New Here, Need Help.

[Anonymous]

Hi Everyone,

I am new here, and need advice on how I can improve my very low FICO score.  My Transunion FICO score is only 544.  I have 1 credit card account that was charged off as a bad debt, and 1 account that is currently listed as "in collections".  I have a few questions:

- If I pay the balances on these accounts in full, will this help to improve my FICO score significantly? 

- How long does it take to improve the score? 

- Would signing up for a credit counselling service like CCCS help someone like me, or is it better to try to pay off balances on my own?

Paying off both accounts at one time will be a big stretch for me, but I will try my best to do this if it will help to improve my score.

Sorry about the basic questions.  I have lived outside of the US for many years, and unfortunately, did not work on this issue while I was away.  I will be moving back to the US soon, so I need to resolve these issues quickly.  I am very responsible now, and pay all of my bills on time.  Unfortuately, because I live outside of the US, this has no bearing on my credit score!

Any help would be greatly appreciated.

Sincerely,

Chris

[RobertEG]

Hi Trendy, and welcome.

Paying either will not improve your immediate FICO score.

Paying the accounts is more significant in preventing future FICO impacts, and possible legal action.

The charged off (CO) account, if not paid, may result in the OC securing a collection agency (CA) to collect the debt.  Then the CA can make a new post to your CR which will hurt your FICO score.

Paying the collectiion account (CA) will similarly not improve your immedite FICO score, for paying a CA does not remove it from your CR.  What it does do is remove the threat of legal action being taken to collect the debt.

Your decision to hire a credit counseling service is a personal decision on your part, but I personally see no benefit in paying them to get advice that will willingly be offered to you free, and without bias, on this site.

[Anonymous]

Hi RobertEG,

Thank you for the welcome and your advice.  I did not realize that paying these debts would not impact the FICO score, but I will pay them off ASAP anyway.  I realized that credit counselling was not for me after talking to a counsellor ~ they tried to enroll me in a program that would take 6 years to pay the debt off!  No way!

I'll try to find my way around the forum and look up advice that will be useful for me.  If you have any suggestions about where I can start, or any books that you might recommend, I would be extremely grateful.

Thanks again!

Chris

[RobertEG]

Read the many threads on the Creidit 101 dialog.  That willl make you a FICO wizard!

[RobertEG]

I can assure you that, as you wander through the many posts on this site,that you will have questions.

The neat thing about this site is that no one cares how much you know or dont know about credit scoring.

I agree with about 99% of advice offered on this site.  Just come, post a "stupid"  questiion, and you wiill get an answer.