Cleaning up bad credit...where do we start?

Question

Due to previous relationships and bad choices, my husband and I are dealing with really poor credit. I have ordered copies of all three credit reports and to be honest it is overwhelming. We both have old accounts on file that have been charged off and closed as well as some that just show as deliquent. Where do we start? Is it better to start with the most recent items and tackle those? Does a paid Charge off reflect better than the charge off itself? Do items ever really fall off after 7 years? I'm overwhelmed but want to do the right thing. Any advice you can offer would be great!

Thanks in advance!

Answer 1

First, negatives fall off your credit report 7 years and 180 days after the date of delinquency. They cannot be re-aged for any reason. Dispute with the credit bureaus anything that is over 7 years as being beyond the reporting period.

Second, start with paying all your active accounts. Tackle them one at a time. Squeeze as much as you can out of your budget and throw it at the highest interest rate debt, while paying minimums on the rest. When the highest interest rate debt is paid, move to the next till they are all paid off.

Next, tackle the old debt, newest first working back to the oldest. You can settle this for 50% to 75%. The older the debt, the more likely the creditor will accept a smaller percentage. Lump sum payments get the best deals. Payment plans have to be short term. Get any settlement agreement in writing and don't give them access to your bank account. You can also ask the creditor to delete the item -- some will, some won't.

Paid negatives always look better than unpaid ones. The older the negative the less impact it has on your score.

If both of you work at it, maybe even second jobs, you should be able to clean it up in 2 or 3 years.

If you feel you need help, check out this site: http://www.nfcc.org/ . Consumer Credit Counseling Service (CCCS) is a non-profit company offering free counseling.

Answer 2

Well, they are right, it is not going to be easy. When we got married, my husband had no idea what was on his report. I got copies online and signed up on freecreditreport.com, so we could see it anytime up to date. You just have to start at the top of the list and work your way down. You have to look closely at the ones that say charged off, if they are closed, look at the list for another account with the same amount. It was probably sold to a collection agency, so you only have to pay one of them. Start with the ones that are open and delinquent. Call them and set up payments, but only agree to pay what you can afford, don't overextend yourself and get into more trouble. Even if you can only pay one at a time, at least it will be improving. We owed over 1500 when we first got his report, and by talking to them, they forgave 800 of it we just had to pay the other 700 right that second. So don't call until you have a few $'s in the bank. It will be worth it in the long run, cause they will usually only deal with you once. Best wishes!! And there is hope, all our debts are paid(it has taken years) and his credit score rises every month!!!!

Answer 3

I wouldn't concentrate on the word "cleaning", better use the word "rebuild".
Let me go step by step:
1. If you have recent active trade lines catch up with payments and keep paying on time. Does not matter how much you paying, only late payments hurt you.
2. If you do not have recent revolving credit (credit cards) start with secure card using http://securecreditcard.com/ and look for secure cards. I believe Orchard Bank's secure card is the easiest and cheapest to obtain and then after 6 months you'll be qualified for unsecured card with at least the same provider (Orchard Bank) but, probably, with another merchants too. Keep in mind your trade lines must be active 3 months to start benefiting you.
3. Try to keep your cards ENDING balance on the level 40% of credit limit.
4. It is important to remember that one new negative (collection, charge off, delinquency, etc.) item in your credit report will override everything you were working for so hard. Avoid new ones, but in regards to old records paid charge off or collection it does not make visible difference.
5. Do not waste your time on getting rid of old records. It is right, they will stay for 7 - 8 years before disappear from your history. But older they are, less is their influence on your score. Smart management of your recent active trade lines gives you all necessary tools to rebuild your credit history
6. Do not apply for new trade lines often. Credit pulls are hurting too, even though not so much. Once in 4 months is okay. Actually, 3 active trade lines in good standing with at least one revolving are enough to rebuild the credit.
7. Give it a time. A year from now following the above mentioned steps will take your score on new level.
Good luck,

Answer 4

Speaking from experience, you have a long hard battle ahead of you. Charged off items do not just disappear after 7 years. You have to write repeatedly to get them off. You can contact the credit assistance companies, there are many now, and get all of you debt conslidated and pay it all off as best you can. I had to pay 26% interest on the purchase of a truck in order to re-establish my credit. It sucked, but I finally got the truck paid off, early even, and paid off my student loan and credit cards. Take any credit cards you have now and cut them to pieces. Then, make an excel spreadsheet of your debts and regular bills. Whatever you have left at the end of each month, take 50% and put it in savings and the other 50% pay extra on your highest interest debt. It is hard to get yourself out of a hole, but for 4 years now I have been compeltely debt free. Keep you chin up. You will have to deprive yourself of a lot of luxuries for a while. I.E...cable tv and the like until you have your debts paid off. Find ways to lessen the amount of money you spend every month. As I say, chin up and keep at it....you will succeed.

Answer 5

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