cancel
Showing results for 
Search instead for 
Did you mean: 

Pointers for rebuilding from a divorce and medical collections debt

tag
Anonymous
Not applicable

Pointers for rebuilding from a divorce and medical collections debt

I have been working on my credit for a while.  Finally found this forum and found some great advise. 

 

My credit score in December and Jan was around 620.  I have paid off most of my collection accounts and out of 15 or 16,  I only have 4 left.  I am working on those.  My current score from Eq is 686, Tu is a 704.  It is hard to get it any higher.  I would like to have a 720+ to get a decent autoloan.  

 

My credit was ruined because I never really cared too much.  I went through two divorces and had some really nasty stuff on my credit report but either I paid it off or it fell of.  Also, I had medical collections on my record.  When I was younger I had a few department store collections, but those have since been removed.  

 

I have a handful of credit cards.  One with a CL for $500, one with a CL for $2000, one with a $780 CL and one for $500.  I have a handful of department store credit cards JCP for $2000, Victoria Secrets $700 and best buy for $300.    I try to keep  my department store cards low or zero.   The VISA, MC and Discover card I try not to use but seem to use them often.  Their balance is still around 30-40% of my CL.    I pay it down or off, but then end up using it again.

 

My vehicle is 8 payments away from being paid off, but the Credit Union I used to finance doesn't report to a credit bureau unless there is a late pay (NEVER had that).  I have 4 paid off vehicles under my name, but I keep getting a very high interest rate (10-14%).  Any suggestions to up my score and lower my rates?

 

Message 1 of 10
9 REPLIES 9
FrugalRican
Blogger

Re: Pointers for rebuilding from a divorce and medical collections debt


@Anonymous wrote:

I have a handful of credit cards.  One with a CL for $500, one with a CL for $2000, one with a $780 CL and one for $500.  I have a handful of department store credit cards JCP for $2000, Victoria Secrets $700 and best buy for $300.    I try to keep  my department store cards low or zero.   The VISA, MC and Discover card I try not to use but seem to use them often.  Their balance is still around 30-40% of my CL.    I pay it down or off, but then end up using it again.

 

 



The first thing you need to analyze is THIS.

 

What do you mean you try not to use them but use them often?

For the best FICO score based on overall utilization ALONE, you need to have 1 card reporting between 1 - 9% and all others at 0 at statement date. That might help.

But having a bunch of cards at 30-40% is definitely NOT helping and much less if you kinda don't know how you keep using them again.

 

You need to be a little more analytical about your budget. You seem to be overspending. And it's not only hurting your score, but probably your wallet, specially if you are rolling balances over from month to month.

 

Are you rolling balances monthly? Or are you PIF before the due date, at least?

Follow my financial journey: http://www.frugalrican.com


EQ FICO (01/16/2012): 656 - EQ FICO (02/16/2012): 743 - EQ (02/24/2012): 760 - EX (04/28/2012): 739 - GOAL 2013: 800+

AMEX BCE (0/10K) --- BOA 1-2-3 (0/15.9K) --- Discover More (0/6K) --- Chase Freedom Visa (0/1.4K) -- Hyatt Visa Sign. (0/5.8K) -- Barclay's NFL Card (0/7.5K) -- Chase Sapphire Preferred (0/5K)

Message 2 of 10
Anonymous
Not applicable

Re: Pointers for rebuilding from a divorce and medical collections debt

I have two credit cards that I mostly use.     One is my Walmart Discover and the other is my Barclays card.  I am paying down their balances, but if I have something that I can't afford out of my checking account (single mom with two kids), I will put it on the card.    I pay about $100 more than the min payment, but i do spend about $50 a month.  a very vicious cycle.    

 

The other cards are dormant.  No activitiy.  About once every 6 months i will charge $30-50 and when it comes due I pay it in full.  (i heard that helps to use the card from time to time). 

 

My current debt is $350 on my $780 CL card and $700 on my $2000 CL card.  I am trying to stay within my budget, but its very hard with two kids during the summer. 

Message 3 of 10
Anonymous
Not applicable

Re: Pointers for rebuilding from a divorce and medical collections debt

What is rolling balances?  is that taking the balance from card a and moving it to card b?  or is that a balance at  the end of the month each month?

Sorry.. I am very new to all these terms. 

Message 4 of 10
FrugalRican
Blogger

Re: Pointers for rebuilding from a divorce and medical collections debt

By "rolling balances" I meant carrying balances over from month to month on the same card.

Not only is it a vicious cycle, but if you are paying interest on it, then your progress is much more slower.

 

I know your situation is probably dire with two kids and being single, but if you want to make further progress on this, you are going to have to get creative with your budget, because utilization is one way to definitely help out with your score.

 

Also, how much are you paying for your car?

And is your car in a bad condition that you'd be looking into another car loan that quickly?

