topic Re: Rebuilding credit, some conflicting advise. in Rebuilding Your Credit

Rebuilding credit, some conflicting advise.

Anonymous — Mon, 18 May 2020 00:39:21 GMT

So I've been starting to take my credit seriously for the first time in my life (I'm wanting to buy a house within the next 2 years) This started around 2 months ago with a credit report pull. I had a 450 credit score and was obviously feeling pretty bummed. I've been reading up a lot on this site and others on how to improve and the first thing I did was open a secured credit card and also get my student loans up to date.

So far my credit has went up to a 533. Not great by any means but a nice jump from where I started. Now I'm looking at other ways to improve my credit and the next step seems to be handling the negative marks I have.

I have 2 accounts in collections that are dragging me down. One is a medical bill for $78. The other some gmac insurance for $130. Honestly I don't really recall either of these but they are there.The options I've read about seem to first dispute any marks on your report. I've read a lot of people having success with this and sort of understand how it all works and why it works. But I've also read some scary stuff about peoples credit reports taking a dump after filling these disputes and wish they would have just left it alone. Is this something I should consider? One collection is around a year old and the other 2 years old. The other option I considered was the pay for delete but it seems to be hit or miss and doesn't really work nowadays? The last option and the one I originally considered was to just pay these in full since they are so cheap. But I've read that doing this can also hurt your credit because it changes the activity on the accounts from 2 years old to when you pay it. Making it have more of an impact on your credit score. I don't mind paying them even if they are not legitimate, I just want to take the best route with dealing with this.

Other than continuing to use my credit card every month, keeping utilization low and paying off in full every month, what's the next step I should take with the collection accounts? Thanks for any help!

Re: Rebuilding credit, some conflicting advise.

RSX — Mon, 18 May 2020 01:11:12 GMT

Call each of them and ask for a pay for delete

if they won't delete, pay in full anyway while on the phone if possible

i wouldn't even try to get a lower amount with those 2 numbers

good luck.

Re: Rebuilding credit, some conflicting advise.

RSX — Mon, 18 May 2020 01:20:08 GMT

The dispute issue is when they ARE correct and the provider re validates

in your case, don't dispute them

pay them and they will update - but with a Zero balance which will mean your score will start to go up, not down

Re: Rebuilding credit, some conflicting advise.

Anonymous — Mon, 18 May 2020 01:27:09 GMT

Alright thanks..I figured that would probably be the best option but was really hoping to have them removed since they are so small. Hopefully I can get a pay for delete. Should I do that over the phone though or try to send out a letter?

Re: Rebuilding credit, some conflicting advise.

Anonymous — Mon, 18 May 2020 01:54:28 GMT

What all derogs do you have on your reports? I am assuming you have lates on your student loans as you said something about bringing them current. We cannot offer advice without knowing all the details. We need to know how many current accounts you have both CCs and loans. How much is owed, what credit limit is, any derogs on the account, monthly payments, etc. We need to know about closed accounts also...any charge offs, any derogs on those accounts? Also list all collections and amount owed. It would also help to know how much money you have to pay on these. What are your expenses? Perhaps we can find ways for you to cut expenses and you can use that money to pay down any debts.

Re: Rebuilding credit, some conflicting advise.

Anonymous — Mon, 18 May 2020 02:08:29 GMT

Thanks for the reply. The student loans were brought up to date and they removed a lot of the late payments. Student debt is 20k with around 130 a month payment, though they put payments off till November because of covid 19. Other than that, all other collections and amount owed is in original post. I don't have a car payment or morgage. I have the secured credit card with a 350 limit I keep below 10% utilization. I have a decent wage for my area and I've been able to put a significant amount of money back so it sucks to have those 2 collections against me that are so small. Not even sure how I let them get there.

Re: Rebuilding credit, some conflicting advise.

Anonymous — Mon, 18 May 2020 02:22:18 GMT

So you have never had a car loan in the past seven years? You have never had any CCs or other loans within the past 7 years that are reporting on your CRs? We also need to know how many lates you have on your student loans and when these lates were. Were they 30, 60, 90, 120 lates? How late the loans were will really affect your score. Any other derogs besides the collections and student loan lates? Do you have any accounts that your CR show that are CO?

Re: Rebuilding credit, some conflicting advise.

Anonymous — Mon, 18 May 2020 05:14:45 GMT

To be honest... it seems like the lack of credit history might be hurting you more than the collections and derogatories.

- Low available credit (less than 2500-5000 is very low in credit scores eyes)

- Too few tradelines (you only have 1 credit card)

- Poor Credit mix (you have just the student loan as an installment. no auto loan, no mortgage, etc...)

Dont get me wrong. late payments will hurt, collections will hurt but even without those im not sure you are much more than 575-600.

Some Advice: Find ways to get more credit cards/revolving credit. It is really hard to get rid of negative/bad credit items. Our best tool against that is to dilute bad credit with good credit. more credit cards, more available credit, more cards reporting low balance.

you said you have a decent salary and have been putting away some money. if thats the case than...

pay off the collections. call and ask for a pay for deletion. if they wont still pay them off. the money is really small.
apply for more credit. dont worry about the hard inqueries. your looking to improve your credit in 2 years and those will stop effecting your score after 1 year
Look into more secure credit cards. it sucks having to go with secured cards, but the more you have the more available credit you have, the more your score rises, the better odds at an unsecured card
There are some ways to get an installment loan in kind of a hack-ish way... others would know more than me.

other than that... save. keep saving. having cash isnt a bad thing and the less you need to borrow the less you need to rely on a credit score.

Re: Rebuilding credit, some conflicting advise.

