Need some advice!

[Jordan515]

Ok, so I'm just now starting to try and rebuild my credit and I figure a good first step would be to start paying off some of my debts which are as follows:

$289  Acc open date May 11, 2009

$228 Acc open date Oct 26, 2009

$168 Acc open date Mar 14, 2012

$121 Acc open date Oct 13, 2010

And please bear in mind I have absolutely no idea what I'm doing here so keeping it sweet and simple would be appreciated!

What are my best options for paying these accounts and spending the least amount of money to do so?  I'd prefer not to pay any of them in full unless it will hurt my credit futher to not do so.  I know there are a ton of factors that determine what my best options are but if somebody could lay these out plain and simple it would once again be greatly appreciated!

EDIT: Also I actually just got a secured credit card yesterday with a $500 Deposit so am I correct to assume that I should spend roughly 1/3 of that and pay it off promtly every month to begin rebuilding credit?

[SSPA87]

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@Jordan515 wrote:

Ok, so I'm just now starting to try and rebuild my credit and I figure a good first step would be to start paying off some of my debts which are as follows:  Are the accounts in collections?  If so, Pay-For-Delete would probably be your best bet, especially with them being such small amounts in the grand scheme of things

$289  Acc open date May 11, 2009

$228 Acc open date Oct 26, 2009

$168 Acc open date Mar 14, 2012

$121 Acc open date Oct 13, 2010

And please bear in mind I have absolutely no idea what I'm doing here so keeping it sweet and simple would be appreciated!

What are my best options for paying these accounts and spending the least amount of money to do so?  I'd prefer not to pay any of them in full unless it will hurt my credit futher to not do so.  I know there are a ton of factors that determine what my best options are but if somebody could lay these out plain and simple it would once again be greatly appreciated!

EDIT: Also I actually just got a secured credit card yesterday with a $500 Deposit so am I correct to assume that I should spend roughly 1/3 of that and pay it off promtly every month to begin rebuilding credit? You should try to find out the day they report to the CRAs and on that date have 1-9% utlilzation showing on the account.  Fico wants to see you using credit wisely, so showing some usage is better for your score. 

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[dddewdrop]

  Welcome. With the secured card the correct amount is between 1 dollar and 9% utilisation which in your case is 45 dollars. Charging roughly 1/3 each month is not necessary and will not maximise your score. So if I were you, I would charge some small thing every month and then pay it off right after the statement date so you don't incur interest. The amount on your card that is reported to the CRAs is the balance of your account on the statement date. That amount should be less than 45 dollars to keep your score as high as possible. If you miss this one month it doesn't matter as long as you do this in the month before you need your score to be at its highest. As for the other debts, if you can afford them it is far better to pay them in full then to settle for the least amount of money. When you pay them I would recommend sending a PFD letter before paying them. This is an offer to make a deal with the creditors. The deal is, you will pay in full now in exchange for them deleting these records from your credit report. That way they will be gone for good.  There is more info on PFDs elsewhere on this site. Good luck.

[Jordan515]

Ok so with a PFD letter you will need to pay in full?  Also I believe I read somewhere that I should be careful of something regarding SOL for my State which is Iowa and that if done wrong could have a very negative effect.  Can anybody clear this up for me?

[InvincibleSummer3]

The advice you need depends on what your goal is. When you say you want to rebuild, what does that mean to you? In my experience, a collection agency is more likely to delete a tradeline (which they are NOT obligated to do) if you pay in full. SOL refers to the amount of time that you can be sued for a debt. Do you know when these debts actually originated?

I would encourage you to start reading. The best thing you can do to help yourself is educate yourself on the process so that you can make informed decisions. Start here:

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Credit-Scoring-101-START-HERE/m-p/8169

Before you contact a single collection agency.....read. Seriously.

[Jordan515]

Ok so should I not be worried about the SOL with these debts being such small amounts?  Also these debts are all with CA now to clear that up.

So should I contact the CA first via phone and offer to pay in full if they agree to a PFD in writing?

[guiness56]

Have you ever received a dunning notice for these collections?  If you have and did not send a DV letter, if you send one now they would probably just ignore it.

If you know these are your debts, you can contact the CA and ask if they will accept payment for deletion.  It is best to get it in writing but sometimes the CA just won't do that.  If they don't delete an oral agreement is just as binding but harder to prove.

Start with the newest ones as they have the most impact on your score.  Work down to the oldest one.

Are the OCs also reporting on these?

[InvincibleSummer3]

Read. I cannot stress this enough. I already pointed you in one direction. Here's another.

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/What-Steps-Do-I-Take-Do-I-DV-PFD/td-p/337142

Another research topic I'd gently suggest would include "how to not accidentally reset the SOL on a debt in my state of residence". Jordan, you have to learn how to be your own best advocate. I love the group here but not all the advice you get from these forums will get you to your goal. Some can be harmful. Please, please learn how to tell the good advice from the bad.

[guiness56]

Just to point out, contacting a CA will never restart your SOL.  Paying in full or settling will not restart your SOL.  There are 18 states that by making a payment with no written agreement will not restart the SOL.

Nobody on this forum would intentionally give harmful advice.

[Jordan515]

Have you ever received a dunning notice for these collections?  If you have and did not send a DV letter, if you send one now they would probably just ignore it.

Not sure, these all happened shortly before I moved and never changed my forwarding adress.

If you know these are your debts, you can contact the CA and ask if they will accept payment for deletion.  It is best to get it in writing but sometimes the CA just won't do that.  If they don't delete an oral agreement is just as binding but harder to prove.

Start with the newest ones as they have the most impact on your score.  Work down to the oldest one.

Are the OCs also reporting on these?

I don't believe so, there are only 4 open accounts on my report and they are all the ones listed in my original post.  Is there any way to tell if the OCs are as well?