I am trying to restore my credit, and build an acceptable credit history. What is the best way to do this?

Question

I have already pulled a copy of all 3 credit reports and went through and tried to recognize the items. I also have the phone numbers and addresses for some of the places, but not all. Is it best to start with the small bills and work up or the larger bills and work down? The majority of the collection accounts are for medical bills from when my daughter had surgery. Any ideas that may help me get on track would be greatly appreciated. I also know that once I get this settled and as well as now, I need to make sure all of my bills are paid on time and that the accounts in good standing need to keep low balances. Thanks.

Answer 1

There are many ways to restore your credit. First, you must make sure the items being reported on your report are really yours. Many times you have either already paid or you may be a junior or senior or III and it is someone elses info on your report. Once you have found any discrepencies you can dispute any items on your report through the bureaus themselves. This can be done online or by snail mail explaining what items you are disputing. This will take approx 60 to 90 days to update your report.
Second, make sure you make all payments on time to all accounts that are still open and not in collection. If you are past due on any accounts bring them up to date so they do not go into collection.
Third, look at all the collections. If you have the ability to make a lump sum payment to any or all of the creditors (even if they are for different accounts with same collection agency) call them up and try to come up with a settlement for less than actual balance. ALWAYS GET A RECEIPT THAT SHOWS ACCOUNT IS "PAID IN FULL". If you can easily pay some of the smaller ones off go ahead and do so.
Fourth, contact the larger ones and set up a payment schedule with them. This will help your rating by showing you have the ability to make payments on a regular basis. You may see a slight dip in your scores in the short run especially if you have older collections with no recent activity. When you have activity on an old account it brings it back to a recent account with past due balance, however in the long run it is the best thing for your credit.
Another thing you must look at is your credit cards. Keep them at or below 50% of the high limit. This will increase your score. You can use cards and you should, but only use what you can pay each month, for example charge 200, pay150, you are showing you can make payments and only paying interest on the 50 leftover increasing your score. If you have any judgements on your report they must be satisfied through the courts in order to come off of your report. This will only happen after 10 years of being paid or satisfied.
Good luck and I hope this helps. It is good that you are interested in making things better for yourself. When you go to buy a house or car, your interst rate will be better and it will save you money in the long run.

Answer 2

I can help you take care of those collection items. Like the 2nd poster mentioned it's important that when you take care of the deliquecies, you have to follow through. The 4 links I posted gives THOROUGH information on just not how to pay these debts off, but to hopefully get them removed from your report altogether.

http://www.creditinfocenter.com/debt/settle_debts.shtml

http://www.creditinfocenter.com/debt/neg_rating_after_settle.shtml

http://www.creditinfocenter.com/debt/CanCreditorSue4SettlementDifferences.shtml

http://www.creditinfocenter.com/debt/ActualDebtSuccesses.shtml

If you don't have any active accounts, an easy way would be to open a secured credit card, make small purchases, pay off the balance while adding to the deposit. This is a good way to custom build a credit card in good standing.


Hopefully those links I posted will help you


Thanks for reading and good luck!

Answer 3

start at the bottom and work your way up. always add what you paid to the previous loan when you move up. It is called a debt snowball. if you pay off a bill that is say $100 total and pay them $25 monthly then when gone add the $25 to the next and it will get gone faster, and so on and so on. Good luck to you