Bad credit without ever having a credit card?

Question

I need help. I am 26 years old with horrible credit. I have never had a credit card, all of my stuff is from bad decisions and not having steady income. (was a server for almost 9 years)
Medical bills, eviction, car repossesion, you name it, somehow i got mysef into it.
Just in the past year or so have i realized how much its affecting my life and I want to do something to save my future.
At this moment im feeling overwhelmed and dont know where to start. I have seen info about the debit consolidation programs, but not trusting of them. How do i start paying off these people and companies, without going broke day to day?
names of comapies, help groups, anything would help at this point!!

Look, most of this was when i was younger. No need to go into personal life but i didnt have much direction and education in this. The people closest to me didnt beleive in the "system" and thats what i grew up hearing.
So i will flag judgemental answers for this question. I didnt really want to post in the first place, but i need real help with this.

** Its between $10,000 and $12,000. I was told for that amount it wouldnt be worth claiming banckruptcy. But its also way ove my head at this point in my life. **

Answer 1

I feel your pain! I too am 26 with pretty bad credit and have never had a credit card. Mine are from medical bills and utility bills that went unpaid because of stupidity. From the time the first thing was put on my credit report its almost been 7 years so its gonna start being removed from my credit report just for that reason. However some of it is a little newer so I plan on paying these companies in order of relevance next month when I receive a good amount of money. I don't know debt consolodation web sites or anything like that. My advice is if your going to start paying things off make sure you have enough money to pay 1 entire item off at a time. I don't really recommend making settlements with the collection agencies because I read that even though you made an attempt to pay off your debt it looks bad that you didn't pay off the entire amount owed. I plan on paying off the most recent debts before paying off the older ones because chances are the older ones will fall off my credit report before I can pay them off.

Answer 2

It is very tough. I know a lot of people who have gone through this, and there really are only two things that worked. One was to work hard to get a better job and wait it out. The other is to declare bankruptcy... will will help you pay your bill, but destroy your credit for a number of years. But once you are able to pay your bills on time, it will slowly get better. In any case, don't get a credit card until you are debt free! Getting debt free is more important than fixing your credit at this point. Avoid the debt consolidation programs. A few of them help a little, but most of them don't do squat. Some are even scams. You might consider going to your bank or credit union and asking them for advice. They will be better informed about what REAL debt help is available in your community. Good luck!

Answer 3

Congrats on taking initiative to do something to change your life is the first step. The first step is always the hardest as it makes you look at your life and see whats going on. There are alot of people our age that dig themselves way deep into a hole and keep digging until there is no way to get out. You are making an effort to change this and get out of the hole. Congrats.

I think one of the best things you could do is go to a financial banker. Try going in to any "Major" bank. Don't go to the little guys cuz think of it this way "who will give you a better rate? The big place with lots of customers or the little guy with a few customers?" Also you want to go to a name you can trust.

If you have lots of debts incurred go to a bank and ask them for a consolidation program. Also they can set you up with a savings plan and work with you on your credit. The best part is that most bankers will do this for free. Set aside some time and go and make an appointment with one of them.

Good Luck.

Answer 4

I do a seminar on credit so I will try to sum it up for you.

File a bankruptcy first. Then you will have a clean slate to start with. The bankruptcy (BK) filing will be with you for 7-10 years, but it is better then having the bloody history you have now (which is going to stay on your reprt for about the same amount of time). You can get a mortgage loan after a BK, but you are not going to get one with a bunch of open collections and other recent derogs(late payments or anything negative on your credit). Make sure you do a chapter 7 not a 13 wage earner. The discharge date is when the time clock starts ticking and in a 13 that could be years before discharge. In a 13 you will end up paying something every month to pay your creditors back. In the 7 it just all gets wiped clean, you will pay for the filing, but the debts just go away. Either way you are filing a BK and looked at the same to the lenders.

