Trying to fix things!

[Anonymous]

Hi Everyone,

This is my first post here. After lurking the forums for a little while and seeing how helpful and kind this community is, I'm hoping to maybe get some help/tips/advice.

I'm 26 years old and have never been the greatest with my money. When I was younger (20-22 years old), I started using credit cards and usually did really with them. Long story short, I started getting "credit happy" and applying for credit cards left and right. I even was able to get  a personal loan and a line of credit through my credit union at the time. Long story short, I relied very heavily on credit, and wasn't responsible.

Around the end of 2015- early 2016, I got very depressed and kind of let go of life. I stopped paying on my loans, credit cards, let bills get very passed due, etc. I wasn't making a whole lot of money and things got bad. I ignored them. Now, I'm in a much better spot in my life, took my side job and turned it into my full time gig, and am making much more money. I'm in a relationship with someone I plan on marrying and buying a home with in the near future. However, my old debt is something I need to face.

I've been spending a lot of time reviewing my credit reports, and here is what I have:

• Credit score: 551
• Two open accounts (My student loans which are in good standing and being paid every month on time, and my auto lease which has one payment left until paid off.)
• My credit report shows no accounts in collections
• I have one credit card that was charged off on 06/2016 with a balance of $361. It is with a collections agency and not with the original creditor
• I have two credit cards (department stores) that were charged off, but I made full payments afterwards and they each show as "payment after charge off/collection & Canceled by credit grantor"
• I have another credit card with Barclays that shows a $0 balance but was charged off in late 2015. The debt is now with a third party collections agency and shows as "Charged off as a bad debt & Purchased by another lender"
• I have a loan with One Main Financial that was also charged off. Report shows a balance of $2,612 and a remark that reads "Charged off as bad debt & Profit and loss write-off". I called the collections agency and they say I own $2,900, more than what my report reads.
• I have another personal loan and a LOC that were both "Charged off as bad debt & Profit and loss write-off". They were with a collections agency (law firm of the credit union) that wanted to sue to me. I was served. I payed the $3,000 I owed and they dismissed it. This was two weeks ago. Waiting for my report to be updated.
• I have another loan for some furniture that was charged off in 2016. I paid with the collections agency in full and it shows as charged off paid on my report. Same thing with a phone bill that is also on my report.

I'm looking to pay the old debt, whether I do it in full with the collections agencies, or somehow directly with the creditors, which I've noticed is very difficult. Should I pay the full amounts if I'm able to? Should I settle on an amount? Would settling hurt my credit even more?

I'm looking to just pay this off in a way that will help my score the most! I've noticed my score go up over the last year. I was even able to get approved for a Capital One card with a $300 limit today. I plan on using this card for gas and always paying it off.

I know this was a long read, so I appreciate any advice or tips!

Thanks!

[Anonymous]

Check out my 11 rules signature link first, as a starting point!

[Gidgetmom]

Welcome to the forums!  

As I am sure you have seen...you are not alone.  Many of us screwed up our credit in our early years.  I gotta give you kudos for trying to get back on track though!  

I recommend taking the time read ABCD’s 11 rules for rebuilding (I wish he had these all gathered up in one place when I started my rebuild 😉).

I learned here that paying the debt in full, rather than settling, looks better to an underwriter should your file ever require a manual review.  Settling isn’t going to “hurt” your score more, as the damage is already done.  You may have luck getting some of them removed from your report  by requesting a pay for delete; or, once they are paid, you can start a Goodwill letter campaign basically begging them, in a very nice way, to remove them from your reports.  I have been able to get a few items off my report with goodwill letters.  My letters have always admitted my mistakes, owned them, and sweetly requested a goodwill gesture to assist in getting my financial life back in order.  I’ve had some success with it.

As you go through this process, you will want to add some positive tradelines to your file.  There are good, secured cards you can get.  One of the favorites here is with Discover.    I am not sure what the scoring is for secured cards, but it’s something you can search the forums.  Please stay away from Credit One cards, and the like.  They charge you for everything, including increasing your credit line.  Be patient.  Get your score above 680 and better cards will come.

The biggest mistake people, including me, have made is trying to rush the process of getting new credit.  It will take time for your score to recover (unless your lucky enough to get all the baddies removed 🤓).  Every hard pull of your credit dings your score.  New accounts will ding your score.  I went from the upper 500’s to the mid 700’s, but it took over two years.  My score would be higher if I hadn’t tried to build my positive tradelines so aggressively in those two years (plus I have one 30 day late from over 3 years ago, which I just sent another Goodwill letter about last week)

I can’t say it enough...it will take time.  Be patient, diligent, and start saving also!  You never know when the next curve ball will hit!  Having credit is great, but having money is better!