Credit Repair Advice?

I was browsing through the “Which Credit Card should I get?” thread a bit ago, and hoo boy am I TERRIFIED right now.

I have a feeling that my credit is far less than favorable, partly due to a clerical error from my last car loan (SHould’ve been a late payment, but was paid off… apparently turned up on my credit as a “charge off”. Bank says they’re in the process of fixing it, but I haven’t run my credit since I checked (about 8 mos ago) so no clue.), and mostly due to INCREDIBLY poor financial choices over the years, such as 60 day late car payments a couple of times… once I had a credit card I ran WAY out of my financial bracket and don’t even know where to go to start paying it off. Got it from some website like a few years ago… their web site now forwards to Paypal.

Obviously, this causes some severe issues in my everyday life. My parents had to co-sign for the car I currently have (Which I’ve paid ahead of time and dearly for since the moment I brought it home), I’m pretty certain I can’t qualify for an apartment on my credit alone and all of my dreams of home ownership are effectively crushed beneath this credit report that I envision to be quite monstrous.

Has anyone ever escaped a very financially irresponsible youth?

How did you do it?

Did you use a particular credit repair organization?

My last two apartments have been paid on time and consistently and don’t have broken leases or anything (The first one didn’t have a broken lease, but I left the place in kind of a hurry, sending money to my ex for half the rent through the end of the lease and lord only knows what my ex did to the apartment itself before he moved out.) I don’t have any credit cards now and I do belong to a credit union. So I’ve got the “Cut up all of your cards and don’t get any new ones” and “Join a credit union, big banks just want to screw you” issues under control.

What else can I do?

Pull your credit reports. Review them for accuracy. Dispute all inaccurate items with the bureaus. They have 30 days to verify the item or remove it. You also have the right to submit a 100-word explanation for any accurate items. I have no idea if potential creditors pay attention to such messages (my company doesn’t; we go by straight credit score) but in the main they can’t hurt.

Get one credit card with a low credit limit. You may have to get a secured card. Use it for one thing only, like gas or groceries, and pay it off in full every month.

Don’t bother with “credit repair” agencies. They can’t do anything you can’t do yourself.

Check out what the Motley Fools have to say abut creidt reports and credit management in general.

First of all I know how you feel about your current financial situation. I have been there, but through no fault of my own my ex boyfriend stole my credit card, gas card, bank info and screwed me for thousands of dollars. I got no help from the cc companies- it was my fault because I allowed him access to my cards. Sure having them locked in my fire safe and him not on the accounts. They said since we lived together- I allowed him access anyway…

Do not use a “credit repair” service. They are nothing but scams. My sister recently got into a bit of financial trouble because she lost her job and she is a full time college student etc etc and she falls behind on her bills. She used one of the “repair” services that “one check pays all your bills”. They paid her bills late then told her she had to contact the original creditors to have the payment due dates changed to when they were going to pay it. They are just bad. I do not know of anyone who has used the “services” and has not gotten screwed.

The only way to “fix” your credit is to get a copy of you credit report from all three reporting agencies like Otto suggested. TransUnion, Eqifax & Experian. Go over then carefully to check for errors, discrepancies, stuff that is not yours, stuff that has not been updated in years. (my recent credit report showed no activity/updates on a car loan for nearly a year and had my dad as my spouse :eek: - ho co-signed a car loan for me) Fill in the form sent with the credit report detailing all of the errors/discrepancies etc. Ask them to update outdated info. Add extra sheets if necessary.

Then once that is taken care of. Pay you bills on time, use what credit you have very carefully. Make arrangements with companies you owe money to for a monthly payment setup. They can be more forgiving if you are nice to them. Also, if you know you only have 200$ to spend each month on credit card payments get your limit lowered to 200 bucks and pay it off every month. Spending & paying wisely pays off. In Aug 2001 when I bought a used Saturn my credit score was barely over 500 (6 years after theft of my credit) so I ended up with 15% finace rate :mad: But I had been good with my spending and paid everything on time etc and in january when I traded that Saturn in for my new Honda my credit was nearly 800 and I got 3.9% financing.

Woah! did I ramble a lot there.

For what it is worth… hope it helps and do not dispair. It does get better :slight_smile: and do not file bankruptsy- it will not help you no matter what some people will tell you.

