Good or Bad strategy?

[Anonymous]

I must say this is a wonderful forum!

I graduated college in 2005 with a very bad credit, got a good job making $55k/yr into an entry level position. I have so far changed job and increased my income to $80k/yr. I have changed my spending habits and I have been able to manage money a whole lot better than I used to. My Equifax score is up currently from 484 to 506 within 30days. I had 8 collections of which I have paid off 5 and the remaining 3 will be paid off by month end. Also I had 3 credit cards. A current capital one card limit of $700 with 2 - 30day late payments from '05 and '06, which I have paid on time for the past 12months with current utilization of 15%. A chevron credit card limit of $200 that was closed and I paid it off in 2005. The worst of them all been a Chase card with limit of $1000 and charged-off balance of $4013 (the $3000 difference from late fees and interest) and 34 - 90day late payments. I have been making payments on this card since february and arrived at a settlement amount of $2200 with the collections agency. Now my last payment of $400 to complete the settlement will be on the 20th of May after which it will show paid on my credit. Is it better settling for that amount or paying it in full?

I am getting married in October that's why I chose to settle so I can cover the expenses for the wedding. I am lookingto buy a home by this time next year and I am hoping when that Chase card charge-off is changed to paid, I will be off to a good start finally. I am having my bestman with a credit score of 780 add me as an authorized user on one of his cards with a limit of $5000 so it can give me a higher credit limit on my CR and help improve my scores. Do you think this is a good way of arriving at a 620+ score or more by the end of the year. Please give me your thoughts on this. Thanks

Message Edited by Akinzo on 05-09-2007 02:15 PM

Message Edited by Akinzo on 05-09-2007 02:20 PM

[Anonymous]

With credit, the past is water over the dam...if you've settled, you've settled, and at least they can't sue you or keep re-reporting the debt.  Yes, it will sting and after all is said and down, you will take a FICO hit.

With credit, "the solution to pollution is dilution."  Forget the past.  It's there, there's nothing you can do about it...all you can do is dilute those baddies with good credit history...tradelines in good standing that you pay on time and keep your utilization low on.

It will take about a year for the fallout from the late-pays and charge-off to begin to decay.  You might not see tremendous progress in your FICO or in getting CLIs until the third or fourth quarter of 2008.  Nevertheless, keep plugging at it, because the only way you will ever improve is to start ginning up some GOOD credit history.

By the middle of 2009, credit card companies and many other prospective lenders will look more at your past two years of good stewardship and faithful management than your missteps earlier in the decade. 

[Anonymous]

Thanks...Now do you think my friend's CC account with a $5,000 limit when added will help boost my credit ?

[smallfry]

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@Anonymous wrote:

Thanks...Now do you think my friend's CC account with a $5,000 limit when added will help boost my credit ?

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Not a whole heck of a lot.

[Tuscani]

Being an AU may help some.. but I highly doubt it will give you the increase you are looking for.