05-24-2009 04:27 PM
05-24-2009 05:01 PM
Welcome to the forums!
I'd suggest reading the following:
Credit Scoring 101 - great for knowing what is in your credit score and to see how your score is impacted.
and What Steps Do I Take - great for learning the repair process.
Generally, paying a CA without a PFD can drop your FICO scores. Always DV, then offer a PFD, only if you have the $$$ to PIF or SOL has expired.
If an OC has CO'd an account, then you'd still have to pay the OC. If they CO an account, they still own the debt.
The links above will give more detail.
05-24-2009 05:19 PM
I am really interested in improving my credit score, but the items that are bringing the score down have either been charged off or are in collections. In the simulator I indicate that I want to pay all balances in full and the score goes down. When I put in some monthly payments the score goes up. But..how do you make payments on something that the OC has charged off. Does your score get affected by you making payments to a collection agency. I basically want to know what's the best way for someone who has the money to pay off all the delinquent accounts, except student loans, in a way that will positively affect the credit score in the quickest way possible. Please Help.
Use the FICO "Estimator" in my sig line to estimate scores if you want to see what might happen once collections are removed (example: you successfully get PFD's).
The Simulator does not take into account those type of baddies coming off. And a paid collection scores the same as an unpaid collection.
You can't remove all the baddies. But you can build the goodies My suggestions, in addition to your GW, PFD, repair work is:
1. Establish a savings account with a credit union that offers secured loans (make sure rate is not more than 3% above the savings rate) and secured credit cards.
2. Deposit $500 to $1000 into a savings account.
3. Take out a "secured" personal loan. This is a good addition to mix as an installment loan.
4. When you get the loan check (the money you borrow), deposit it back into savings.
5. You now have doubled your savings balance (example: you deposited $1000, then borrowed $1000 which you deposited into savings giving you $2000). The amount of interest you collect on $2000 should be equal to or higher than the interest they charge you for the loan on $1000....so essentially you are not out (of pocket) any cost to build your credit with this loan.
6. Ask for a secured credit card. If they won't approve initially, ask again in 6 months.
7. Once you obtain the secured credit card, only use it for items you PIF each month (don't accrue interest)
8. Pay off the loan at 12 months.
9. At 12 months ask to unsecure the card.
10. You have established to great credit references and credit TL's and built a relationship with a solid credit source....credit union.
11. During the course of the year above, continue working on the repair side of your credit.
12. You may also obtain other builder card such as CapOne or Orchard to add an addition TL and CL.
13. After you pay off the loan to the credit union, continue to make regular deposits to saving, just like you were still paying the loan off. This is a financial habit that you need to continue, and it gives you your emergency fund and savings that protect against unforseen events which can take you by surprise (and hurt your credit if you are short on cash).
05-25-2009 06:23 PM
05-25-2009 07:22 PM
Its a pretty good. I explored this option in the very begining. I was gonna use a CD to secure a loan and then pay it off....etc...
But, the fastest and the best way to go is a revolving a/c. Do you have any open CCs? If not, try to open one somehow. Even a secured one.As to your first post, llecs covered that.