I have about 18 bad debts on my report most of which will be gone in two years. Should I let them click off or pay them off? what will my score look like etiher way? Is there a profesional I should talk to? Would that be a lawyer or a credit counsler?
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Sun, Apr 26, 2009
April 26th, 2009 at 7:19 am
It depends on how quickly you want to get your scores up. If you have some items that are due to drop off your report in the next year or so, you could play the waiting game if you feel like you could wait it out. For the ones that doesn't expire as quickly I would contact each one of them starting with the smallest amount first and negotiate for a "payment for deletion", which is a payoff amount that will have the derogatory item removed from your credit report. If you're successful in making this happen get something in writing on a company letterhead from them before you send them a dime. Although it would shorten the length of time (15% of your score) and the different types of credit that you had (10% of your score), it gets rid of what's hurting your score the most: the amount of debt you have(30%) and the payment history(35%). Also check whether there's any mistakes or any accounts that are not yours. It's important to dispute these with the credit bureaus.
Now, once you've cleared up all the bad debt, you have to start showing good credit. The easiest way would be to find a close friend or a family member with excellent credit to add you to their credit cards as an authorized user. Usually after about 3 months their payment history and activity on the account now reports on your credit as well, giving your credit a boost.
Also it would help to show that you are trying to establish credit by openning a credit card. A secured card would be your best option because it's the easiest to get, no having to have your credit pulled and then denied. You would have to put a deposit upfront, to secure the same amount of the deposit, but you have total control of the credit line depending on how much you put in the deposit. And you can think of this as another way of saving money since the deposit is practically a savings account that would garner interest. The more you deposit, the higher the credit line. And if you make your monthly payments and a low, or preferably zero balance, after about a year the deposit is refunded to you and the card becomes unsecured. Once it is, the higher the credit limit, the better because it gives you a larger cushion of utilization (avaliable credit) versus what you owe.
You also can open a Certificate of Deposit with what you had in savings and secure it against an installment loan to build credit as well. Keep the money in savings that you get from the loan for at least 9 months to a year then use it to pay off the loan.
Finally, if you're paying recurring monthly bills on time such as rent, utilities, wireless phone, cable which don't show on your report, you can enroll with a reporting agency http://prbc.com/default.php? that allows these payments and others to get reported every month and compiled in a scored report that can be considered with your traditional credit reports. You can have up to 3 years historical payments verified and reported (for a fee) as well as enrollment in a billpay service that automatically reports all payments that are made.
Hopefully the information I've given will help out…
Good Luck!
April 26th, 2009 at 7:19 am
u have to pay your debt in full, then they will remove it from your credit report..
April 26th, 2009 at 7:19 am
First of all, if you are applying for Store credit cards such as Target Credit card, Macy's credit card – things like that, call and cancel and do not apply for cards anymore.
Reason is that everytime someone CHECKS your credit report, you lose points. And the more credit cards you have, the more points you lose, too,.
Second, cut down expenses. and only use money for the most needed things. Concentrate on paying you debts first. Consolidate your debts.
Third, make sure you don't bounce your checks. Those stay on the record for a few years.
April 26th, 2009 at 7:19 am
You need to make an entire lifestyle change. Until you start paying off your debts when they are due (all the time), your score will not improve. Learn to live within your means.
April 26th, 2009 at 7:19 am
There are non-profit credit counseling agencies in most good-sized cities. You want to be sure this is a credit counseling agency, not one that issues "credit consolidation" loans. Check with your local Better Business Bureau office.
Improving your credit score is a matter of (1) paying off debts on time and (2) history. Various credit reporting agencies and lenders look at different things. Mortgage lenders (home loans) look at your history over several years. Bankruptcies stay on your record for years (depending on where you live).
Generally, you are better off paying off a debt, even late, than abandoning it. For example, if you apply for a home loan (after a suitable time rebuilding your finances), your loan application is submitted to a loan committee for approval. They have some leeway in approving loans, and if you can show that you repaid your debts, with an explanation of why you got into trouble (as in, "due to an illness requiring hospitalization, I was unable to work for a year, which delayed my repayment of my debts"), and show that your credit history was good before and after the event, they're more likely to approve your loan, although they might require a higher interest rate.
If you have a very bad credit record (and 18 bad debts would be considered a very bad record), then you really do need to talk to a credit counselor to come up with a plan to build up your credit score. This is a matter of changing how you handle money – because from this date forward, you can't afford any late payments at all, ever.
April 26th, 2009 at 7:19 am
First, you need to establish a good payment history. On time payments work best. As the debts are satisfied, call the credit bureaus and get them removed. As time goes on, periodically check your credit scores and see how it's coming. Be aggressive and get on top of this, I speak from experience. I'm just starting to dig myself from under about 70K in debt. I'll get thru it, so will you !!!
April 26th, 2009 at 7:19 am
First of all check if you have any mistakes or things you know you didn't credited under your name and social. It's easy to say just let it hit my credit report, but it's better if you pay it off, even though you will have them on your credit before regardless of whether they're paid or not. If you pay your debts off, (suggestion, smallest to greatest), make sure you check your credit report often as sometimes they don't labeled your debt as paid off, and you don't want to pay in vain. Make sure you keep all receipts and all documents associated with the payments you make. Good luck!