@pruittc1 wrote:
Hi all! So I am hoping to get some advice on the best moves to make for rebuilding my credit. My scores are around 550-580 ish. Baddies are 5 collection accounts. One is $1390 (9/2024), one is $78 (7/2023) LVNV has two one is $444 (12/2022) and the other is $421 (6/2022) and one is $2270 (6/2022). No open revolving accounts, no open car or mortgage loans so my debt to income is not affected. I was thinking something like Chime, finger hut, Wards? No one else will approve me I did try like 3 different apps like premiere and cap one with no luck. Should I pay off the collections, can't all at once but I can work on some of the smaller ones. Will showing a zero balance on those help? Or should I focus on opening accounts that would counteract the baddies. I have to choose one to start and work from there. All suggestions are welcome and greatly appreciated.
In your current situation, there's no amount of adding new positively reporting accounts that will counteract the bad, it just doesn't work that way. Adding new accounts is almost guaranteed to lower your scores further. For the time being, I would put any thoughts, or attempts of adding new credit on the back burner. Your main focus should be on addressing the bad debt, and getting it paid off by whatever means you have available that won't hinder you from keeping up with your other obligations, rent, utilities, etc... This could include taking on an additional job, or side hustle you can use to generate more income to throw at the debt.
Before all that, you may want to consider going with the debt validation strategy that some suggest. Under the FDCPA you have the right to ask for the validation of the debt within 30 days of being contacted by a collector. This will temporarily suspend any collection efforts, and if they fail to validate the debt, it could be removed from your reports.
If this doesn't produce any favorable results... Any of the collections that are in jeopardy of seeing legal action should be a priority to address. After that, If any of the collections are associated with revolving debt such as credit cards, I'd address those next since they'll continue tanking your reported utilization % until they're paid to zero. Usually the avalanche method is the best way to go after these things, as it will save you the most money in interest, and fees, going after the biggest, or highest interest debt first. Once it's paid off, you move on to the next highest, so on and so forth until they're all gone. Sometimes when people have limited funds to tackle debt, they'll use the snowball method instead. Tackling the smallest debt first, when it's paid, they move on to the next smallest and so on.
Reaching out to the creditors and negotiating a lower debt is always an option too, but most often they'll be willing to do that only if you're able to PIF right then.
