How to improve and how does it take to improve Credit Score

[Anonymous]

I have credit scores of 550, 551, 543 it has drop by at 140 points in the last year 2008 to 2009. I think I know what the problem was:Payment History for 2008 - 2009

Late on mortgage 30, 60 and couple of 90 days payments (loan modification Dec 2009)

One charge off account (should I pay off in one lump sum)4 or 5 account sent to collections (should I pay them off in one lump sum) Car note two Late 30 day paymentsAmex never late (did charge anything all of 2008 and 2009) – open since 2007

I receive a loan modification for my mortgage that started in Dec 09,

I will have enough money saved to pay off 5 of 6 charge off/collection accounts. 

My question is if I pay off the charge off/collection accounts and continue to pay mortgage and car note on time, how long will it take to get my credit score up? Is it realist of me to think by June 2011 my score would be close to 700?

[cdtotten]

Sorry to hear of your financial problems.

First off, your score will not increase a single point because you paid off your charge offs. You should pay them cause you owe money, but it will not increase your FICO score. In fact, depending on when you pay, it may hurt your score in the short term.

With that many late payments and derogotory accounts, your scores are going to be down for a good while. If you continue to make your payments on time, without exception, you will see a slight rebound in 2 years, and then a slow progression up past then. I am going to go out on a limb here, but I just don't think it's remotely possible for you to hit 700 with that amount of delinquencies, modification program, and COs. 

You can try writing goodwill letters to your creditors asking them nicely to remove some lates, it may help a little. In 18 months, if you keep your CC util % down and make all your payments on time, I would expect maybe a 600 average?

[Anonymous]

Thanks

[newstart2010]

When you decide to pay off the charge offs do it with a Pay For Deletion letter so that you can try and negotiate them being removed from the credit reports completely.  that is all that will increase your score.  If you settle, or pay them off, and they stay on they will not increase your score at all.

[stagefoursurvivor]

I would suggest you research this further but, newstart is guiding you in the right direction. There are other 'net forums that will guide you step by step in dealing with this free of charge. Not a paid service or credit cleaning service.

Good Luck 

[haulingthescoreup]

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ericasja wrote:

I have credit scores of 550, 551, 543...

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Just to check, where did you get your scores? Unless you have applied for a mortgage, your Experian score (at a minimum) is a FAKO, a non-FICO score generated by a different formula.

If you got your scores from a credit monitoring service, they're probably all FAKO's.

This doesn't negate the advice that you've gotten, because in the end, your FICO scores are a result of what's on your reports, so it's important to get your reports correct and in the best possible shape. But it's entirely possible that your FICO's are higher. (or lower )

You can buy your EQ and TU98 FICO scores here. You can't buy your EX FICO score anywhere --they'd rather sell you their FAKO Vantage score. (or PLUS score, equally FAKO)

There's no hurry in buying your FICO scores, although it's always good to know where you're starting from. Keep working on your reports, and if you're looking at FAKO scores, ignore the advice, which is sometimes harmful to your FICO's. Just keep reading here.

And if you haven't already, please read Understanding Your FICO ® Score and Credit Scoring 101 (at least the first post.)

These will give you the background knowledge you need to understand what you read here on the forums.

[newstart2010]

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@stagefoursurvivor wrote:

I would suggest you research this further but, newstart is guiding you in the right direction. There are other 'net forums that will guide you step by step in dealing with this free of charge. Not a paid service or credit cleaning service.

Good Luck 

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This forum will guide you specifically on the steps to take as well.