How much will it drop?

[Anonymous]

Here is a breakdown of my derogatory marks...

Chase - 30 days past due twice:

11/06, 1/07

60 days past due 4 times:

12/06, 2/07, 3/07, 4/07

Chase was VERY rude and threatening when calling, so I told them I won't answer the phones and they'll be the last to get paid - and they were.  They refused to help in my situation when I called them the day I lost my job.

Dell - 60 days past due twice:

12/06, 1/07

They wasted no time canceling the account and calling to bug me.  They orginally said they'd help with the situation, but then went back on that promise.

Vehicle Loan - 30 days past due 4 times:

12/06, 1/07, 2/07, 3/07

Refused to help in my situation.

Wamu was very helpful.  They set me up with a payment plan and were very understanding.

GM, though initially said they could do nothing to help, did call occasionally to let me know that if I could pay a minimal amount, they would not report to my credit.  I did as they asked and am blemish-free with them.

[SmartCookie]

At 24, time is most definitely on your side and taking charge of it now puts you in a very good minority! 

Not sure if you have read the start here but please read and re-read till you turn blue:   http://ficoforums.myfico.com/fico/board/message?board.id=ficoscoring&thread.id=2654  also read the Frequently requested threads and pay special attention to PFD and GW letters:    http://ficoforums.myfico.com/fico/board/message?board.id=generalcredit&thread.id=6834

I stand by my original recommendation, do not apply for new credit yet.  Repair and do clean up first. You might be able to apply and get approved for something that is a good choice in 2 months, 4 months, a year... depends on how fast you clean up and what luck you have.

Keep the majority of your money going into your GM and WaMu and continue not to be late.  Consider calling them again soon threatening to close the cards (do NOT close them) if they don't lower your rate at least temporarily.  Explain you have other offers coming in with better terms. 

For the closed Dell and chase cards that still have balances, you can GW in order to preserve any positive information but most people (myself included) would call and see what they would settle the account for.  Do not take the offer.  Write up a PFD offer for that amount once you have that sum set aside and if they will take it (must get it back in writing), that entire TL and all derog will be wiped as if it never existed. 

The reason you don't want to pay off the closeds now is that you will then lose all of your negotiating power for a PFD (they want their $) and will only be left with the chance of a GW.  Once they have their money.... they really don't care about GWing you.  Use the PFD while you have the chance!  

As I said though keep most of the money going into the open accounts, but make sure you figure out what you can budget off to the side in anticipation of being 'ready to go' when you can PFD the closed ones.  Don't write the PFDs until you have set aside what you are offering.

[Anonymous]

Wow, thanks for that great reply.

Now, you mention trying to settle the debt with them.  I only owe 975 on the Chase, and 1300 on the Dell.  Is it even worth trying to settle with them for such a small amount?

Won't settling cause a potential problem in the future if they sell the debt to a collection agency and they try to collect in say 5 years?

[SmartCookie]

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stress83 wrote:

Wow, thanks for that great reply.

Now, you mention trying to settle the debt with them.  I only owe 975 on the Chase, and 1300 on the Dell.  Is it even worth trying to settle with them for such a small amount?

Won't settling cause a potential problem in the future if they sell the debt to a collection agency and they try to collect in say 5 years?

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Sure it is worth a try.  That's $2275 and I'd rather have it gone for $1000!  Not saying they will settle or for how much... they will usually question you as to your income vs monthly expenses to determine what they think they can get from you.  The time to do it is now before it gets into outside collections in any way shape or form.  Remember, everything in writing even if you called them to negotiate, ask them to send an agreement or where you can send one (checkless) to.  Please make sure to do your reading so you understand the finer points of the negotiation process.

Settling means they are agreeing to take a percentage as legal payment in full.  Again this is why you get it in writing.  You will no longer owe them anything, there is nothing to collect, it will not go to a CA.

So, let's take Dell.  Ideally it would go like this:

You: hi I have a balance that I am having trouble paying.  I'd like to see what you might accept so that I can try to get the money together and get this wrapped up.

