Rebuilding Your Credit

[Lasko189]

I know paying off installment loans early can hurt my credit, but what about paying them down. Currently I have about 20,000 in installment loans. 12,000 of which are student loans which I just started paying on. The other includes 4,000 on a tractor I use to maintain my property, which is paid now to under 50% of the original loan and 4,000 for a bedroom set that is paid down to about 70% of the original loan. My question is this, would paying these loans down to say 50% or less of the original loan improve my credit? Also right now I only have one credit card for Trek through GE Money, it can only be used for trek purchases. I recently paid the balance off to keep from getting hit with interest. Would it be a bad idea to apply for a regular credit card? I also just paid off a past due utility bill for an apartment I moved out of over a year ago that I only found out about by pulling my credit, it had went to collections. I am current on all my other bills (utilities, cable, internet, cell phone). I'm sure I have some past due hits on my credit from when I was unemployed for several months also, but everything is caught up now or paid off. My scores as of now are Transunion 606 Experian 568 Equifax 563

[GregB]

Paying down the bedroom set a bit might help but probably not have much effect. The recent collection is killing your score. Do some looking around on this site and search for PFD (pay for delete) if not paid and GW (Goodwill) if already paid.

I don't think you are getting a regular credit card without getting that removed. A secured CC would help your score.

[Lasko189]

I already paid the utility bill and I actually just finished writing them a "Goodwill" Letter just moments ago. My other tactic to raise my credit is to ask a family member with good credit to add me to one of there established credit cards with a low balance and high credit limit. I even told said family member I didnt even want the card that came in my name and that I would even make there payments if that would make up there mind.

[Shogun]

Looks like you're headed in the right directions.  Have you looked at all your CRs?   You should try for a GW on those lates, see if you can get those down.   Paying down on an installment loan doesn't do much for your credit because the util is not factored on installment loans. 

Send those GWs, and keep your payments current.  You should get a secured card that will help with your revolv,   "Good luck!:

[Lasko189]

Taking a closer look at my credit score paperwork the bedroom set was bought with a line of credit not an installment loan. It was something the wife wanted and I was the cosigner. Well the account was closed due to inactivity. I now know letting that happen was a mistake. So taking that in to account im actually WAY over my debt to credit utilization. Seeing as right now I only have one open credit card with a 1500 dollar limit and I still owe over 3,000 on the bedroom set.

[Epcot]

After reading this thread I checked and just realized I don't have an installment loan. Last one I had was about three years ago for a car loan.

[Lasko189]

Im curious how much paying my revolving debt down to say 100.00 bucks will raise my score. That would put my credit utilization to positive 1,400.00

[Shogun]

Utilization on revolving accounts plays a big part in your scores.  9% or less seems to be the optimal setting.

[Lasko189]

But paying the revolving debt off completely might actually lower my score or keep it from rising the most possible, correct?

[Shogun]

Yes, that is correct.  Magic number seems to be between 1 and 9%.