What else can I do?

I am not an expert but …

  1. Resolve all unpaid debts. Ignoring them will not make them disappear.

  2. Save money somehow. Save enough for a small down payment on a house. You may be surprised that once you get the unpaid debts resolved, one way or another, you can qualify for a mortgage. You will probably get a higher interest rate but if you continue to meet your financial obligations, you will be able to refinance at a lower rate after 4 - 6 years.

  3. Work history and debt-to-income ratio are huge factors in qualifying for a mortgage, once you have established that you are paying your bills on time.

Don’t give up on making a better future for yourself. Just because you have made some poor decisions doesn’t mean you can’t right the ship and get yourself situated for a good life. I think patience is important. None of this will happen in a few months. Depending on your situation, it may take four or five years. There are no quick fixes, despite what may be advertised. Don’t beat yourself up either. People make mistakes. You can’t do anything about the past but you can change your future. Good luck… Been there. Done that.

Thank you all for your advice and understanding. beagledave, I signed up on Motley Fool and Otto, I will definitely get a secured credit card. I’m pretty sure my Credit Union has a program for that. I never even thought about using it for normal, everyday purchases and then paying it at the end of the month. That’s brilliant!

I don’t have most of the information for the places I owed way back when, such as When I run my credit report, will each creditor have contact information attached to it?

LVgeogeek, I am so sorry you had to go through that. I can’t imagine how furious I would be if someone else got me into this situation. As it stands, I’m pretty darned furious at myself about it, I would be insane.
jacksen9, thank you for your motivational words. You’d be surprised at how easy it is to just convince myself that I screwed everything up and I’d better hope my son will let me live with him once I can’t afford an apartment on social security anymore, eeeee!

What Otto said.

And shit will fall off after 7 years.

You can, in some rare situations, request your utility companies (phone, power, water, cable, trash etc) to report to the bureaus. They ordinarily do not, and may not be willing to, but I have heard of it being done.

DO NOT get involved with any “credit counceling” agencys!! I would not close any credit card accounts, either. Pay them off and stop using them if you are afraid of running up debt, but do not close them. Often times “Account Closed” will throw up a red flag to future underwriters. Like Otto said, use it sparingly on a regular basis, and pay it off every month. This establishes a “payment history”.

Unfortunatly, the trend seems to be moving toward automated credit decisions based soley on the credit score, so protect it!

Fagjunk Theology: Not just for Sodomite Propagandists anymore!

To summarize the good ideas here…here is a list from the Fools

They have a free seminar on getting out of debt, as well. Good luck!!

I’m the resident credit reporting company guy.

First: Credit repair companies do what you can do yourself. Just dispute everything, via regular snail mail (after you’ve seen your reports from all three national credit reporting agencies). Via [snail mail] <<<IMPORTANT. Dispute around any big holidays…well, just before.

Second: Obviously, keep current on anything you can, pay off bad debts.

Third: The older stuff gets, the less impact it has on your credit score.

Fourth: The older derogs get, the less likely any data provider can verify them. Worst offendes: mortgage companies. Credit card companies are good til about two years (for just late pay)

Fifth: Accounts that went to default/written off are verified a bit longer, since they get shipped off to specialty groups within the creditors’ operations. So, written off accounts, repos and such are likely to be 7-year nightmares.

Sixth: You just recieved valuable information from someone who - TADA!

  • is not guessing.

Philster, you’re a rockstar. Big holidays, huh? Does this mean I should wait until just before Christmas to start disputing stuff?

Can sneak them in now since it’s tax season and people are doing, ya know, tax stuff and trying to verify their finances (or whatever it is that people who don’t just fill out a 1040EZ form do).

Yes, Christmas would be the ideal time, but if you can’t wait until then, I suppose the next holiday is Memorial day. You want your dispute there before the holiday weekend…say a day or two, by regular mail…no faxes, no priority mail. For Memorial day, try to get you letter there about 2-3 days before that long weekend.

