Hi everyone! I’m working on repairing my credit. I’m a 20 year old student Unfortunatly last year I was unemployed due to high risk pregnancy. Before my pregnancy my credit score was 689 but due to me being short on cash I got alot of cards I couldn’t afford to pay for to help make ends meet and my score has plummeted. Fortunatly I’m working again and am ready to build my score back up. The good thing is none of my accounts are in collections two or so are past due by thirty days but since I’m working again I won’t have a problem paying them down. I’m staying with my parents so the only bill other than credit cards would be a phone bill thats not over 120 also I pay my parents 200 a month for rent. I’m working full time and will bring home about 1700 per month. My question is should I get a credit counselor and whats the difference between debt managment and settlement how bad would that affect my score if at all. Help plesase finacial advice welcome!!
The total amount of debt I owe is alittle under ,000.00
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Thu, Feb 18, 2010
February 18th, 2010 at 7:12 am
You can use credit repair agency, for example this one – http://creditreport.imess.net
They will clean lots of bad stuff from your credit report – and do it much faster than yourself.
February 18th, 2010 at 7:12 am
The debt companies simply get you a lower interest rate by telling you to stop making payments. Then the credit card company will "Settle" for something that is better than nothing.
since your credit is already ruined I would stop paying on the cards you are behind on and pay miminum on all others except smallest. Work the smallest to largest. On the ones already past due you could save up about half what you owe and they call them with an offer to settle it.
daveramsey.com
February 18th, 2010 at 7:12 am
Credit counseling is NEVER a great option in most cases. Certainly not for a $6K debt. Credit counseling represents information on your credit report that almost seems like bankruptsy – you’ll have notes on your report that other creditors won’t want to see. Additionally, there are organizations that may not handle things correctly. Basically, you need to hunker down…figure out how to give as much money as you can (maybe ask parents to suspend your $200 rent while you pay down your debt?) to that $6K and before you know it…it will be paid off. Maybe get a 2nd job for a while? You could easily have that paid off in a year…
February 18th, 2010 at 7:12 am
If you can stay on track you won’t need a credit counseling service. They will neither help nor hinder your score but they can help reduce your interest rates. Your job should be a sensible plan to attack your debt and as you do, your score will increase over time. The link below can put you in touch with a valid counseling program (note there are alot of scams out there that promise but can’t deliver) if you need the help. If you know what you need to do, DO IT. Time will erase the negatives to build your score back up again. Look at ways to increase income and/or reduce expenses. Learn from your mistake that credit adds to debt … it doesn’t reduce it. Your score will only be important if you want another loan or credit card and to be honest, you don’t need one til you’re debt free.
February 18th, 2010 at 7:12 am
Hi,
If you are only 6,000 in debt and are fortunate enough to have your parents helping you with out, don’t go the debt management route.
The fact that a couple went past due by 30 days doesn’t help your credit score, but once you establish an on time payment schedule again, you should be able to get your score up again.
First thing to do is sit down with all of your credit card statements, put them in the order of highest to lowest interest rate.
Decide how much you can afford to pay out each month. Obviously the more the better.
Pay the minimum payment ON TIME to the lower interest rate cards, and the remainder of the budgeted money to the highest interest rate card. Get that one paid off first, then continue to the next, always paying ON TIME, the minimum to the lower interest cards and the balance on the highest until you have them all paid off. Once they are all paid off, cancel the ones that you paid late, keep the others.
Since you basically ended up in the situation because of a high risk pregnancy, save any documents (Dr bills, medical reports) pertaining to your medical situation.
Once the cards have been paid off, use one to purchase ONLY what you can pay off when the bill is due. After a year or so of good use and payment history the bad spot you went through won’t be as important to future lenders.
If you are concerned about being able to make bigger purchases (a home) in the future, should it be prior to the seven years it takes for the bad credit to fall of the radar, Most lenders will accept a letter of explanation (the pregnancy and back up documents) and will be more willing to lend since you can verify that it was a "one time" situation.
Good Luck and Congratulations of realizing at your young age that your credit score is important.