Bad Credit Question

[Anonymous]

Thank you. Appreciate the advice. 

[Anonymous]

@Anonymous welcome to the forum. Listen unless you have the money to pay every single collection, paying one is not going to make any score difference.

Bankruptcy definitely isn’t the answer because then you’re marked on your credit report for 10 years from then.

If you are that tight right now, the best thing you can do is save up money for an emergency fund and then start saving up a savings fund, and before you know it, all those will drop off and you’ll have a nice down payment for whatever you want, along with a permanent emergency fund and savings fund like a responsible credit user. Jmho.

[Anonymous]

Now if you do have the money to pay every single one of those collections, that will give you a score boost, but then you have to deal with everyone of the chargeoffs & if you get every one of those paid, they’re still going to hurt you unless you can Goodwill every single one of them off, just full disclosure.

But I think we recently had someone who even hit 800s with a paid chargeoff(s), but no collections. So it is possible, depending on the profile and details and all that good stuff. If you can pay all the collections and chargeoffs and then do the other things you need to do to your profile with the appropriate ages.

But I still say it’ll all fall off in a couple years and you could have yourself in a very good position at that point in time if you do things responsibly from here on out. But you have to decide what fits your situation best.

[Anonymous]

Most definitely. Thank you for the information. Much appreciated. I'm looking to pay off the smaller balances for sure. The higher ones are a far reach at this point. Unfortunately. But you and others are right. Build positive credit going forward and rebuild until they all fall off. Thank you again. 

[Anonymous]

whats the point in the small if you cant do the big?

[SouthJamaica]

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@Anonymous wrote:

Hello everyone-

currently have about 12 collections/charge offs on CR- Reports show that they will fall off report Mid 2023. Have about 3 good standing low limit credit cards. Is BK an option now or just wait for all the negatives to fall off? Current scors range between 575-632 depending if i carry balances. Thanks for all the help!

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No reason in the world for you to file bankruptcy. It certainly won't help your scores.

[Anonymous]

Sounds about right. Thank you. 

[Anonymous]

Lol good one 

[Anonymous]

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@Anonymous wrote:
whats the point in the small if you cant do the big?

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+100

I have been in the same spot. I am nearing the 7 year point for 90% of my baddies and I decided not to waste resources ($$$).

I decided to pay what will still be on my reports past the bulk of them aging off.

Then, if I have a decent savings built up and can spare the change, I will then at that point start worrying about those accounts.

I want to buy a house and a new (to me) vehicle. If I focus all my money on accounts that will no longer even be on my reports by the time I am done weeding through them, I will not have a down payment for house/car, mortgage expenses (closing costs, etc), or an emergency savings.

Prioritize your resources.

I know the moral code around here is if you owe it, pay it. I am not saying I disagree, but I believe in finances over fico scores. I am going to do what is best for me and my family and not waste money on something that will have little to no change in my situation when I could be putting that effort ($$$) elsewhere. I can always circle back to those debts that are past the SOL (statute of limitation) and have aged off my CRs later when I have me and my family in a better situation. Debts don't go away (unless they cancel them) and instead they just pass the SOL and age off your CRs. They arent going anywhere.

If I were you, I would bide my time for the next 3 years with those COs and CAs, build up a savings for emergencies and whatever major purchase may be in the future and build up positive credit in the meantime. If you start working on building positive accounts now, 3 years from now when everything falls off you will be positioned much better than waiting until then and then starting to build credit (been there, did that). I previously though once everything aged off that I would have good credit and that was false! I needed to be building credit while I waited, which is what I am doing now.

I wish you the best and I honestly would not even touch the low hanging fruit unless you think you can work your way through all of those account between now and 3 years from now and just save your money for a better cause down the road. 

Again this is all just IMO

Good luck!

I will add a few ideas in another response so this one does not drag on for ages.

[Anonymous]

Continued....

1) So, I would 100% pull all 3 credit reports from annual credit report. It is free but has no scores, but scores are not something to worry about right now. These specific credit reports are the most comprehensive that I could find and spell out exactly when to expect these derogatory accounts gone.

TU (Transunion) will list "estimated date of removal"

EX (Experian) will list "on record until"

EQ will list "date of first delinquency", just add 7 years to those dates and that is when they will fall off your EQ credit report. On the reports it also lists "major delinquency first reported", this is not the date you are looking for.

This may help you gauge how long you really have to work through these debts and maybe how to prioritize them, if you do decide to pay any/all of them or if you should wait them all out.

2) do not dispute in hopes these accounts just fall disappear from your credit reports. These days creditors are sharp to this disputing tactic and most times are absolutely on top of it and will respond. You owe them money and while you do they are highly unlikely to go without responding to these disputes and any updates on accounts that have been dormant (and in your case many years for some, likely) will dong your scores further. Just avoid it unless absolutely fraudulent or erroneous.

3) do not reach out to any CAs or OCs (original creditors) unless you have absolute intention to pay then or make a payment arrangement you can 1000% stick to. You can reset the SOL to sue you (different than 7 year reporting window) generally if you:

Reaffirm the debt is yours

Promise to pay

Make a payment arrangement/plan

Make a partial payment

You will need to check the laws for your state on how long SOL is for your type(s) of debts and what specificall resets it, but that is the jist of it.

I would not make any partial/random payments without contacting someone and settling/negotiating/agreeing to said payment beforehand.

Good luck and feel free to come back for more info/guidance or if you have questions!