How do I fix my credit and make sure my unpaid debt is taken off of my credit report?
love_earth22 asked:
I am getting sick of my bad credit ruining everything I try to do. At this point I am finally able to pay off my debt in order to fix this problem. I have heard stories of people paying off their debt but the company leaving them as unpaid on their credit report. I DONT want this to happen. How do I go about paying everything off while making sure it is taken off my credit report for good? How long does it take your score to change after you paid everything off?
I am getting sick of my bad credit ruining everything I try to do. At this point I am finally able to pay off my debt in order to fix this problem. I have heard stories of people paying off their debt but the company leaving them as unpaid on their credit report. I DONT want this to happen. How do I go about paying everything off while making sure it is taken off my credit report for good? How long does it take your score to change after you paid everything off?
Tags: Credit Debt, Score, Unpaid Debt
December 14th, 2009 at 9:22 pm
Paying off old debt will not improve your score. The damage is already done and the derogatory item will remain on your credit report for the balance of the 7 year reporting period, whether paid or not.
However, creditors do look at your whole report, not just your score. Paid old debt looks better than unpaid.
With this in mind you should try to settle for as little as you can. If the debt is over 3 years old, offer 25%; 2 or 3 years old, offer 50%; less than 2, offer 75%. Lump sum gets the best deals. Payment plans must be short term. Get any settlement agreement in writing and keep it along with your payment proof, forever. Do not give collectors direct access to your bank account.
If any of the derogatory items are single entry items like medical and utility bills, negotiate a pay for delete — you pay $x and they remove the item. This will help your score. But it doesn’t work for regularly reported items like credit cards and installment loans. The collection agency can’t remove what the original creditor reported.
After you get every thing cleared up, you will need at least 24 months of consistent, on time payment history to see improvement in your score.
December 14th, 2009 at 10:35 pm
One thing to remember is that debt that has gone to collection status, which is showing a I-9 or R-9, etc., has most likely gone to a collection agency. If you are going to negotiate for less than the full balance, no matter how old it may be, the bureau will show that the account was “settled”. This affects your bureau score the same whether you have offered 10% or 75% on the dollar. If the account has “charged off” it is definitely with a collection agency and the best rating you can hope for on that account is “paid charge off”. These accounts affect your overall credit score less as they get older. If you pay off any account, the creditor must show it paid. If they do not, you can fill out a dispute form and the creditor must respond in writing to the bureau within 30 days with proof that the status is correct. If they do not, the account must be removed from your bureau. Even after being removed, the account can re-appear because companies do not always update properly. Sometimes an account has to be disputed several times before it is permanently removed. This dispute method is what some companies use when they promise they can fix your credit. If you truly have an account that is disputable, you do not need a company to do it for you. You can do it yourself.
The greatest majority of your credit score is calculated on your last 2 years of credit history. If you were to take a “snapshot” of your payment history during that time, you would get a good idea of what the credit bureau computers were basing it on. It is much more damaging to the score to have recent 30 and 60 day delinquency than it is to have 3 and 4 year settled or charged off accounts.
The quickest way to get your score to go up is to keep your open accounts current. It will also help to dispute accounts that may have been incorrectly rated on your bureau. Once you keep open accounts current for two years or more, you will be surprised how much your credit score will go up.
December 16th, 2009 at 4:36 pm
You need to do some credit repair and learn how to do it.
You also need to find a way to add good credit lines and get bad ones removed.
Paying off old negatives can hurt you unless you get them to agree to remove it.
Making a payment moves the 7 year reporting period forward again.
Everything you do needs to be in writing.
December 18th, 2009 at 9:26 am
Unfortunately, a credit score is a lot easier to damage than it is to repair. But learning how to fix bad credit may save you from embarrassing loan or credit card denials, or even from being turned down for a new job.
If you find yourself in a situation where your credit score has dropped due to late payments, excessive debt, or any of a number of other factors, it is key to take proactive steps to repair your credit by raising your FICO score. The FICO score is the industry standard for assessing an individual’s credit worthiness and is a numeric grade that is calculated from a variety of historical components around that individual’s payment history and credit management.
December 20th, 2009 at 4:52 am
Last month I paid off my last bill. I worked on it for 2 1/2 yrs. Every once in awhile my credit union sent me a notice telling me that my credit score improved and, as a result, the amount I had to pay in interest would be decreased. So, at some point, your score improves during the pay down process.
Once a year you can request your credit report from the 3 credit bureaus for free. If there are any errors you need to prove it. For example, if you cancel a card & it wasn’t reported you can get a statement from the creditor & send it to them. If you’ve paid off a bill but it still shows up on the report you would need to send them a copy of the final bill or a statement from the creditor. So the errors are easily fixed. But it would probably take the credit bureaus 90 days to reflect any changes. Remember you can only get free reports once a year. Also be sure to get the reports from each bureau. Although information is reported to all three what is correct at one of the bureaus might not be at the others.
Your credit report will reflect your credit history for 7 years (I think). If you have department store charges it’s important to cancel them. You can contact them to ask them to set up the charge account so that you can’t charge anything while you are paying it down. If they can’t do that it is important to keep reducing your limit. For example, if you’ve gotten your bill down to $550 ask them to reduce your limit to $600.
Keep one account e.g. VISA or Master Card open. That’s important. But keep reducing your limit as you go along until you get to about $500 or whatever limit you’ve decided you want.
Search the internet by inputting something like addresses of credit bureaus so that you can check out your reports now. Then after a year get them again. Always pay cash for everything.
I got out of debt by paying extra on my lowest bill. When that was paid off I then concentrated on my next lowest bill and so on. You are going to have to make sacrifices while paying down debt. You might want to take your lunch to work for example. I cancelled all sorts of things e.g. magazine subscription and changed to cheaper phone service and did without all sorts of stuff. Do not shop recreationally. Whenever I had to shop for shoes or whatever I would always ask myself “Do I need this?” If not, I didn’t buy it. If I needed something I settled for something less expensive. I bought clothes at places like Salvation Army (you’d be surprised at the name brands they have).
Anyway, good luck. The sacrifices will be worth it.