Rebuilding Your Credit

[Jewel1]

Good morning, i've learned from your guidance and in the past and found it extremely beneficial.  Here I am again... i'll make it simple:

I have 4 accounts left - 

BOA               $2175

Citi                 $2042

HSBC            $224.23 (I will pay this in full)

GE Capital     $1708

What is the best thing to do...I do want my decision to negatively impact my FICO score.  Should I settle or set up a payment plan to pay in full.  I will be calling them this week.  Also, should I be requesting a letter of some sort or request they report in a certain way?

Thank you so much,

Julie Ann

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[Shogun]

Are all of these still with the OCs?  Have they been CO'd or just lates.   There are no CAs reporting on them?  If so, that's good.   How old are these accounts?  Do you know the DOFDs of each of them?  And do you know the SOL of your state?  These are just some things to consider when dealing with your debts.  It just helps us to have more information.

If you can still pay the OC, that's better.  You might be able to keep the CAs off your CR if they're not already on there.   Your gold standard when dealing with these is to try for a PFD.  The accounts you have listed above are kind of tough cookies when it comes to that though.  Ultimately you want to get these paid, and if possible, get them off your CR if they are killing your score.

If unable to get a PFD, then you want to get them paid, and then try to GW them.  Sometimes this works so it's worth a try.  You say you are paying HSBC off in full, what are your plans after that?  Tackle the next one?

[Jewel1]

Well, they are still with the OC, no CA involved. I had them with Money Management International and it was great until I was late on a payment they dropped out of the program.  They are reporting the CR as 120+.  When I called they asked if I wanted a payment plan or settle.  They will all drop off in 2015.  I believe the SOL in Florida is 5 years.  I asked BOA if I paid it off would they remove it from report and they basically laughed at me.  They were with MMI for 4 years and no blemishes on report.  Now the blemishes from these hit and my scores range from 553-573.

[madmann26]

You could also try and setup the payment plan and ask if you complete that successfully, will they be willing to reopen the trade line even if it were for a lesser amount? It's worth a shot.

[Shogun]

I know where you're coming from with this.  I did a debt management many years ago and it killed my CR.  I'd make the arrangements with the OCs about getting it paid down.

[Jewel1]

So settling or pay it off doesn't matter it terms of my FICO.

[RobertEG]

No, it doesnt matter from a purely scoring perspective, but how you proceed could have legal implications. 

First, I suggest you dig up a copy of your state SOL statute.  In some states, making payments or even making a firm agreement to pay without paying a cent, can reset your SOL.  So you may be extending their ability to bring legal action.

Second, if you enter into a payment agreement, that is a contract with them, giving rise to possible breach of contract suit should you ever become delinquent under that agreement. 

As for making a settlement offer at this time a paid in full vs a settled for less would avoid their posting of the negative "paid for less" special comment in your file, which becomes viewable therafter by anyone pulling your CR, informing them that, in the past, you did not fully pay all debt incurred.  If you do go the settlement offer route, I would ask their commitment not to report that special comment, thus making it look to others the same as if it had been paid in full.

[Jewel1]

Ok...now nerves are setting in.  It seems like either way it can be a mistake.  I will check - i'm in Florida.

[JustinNguyen]

Send them a writing letter say. Offer them 60% to exchange state update pay in full. Let see what they do lol

.... If they respond them send a cashier check with 60% and keep all paper forever. At least 10 years lol

[Rlandon87]

Actually you need to search several PFD letters and find the one that suits you OR one that has already worked for one of the companies you owe.

You could offer a % of the amount owed- you want it deleted NOT a remark that says paid in full- because guess what, you will still have the 30/60/90/120's.

If they don't take the PFD (certified letter In mail, not over phone) then offer to pay a % for a paid in full comment on your report- and make sure you ask for that- not just "settled".

As i see you only seem concerned with your fico score- you should look further than that because a potential lender may, and they will not look at a 600 score with a settled account containing multiple lates the same as an account marked paid in full with lates or a clean report with no traces of any lates or charged off accounts at all

Try for the PFD - it's worth the effort. If you just cant get it done accept nothing less than a paid in full remark and then GW the crap out of the company to remove the lates....

Remember to save all paperwork/promises made by the company.

My .02. And may not even be worth that