Where will I get the best return?

[Anonymous]

Hi! I'm new here, have been lurking and reading for a while. Like most people here, my FICO score is low (high 500s) I'm working on my plan of repairing credit and just opened two secured cards - Capitol one and FNBO kickstart. I'm planning on keeping a 5% utilization on one and a 15% on the other. I recently just paid off my student loans (well, they helped themselves to my paycheck!) however, as I was being hijacked for over $600 a month I am so relieved to have this debt gone!! I even have a refund of about $550 for overpayment coming.

My question is this, should I apply my $550 to my current auto loan (I have 3100 left on the loan) and have never missed or been late on a payment. OR should I apply it to a few accounts in collections? I have a few accounts around a $100 in collections. I could potentially pay off about 3 accounts that are about 3-4 years old!
Which would make the better impact on my score (If any)?
Thanks in advance for advice!

[Anonymous]

Paying the collections off to positively affect your score will depoend on a couple of things.  You need to inquire about "pay for delete", pay the ones that will agree to delete first; however, you need to pay attention to the statute of limitations and make sure if you inquire about PFD and they won't delete and you don't pay and you're inside SOL you "could" be sued over the debt.  Paying a collection that doesn't delete will ding your credit, but will look better when you're credit is manually reviewed.  If an account updates monthly, you may want to consider paying even if they won't agree to delete because that will stop the proverbial bleeding.

[Anonymous]

If you can arrange a PFD, then do it. But it depends on who the debt is with.

[Anonymous]

My first question is are you out of Statue of Limitations to get sued (each state is different)..

My next question is have you verified the debt with the junk collector? If not, start there.

These junk collectors will want to get paid (they bought ir for cents on the dollar) and will not remove the tradeline, so you will be out of money and still have this on your report.

My suggestion is ensure they can't sue you. Then verify the debt. Then, and of this must be in writing, that if you pay they must delete. If they say no, then I would look into getting an attorney to take it on, especially if the balance they are requesting is higher than the balance of the charge off.

[gdale6]

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@Anonymous wrote:

My first question is are you out of Statue of Limitations to get sued (each state is different)..

My next question is have you verified the debt with the junk collector? If not, start there.

These junk collectors will want to get paid (they bought ir for cents on the dollar) and will not remove the tradeline, so you will be out of money and still have this on your report.

My suggestion is ensure they can't sue you. Then verify the debt. Then, and of this must be in writing, that if you pay they must delete. If they say no, then I would look into getting an attorney to take it on, especially if the balance they are requesting is higher than the balance of the charge off.

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You want to validate the debt, verify is what the CRAs do.

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/Debt-Validation/m-p/7133

[Anonymous]

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@Anonymous wrote:
Hi! I'm new here, have been lurking and reading for a while. Like most people here, my FICO score is low (high 500s) I'm working on my plan of repairing credit and just opened two secured cards - Capitol one and FNBO kickstart. I'm planning on keeping a 5% utilization on one and a 15% on the other. I recently just paid off my student loans (well, they helped themselves to my paycheck!) however, as I was being hijacked for over $600 a month I am so relieved to have this debt gone!! I even have a refund of about $550 for overpayment coming.

My question is this, should I apply my $550 to my current auto loan (I have 3100 left on the loan) and have never missed or been late on a payment. OR should I apply it to a few accounts in collections? I have a few accounts around a $100 in collections. I could potentially pay off about 3 accounts that are about 3-4 years old!
Which would make the better impact on my score (If any)?
Thanks in advance for advice!

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Frankly, niether... I would consider using it to establish a third CC with a CU like SDFCU. 

For the accounts in collection, I would first consider paying off any of them which are updating monthly on your reports. 

And that is a poor utilization strategy. Let one card report a small balance, and PIF all others BEFORE their statement date.

[Anonymous]

Thank you all for the advice!

Norman, can you clarify the payments
for best utilization impact? I feel like I've read so many things! So, if tomorrow I pay for gas ($50) on my Capitol one card, when should I pay it? Immediately? After the statement but before the due date? Should I pay in full or pay 95% of it and leave a small balance!?

[Anonymous]

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@Anonymous wrote:
Thank you all for the advice!

Norman, can you clarify the payments
for best utilization impact? I feel like I've read so many things! So, if tomorrow I pay for gas ($50) on my Capitol one card, when should I pay it? Immediately? After the statement but before the due date? Should I pay in full or pay 95% of it and leave a small balance!?

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It does not matter how much you charge on the card at any given time. You can charge it to 100% and pay it off several times each month. The only thing that matters is the balance that is left on it the day the statement closes. Do not rely on the mailed statements - do ALL of your payments online. I make payments several times a month and then I pay whatever the current balance is a day or two before the statement date. Pick one card and let that one carry a small balance each month - typically less than 10% of its limit.

[Anonymous]

If I charge nothing on a card in a month period, does it still report?

[Anonymous]

yes, it will still report. I've got a Fingerhut account that I have never used that has 9 months of good reporting on it.