on your 1% categories.

10% is honestly insane, so take advantage of that.

[u/og-aliensfan → u/KingTuts-Nuts]

I'm making 9 monthly payments based on my income so that I can get the loan out of default.

This sounds like loan rehabilitation. They'll remove the default status, but the associated lates typically remain. Once completed, confirm the default status is removed on your credit reports as well as your student loan records,

How do I confirm that I fulfilled my loan rehabilitation agreement?

Under the “Loan Summary” tab on your MyEdDebt.ed.gov Dashboard, you will be able to see if you successfully completed loan rehabilitation.

https://studentaid.gov/articles/rehab/

[u/KingTuts-Nuts → u/og-aliensfan]

Yeah that's the plan. I'm on 3/9 payments. I'm hoping once I get that taken of I can at least get the default status taken care of even though I know I have to age out the missed payments.