re-establishing credit after bad FICO score, is this good ?

Question

Hi, I don't owe anyone, anything, but my credit report needs to be cleaned up as I'm working on that. I settled all accounts via an attorney, not paid in full, but settled. I am thinking of getting this low APR credit card and using it to buy something like $25 a month and then pay it each month, just to show I can do it. But I know if I "open:" some things, those settled accounts might come after me, I need all the help I can, especially warnings on what not to do to open those settled accounts. I know not to have anything current put to credit agencies, what else sets red flags newly to my credit report as it was all "settled". Will this credit card open up a can of worms, I don't need it exactly, I just want to start establishing credit. And also, the work to repair it started with the attorney in 2002 and was finished probably in 2004. Isn't it after so many years (2 ?), it lessens the impact of the settled accounts on my FICO score ?

Answer 1

Paying off all of your debts immediately does not help you with improving your credit. Because you should show lenders that you are a good BORROWER. Your existing report shows lender that you pay your payments in full once you have money and you don’t when you are financially in trouble. Therefore you are not a good borrower to a lender (you are risky and they don’t make money out of you). So here some stuffs I suggest to do to polish your credit report and improve your credit:

1) OPEN A BANK ACCOUNT
Open a bank account and use it responsibly. This is the first step in establishing a financial history.

2) SECURED CREDIT CARD
Apply for a credit card. Shop around and only apply for a card if you can meet the lender's requirements. Responsible use (spending within your budget and paying your bill on time) will help you build a good credit history.

3) DEPARTMENT AND GASOLINE CREDIT CARDS
Since gasoline credit cards are not revolving (cannot carry a balance forward month-to-month), often they are easier to obtain than regular credit cards. Similarly, some department stores offer revolving credit for a specific purchase and this is sometimes easier to establish. It is also a great way to establish credit.

4) Do not spend more than 1/3 of your limit. That's a rule. Say you have $500 credit limit. So do not spend more than $150 with your credit.

5) Do not pay your existing credit balance in full every month. Pay more than minimum payment but do not pay full. Say your minimum due is $10. I suggest you to pay like $50-$70 each month. Yes you should pay some interest but that's a price to improve your credit.


This website can be very useful for you:
http://www.howtoestablishgoodcredit.com/Credit_Articles/index.php

Answer 2

If you settle an account it means that you negotiated a pay off amount and paid that. The account holder likely got a tax write off for the rest, so they cant legally try and obtain any more from you. I hope you got it in writing (especially since an attorney helped you) but they should not be able to come after you now. People open new accounts all the time and "settled" accounts dont magically "unsettle" themselves.

Its a good idea to start a new account history..... Only opening new, good accounts will lessen the impact of bad, old accounts.

You dont actually have to charge anything either-- just having the account open and current is the same thing as having a low balance and paying each month.

Answer 3

If you paid all of your Debts off, or even settled them with Creditors and they accepted, then your Credit Record should be clean and you have nothing to worry about. My Fiance went through the same thing you did, and I decided to take matters into my own hands, because if we are gonna have a Future together, he needs to clean up his Credit. He like yourself after taking care of all debts, then had NO credit. I found a Secure Credit card through Orchid banks, Low Apr, One time fee $35. But you do have to invest $200.00 in a Savings account with them to secure your card. It is your money and they will not touch it as long as you pay your Credit card Bills when they come and on time. You may want to check them out, they were the cheapest I could find online for No credit. Be sure and check out terms before you take out any Credit card. This is a good way to start building your Credit. You ARE on the right Track. Hope this helped.

Answer 4

Settling an account means that you have satisfied the debt. It may show on your credit file for 7 years as a settled collection account, which will bring your score down, but NOT having any current tradelines will keep it down. Re-establishing credit takes time, but settling any bad debts is the first step. The second step is proving to the credit world that you can use credit responsibly. I would go for the new credit card, but don't get in over your head!

Good luck!!

Answer 5

Figure 3 years after the last "settled" on your credit report for you FICO score to go up substantially.

I wouldn't mess with opening up another account, because the other creditors CAN go after you again (at least that's what I was told).

We learned to live without (credit card) credit. It's not that hard.

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Answer 6

Wendy. I would buy the programs coming back strong financially they have help me with my credit and showed me how to clean my credit report. My daughter filed bankruptcy and she is doing wonderfully with the programs. I know they could help you if they have helped me. I try to tell everyone about these programs. I wish if they had stock in the company I would buy that too. Who ever did these knew what they were talking about. Thats what I like cause in this case I did get my moneys worth.

Answer 7

it rather is peculiar which you would be denied base completely on your credit. it rather is greater in all hazard which you have no longer have been given adequate earnings to gentle;le make a loan fee. ) credit generally shows which you have no longer borrow generally adequate to ascertain a credit status. generally conversing making money of a universal volume on a relentless date will build your credit status the quickest.

Answer 8

I have placed this in the source box. There is a wealth of information there and a great free debt management software program. I bookmarked the site as I return to it often for the advice it offers. I hope this helps you.