Dell:  What do you make per month/what is your rent/other bills etc etc.  Ok we can settle this in full for X

You:  Hmmm... I might be able to borrow money but I think I can only get X-100, could we do that?

Dell: yes or no

You: Ok thanks so much I will call you back.

Now, write a PFD for that amount to them.  If they don't take it, increase the offer a bit.  Make certain that they understand in more or less words that no PFD from them, no money from you. 

But again, please do your reading and study up.  Every situation has its own circumstances and you need to research how you can tailor everything to work for your situation.

Message Edited by SmartCookie on 10-17-2007 11:33 AM

[haulingthescoreup]

SmartCookie, I think that is the BEST explanation of what a PFD is all about, and of how to go about it, that I've read yet! Kudos.

OP's situation is a perfect example of why everyone, especially young people, need to have that 4 - 6 months of expenses locked away. Suze Orman sort of blows this off in Young, Fabulous, and Broke, saying that it's unrealistic, but I completely disagree. It's so terrible to build up your credit, have an apartment lease, some cards, maybe a car loan, and then lose your job and have it all blown out of the water! Even if you have to move back home for a while, you still have to be able to cover your obligations. I remember reading another post where the poster lost his/ her job and lived off a HELOC for six months, and his/ her credit was unaffected. Those can be good rainy-day savings equivalents.

OP, please believe me when I say that I am not being critical of you--I think you're being very responsible about how you're handling this. If I had lost almost 170 points off my scores in 4 months, I think that I would still be curled in a fetal position! Good luck with your bounce back. That 633 is a nice indication of how well you're doing.

[SmartCookie]

Thanks haulingthescoreup!  I appreciate that and hope it was informative to those who it might help.

Oh and I love Suze... love her.  That book is actually a good recommendation come to think of it.  Stress83 you might want to get it if your library has it.    And I totally agree, aiming towards putting away as much savings as possible for the emergency fund is good at any age. 

[Anonymous]

It was devastating to see the drop in my score.  It was great being a young twentysomething and able to get whatever I needed when credit was involved - especially without a cosigner.

I attempted to go into business for myself (ie: real estate).  When my employer at the time found out, they axed me.  My savings kept me afloat for a couple months, but after that was gone, it was all down hill.  Furthermore, my business venture didn't work out, so I finally hung my head in shame and went back to work for another company.

I have followed the examples in the PFD letters, but I am wondering how Dell and Chase will handle it.  I included the "debts in dispute" and "no liability" in there, but I am not exactly disputing the debt, and I know I am liable for it.  I'm just wondering if it's appropriate to write the letter when I've been making more than the requested payments for these accounts, even though they've been closed.  I do want the accounts deleted from my report entirely, but I'm not exactly sure if settling is going to help (for instance, Dell has its own "inside" collections agency).

[SmartCookie]

Slow down on the payments and tailor the PFD letter to your situation.   You can keep it fairly simple, once you have the figures just write and focus on that you will accept their settlement offer provided that they state in writing that the account will be deleted from all CBRs.  Tell them they have 10 days to respond to you in writing and if they accept the terms, you will issue a check immediately etc.

Make it work for your situation.... the examples are general. 

[Anonymous]

I'm going to offer Dell $500 and Chase $300.  I know that's pretty low, but I figure it'd be a good start to bargaining.

What are these "green cards" people are referring to getting back after sending the PFD?  Delivery confirmation from the Post Office?

[SmartCookie]

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stress83 wrote:

I'm going to offer Dell $500 and Chase $300.  I know that's pretty low, but I figure it'd be a good start to bargaining.

What are these "green cards" people are referring to getting back after sending the PFD?  Delivery confirmation from the Post Office?

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If you are going to offer that low I would really consider calling them first to see what they might accept.  If anything, you don't want this too drawn out.  I don't disagree at all with your reasoning though and if you are comfy with that I say go for it.

Yep those green cards are just the return receipts from the CMRRRs.