Rebuilding Credit - What do I do next?

[Anonymous]

Hello all-- I am in the process of trying to rebuild my credit. My scores are in the high 500s and I am finally ready and in a financial position to take a stand. For one reason or another, I have had several credit cards charged off. I've been doing extensive research online and have removed a couple collections via PFD letters. I am not sure what to tackle next so I will give you a breakdown of my outstanding debt:

Barclays Bank: CC charged off for $800 in 2015

Chase: CC charge off for $700 in 2015

Discover: CC charged off for $200 in 2018

Citi: CC charged off for $200 in 2018

Wells Fargo: CC charged off for $200 in 2018

None of these accounts have been assigned to an outside collections agency. All these accounts are still reporting late payments to the bureaus. I have tried disputing/negotiating/etc. to no avail. At this point should I just pay these accounts (I can afford to pay each in full)? My goal is to get a credit account in my name to continue building credit. Right now, the only credit I have in my name is a student loan and a car loan which have both been paid on perfectly. Currently, I am an AU on three cards that are never used and have 100% on-time payment and history dating back to the 90s. I have tried applying for a couple cards on my own, but I have been declined every time. What should I do?

Thanks so much for everyone's help!

[Anonymous]

You definitely need to get them paid - paid chargeoffs are much better than unpaid. None of these is likely to remove their reporting but you could ask down the line, after reestablishing solid payment history, if they'd delete the lates. I imagine the fact that they're still actively late and unpaid, and the score suppression that's causing, us why you aren't getting approvals. Since they're reporting lates though, you might ask if the accounts can be reinstated with payment. Worst that happens is they say no. Definitely pay them before they are sold - if they are, you'll have two notations for each account. 

[Anonymous]

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@Anonymous wrote:

You definitely need to get them paid - paid chargeoffs are much better than unpaid. None of these is likely to remove their reporting but you could ask down the line, after reestablishing solid payment history, if they'd delete the lates. I imagine the fact that they're still actively late and unpaid, and the score suppression that's causing, us why you aren't getting approvals. Since they're reporting lates though, you might ask if the accounts can be reinstated with payment. Worst that happens is they say no. Definitely pay them before they are sold - if they are, you'll have two notations for each account. 

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Thanks for the quick reply! If I pay the COs in full, do I risk resetting the clock on when they will be removed from my credit report? The Barclays and Chase cards will be removed from my report (relatively) soon as they first went delinquent in early 2015.

[donkort]

I would pay them off for various reasons.  Two are evident, right off the bat.

1.  It would reduce your overall utilization, resulting in slightly higher scores (even though they would still be stifled because they're charge-offs).

2.  Should you desire a mortgage, you would probably have to pay them off, anyway. 

I'm not sure if FICO 9 ignores paid charge-offs as well as paid collections.  But if it does, and FICO 9 becomes more common, then that should be another incentive to pay them off.

[donkort]

Accounts are deleted from credit reports 7 to 7 1/2 years from "Date of First Delinquency."  

A payment to the charge-off company cannot "re-start" the clock by changing the (DOFD).  The DOFD is static, and cannot be changed.  

Keep a copy of all your accounts for your records, in case they "start the clock" by extending the "Statute of Limitations."   You have to have proof of the start of your delinquency.  

[Remedios]

Payment to original lender or collection agency doesn't reset removal date.

It's legally mandated, and there is no way around it. 

However, it's frequently convoluted with expired SOL, which can be restarted under certain circumstances, such as making a partial payment,  or promise to pay. 

As far as should you pay, the answer is it depends on whether you want to lose a chance of doing any business with those lenders for the next decade or so.

If you do, pay them and be done. 

Once you take care of your charge offs, you will be in position to put money into deposits for secured cards and start rebuilding your credit for real. 

Good luck! 

[Anonymous]

I would start paying them before the collection company gets them.   You will need those banks listed well before they will need you.   10 years from now you may want an account with them......if you burn them today they will have the last laugh later.   Pay them even its $20 a month.  If you don't pay them it will come back to haunt you.

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@Anonymous wrote:

Hello all-- I am in the process of trying to rebuild my credit. My scores are in the high 500s and I am finally ready and in a financial position to take a stand. For one reason or another, I have had several credit cards charged off. I've been doing extensive research online and have removed a couple collections via PFD letters. I am not sure what to tackle next so I will give you a breakdown of my outstanding debt:

Barclays Bank: CC charged off for $800 in 2015

Chase: CC charge off for $700 in 2015

Discover: CC charged off for $200 in 2018

Citi: CC charged off for $200 in 2018

Wells Fargo: CC charged off for $200 in 2018

None of these accounts have been assigned to an outside collections agency. All these accounts are still reporting late payments to the bureaus. I have tried disputing/negotiating/etc. to no avail. At this point should I just pay these accounts (I can afford to pay each in full)? My goal is to get a credit account in my name to continue building credit. Right now, the only credit I have in my name is a student loan and a car loan which have both been paid on perfectly. Currently, I am an AU on three cards that are never used and have 100% on-time payment and history dating back to the 90s. I have tried applying for a couple cards on my own, but I have been declined every time. What should I do?

Thanks so much for everyone's help!

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[sjt]

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@Anonymous wrote:

Hello all-- I am in the process of trying to rebuild my credit. My scores are in the high 500s and I am finally ready and in a financial position to take a stand. For one reason or another, I have had several credit cards charged off. I've been doing extensive research online and have removed a couple collections via PFD letters. I am not sure what to tackle next so I will give you a breakdown of my outstanding debt:

Barclays Bank: CC charged off for $800 in 2015

Chase: CC charge off for $700 in 2015

Discover: CC charged off for $200 in 2018

Citi: CC charged off for $200 in 2018

Wells Fargo: CC charged off for $200 in 2018

None of these accounts have been assigned to an outside collections agency. All these accounts are still reporting late payments to the bureaus. I have tried disputing/negotiating/etc. to no avail. At this point should I just pay these accounts (I can afford to pay each in full)? My goal is to get a credit account in my name to continue building credit. Right now, the only credit I have in my name is a student loan and a car loan which have both been paid on perfectly. Currently, I am an AU on three cards that are never used and have 100% on-time payment and history dating back to the 90s. I have tried applying for a couple cards on my own, but I have been declined every time. What should I do?

Thanks so much for everyone's help!

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PDF is only successful with collections (medical, utility, JDB) and even then.

Your best move is to pay the charge offs either in full or in installments. It's not that much. You will probably get a score bump once they are all paid.