Basic credit questions?

Question

Ok I just turned 23 but when I was 18-21 I did some REALLY stupid stuff w. my money. I overdrue a checking acct by 272 dollars and it was reported to Chex Systems, and I owe about 4-6 different places money that I think have referred me to credit bureaous. For the past year and a half I have been making a consious effort to pay my bills on time and have been doing great but have no had the money to go back and pay off all my debts that have went to collection. I tried to get an auto loan and was not approved. Basicaly, I need a general idea of how credit works because I have no idea. If a bad debt is on ur credit report for a certain time and its not paid does it ever go away? can anyone help? Am i able to repair this or have I ruined myself for life at such a young age? *please dont leave any comments about how i am screwed or really messed up, believe me i already know what damage i have done*

Answer 1

Bad credit which was reported to the credit bureaus stays on your credit report for 7 years. The statue of limitations for being sued over these bills can vary depending on which state you live in. In some states, you can still be sued for a bill even after it has fallen off the credit report. Listed below are some free websites which help people understand their credit report and how to correct it.

Answer 2

Even after you pay off a collection account in full, and your credit reports show that you've paid the collection in full and have a $0 balance, it won't help your FICO credit scores.

Here's why...

Any appearance of a collection account on your personal credit reports lowers your credit scores. Once the collection account finds its way onto your credit report, it's part of your credit history. Whether you pay it off or not is of little consequence.

Whether, the collection account is $100 for a severely overdue library book or $5,000 for 50 overdue library books—the end result is the same—your credit scores can decrease by the same amount.

This is a critical point. Many people think that because the debt is small, it can't possibly hurt their credit scores. Wrong.

Everyone knows that late payments on your mortgage or car loan, which can be hundreds or thousands of dollars, will damage your credit. However, if you let even a small $70 amount go to a collection agency, and it appears on your credit reports, it can damage your credit just as much.

Bottom line: anything from a collection agency that appears on your credit reports is going to decrease your credit scores. So, become extremely vigilant in protecting your credit reports from this type of information appearing in the first place.

Go with a company like Bradley-Ross Law (http://www.bradleyrosslaw.com/) to get the existing ones wiped off your credit report.

Answer 3

It will flush off your record after 7 years. Do not let anyone talk you into a bankruptcy, then it is 14 years. 7 years and off your record is nothing at your age.

You can open negotiations with the debtors and probably pay 50 cents on the dollar and get them to settle an old debt. But you need to open negotiations for them to report positive on the second time around payments, i.e. "paid as agreed."

Get a copy of your credit report, locally, or on line, find out who is on there reporting, may not be as bad as it seems, some do not report.

Work on developing a good relationship with a local banker, make a cash deposit, then borrow a small amount of money against it, even though you may not need it, pay it back early.
Example $1,000, 90 day note, pay back in 60 days with the interest. Believe it or not, you can work your way up to 6 digit signature loans this way, over about 10 to 15 years.

Answer 4

Have you checked on consolidating those bills with a credit agency that deals with that. I tried that and it basically stops all interest charges and late charges. It will cut your payment to a smaller amount. Then you only send 1 payment a month to this credit agency and they pay all your bills..If not bankruptcy may be your best choice. Bankruptcy does stay on your record for 7 years. However, if you can't get these bills paid, they will be on your record too. Everyone makes mistakes...I have made plenty. I would advice you to check out these 2 areas I listed.Also some of the creditors may be happy if you pay them 5.00 a month..at least they know you are trying. If it's better, I would pay off the little ones and then concentrate on the big ones (if possible)

Answer 5

Get a copy of your credit report. Write a letter to each showing a derogatory disputing debt. This will get rid of half of the problems. For the others. They need to be paid. Take them one at a time. You can reestablish good credit.