credit card debt/ credit score?

Question

i had 8 credit cards, now i'm down to 2 plus a student loan. is this improving my credit to get current and then finally pay these creditors off? they all were at collection agencies, i got them up to current, and slowly one by one am getting them paid off. is this looking bad or good for my credit? im hoping this will re-build my credit and allow me to lookgood with my credit score and credit status. anyone know anything about this kind of stuff?

Answer 1

you are diefinitely improving your score. you obviously have some blemishes on your credit report and they will tske some time to come off, but remember, you are BUILDING your credit. it will take some time. the less credit cards you have the better. You are on the right track. now, just take what you have learned and do not get into debt like that again.... you can pay off the debt, but you must make a lifestyle change.

Answer 2

Your credit increases when you pay back a debt. The more you pay, the better your credit rating gets. When you pay all of your debt off, your credit will probably be very high, as it sounds like you had a lot of debt.

If you only make minimum payments on a credit card or loan, you are usually only paying the interest, and you will never get out of debt. Your credit rate still increases, however, because the interest is part of your debt, and you are paying it.

The only thing you could do which would be bad for your credit would be to not pay, or to pay late. Any time you have to make a late payment (which should be avoided at all costs), you can often avoid damaging your credit score by calling up the credit company and apologizing for the late payment and asking them to not report it to the credit bureau. They will still charge you a late fee, but most of the time they'll do as you ask and not damage your credit.

Answer 3

It is always good to pay your credit cards off. The fact that they are coming from collection agencies isn'st really good. Just make sure the collection agencies have not re-aged the debt.
Re-aging is when a debt becomes deliquent, that the date is usaully reported to the credit bureau. The date cannot change under federal law. Consumers are saying that debt buyers and collection agencies AKA 3rd Parties are taking the old debt and reporting it to the credit bureau with a new date which is highly illegal. Make sure you are not a victim of what is now called "Zombie Debt"

Answer 4

Ok, I just know a little bit. First off, about the 6 cards you used to have, did you cancel them once they were paid off? If so, don't do that again. Every time you cancel a card it erases all credit points you have have earned (including the points for paying it off). Paying a credit card off (as long as you pay the minimum each month, preferably more than that) always is better than not doing so. Do yourself a favor, pick up this book "The Money Book for the Young, Fabulous & Broke" Suze Orman. It gives really good, basic financial advice. It's especially written for those of us who don't know much of anything about finances. Good luck!

Answer 5

Whereas it went to a Collection Agency, you have very poor credit history-- The fact that you have most of your accounts current now- has and will help, but it will take a very long time to rebuild a good credit score.

Answer 6

Paying off your debts can only be positive for your credit score.

However, because you had so many cards go to collection, your score will not improve for a few years.

Answer 7

By getting them caught up you will slowly improve your score, but by closing your accounts you are hurtinh your score because you look & are more credit constrained. It would be better to leave the accounts open & not use the cards.

Answer 8

It is very important to have accounts that are in good status for a long time which give you credit history. It is also essential that your amount of outstanding debt is much less than your available credit - the amount of debt should be 1/3 of your available credit (credit lines, loan amounts, etc)

Make payments every month & try to pay in full if you can. Also, make sure you use the credit cards for something small every month and pay it right away - that is what builds credit.

Closing a credit card too soon (within mos. of opening it) or closing it without ever using it can give you bad credit - or lower your score.

Make sure when you pay off the collection agencies you get a letter from them stating that the balance was paid off in full and then send a copy of this letter to all 3 mahor credit bureaus - Transunion, Equifax, and Experian. All of these have websites too so you can find their contact info there.

This is a link to Transunion for a totally free credit report. This is only supposed to be used if you were denied from a credit card, etc - when you are denied credit you are sent a letter stating which creditor denied you and you are always able to get a free copy of your report to see why you were denied and usually the creditor will include the web site to get this report off of - you cannot get it off the main site. So - when you go here, just click on denied credit - say you were denied Discover card and pick a date within 30 days - it will not effect your credit. Or use the FACT link that says everyone is eligible every year for one free report. Sometimes though that link will give problems - depending on your state, etc and it is limited to once a year - the other link is not. They just need that info to make sure you are eligible for it. Otherwise, you have to pay $30+ to get your reports. You cannot get your credit score unless you pay - we paid for one that had all 3 bureau scores - I think it was truecredit.com Also, my boyfriend has a Washington Mutual Bank credit card that is good because it updates his credit score monthly - which is rare with a credit card.

