Credit Repair

[Capo Dei Capi]

What kind of credit score could I see in about 2 years?(Right now its 517 according to creditkarma, but when I applied to a bank they did a soft check and it was 589.)

I have 4 things in collection that are a total of $1572 that will be off by Dec. 2018. And I am planning on getting a $500 secured credit card soon and using it each month and paying off the balance. Currently I have no line of credit, and only 1 hard pull from applying to an apartment. And both the check for the credit card+apartment would also be off in addition to the 4 things in collection.

Would I be in the 700+ range or is more needed to get to that level.

 

[derekxec]

I'm no expert or anything, but get rid of those collections asap. The credit card will be alright but make sure you don't keep it more than 30% or so with debt on it. Make sure you can pay it off every month, and try to get a card that gives cash back rewards too. I use CapitalOne and they are pretty good. Main thing is to pay it off *every* month and your score should go up pretty quick. Good luck!

 

[blvckhvtter]

Credit Karma is not really accurate. You'll want to check your FICO score for a more accurate number. I would also suggest getting at least 3 secured credit cards (you can check out NerdWallet for good ones) and like @derekxec says, keep it under 30% utilization.

 

[Capo Dei Capi]

I'm no expert or anything, but get rid of those collections asap. The credit card will be alright but make sure you don't keep it more than 30% or so with debt on it. Make sure you can pay it off every month, and try to get a card that gives cash back rewards too. I use CapitalOne and they are pretty good. Main thing is to pay it off *every* month and your score should go up pretty quick. Good luck!

I am not planning on buying a house or a car(on credit) within the next 2 years, so I can wait until the 7 year fall off dates. If I pay them off they will stay on my credit report for 7 years from the pay off date.

@blvckhvtter I'm going to start off with secured one from the credit union I'm at since its only 7.9% apr non variable.

 

[Capo Dei Capi]

UPDATE:

I found out that the 7 years wait as well as option of paying to delete can't be trusted, and that debt settling is better.

 

[toml3030]

I have 4 things in collection that are a total of $1572 that will be off by Dec. 2018. And I am planning on getting a $500 secured credit card soon and using it each month and paying off the balance. Currently I have no line of credit, and only 1 hard pull from applying to an apartment. And both the check for the credit card+apartment would also be off in addition to the 4 things in collection.

Would I be in the 700+ range or is more needed to get to that level.

Your credit scores will not improve that much at all if you have a live collections account in your credit within the statute of limitations. You need to settle them or pay them off before you get dramatic credit score improvements. Also if you try to buy a house, many lenders will not approve a loan with a live collections account on credit, because they don't want anything that can be legally be collected from your income. This is why if you're in a lot of debt, a bankruptcy may be a better option than having a bunch of chargeoffs on your account.

 

[toml3030]

If I pay them off they will stay on my credit report for 7 years from the pay off date.

It's 7 years + 180 days technically. Also, there's the credit clock and statute of limitations clock. If your debt passes the statue of limitations clock, lenders care a lot less because they can't legally attach the debt to your income or your possessions.

 

[Capo Dei Capi]

Your credit scores will not improve that much at all if you have a live collections account in your credit within the statute of limitations. You need to settle them or pay them off before you get dramatic credit score improvements. Also if you try to buy a house, many lenders will not approve a loan with a live collections account on credit, because they don't want anything that can be legally be collected from your income. This is why if you're in a lot of debt, a bankruptcy may be a better option than having a bunch of chargeoffs on your account.

My debt isn't too high, but I'm going to try to settle for 10 to 25 cents on the dollar since they are all old from 2011.

 

[toml3030]

My debt isn't too high, but I'm going to try to settle for 10 to 25 cents on the dollar since they are all old from 2011.

That might not be the best idea, since all those debts are now either past the statute of limitations or about to do so. The best way to go may be just to wait it out. Remember, if those debts are still within the statute of limitations, there's nothing to stop them from suing you for the full amount if they think they can get it out of you. Don't acknowledge your debt as it may reset the statute of limitations clock. The only way I'd settle those debts is if the creditor is willing send you a written letter saying that the debt is "paid in full" on your credit file rather than "settled".

 

[Capo Dei Capi]

That might not be the best idea, since all those debts are now either past the statute of limitations or about to do so. The best way to go may be just to wait it out. Remember, if those debts are still within the statute of limitations, there's nothing to stop them from suing you for the full amount if they think they can get it out of you. Don't acknowledge your debt as it may reset the statute of limitations clock. The only way I'd settle those debts is if the creditor is willing send you a written letter saying that the debt is "paid in full" on your credit file rather than "settled".

The waiting out is not guaranteed if the debt is sold, it restarts the 7 year period even though it can't be sued for.

 

[magnus99]

Credit is a good thing in a business but it is bad also.you must not trust anyone when it comes to money. Some persons will give you trouble with getting your money

 

[toml3030]

The waiting out is not guaranteed if the debt is sold, it restarts the 7 year period even though it can't be sued for.

No; the debt clock can not be reset by the debt being sold, because the clock starts from last activity from your end, not the creditor's. Some dishonest debt collectors may try this, but it's not legal and you should be able to get it off if you complain to the credit bureaus.

 

[Capo Dei Capi]

No; the debt clock can not be reset buy the debt being sold, because the clock starts from last activity from your end, not the creditor's. Some dishonest debt collectors may try this, but it's not legal and you should be able to get it off if you complain to the credit bureaus.

That's what I was under the impression of at first, but I heard a few reports of it being different. I'll go to a local credit repair consulting service that I've found and has good reviews and is highly recommended by people.

 

[toml3030]

That's what I was under the impression of at first, but I heard a few reports of it being different.

Re-aging of accounts is illegal under Fair Credit Reporting Act. FCRA specifically says debt can be reported on your credit for 7 years and 180 days after the delinquency of the original account.

I'll go to a local credit repair consulting service that I've found and has good reviews and is highly recommended by people.

Just remember that they can't do anything for you that you can't do for yourself. Before you pay anyone if the debt is at a collection agency, I would just dispute it directly with them. (not through the credit bureaus) A lot of times they don't have their shit together and can't come up with proof that you owe the debt within 30 days as required by law if you dispute it.

 

[Sherb]

Damn, @toml3030 knows his shit.

@Capo Dei Capi, do you have the money to start paying off those four debts? If so, I suggest you start doing that. Snowball it, pay off the least expensive ones first. Snowball is mainly for people paying off debts for peace of mind versus actually saving money with Avalanch (paying off the highest interest rate accounts first), but in your case, a smaller number of accounts in collections as soon as possible is highly beneficial. Waiting another two years for everything to drop off is not going to counteract the bump you'd get from a CU secured card by any means.

You probably know these already, especially if you have knowledge of Credit Karma, but the main factors that go into your credit score are: Credit Inquiries, total number of accounts, age of credit history, derogatory marks, payment history, and credit utilization.

Get that secured card and use less than 10% of the credit limit. Pay on time, every time, and set up AutoPay so you don't forget. Pay off the accounts in collections instead of waiting another two years for them to hopefully drop off. There's a shit-ton going on with FCRA and the CFPB at the moment, and in the next couple years there is no telling what kind of new rules they will come out with. Wait six months or so before applying for new cards, and do so every six months. You should start to see a gradual increase in your credit score.

But for fuck's sake, pay off your debts.