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Rebuilding credit after Student Loan default?
I'm currently hovering around a 640 credit score as reported by CK's soft inquiries, and I learned the hard way today that FICO scores can vary significantly. We were just denied preapproval for a potential FHA mortgage, which the hard inquiry only dinged me a couple points by CK's algorithm, but my median score was only sitting at about at 620. Since 640 is the general "magic number" for many FHA lenders, is there anything I should try to do to improve my credit score in the short to mid term?

Granted, I realize that repairing credit is not an overnight process, so don't misunderstand me as assuming that it'll happen immediately, but I'd obviously like to start building home equity and get out from the rent trap as quickly as we feasibly can.

Some general profile info so y'all can better suggest some next steps for me:

My only accounts at this time are Student Loan installment accounts, which I previously defaulted-- BUT had the default removed after repayment counseling. The one thing that didn't get removed were the late payment penalties, which are still on my report from 2012 - 2014. I have around $20,000 in installment debt distributed across 9 open accounts, with zero balance on 4 closed accounts (13 accounts total.)

Playing around with CK's Credit Simulator, it looks like diversifying my credit portfolio with a rotating balance (potentially a secured credit card) has a fairly promising effect, with CC balances of $1,000 - $2,000 impacting my score by up to +20 points. Is this a realistic expectation to rebound my score that much after the effects of the initial hard inquiry fade?

More importantly, since it doesn't look like we'll qualify even for an FHA loan in the short-term, will my credit be positively impacted by paying off the installment accounts? I've read some mixed information on whether zeroing your accounts is a good or bad thing; on one hand, it's less total debt, but may raise your debt per account. Beyond that, since the negative impact of the default has been wiped, the thing really dragging me down is payment history-- am I better served to continue paying the loans at their current monthly rate to increase my percentage of on-time payments?

I very much appreciate any advice you folks have to offer, and am happy to answer any other questions that might better direct my future credit.

Thanks in advance!

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Ok...  Yes you do need to get your score up.  I would not pay off your instalment loan just keep paying it on time.  That will help.  I would also get a couple of secured cards if you can.  They dont have to be high limits (that does not matter as far as your score is concerned)  Make sure that you pay them on time and never miss a payment and never go over your limit.  When your cards report (Statement date)  make sure one card is at zero and one card is showing between 1 -9% of your credit line.  Then when the statement cuts pay it off.  You should see your score go up after a couple of months. 

I would also really take the time to do some research on how credit works and what makes it go up and down.  You can search here on CK and other sites.

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