It is very important to check on your credit report - to make sure the accounts you have are open and the info is correct and to make sure the ones that should be closed, in fact are. It is also vital to make sure that no one has opened an account in your name/identity theft, etc. I like to check on ours every few months.

It will take a while for your score to improve if it was sent to collection agencies that notified your credit. Everyone is in debt so a good rule to live by is that you shouldn't use your card unless you have the money in the bank to pay it off - that is what I do. I don't ever miss a payment and in fact, I pay every statement in full. The one time I could not, I found a 0% balance transfer APR card and transferred the balance from the one card to that card since the 0% APR on BTs was good for a year. But you have to be careful with those offers too - some charge a fee(you want to make sure there is no fee and Citicard/Citibank is normally great with that), and that you can transfer balances for a year (Discover Card only lets you transfer one in a year and there is a fee - they liedbut then when I got the card they changed it), Chase is horrible - they charged me interest on a payment so I will never go with Chase again.

Your credit will follow you everywhere - it is a representation of you for auto insurance, apartments, etc but don't beat yourself up. So many people with new credit go nuts and build up a legacy of debt but you are doing the right things now so that is all you can do. Just from now on, don't buy unless you can pay it off. And - although Discover card was wrong with the balance transfer offer, they are a wonderful card company. You build cash back bonuses with your purchases, sometimes up to 5% per purchase and then you can redeem it for giftcards to popular merchants, a credit to your statement, a check, to charity, etc. I love Discover. If I call them and ask for a promotional 0% purchase APR for 6 mos or one year, they will give it to me which means I don't pay any interest for that amount of time - so feel free to call your creditors - you have a choice of so many so ask them - what can you do for me because the other card I have has a 2.9% purchase APR - (even if untrue), so what can you offer me? Can you offer me 0% or 1.8& for 6 months? But - in the event that they can and do - pay off what is on the card first or you will still build interest on the preexisting purchases. Also - with the 0% balance transfer offers - make SURE - that if you use a credit card for balance transfers that you DO NOT use it for purchases because the purchases will still build interest - and then your payments always go toward the lower interest rate balance first (teh 0% ) so then you could be stuck with $3000 balance transfers and $40 in a purchase that will accrue interest until the $3000 is paid off so be careful!! So the 0% APR - for balance transfers or purchases, which are two different offers mean you pay no interest on thhose transfers or purchases for 6 months - one year, etc - read the small print.

Overall - be careful. Never buy something unless you know you can pay it off or call teh card first and try to get 0% purchases for six months or a year if you are buying something big. You have to tell them that you are getting better offers so what can they do for you. Discover card is great. Make sure you keep accounts open and in good standing for a mininum of 6 months. Never get a card with an annual fee. Find out the purchase APR and BT APR before getting the card - there are ALWAYS better offer - check your credit report often and make sure it is accurate - if it isn't, there are ways to dispute the items that are wrong on the credit websites and/or to call or write the creditor with the problem. Make sure you have $ before you use the card and use cards that give you $ back - Citicard does although I have never seen one reward yet and I have gotten over $500 from Discover in those cash back bonus awards. Just make sure you pay - ontime every month or in full and keep it low - don't use it if you don't know for sure you can pay it off next month. Make a max you will spend on that card - and not your credit line :o) I always keep the balance below $500 or $1000 because then I know it won't get too out of control. Make sure you keep accounts open and in good standing minimum six months to a year. If you have a financial hardship, call the creditor and see what you can do about it - make SURE you call the cards and close the accounts not just ignore them. And at the point you were at, you had to close some cards - that is fine - ignore the other answers up there about it being the wrong thing to do. Too much avail credit is bad, not enough is bad, too much outstanding debt is bad and if you never use them that is bad - if you use them too much that is bad - haha - so you just have to find that place in the middle - just enough not too much and you will be ok. It takes time. Just be cautious and careful and responsible - it sounds like you are doing a good job, so be patient, get those paid off letters to send and use some more caution in the future! Good luck!

Answer 9

It depends on how long ago they were in collections. Call me at 866-387-1984. I'll be able to answer your questions more fully.

Anne