Order of repairing Credit

[Anonymous]

Hi,

I apologize in advance if this is the wrong forum for this question. Please advise, and I'll repost to the correct one.

I have two derogatory remarks (accounts in collection). One is for $200 and the other is $300. Both are medical bills that I refused to pay at the time, because I thought they were outrageously frivolous and unfair. Needless to say, they win. I had no recourse and they are now dinging my credit score.

I also currently have poor credit card utilization (I'm using too much of my available credit) and I'm not sure which of these two issues to take care of first. Should I pay down my current credit card balances? Or should I offer a "pay for delete" on the accounts in collection and if accepted, get them off my credit report (neither are due to fall off my credit report any time soon)?

Ultimately, I need to take care of everything, but I'm not in a position to do that now. So my question is, which of my two options will have the most immediate positive impact on my credit score? My score has fallen to 640 (again, according to credit karma) and I'm on a mission to bring my score up to good or excellent standing. I'd appreciate any advise.

Thanks,

[Anonymous]

If the collections are recent (less than 2 years) Pay them off first. The good thing with medical collections in my experience is once they are paid most usually delete with out even asking. If they don't a simple phone call usually gets them to delete. I had three collection agencies collecting different medical debt. 1 deletes automatically, 1 deleted with a phone call, and one asked for a letter requesting deletion and then deleted it.

Then work on paying down the credit card.

[Anonymous]

Thank you! This is what I was leaning towards, but wanted to see what experts thought first. 

According to Credit Karma they are both rated a 'C' on my credit report card. As a side note, can anyone tell me how accurate Credit Karma is? It's giving me some weird info...

For instance, it's showing a poor grade (a 'D') for total accounts, saying that consumers with more accounts typically have better credit scores. Wouldn't the "type" of accounts matter more? I doubt it would help my score to simply add more credit card accounts. 

The simulator also shows that my credit improves if I pay off all my credit card balances in full, but if I pay down anything less than $5k my score goes DOWN!  How can that be? Butaybe these are questions for a separate post in a different forum.

Thanks again for the advice! 

[Anonymous]

Sorry. Either you ninja edited your initial reply or I misread it -lol. I originally thought you said pay down the credit card debt first. 

Ok. So pay off the two accounts in collection first? The only reason I hesitate to do this is on the outside chance I lose my job or something happens where I can't pay off my credit card debt. If I pay the debt off now, the collection accounts won't change. However, if I pay off the collection accounts, there is some chance my credit will be ruined anyway if I ever had to file for BK.  

This is a worst case scenario and I don't plan on doing so, but it was the reason I was inclined to pay down my credit cards first. Just seems a safer route. 

[Anonymous]

Yes, I rethough my orginal reply. Sorry for the confusion

I am far from an expert so I would love to see what others chime in with. I have just been learning to fix my husbands credit of past mistakes and oddly find this type of thing fun.

[onepointatatime]

Although I'm by no means an expert, I would PFD the collection accounts first, without hesitation.  Those turds will stick (and stink) up your credit report for 7 years from the DoFD, which if I'm reading correctly is recent.  Also, they are weighing down your score massively - I have the same problem, look at my EQ and EX scores especially.

Since payment history is 35% of your score and UTL is 30% of your score - not to mention that bad payment history is notoriously hard to get rid of (I've been trying for a year, and still haven't succeded) - the choice for me is clearly the collections.  Ideally though of course, you should follow up and pay down your revolving lines to 10% or less, if it's possible.

[dashpt]

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@Anonymous wrote:

Hi,

I apologize in advance if this is the wrong forum for this question. Please advise, and I'll repost to the correct one.

I have two derogatory remarks (accounts in collection). One is for $200 and the other is $300. Both are medical bills that I refused to pay at the time, because I thought they were outrageously frivolous and unfair. Needless to say, they win. I had no recourse and they are now dinging my credit score.

I also currently have poor credit card utilization (I'm using too much of my available credit) and I'm not sure which of these two issues to take care of first. Should I pay down my current credit card balances? Or should I offer a "pay for delete" on the accounts in collection and if accepted, get them off my credit report (neither are due to fall off my credit report any time soon)?

Ultimately, I need to take care of everything, but I'm not in a position to do that now. So my question is, which of my two options will have the most immediate positive impact on my credit score? My score has fallen to 640 (again, according to credit karma) and I'm on a mission to bring my score up to good or excellent standing. I'd appreciate any advise.

Thanks,

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Get rid of the collections then take your time paying down credit cards.....