No credit card required
Browse credit cards from a variety of issuers to see if there's a better card for you.
Hi all,
First time poster here, been lurking on this forum for a while on different posts reading up on a few things but decided it would be best to ask questions based on my situation. I'm obviously new to this process and have so many questions with conflicting answers from multiple sources so I guess that's what promted me to make my own post. Here's my background first...
I made alot of dumb decisions as a teenager and continued to do so as a early 20 something. Now I'm married and looking to rebuild my credit as we are looking to start a family in the next 3-5 years which comes with buying a house, etc. Current FICO score is 532 and am aiming to be in the 600's by the end of this year (please advise if this is realistic or not). I have a few qustions regarding accounts that are charged off and in collections. As it stands, I have 2 charged off retail accounts from department store credit cards (about $800 and $500 so a total of $1300). I have 8 accounts in collections with a mix of medical, cell phone, and insurange accounts that went unpaid. Those accounts range from $60-$500 so all in all, I am looking at about $3600 in debt with accounts that are either charged off or in collections. I have a steady job now (not the case when all these problems started) with a yearly salary of about 65k when bonuses all are done. I have some money saved up right now and have flexibility to put more aside each pay check to start paying off debt. I have 2 secured credit cards with a CL of $300 and $500 and am making regular on-time payments on those.
My biggest questions revolve around accounts in collections and charged off accounts. I get conflicting advice that ranges from "don't pay them off unless you can arrange a pay for deletion deal" to "pay them off anyway unless you want to get sued". Dumb old me started receiving collection letters in the mail and for some reason thought it would be best to ignore them so they are well past the 30 day notice and from what I understand, sending any DV letters won't really matter any more. Most of the charged-off/collection accounts are about 2-3 years old with the exception of an old cable bill from college that will be 7 years old next January. Sorry for the long post, any clarification on what first steps I need to take are much appreciated. Thank you in advance to those who take time out of their day to reply to me!
Others may be able to chime in but here is some basic information to get you started.
Pull your annual credit reports (free with no credit score but all the information you need) or you can pay $1 for all 3 scores on CCT. So you have all your real credit scores.
Once I got those, I created a spreadsheet that included all the creditor information, amount owed, DOFD and willingness to PFD. Priority should be given to PFD, SOL and CC charge offs that are affecting your UTIL.
Collections:
Of course it would be ideal to get PFDs, but it's not always the case. Always aim for PFD first. Check SOL in your state to see how long they have to sue you for the balances. Those need to be take care of. You can check around the Forum to see what kind of luck others have had.
Medical Collections:
These are the collections I had a lot of (over 10). Depending on the collection agency how easy it will be to PFD. Search around the forums for that. There is also talk about googling the HIPAA process. I didn't do that but it may be worth a shot. If any of the collections were payments that the insurance paid late and you have proof you can get those deleted.
CC COs:
These will affect your UTIL so of course aim for PFD, but if not still pay them off. The late history will still stay on your CR even if you pay off the CA.
Other Debt:
Aim for PFD, otherwise get on payment plans so you don't have to shell out a lot of money at once. Or pay from smallest to biggest.
Having open Collections/CO's will depress your score because they are updating monthly.
Current Credit:
Get one more CC (secured) and also talk to your local credit union about getting a secured loan. You need an installment loan for a good credit mix. If you can, I would get added to someone's card as an AU with a high limit, low UTIL who has a clean payment history. Make sure to pay your current cards before the statement cuts so when the balances get reported they show $0 or less than 10% util.
Reaching 600's? Can't say for sure. It's a process. I would suggest you sign up for myFico to get a play by play of your credit scores as you do the clean up.
Good luck and welcome to the forums.