ArkiStan

Since my college career, a mixture of poor personal financial management and unfortunate circumstances have driven my credit rating to devistation. Delinquent bank and credit card accounts have resulted in numerous interactions with various collection agencies. The actual delinquent amounts are minimal, 2k or less. Yet, i assume it's not really the amount that matters.

I'm now determined to recover my ugly credit history and I need tips on how to do it as quickly as possible. Beside the obvious protocol of making payments on time, I as the following:

1. Is it better to make many small payments or to make one large payment in advance? For example, which would help my credit more, to make regular monthly rent payments or to buy an apartment and not worry about rent at all?

2. I understand that once involved with collection agencies, scarlet letters will appear on my credit report for many years to come. Assuming I straighten myself out, how long should I expect the scars to show on my credit report?

3. Any other less obvious recommendations? For your info, I will be in grad school for the next 3 years, then hopefully get a job afterward.

zippyjuan

Here is what goes into a FICO credit score. http://www.myfico.com/CreditEducatio...re.aspx?fire=5
They do not say how long bad information stays on your report, but I know bankruptsy lasts seven years. It also says that the further into your history the problems are, the less they are weighed. I would at least make sure your current debt payments are kept up to date and not late and work on paying off the highest interest debt you owe first. If your rating is bad, you may not want to buy a place to live now since you will probably face a high interest rate, but you may inquire to find out just what that may be. Definately get a copy of your credit report (if you haven't already) and see what it says. I don't have a link, but you can get a free one.

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sizemic1

Make regular payments to your creditors. You may want to try to pay a little bit more, but don't go crazy. If your min. payment is $125, pay $150.

I'm not even sure apartment managers report to the credit agencies. I rented a place for a while and don't recall that ever being on my credit report.

The most important thing is just start making regular payments to everyone to get yourself reestablished. It'll take 5 years for deliquencies and collection notices to come off of your report.

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johnnymk

I have heard of credit card companies willing to make deals with their customers, although I don't believe that 2K would be enough debt for them to make that offer.

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sizemic1

What kind of a deal have you heard of?
I've never heard of any company removing negative remarks from someone's credit report. They might give you a break on the interest rate and/or reduce you minimum payment for a certain period of time..but that's the best i've ever heard them do..and it still doesn't do anything for the negative remarks burned, in for what seems an eternity, on your credit report.

yo

I heard that if your parents have a good credit score, then you can piggyback on their credit cards and you will receive their 'good standing' marks and increases your rating faster.

johnnymk

I know a guy who owed quite a bit of money on his credit card. He was really in trouble when his business went nowhere right after 911.

Well, he told them he was going to file for bankruptcy, which he eventually did. If I remember correctly, they were offering to not only reduce the payments, but also the principal amount. If you want the details, I will ask him. After bankruptcy, I don't believe they got a dime.

Also, there was a guy at work who charged everything, and I mean everything. He was a real scoundrel. He probably owed $100,000 to various credit cards and other agencies. He would put something on his credit card and pay maybe ten bucks. He did this on all of his credit cards.

The guy and his wife went on vacations and bought everything under the sun. And from what I heard, he kept getting credit card offers in the mail. He must have done this for 15 years, and it was common knowledge among my coworkers. Everyone was amazed that he could do this for as long as he did.

He eventually lost his house last year, but he lived like a king for years.

smeakim

Here is a site that you can put in your CC and rates and they will tell you based on the mins or on a fixed payment scheduyle how soon you can expect to have things paid off. Don't go with the consolidation agencies you hear on the radio and TV. That will look worse on your credit history. Also see if you do have one card in good standing you might be able to balance transfer to a lower rate. Make you monthly payments more than the min and it will go away. Also don't buy now your rate will be crappy. Go to the three main credit bureaus. Also now all states allow you to get a free credit report once a year from each bureau. Just some food for thought. Good Luck.


http://cgi.money.cnn.com/tools/debtp...ebtplanner.jsp

http://www.transunion.com
http://www.equifax.com
http://www.experian.com

attgig

i think bankrupcy stays 10 years, and regular bad reports stay 7 years.

Also, they passed new bankrupcy laws so that you can't go into bankrupcy as easily anymore.


as for credit cards, just pay off all your debt. the better your income to debt ratio, the better a lender will look at you if you ever want to make a larger purchase.

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Grimm

Identify which debits have the highest interst rates, pobably one of your credit cards.
Pay everything at the minimum level except this highest rate. Pay it all the way down. Then pay off the next highest rate, and so on. Always , make your minimum payments.

If you can get a co-signer, you can try to get a consolidation loan. Get all your debts lumped together under a lower interest rate, then work to get that paid off.

If you decide you are "out of trouble" when that loan still exists and start spending again, you are doomed.

If your credit is already thrashed, consider renegotiating your debits. Do it before this October (the bankrupcy laws change and you are screwed). Contact your creditors and tell them that you are prety far under, with the high interest rates you are paying you don't think you can make it. See if they will give you a lower rate.
Given a choice between making less money off you and losing money, they will choose to make less money. your credit report will probably take another hit, but it will be much better in the long run after you start making all your payments.