BAD CREDIT- I need advice

[natethehorn]

So I made a lot of financial mistakes when I was younger, 18-23, like ignoring bills because I could not pay them. Now, I have saved some money and want to begin repairing my credit before I end up getting married and my mistakes affect someone else. Where is the best place to start? I have three credit cards that have been charged off as well as several old bills. I rarely get calls anymore from collectors, but know because of the charge offs, that these are still on my credit. Basically, if I went in to apply for a loan, they would laugh in my face. I know after 7 years of no contact or payment on a specific item, it will disappear from your credit, but I have no way of knowing when that time will expire. As for things that have gone to collection, I hear its better to try to settle things with the original company and that I should ask for certain ways for them to mark my record as settled debt. Basically, I don't know where to begin or the best way to repair my bad credit. I know there are a ton of shady credit consolidation companies and what not, and I want to make sure I clear this up as much, and as soon, as possible. Thanks in advance.

 

[Tenor]

First step is to order copies of all 3 of your credit reports. Then you can tell whats on there and when it might be coming off. After that I'm not to sure what to do next.

 

[JohnnyM]

A better lawyer may want to correct me on this, but Texas has a statute of limitations of four years on debt. Meaning "no contact" for four years, not seven, will clear that debt. However it may take seven to actually disappear from your report, I'm not sure about that. If you do have debts out of the four-year window, you can write to the creditors and demand they stop reporting it as a past debt (I think).

Don't listen to anyone from the creditors on the phone, only write certified mail, return receipt requested. They'll say anything on the phone but once you write them, they take it more seriously (at least in my experience).

Go here The Link and read that information, it seems pretty good.

 

[lost in mizzou]

Nolo Press has a book "Credit Repair" that goes into far more detail on the matter than anyone here possibly could, and their legal advice is usually pretty accurate.

Their website (nolo.com) probably has some info too, but I'd try to find the book.

 

[tbone]

Bad credit is like a hangover. The only real cure is time.

My advice, based on being in a similar situation back in the day and now having over 700 FICO score:

1. Committ to pay off what you owe, even if it's been charged off, no matter how long it takes. This might not repair your credit as much as it will your pride. Completely ignoring a debt and never paying it is not what you want on your concience as you get older. You may not be able to convince a lender yet that you are not a scumbag yet, but at least you'll know for your self that you aren't. Trust me, this will make a difference. I'm not proud of some of my payment history, but I am proud to be able to say that not once have I ever welched on a financial obligation. They all got their money and all interest and fees to which they were entitled. 100%. You will be able to deal with the time it takes to repair you credit better if you fell good about yourself when you look in the mirror. Trust me on this.

2. Committ to yourself to PAY YOUR BILLS ON TIME, from now till the end of time. It's the only way to repair credit. Your credit score is based on your history over a certain window of time. Your score will improve as the ratio of postive history to negative history within that window increases over time. Eventually, the bad **** will drop off. I don't know if its 4 or 7 years or whatever. What I can tell you is that if you don't PAY YOUR BILLS ON TIME, that period will never start. Let me restate: PAY YOUR BILLS ON TIME.

3. Figure out how to live within your means, if you aren't. This can be hard to do. I'm not sure I have any real advice. I took a dual approach - decreasing spending and increasing my means. Everyone talks about getting on a budget, but it seems like no one says to go out and make more money. I reccommend both - the more money part certainly helps.

4. Follow all the other reasonable sounding advice you get like dealing with the original lender instead of collectors, how to get notes on your credit report, certified letters, etc. I listed this as number 4 because none of it will matter unless you follow 1-3, especially 2.

Bottom line - there's no free lunch. That may sound harsh but it's true. There is a light at the end of the tunnel, though, and it's not a train. You can't imagine how good it feels to make progress toward it.

Feel free to PM me if you want.

Best of luck.

 

[AlwaysTexas]

I second tbone's advice to pay off the old bills. I recently bought a house, and spent about a year prior cleaning up credit issues. I paid off everything, including debts that were so old they didn't show up on my credit. But I knew when I went back to talk to the mortgage people that no matter what they asked me about I could tell them it was paid. It's a huge sense of accomplishment - one I didn't used to think I would ever have. Now, I don't cringe every time the phone rings and I don't recognize the number on caller id.

Also, the pay your bills on time is good advice. When your credit is not so good, and you're in that long, horrible process of improving it, one delinquency hurts. It's a very fragile thing. For what it's worth, there was a time that I didn't think I'd ever be able to finance anything. Now, I still can't get a store credit card, but I own a home, and just leased a new car.

Good luck!

 

[stupidgringo]

Call CCCS - Consumer Credit Counseling Service - they are a non-profit that specializes in fixing credit problems by helping you negotiate with creditors to get them paid. Even if their program is not for you, they'll have good advice. They have offices in Austin, and I believe they're in most other major cities, too.

 

[msdw24]

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[pevodog]

Another important thing is to limit the number of credit cards . Don't carry balances if at all possible and if you must carry a balance keep it as a low ratio to available credit as you can. In other words having a bunch of maxed out credit cards hurts your score.

 

[slevhtown]

As far as credit cards, if you have to keep a balance on them try to keep it as low as possible. Some people will tell you to consilidate all your debt on to one credit card. This is bad advice because you want to keep you balances on each card below 50% so if you move the debts from 3 cards that are at 25% to one card that is also at 25% your score will lower because of the high debt on the one card.

That being said don't open up new cards to try to lower your ratios, that will hurt even more. As someone said earlier payoff the largest debts first.

Also as someone said 7 years is from the date last reported, not date last active, everytime the debt changes credit collection companies it will be reported. When you are dealing with what banks say which collections need to be paid if you are buying a house, then most of them look at the last active date. It will still stay on your report though as long as it keeps getting reported.

 

[eflow24]

Your credit is good with me!!

 

[zzzz]

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