topic Re: Need help getting started in Rebuilding Your Credit

Need help getting started

dggibbons21 — Thu, 07 Feb 2013 06:52:17 GMT

Hello everyone, after some bad life choices that I have finally recovered from I would like to begin repairing my credit before it destroys the rest of my life (I am 23).

Currently on my credit report I have a charged off citi bank credit card that has gone into collections as well as several medical bills in collections and what I believe is an out of state speeding ticket. I also have some student loans which are currently in a forbearance. Last I checked my score was a 570.

I was just approved for an unsecured capital one credit card with a low credit limit and high (24% or so) APR. I plan to use this to basically purchase a tank of gas or so per month and pay the balance in full to begin establishing a positive history with a creditor.

Im unsure as to where to begin or how to negotiate the pockmarks on my credit report. I am planning on returning to college so I am not concerned about the student loans as they will be a non factor until I graduate. I am working with a limited income but have few expenses as I still live at home. Mainly my questions are as follows,

Do these collection accounts continue to lower my score the longer they are on my report?

Do I attempt to negotiate with the initial creditor first or simply begin with the collection agency?

What do I do about the charge off? I cannot afford to pay it off in one shot and it is a large balance (around 4000 $). The collection agency is offering to settle it for around 1500. Is it better to enter a long term arrangement and pay it in full or should I just settle it? Some people are also suggesting I wait until it falls off my report before pursuing it as doing anything now will cause the 7 year period before it is removed to begin all over again, I am very confused about all of this and am having trouble finding any concrete answers about what the best way to proceed is.

Im basically looking for a general plan of attack to begin fixing all these problems. I understand this will not be a quick process and am not looking for a quick fix. I didn't get into this trouble in a month and I don't expect to be clear of it for a long time.

Thanks everyone for your consideration and time.

Re: Need help getting started

Shogun — Thu, 07 Feb 2013 07:31:56 GMT

dggibbons21 wrote:
Hello everyone, after some bad life choices that I have finally recovered from I would like to begin repairing my credit before it destroys the rest of my life (I am 23).

Currently on my credit report I have a charged off citi bank credit card that has gone into collections as well as several medical bills in collections and what I believe is an out of state speeding ticket. I also have some student loans which are currently in a forbearance. Last I checked my score was a 570.
I would check to see what the DOFD was of these debts you have in collection. Plus how much are they? Can you PFD them? The speeding ticket I would probably go ahead and take care of, some of those don't really expire and could issue a warrant for that. I'd really check into that one.
I was just approved for an unsecured capital one credit card with a low credit limit and high (24% or so) APR. I plan to use this to basically purchase a tank of gas or so per month and pay the balance in full to begin establishing a positive history with a creditor.
Sounds like a great idea!
Im unsure as to where to begin or how to negotiate the pockmarks on my credit report. I am planning on returning to college so I am not concerned about the student loans as they will be a non factor until I graduate. I am working with a limited income but have few expenses as I still live at home. Mainly my questions are as follows,

Do these collection accounts continue to lower my score the longer they are on my report?
Those collections hurt as long as they are on your CR.
Do I attempt to negotiate with the initial creditor first or simply begin with the collection agency?
It depends, who is on your CR? If it's the CA, will they accept a PFD?
What do I do about the charge off? I cannot afford to pay it off in one shot and it is a large balance (around 4000 $). The collection agency is offering to settle it for around 1500. Is it better to enter a long term arrangement and pay it in full or should I just settle it? Some people are also suggesting I wait until it falls off my report before pursuing it as doing anything now will cause the 7 year period before it is removed to begin all over again, I am very confused about all of this and am having trouble finding any concrete answers about what the best way to proceed is.
If you pay/settle it, it's done. There is no restart of the 7 year clock, it's done. Now if you make payments, there is a chance on restarting the clock, it depends on your state's statutes on that one.
Im basically looking for a general plan of attack to begin fixing all these problems. I understand this will not be a quick process and am not looking for a quick fix. I didn't get into this trouble in a month and I don't expect to be clear of it for a long time.

Thanks everyone for your consideration and time.

Re: Need help getting started

Kevin5974 — Thu, 07 Feb 2013 07:51:06 GMT

Congrats on getting started. I wish I had started 3 years ago (I am 26). To begin, paying the collections and having them report as PAID will NOT helpbyour score. Only if you can negotiate a Pay for Deletion will this benefit you. You will pay a premium for that deletion so expect 65% or more. Most damaging to your score is that Chargeoff if still being reported as being owned by Citi. If you enter into an installment agreement to repay it, it MAY extend the SOL. I would try to save some cash and get that settled in full. They likely wont do a PFD, especially for less than the full balance. I would settle it and goodwill the heck out of it. Find out if that collection agency owns it, or if they are collecting on behalf of Citi. Good luck!

Re: Need help getting started

dggibbons21 — Thu, 07 Feb 2013 16:58:01 GMT

When you say pay a premium for a PFD what do you mean? By 65% do you mean of the total debt owed? I was planning on starting with the medical bills and paying them off as time allowed due to the fact there are three of them and they are relatively small (ranging from 109$ to 330$).

Re: Need help getting started

Kevin5974 — Wed, 13 Mar 2013 17:09:41 GMT

Well what i meant is that if you have a collection for $1k, you can probably call and negotiate a settlement for 35-55% of the original balance. But because you are asking for a deletion as opposed to a PAID mark, you can expect that they may not discount the debt as much, or even at all. I have heard medical bills will not negotiate as much. Sorry for the delayed response.