Credit Repair Leading To DROP in Credit Score?

[realmoney]

I had a question in regards to deletion of credit cards from my credit report. I had 3 lines of credit. Capital One, Macy's and Chase.

Capital One-Charge off (settlement accepted)
Macy's-30 days late
Chase-120 days late

Then approximately $40k in student loans made up for several different loans.

I hired Lexington Law to take care of this, approximately 1 month in they were able to take care of the Chase account.

As a result of deleting this account my credit score DROPPED 60 points....

Can someone explain this to me? Should I not dispute the 30 day late account? I have no credit cards open currently. I want to get the charge off taken off of my credit report but I'm afraid that this will be detrimental since this will practically erase any history of me having credit period.

Any Advice?

[Lian]

I am unsure of how you are getting, or expect to get, the accounts "deleted" from your credit report.
Payment of debt does not result in the deletion of prior reported derogs and delinquencies, let alone of the accounts under which they occured. If the accounts were closed for whatever reason, they also still remain in your credit report until such time as the account itself is actually deleted by the creditor.

Was the Chase account actually deleted, or just the 120-day late? If other delinquencies were also reported on that account, they would still remain. A 120-day late is usually preceded by a 90-day late, which is still a major derog. What was the extent of "deletion" of information on that account, and what derogs still remain?

And if unpaid balances still remain on accounts, even if closed, they continue to count in your % util. So deletion of one 120-day late may not have addressed other negative aspects of that account.

Finally, if accounts are actually deleted, that could, depending on the circumstances, have negative scoring effects. You lose its credit limit if the account still had a balance, and you additionally lose its age in calculating your average age of accounts. How old are the cards that you are attempting to delete, what are their credit limits, and are those CLs still adding to calculation of your % util?

More info is needed to determine score movement.

[realmoney]

Thanks for the reply

ALL of the credit cards are paid in full, the only debt I currently have are my student loans which have never been late etc.

The accounts were closed due to delinquency. My chase account was deleted completely from my credit report, it was deleted by chase, and I've verified it's as if the account never existed.

Chase was 2 years old, same with my Capital One card. The oldest was my Macy's account which is about 4. The Line was Chase was $500, Capital One $1500, and Macy's $500. The three accounts were already closed and paid off about 6 months before I even attempted a credit repair.

After the full deletion of my Chase account I lost about 60 points according to a credit monitoring service I have. I'm assuming this loss was due to a reduction of credit history?

[Hal Jordan]

This is the problem with hiring places like Lexington or Skyblue.

They just send out mass dispute letters to the credit bureaus contesting the negative information on your reports. Many of the people they hire seem to either not be properly trained or just become apathetic to finer points of credit repair and will just contest an entire account instead of a say a late pay like in your case.

So what they did was just dispute the entire account.. Not the late pay specifically. The credit bureaus deleted the account entirely and removed not only the late pay but the entire account itself.. Which was a previous line of credit that was being factored into your fico with age and credit limit and a full payment history...

When they got the account deleted they deleted information that was helping your fico score.


This is like I said, one of the problems of using a credit repair place instead of doing it yourself.

There are more than a few cases of Lexington lowering people's scores.


BUT, I will say this. Once you re-establish some new credit it will bounce back fast. Make sure you look into getting yourself an active credit line (go secured if you have to) but you need to get some kind of revolving credit on your reports to make your scores go up. Payment history and debt to credit ratio are the two LARGEST influences on your fico score.

[realmoney]

Thanks for the reply, I figured as much. I will have to speak with them about that going forward. They are currently working on the charge off and the Macys account. I believe they sent a letter of good will on the maces account and still waiting to hear back from the CB's from the 1st round of disputes.

Any recommendations for a 600 credit score in terms of cards? I know I need to get some sort of revolving line in fast, I just don't know who is going to work with that without charging some sort of annual fee just to open the account. Should I apply now for that or wait until they get rid of the charge off and 30 day late?

Thanks again.

[Hal Jordan]

Yes.. Both Orchard and Capital one have low fico score credit cards that people with 580's and above have said they got approved for. They are usually $300 lines of credit and have like a $59 annual fee and I think orchard charges something like $39 for an additional activation fee but you'll have an open revolving credit account on your reports. Keep that balance below 10% of your available credit (which with a $300 limit means one meal or something a month that you pay off when your statement arrives and no more). FICO doesn't care if you have $100 on $300 or $10,000 on $30,000.. That's still 30% debt utilization. So really watch your balance on your cards because having a high debt utilization like $250 on a $300 card (75%) will trash your score.

Good luck!

[realmoney]

Yeah I applied for the capital one card and was denied after I was "pre-qualified" for it. lol

I think I might have to go the route of a secured line of credit. The charge off is a killer right now since the 30 day late from a few years ago can't be that bad.