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i want to start paying off my debt, i decided to obtain a report from all 3 credit bureaus. i want to know by working out payment arrangements, how long will it take for me to raise my credit score i think i can knock out about 3500 dollars in the next 12 months. i have about 15000+ in debt. i want to be able to obtain a loan in about a year my score i think the last time i checked was about 520. thanks
stacey

2006-06-25 08:43:47 · 5 answers · asked by Anonymous in Business & Finance Credit

5 answers

Your score will dip no matter what you do. For how long depends on how you deal with cleaning up you credit.

If you pay the accounts without using a pay for delete agreement, they will just notate your reports as paid collections. Which will be just as bad as having the collection on your reports.

If you use a pay for delete agreement, when they delete the account your score will dip from losing the history of the account. But you scores will probably rebound sooner than having a paid collection.

If you are dealing with collection agency's, you should send a debt validation first. When they properly validate the debt (and you are still in SOL) send them a pay for delete letter.

Include in that letter that they will not only delete the tradeline they have placed on your reports, but they will also not sell the debt, sell the remainder of the debt (if you request to only pay a percentage of it - which you should request) and will not continue to collect the debt. (collection agency's have been known to do all of those - even when the debt is paid.)

If the debt is out of the statute of limitations (SOL) for your state, you have the right to "not pay" it. After you send the debt validation letter and you know it is out of SOL, you have the right to send them a SOL letter. And, if they are reporting incorrectly on your reports (which they probably are) you have the right to dispute the account with the credit bureaus. Requesting that the accounts are either corrected, or if not, deleted.

I would also suggest trying to get a secured card or two. If you do that now, you would have a years history on it/them which will help you when you want to get that loan.

Only use the cards occasionally for small amounts, a tank of gas etc. and pay in full when you get the statement. Then, keep the cards in your sock drawer for about 6 months before you use them for another small amount.

You might check out Orchard Bank, HSBC or Bank of America for secured cards.

You might also want to check out the link I have provided. Learn how to deal with your baddies and how to up your scores.

2006-06-25 11:06:51 · answer #1 · answered by echo 7 · 1 0

Well, if you arrange with them to pay off the debt in full or in payments, they will remove the items from your report and/or mark those items paid on the report. That much will raise your FICO.

This is actually better, unless you can find someone to help negotiate your debt and consolidate it. This process can be costly depending on the firm, so I would do it on your own.

If you own a home, a FICO of 545-570 should work. And I am willing to bet that paying down the debt by at least 25% would raise the FICO enough to get the loan. If you want it for a new home, then the score should be in the same parameters.

2006-06-25 16:36:32 · answer #2 · answered by BigMissle 3 · 0 0

In order for your credit score to improve, the negative information in it has to be deleted or somehow changed to reflect that the account is paid.

Creditors are not going to change this information until the balance is paid in full, or whatever amount you negotiated with them. And even still, you need to get IN WRITING that they will fix your credit once you have paid them. They do NOT have to delete negative information from your report if it's true. And simply saying the account is "paid" does NOT remove negative information such as late payments or collections.

And if you are only able to pay 3500 on a 15000 debt, it's going to take you several years to pay these off.

Therefore, to answer your question, don't expect a good credit score for a few years.

2006-06-26 00:05:12 · answer #3 · answered by Anonymous · 0 0

Well, first off realize that if your account is already at a collection agency then chances are it is reported on your credit report twice. Once as a charge-off by the original creditor and second as a debt by the collection agency (reported as a collection, not as an account). The charge off will not come off the credit report by simply paying on it. If paid you may have the old debtor change status to "paid charge-off". Depending on the company and the the third party agency, you might be able to request they put status as "Paid as Agreed" . Remember this is the reporting for the original debtor.

Now that the debt is with a collection agency, negotiating payments with them will not necessarily mean it will be removed from the credit report. It will not be removed completely until the entire account balance is paid off. Which means that paying will not help your FICO score until it is paid in full. The balance however should update depending on their reporting schedule.

Realize also that your credit score is a delicate thing. Do not expect to repair your credit over night. It will take time and plenty of positive reporting for it to improve. That means taking care of the active accounts that you do have. It is important to pay on time and also to keep your debt ratios in proper balance.

2006-06-25 18:08:01 · answer #4 · answered by Joseph L 2 · 0 0

Have a look here.

2006-06-25 16:27:04 · answer #5 · answered by Anonymous · 0 0

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