My parents are giving me the money to pay every delinquent debt in full because I absorbed all my financial resources when THEY had financial troubles (cancer, laid off, etc).
I’d like to buy a car ASAP but I don’t know how that would reflect to a lender.
I’d like to take the cash and put it towards my new car, but the idea to pay debt is a gift from my parents, who would like to do the responsible thing, not buy me a new car when I have outstanding debt.
I got the idea that you could pay for removal from my mom, who is obviously wrong. Does that apply to all open accounts, or just charge-offs?
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Wed, Dec 23, 2009
December 23rd, 2009 at 11:13 pm
Pay for Delete will work for non-credit card items. If your debts are for non credit card items like defaulted cell, health club bills, medical bills, make it your priority to pay these off first…the more recent…the better the effect on your credit report/score. FYI: The time to update credit reports is at least 4-6 weeks after payment is made.
Charged-off credit card debt is unfortunately another matter. It’s almost impossible to negotiate the removal of charge-offs from your credit report. If you have charge-offs, you need to be aware that the damage is already done. Don’t make the mistake of simply cutting a check to whatever collection agency has the debt for the charge-off and assume that your credit will be magically restored…it won’t….Doing so will not remove it from your credit reports. It will simply be updated to a "Paid Charge-Off," which, while slightly better, is still a seriously derogatory item.
As per the Fair Credit Reporting Act, a charge-off, whether paid or not, can remain on a consumer’s credit reports for up to seven years.
If you’re going to pay off old-charged-off debt anyway, then you might as well negotiate the lowest settlement you can possibly get, being that the negative charge-off notation is going to stay for 7 years on your credit report anyway. You have to be VERY careful in this effort…Mail them a vaguely worded statement like:
I am willing to settle this matter for 25% of the original amount. This is in no way an admission of this debt, but rather an attempt to settle this matter. Your firm must send me a written agreement on your company’s letterhead that you will accept this amount as "payment in full" and that is issue will be settled. Upon receipt of this agreement, I will mail you a money order for this amount.
December 23rd, 2009 at 11:13 pm
60 -90 days but understand this items that are accurate cannot be deleted or removed per the Fair Credit Reporting ACT as that is federal law
December 23rd, 2009 at 11:13 pm
not sure how much you owe but I do think that it might be a better idea to just use the cash to pay for the car and pay your loans off gradually as it will take time for your credit to improve (longer than a few months)
December 23rd, 2009 at 11:13 pm
What makes you think that you can pay for removal?
December 23rd, 2009 at 11:13 pm
Sorry to say that there are no pay for removal options out there —- what you can do is that if you have a creditor that is collections make an agreement that if you pay them they will remove the item from your report — if you manage to get this arrangement done make sure you get it in writing before you send a dime to the creditor — if the creditor doesn’t agree at least you tried but the payment for removal is the only way that I know of is a favorable shot of having an item removed after paying it off otherwise you’ll have to wait the long 7 years before it’s removed
December 23rd, 2009 at 11:13 pm
Hogwash on your first response, you most assuredly CAN get negative info removed BY the creditor if you can negotiate a deal with them to do so upon your paying the debt or an agreed upon portion of the debt.
Get any such agreement in writing BEFORE paying and never use you personal checking account o make the payment.
December 23rd, 2009 at 11:13 pm
Negotiate a delete for pay for any single entry derogatory item first. You won’t be able to get regularly reported items like credit cards completely removed.
If the debt is over 3 years old, offer 25%; 2 or 3 years offer 50%; less than 2 years, offer 75%. Lump sum gets the best deal — you may want to start on the low site. Get any settlement agreement in writing and keep it, along with your payment proof, forever. Do not give collectors direct access to your bank account.
Paying off old debt won’t improve your score unless you get the item removed. However, creditors look at your whole credit report. Paid old debt looks much better than unpaid.
Pay off the debt and wait or buy less car. You need at least 24 months of consistent, on time payments to improve your score.
December 23rd, 2009 at 11:13 pm
12 months would be about average to prove to them that you are really a different person. Your score would jump almost 150 points..