Follow my financial journey: http://www.frugalrican.com


EQ FICO (01/16/2012): 656 - EQ FICO (02/16/2012): 743 - EQ (02/24/2012): 760 - EX (04/28/2012): 739 - GOAL 2013: 800+

AMEX BCE (0/10K) --- BOA 1-2-3 (0/15.9K) --- Discover More (0/6K) --- Chase Freedom Visa (0/1.4K) -- Hyatt Visa Sign. (0/5.8K) -- Barclay's NFL Card (0/7.5K) -- Chase Sapphire Preferred (0/5K)

Message 5 of 10
Anonymous
Not applicable

Re: Pointers for rebuilding from a divorce and medical collections debt


@FrugalRican wrote:

By "rolling balances" I meant carrying balances over from month to month on the same card.

Not only is it a vicious cycle, but if you are paying interest on it, then your progress is much more slower.

 

I know your situation is probably dire with two kids and being single, but if you want to make further progress on this, you are going to have to get creative with your budget, because utilization is one way to definitely help out with your score.

 

Also, how much are you paying for your car?

And is your car in a bad condition that you'd be looking into another car loan that quickly?


I am currently paying $420 for my vehicle.  It is getting old (not just cosmetically either.  There are some problems with it).  I do need a newer one, but it seems that I can't get a good rate.  (That was back in Dec, but I dont see anywhere on the net that a 686 merits anything less than 9.5% interest rate).

 

 

I am doing all i can to stay away from credit, but like I said.  Some months I have to use it.     Like I said earlier I have 4 medical collections on my credit report.  Should I forgo paying them and focus on paying my credit cards down.   The medical collections are over 2 years old.

Message 6 of 10
FrugalRican
Blogger

Re: Pointers for rebuilding from a divorce and medical collections debt

Have you tried doing PFD (Pay for Delete) letters with the medical collections? You could try to do that WHILE you are getting those balances down.

 

And have you thought about maybe visiting a credit union nearby and see if they can help you out?

Follow my financial journey: http://www.frugalrican.com


EQ FICO (01/16/2012): 656 - EQ FICO (02/16/2012): 743 - EQ (02/24/2012): 760 - EX (04/28/2012): 739 - GOAL 2013: 800+

AMEX BCE (0/10K) --- BOA 1-2-3 (0/15.9K) --- Discover More (0/6K) --- Chase Freedom Visa (0/1.4K) -- Hyatt Visa Sign. (0/5.8K) -- Barclay's NFL Card (0/7.5K) -- Chase Sapphire Preferred (0/5K)

Message 7 of 10
Anonymous
Not applicable

Re: Pointers for rebuilding from a divorce and medical collections debt

LOL!  My credit unions are a joke!  I went to one and she wanted to charge me 14% interest for a new car loan.  The credit union that I am currently financing my vehicle wanted to offer a 12%.  I can't do that.  That would be stupid!

 

 

PFD??  What would I ask them?  Please remove it?  I can't pay both (credit cards and the medical bills).  I was taking the smallest debt and paying that down and moving on to the next one.  All have been removed from my credit report except those 4.    I have looked up PFD, but I am not quite sure what it is actually.    My understanding is that I ask them to remove the negative information for a pay in full payment of the debt.    Is that correct? 

 

If you were in my shoes, would you pay the cc down or the debt off?    I don't know what has a bigger impact.

 

Message 8 of 10
FrugalRican
Blogger

Re: Pointers for rebuilding from a divorce and medical collections debt

My area of knowledge as far as PFD's go... is that they exist. I am sure other forum goers will chime in on those and what to do for a medical collection.

 

Personally, I'd settle my current debt first. Your collections are already on your report negatively. If you have to choose between past and present, smart money is on present debt. Settle that first and then move onto the next thing.

 

The problem is, utilization will only get you so far, getting ALL of your negatives off of your report is what will give you the biggest bump of all.

Remember, just because you pay those baddies, it doesn't mean they'll get removed. The status just might go from "Charged-Off" to "Paid as Agreed" but the score will stay the same as far as the status is concerned.

 

I'd go for the CC debt just because it's accruing interest every month on those balances. That's less money in your pocket overall.

Follow my financial journey: http://www.frugalrican.com


EQ FICO (01/16/2012): 656 - EQ FICO (02/16/2012): 743 - EQ (02/24/2012): 760 - EX (04/28/2012): 739 - GOAL 2013: 800+

AMEX BCE (0/10K) --- BOA 1-2-3 (0/15.9K) --- Discover More (0/6K) --- Chase Freedom Visa (0/1.4K) -- Hyatt Visa Sign. (0/5.8K) -- Barclay's NFL Card (0/7.5K) -- Chase Sapphire Preferred (0/5K)

Message 9 of 10
Anonymous
Not applicable

Re: Pointers for rebuilding from a divorce and medical collections debt

Smart thinking!

 

 

I have been VERY lucky!  The other 12 debts and collections accounts that were hurting me all are off my credit report.  VERY lucky.   I have make cold calls and pestered them.  I would get a zero balance letter and send it to equifax dispute.  Equifax would remove the debt.  TU on the other hand doesnt.  But it seems most places pull an EQ report around here (Texas).

 

 

 

Message 10 of 10
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.