BmoreBull — Mon, 18 May 2020 09:20:52 GMT

@Anonymous wrote:
To be honest... it seems like the lack of credit history might be hurting you more than the collections and derogatories.

- Low available credit (less than 2500-5000 is very low in credit scores eyes)
- Too few tradelines (you only have 1 credit card)
- Poor Credit mix (you have just the student loan as an installment. no auto loan, no mortgage, etc...)

Dont get me wrong. late payments will hurt, collections will hurt but even without those im not sure you are much more than 575-600.

Some Advice: Find ways to get more credit cards/revolving credit. It is really hard to get rid of negative/bad credit items. Our best tool against that is to dilute bad credit with good credit. more credit cards, more available credit, more cards reporting low balance.

you said you have a decent salary and have been putting away some money. if thats the case than...
pay off the collections. call and ask for a pay for deletion. if they wont still pay them off. the money is really small.
apply for more credit. dont worry about the hard inqueries. your looking to improve your credit in 2 years and those will stop effecting your score after 1 year
Look into more secure credit cards. it sucks having to go with secured cards, but the more you have the more available credit you have, the more your score rises, the better odds at an unsecured card
There are some ways to get an installment loan in kind of a hack-ish way... others would know more than me.

other than that... save. keep saving. having cash isnt a bad thing and the less you need to borrow the less you need to rely on a credit score.

I agree with the majority of this, but don’t think that another installment loan is necessary. Any small SSL loan he would get would be overshadowed by the larger student loans. I do agree that the first thing to do is pay off those collections. The amounts are trivial. Ask for a PFD, if they agree pay it. If they don’t agree, pay it. Do not dispute either account. Wait for those two accounts to update on your reports to either paid or deleted and do Discover prequal. If you can’t get an unsecured Disco, grab the secured one. If you have any family that can get you into NFCU, get in with them and grab their secured card. Use all three monthly to establish good payment history, but only let one of them report a small balance.

Re: Rebuilding credit, some conflicting advise.

FireMedic1 — Mon, 18 May 2020 10:47:44 GMT

@Anonymous wrote:
To be honest... it seems like the lack of credit history might be hurting you more than the collections and derogatories.

- Low available credit (less than 2500-5000 is very low in credit scores eyes) Fico doesnt care what your credit lines are. Its what reported each month. Dont know where you saw this.
- Too few tradelines (you only have 1 credit card)
- Poor Credit mix (you have just the student loan as an installment. no auto loan, no mortgage, etc...) Only 1 installment loan is needed for a credit mix. SL's are that.

Dont get me wrong. late payments will hurt, collections will hurt but even without those im not sure you are much more than 575-600.

Some Advice: Find ways to get more credit cards/revolving credit. It is really hard to get rid of negative/bad credit items. Our best tool against that is to dilute bad credit with good credit. more credit cards, more available credit, more cards reporting low balance. OP only needs to reach 3 cards for best scoring for now and never have all acoounts report a balance

you said you have a decent salary and have been putting away some money. if thats the case than...
pay off the collections. call and ask for a pay for deletion. if they wont still pay them off. the money is really small.
apply for more credit. dont worry about the hard inqueries. your looking to improve your credit in 2 years and those will stop effecting your score after 1 year
Look into more secure credit cards. it sucks having to go with secured cards, but the more you have the more available credit you have, the more your score rises, the better odds at an unsecured card
There are some ways to get an installment loan in kind of a hack-ish way... others would know more than me.

other than that... save. keep saving. having cash isnt a bad thing and the less you need to borrow the less you need to rely on a credit score.

This is wrong in so many ways. 1 loan is all thats needed. No go and get more cards and report balances. Slowy work up to 3 cards. More good doesnt cover up the bad in most cases. I have 740 scores. I'd probably be in the 800's with no baddies except the BK is holding me back. Lastly people come here to build their scores so they can get things in the future with lower APR's because thier scores will be higher. Yes you need to "rely" on your credit scores. Dont know where this info came from. But its not accurate.

Re: Rebuilding credit, some conflicting advise.

Anonymous — Mon, 18 May 2020 10:31:12 GMT

Yay for working on improving! I am doing that as well, so will offer up what I have learned and what's working so far.

1. Capital one is the card I got to start rebuilding and then followed it with Credit one. Not like amazing perks or anything, but they did increase my limits after paying on time for 6 months

2. if you don't remember those debt as being valid, then dispute. Check all 3 reports and delete on all 3. Literally did this on Thursday and already received the completed deletion from Transunion. Plus, if they are less then two years old, then this is when they hurt you the most.

3. Call or try to login to the old account. Of it let's you pay then pay or ask the rep if you pay will it be deleted from your report (I'm in this process now and asked a question in another thread so fingers crossed!)

4. If the dispute doesn't remove them, and you can't pay with the original lender, then research the creditor before calling(this forum has been a great resource) If they have a reputation for being reasonable and own the debt, then call and negotiate. Be pleasant. They are way nicer when you call them as opposed to them hounding you. I did this with Caine and Werner last week, and they offered the courtesy deletion once paid in full. They owned the debt, so it was easy to work with them. I chose that and I'm waiting for it to drop off

5. If all the above doesn't remove the debt, then pay it and go with leaving the account in paid status

6. Getting a some more credit and keeping the balance under 15% of what's available will help. I also did this and aid off my cards and my scores have drasticallly jumped over the past 6 weeks. I started in 400's and I'm in 600's.

so like I mentioned, this has been my journey and I'm still in it, but it's definitely working and it's a good feeling to take control of your stuff.

Thats a lot of steps for such small amounts, but it will be worth it if it works. Hope this helps and good luck!