Am I heading in the right direction?

[YoSal00]

After years of making poor, irresponsible decisions regarding finances & credit, I feel like I am finally climbing out of the hole that I've put myself in.  I am 28 & upon beginning college I obtained several credit cards: Target, Victoria's Secret, 1st Financial CC, Capital One CC- all of which have now fallen off. As for income, I bring home apprx $1600 a month. I do not pay rent or utilities as I live with my parents present time. Here's a list of what I do have.

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I currently have:

0 credit cards active- as I have paid off a Capital One CC that was in in house collection status ($300 CL)- so it is now a closed account

2 installment loans/ personal loans with local credit companies: they carry $300 & $400 balances- they are being paid on time

1 auto loan- BIG HUGE MISTAKE! I owe $14,000 still I've had the truck (2006 Chevy Equinox) since July 2012- at $382/ month for another FIVE years (February  2019) I have had 5+ missed payments, with some being 90 days PD. I am on the right track now as far as making payments

Collections:

I have 5 items in collections:

2 hospital bills

Old Navy ($500 balance- currently making monthly payments)

AT&T ($477 balance)

Old utility bill ($107)

I also have a host of undergrad student loans- $45,000- they are currently in deferment, but I am looking into starting to make payments in the upcoming months.

I am thinking that the next steps for me are to garden (being that I have had a number of delinquencies) and just focus on paying everything on time; and maybe in 6- 12 months- apply for a credit card. I also plan on doing a credit builder's loan in the next couple of months through my credit union.

So my question is, with the things that I have listed what would you recommend that my next steps should be as far as building/ rebuilding my credit?

[RobertEG]

The old cards that have now "fallen off........"

Is there unpaid, delinquent debt on those accounts?

While not number one on your current rebuilding list, if they still represent unpaid debt, even though the statute of limitations and credit report exclusion have occured, they could still become a future problem.  It is common, when applying for high principal loans, such as a mortgage, for creditors to ask for disclosure of any unpaid, delinquent debt.  You may still be required to address that debt.

You might consider offering pennies on the dollar to those creditors to settle that unpaid debt, and thus remove their potential peril.

[YoSal00]

Thanks for the reply. Of the cards that have "fallen off", I have only paid one & that was through a settlement offer (First Financial was paid early 2013). All the others (Target, Vic's Secret, Cap One) all went unpaid. I have not paid anything on those since circa 2007-2009 [I'm ashamed to say]. 

Are you suggesting that I reach out to these companies & attempt to make payments in order to keep from having to deal with the effects further down the line? If so, I know that I would not be able to pay any in full out right- I would have to set up payment plans.  Is this ok in your opinion?

[RobertEG]

If you enter into a payment plan, you have agreed to a new contract for payment.

If anything happens that would effect your ability to continue to meet monthly payments, you have a whole new contract issue to then deal with.

Breach of contract, or a new SOL.

My general answer would thus be no, dont enter into a payment plan for time-barred debt unless sure you can meet its terms until the debt is settled.

It may be best to wait until you have an amount you think they may accept, and make them the offer for that amount as full satisfaction of the debt.

Over and done in one transaction, with no issue of ability to make continued payments.

[dursty87]

I agree with Robert. Tackle your debt that is reporting on your CR's first to help you rebuild and help you obtain a couple CCs. After that you can go after the excluded debt. Like he said, it generally only shows up when applying for a big loan ie a mortgage.

In the meantime, while paying off your past delinquencies, you should try to obtain 1-2 CCs in order to rebuild. Do you know what your FICO scores are?

[YoSal00]

Thanks a bunch for the responses.  I am just getting back on track as far as making payments on time.  Due to those late/ missed/ deragatory payments I have planned not to apply for any CCs until around May.  Am I correct in thinking that I need to wait at least 6 months with good payment history before applying for new CCs? However, I am planning to apply for a credit builder's loan by February. My credit scores are EQ 577 TU 599 EX 582 currently.

[Anonymous]

I would suggest applying for a secured credit card now. You could go through Capital One (even though you are paying them off they may approve you, ya never know) or you could join a credit union such as SDFCU or NASAFCU, and get a secured card from them. IMO you need revolving credit to help your scores, not more installment credit.