Once you have the filing discharged you will need to establish good credit. Get a secured credit card.
http://creditcardsusa.net/Rebuild.html?ovmkt=R2M9D6SQ77L5H3SUF1VMIAJS70&OVRAW=secured%20credit%20card&OVKEY=secured%20credit%20card&OVMTC=standard


Save as much as you can and send it to the credit card company to opne this account. Basicly they will give you a card for the amount you deposit with them, but on your credit report it reports just like any other credit card.

NOW here is the BIG thing. Never charge more then 50% of the limit on your credit cards. If the limit is $1000, never charge more the $500. 35% or less is even better! Do use it regularly. They want to see that you can manage credit. Just use it for small things like gas --- that you can pay back every month. No BIG SCREEN TV's with the credit cards. Even if it is your money on a secured card, you must remember this.

Once you have managed your credit well with a secured card or 2 for 6 months to a year, they will give you unsecured cards and you will be on your way.

One last thing... DON'T have any lates after the bankruptcy! The lenders will let you go with a BK if you have learned your lesson. But if they see lates again, that means you have NOT learned and they will be warry of giving you credit.

PS
I dont' use a credit repair company. They charge you thousands to wirte letters and dispute what is on your report, even if it really is your derog credit. If you want to try this route do it yourself. You can dispute your credit report online
www.transunion.com
www.equifax.com
www.experian.com

I have seen credit counselors, hurt peoples credit more them I have seen them help. They just make they payments for you and you pay them something to do it. They are usually late with the payments by at least a month, b/c they have to collect the money from you clear it and then pay your debts. If you are going to try this just call the debts your self and set up a payment schedule.

Just remember the sooner you get the old bad credit to be paid in full (thru a BK or otherwise) the sooner you can start making good credit.

Answer 5

I feel your pain, sometimes we get in trouble even though we don't mean to. So ... what to do.

$12K is a lot of money, especially if you are earning near the minimum wage. If this is the case, I'd just file bankruptcy, and get on with life - just don't do it again.

If you make enough money that you have, say $500 per month to pay on all this, call each and every creditor, and tell them they will be paid so much each month (in proportion to all) and in two years you will be out of debt. Doing it this way will improve your credit score tremendously over time. You may choose to pay some off sooner, but everyone needs to get some money each month. The reason for paying some off sooner - especially some low $ amount debts ? Read further below.

It is even possible that some of these creditors will be willing to "delete" the bad credit entry after you pay them off - simply for you asking for it after you have paid them. If they think you honestly got in over your head, about 30% will do it for you.

Within 1 month of a debt being paid to zero, it's effect on your score will begin to diminish (your score will go up), and by 18 months after being completely paid - it's effect will effectively go away. It will remain on your credit for 7 years after paid date, but you will be able to point to the fact that you did in fact pay everyone rather than file for bankruptcy. That will actually go a long way for you in the future if you do it.

Best of luck.

Answer 6

Credit cards are only one aspect of your credit rating. Any bill that is reported to a credit bureau can go on your report just as credit card would. So any of those bills that you neglected and went into collection ar going to be on your report for 7 years. There is not much you can do about that. Just try to never let it happen from here on out and over time your score will go up.

Answer 7

You are probably a good candidate for credit counseling. 10-12k is really not that much and a credit counseling firm can probably get that reduced.

Consumer Credit Counseling Service is by far the most well recognized company, their service is free and they are legit.

I don't know what state you are in so I can't post a link for you. Google them for your state.

Good luck.

Answer 8

Yeah I'd stay away from those debt consolidation programmes. I would get some impartial advice from a government organiation, who aren't going to be trying to get money from you. If you live in the UK, the Citizens Advice Beureau can help with debt management.

Answer 9

You can do it your self, as for bills like medical call them up and see if u can settle of payments plans.. For the eviction and car repo see if u can make a payment plan and make sure from now on keep payments on time.. Good luck

Answer 10

uh....medical bills are credit. So is a car purchace. As is a rental agreement. Start by realizing that your obligations are all credit and will reflect on your credit.

Call them up. Explain the situation, see what they will accept in payment.