All of my credit cards are charged off should try to pay them or forget about them?

Question

I have 7 credit cards that are all charged off, and have been for about a year. I am planing on buying a house in 2 years. Some people tell me if I start paying on them it will acctually make my credit score go down. The others tell me pay them off as soon as possible. What are some things I can do to improve my credit score because it is only 418 right now.

These cards are CHARGED OFF as bad debt.

Answer 1

I've been where you are. Pay them.

www.creditexpert.com

Look at your report, find all of the bad debts, get their mailing addresses & account numbers, and start mailing payments. Within 3 months AFTER you've paid one completely, there should be a change in status on your credit report to "PAID". If there is not, you can then call creditor to have it reported, and then dispute the item through Experian.

Having it charged off and later show as Charged Off, Paid is much better and does help your score. Everyone goes through hard times and showing your willingness to pay your debt when you are a little better off financially says alot about where you are NOW as opposed to then. Then the credit card offers will start rolling in and you might want to open ONE and not use it much to up your score. Then your score will continue to go up. It won't happen overnight but it will happen. Good luck.

Answer 2

Your score of 416 means you are an at- risk- borrower.

7 cc were charged off 2 years ago. The remainder of the non paid debt can remain on the credit bureaus' reports for 5 more years.

It's true that by making payments on charged off accounts, you can end up owing the original amount plus interest and maybe even penalties. By doing this, the card companies would record your payments as late. I can't see how that would help your FICO score.

If you filed bankruptcy, no lender will sell you a mortgage at this point. You need to build a reliable credit history. That means paying all debts on time. Do't make any late payments. Cut up any remaining credit cards.

Call a lawyer for help with your dilemma.

Answer 3

You really need to pay off your cards to raise your credit score. I don't know who told you that if you pay them it will hurt your credit score. That is just silly. When applying for a loan they look at your debt to income ratio. If you have more debt than income it looks bad. If you pay your cards off your ratio will look better due to the cards giving the illusion of more income due to having the ability to charge amounts onto those cards. I would pay the cards off and then only keep three of the lower interest cards open maintaining a $0 balance every month. Cancel and cut up the other four. Only charge on the cards if you are able to pay the amount off the next billing cycle. You are wasting your money paying interest.

Your credit score goes up by paying bills on time. It also looks good if you pay more a month than the minimum requirement. If you only pay the minimum you are paying the interest and not even touching the principal (the amount you spent to pay back). This takes extra time to actually make your payments work towards paying off the card.

If you want to buy a nice house with a good mortgage I suggest you take my advice and not the ones that think paying off debt hurts your credit. You may want ot ask them what their credit score is.

Answer 4

You need to concentrate on paying off your credit cards. Just because they are charged off doe's not mean that you don't have to pay them.

What they will do is transfer them to collections and the collection companies will come after you. If you still do not pay, they will take you to court and get a judgment against you and then they can garnish your wages, attach bank accounts and file liens on any property you own like vehicles, land or homes.

This will stay on your credit for 7-years from the last reported date.

I would not worry about buying a home because with a 418 score and 7 charged off credit cards nobody is going to give you a mortgage anyway.

Answer 5

I would suggest canceling the card if you believe you will be tempted to run up another balance. You know yourself better than anyone else. Also, since you mention you had another card with a high balance, this might be a good idea. First, you might try just cutting up the card and not using it. This way you would retain your 5 year history with the card and the large credit limit. I don't recommend using credit cards for emergencies, though. What I do recommend is saving up your own money in an emergency fund. Having an emergency fund of 3-6 months of expenses is crucial. This way you won't run up large balances on credit cards (at high interest rates) when an emergency comes. And it also makes you look long and hard at what an emergency is, because you will be using your own money.

Answer 6

You will not be buying a house with a score of 418.

Take some pride, pay off your debts , learn a life long lesson on living below your means and in a few years you will a) feel good about yourself and b) be able to buy things that you can afford.

rule 1: spend less than you make
rule 2: pay off debt

If you follow these you will retire well off.

Answer 7

Be really careful before you make any payments. I believe I heard Suzy Orman say that if you even make one small payment against a debt which was charged off, the entire balance is collectible again. You should ask a professional credit counselor or financial adviser before you do anything. Even if you do pay off all those debts, your credit score isn't going to get much better quickly. You probably wont be buying a house in your name for quite a few years with a credit score in the 400's.

Answer 8

The only way you credit score will improve, is by paying your ALL of your bills when due, not just the credit card bills. If you maxed out 7 credit cards, you are in one BIG financial hole. How on earth are you going to be able to get any financing for a house, with your credit history?

Answer 9

Good luck buying a house. Ain't no way you're getting a decent loan with a score of 418 - so do what you will with the credit cards. Too late now.

Answer 10

I agree with Bill, get an attorney, one familiar with the Federal Fair Credit Reporting Act and Bankruptcy Laws in your state! Each state has different laws regarding this. Pay him or her a retainer to deal with the creditors and collectors. By now, all of these accounts will have been turned over to them. Regardless of what they say or threaten, don't agree to anything, if you do it starts all over again! When they call refer them to your attorney, and don't give them any bank account numbers, some will tell you they will only deduct an "x" amount from your account and then wipe you out completely! This is illegal, but it happens and since you owe the debt, you would have a real hard time getting the money back!

Do yourself a favor, get the attorney!