Credit Repair
How do I repair horrible credit and raise my credit score?
I ruined my credit. I am now trying to repair it by calling my creditors and paying them what I owe. What is the best way I can do this and raise my credit score. Someone told me that by simply paying them off won't raise my credit score and that I need them to report "account paid in full". Is this true? Can someone PLEASE help!
Public Comments
- If you pay them, they WILL report it paid in full. Don't expect the score to rise right away, though, it will take some time to correct, since the old debt will still show up for 7 years, and creditors almost always check the last 2 years credit records when deciding on your payment history. Pay them off, keep them paid off, and just wait, it will slowly improve.
- I would ask them to remove all references to the account in exchange for your full payment. If you pay the account, the negative information stays on your report for another seven years. Get their agreement in writing, before you send a check, and then follow-up to ensure that they removed the account. If a creditor refuses to remove the item from your report, simply tell them that will have to wait for payment in that case, because you will send the money to another creditor who IS willing to work with you on your terms. This might get them to budge. Good luck!
- Just pay them off and keep credit to what you can pay at the end of the month. While things stay on the report for 7 years, the things that count heavily for scoring are within the last 24 months. Do NOT to what Mr. MBA said about threatening them to pay other creditors first. The person on the phone doesn't care and will be perfectly happy to report you as a bigger and bigger delinquent each month until you stop paying games and pay. Trying tactics like this is a great way to turn already bad credit into worse credit.
- There are many things you need to do. First off realize that paying them off won't help your credit. Having them paid current will. You need get everything current, up to date. Make sure that 2/3 rds of your available credit lines are paid, but don't pay it all off. In other words if your credit line is $1000, keep your balance around $300. If you do this and then stay current, no lates at all, for 6 months your credit will improve. Creditors want to see that you have available credit with a balance. If you keep everything paid off, creditors see that they can't make money off you via interest. If they can't make money off you, your score suffers and your credit disappears. You can dispute items on your report but it seldom effects your credit. You can add a note to your credit report explaining the problem such as laid off, etc. Showing you had a problem and then took care of the problem is a positive. The real key is pay on time, every time, and never use more than 40% of your available credit. 6 months of paid on time raises the score and builds.
- Everyone's posted their answers, and now I'll post mine. Here's the deal, first there's some things that you should know: 1. Activity within the last 24 months is affecting your score the most. Anything after that isn't doing that much damage. 2. There's 2 periods of time that you should be concerned about. One, is the statute of limitations(SOL) for collecting debt, which means that there's a time limit for collecting a debt. No matter how many times that it touches different collectors' hands, the date that it first went delinquent with the original creditor applies. The other timeframe is the 7½ year reporting period of the Fair Credit Reporting Act(FCRA). What this means is federal law allows debts to be reported a maximum of 7½ years from the date it first went delinquent with the original creditor. Again, no matter how many times a collection agency touches an account, by law it can only be reported for up to 7½ years. The reason that I mention this is that this allows you a lot of options on how to handle the negative items. If the debt is older than 5½ years, your best bet is to wait it out until it stops reporting. Like I mentioned in #1, the debt's no longer hurting your score, with it being that old. Another option that you can do is to file disputes by writing to the credit bureaus especially if the collection agency has "re-aged" or "re-set" the time that they're reporting which is a violation of the FCRA and maybe get the item removed completely. This works well if there's ANY mistakes on your report as well. Don't just assume that just because you have bad credit, everything on your report is correct. Look over your reports thoroughly, note mistakes, and file disputes in writing, NOT online. If the debts are more recent, then what you should do is negotiate a "pay to delete", which is a payment in exchange for removing it from the report completely, or removing the negative status on it to make it a neutral account. You're absolutely correct in that paying the debt DOES NOT improve your score, in fact it can lower your score. If a collection is simply paid, it creates new activity, especially if it's an older account, so, by paying it without neogitating, can tank your score, making it a waste of money. I posted several links below that explain how this more in detail. Hopefully this works for you Good luck!
- http://creditdebtrepair.info