Give specific relevant information about dates and details of amounts. If they have to summarize your information when communicating the dispute to the data provider, then the dispute will fail any auto-processing the data provider uses, causing further delay. Delays benfit you, because the whole process must be wrapped up in less than 30 days or the disputed info must be deleted.

call me an anarchist and maybe this is hijackiing the thread a bit but dont ya think the credit came has become a bit onerous in our culture? Personally I dont give a flying fig about my credit rating and tho it is indeed a challenge being kicked out of the monopoly game without a get out of jail free card, I have discovered that whole subculture that exists outside of the system. Amazing thing is they all use cash. What a concept. My grandparents must have really been onto something in their day when the didnt use credit for anything. Hmmm, some traditions were worth protecting.

But seriously, I have a 400 something credit score just from trying to survive as a single parent (millions and millions of us in this boat and it astill hasn’t sunk). I had a credit collection representative actually get angry at me when I said I didnt care if my credit was ruined (it was already done) and she said…Well! I can make it so that you can never ever ever have anything ever again :eek: Wow, what a clarifying moment for me. I realized the perception of power and credit has become quite warped in our time. So I was relieved to discover that I had broken through that barrier because I was renting a new house, had all my needs met, including a great used car I paid cash for and had no chain around my neck by The Man holding me down in life.

There is always another way. But we dont start looking until we think we need to.

I appreciate your outlook on credit and I’ve survived for the past few years with pretty awful credit, so I know it’s possible. The issue is that it’s expensive. I currently have a new car (The one thats co-signed for) that I got for an amazing 3% interest rate and that has a bumper to bumper warranty for 7 yrs or 100k miles. In the long run, a used car would cost me some serious cash for maintenance and repair and I don’t need to worry about that, so long as I make my payment on time.

I have been turned down at apartment communities that I would have liked to have resided within because of my credit. I currently am on a lease only because the other two people on the lease have better credit than I do.

Even with their credit, I still had to pay a $700 additional move-in fee because of our combined credit. A fee that would have been waived if I had, say, my parents credit rating.

If something should happen to me that falls outside of the medical/dental/vision coverage I have for myself and my son, I am all but screwed. I don’t have the cash to cover the fact that one of my molars is decaying at a rapid rate and will only be covered on my dental at 20%. (I think they’re gonna have to take it out and put a post in and build a new tooth on it at this point.). Credit provides an amazing safety net if used correctly.

I also do not intend to rent for the rest of my life. When I am in my 50’s, I do not want to answer to a landlord who decides they feel like raising rent. I do not foresee myself saving up 100k to purchase a home outright. The longer I save, the more expensive these homes will become and I doubt I could save quickly enough for it to make much of a difference, since I’ll still be throwing my money away to rent every month while I’m trying to tuck my housing fund aside.

For the reasons I’ve stated above, I do feel that it’s important to have a good credit score, but I appreciate that others may not agree.

My humble opinion, the very belief that credit is the cure to lack of sufficient cash is frigtening. This is not about survival, it is about building financial stability.

Consider the fiscal math on the used car vs. the new car scenario.

Even at the low rate of 3% i am sure your new car has quite a sticker price on it and the cost of full coverage insurance to boot. A clean and worthy used car for $2000 (and they are out there) paid in cash and insured for liability (maybe 500.00 tops) with repairs at the tune of another $1000 (god forbid it would require that much maintenance) is way cheaper than the ave car payment of 250-300 per month. The car is paid for in the first year, divide that out by how many years you drive it and the savings are quite amazing. Savings you can put into the bank earning interest instead of paying interest, which you can then use to pay for out of pocket medical expenses. Savings that can be used to buy a better car when you need it. Savings that can be used to have the extra months deposit required by landlords who DO rent to people with bad or insufficient credit allowing them to have that as a reference for their next move. A reference that is good for getting a mortgage, which is the very easiest credit to achieve, contrary to popular belief, since they hold a very valuable peice of collateral to insure the payment of the loan. You can even get a mortgage the day after bankruptcy is declared, albeit for a higher rate, but in time that can be changed with a good payment history and a great remortgage market out there.

Point being, credit costs money, cash earns money. If it is always about needing a safety net or not having enough cash to meet expenses, then where is the logic in turning to credit to cure the absense of cash? And a final caveat: Insufficient income is the number one cause of poor credit, not irresponsibility. If you are lucky enough to make enough money to have some left at the end of the month use that incredible gift to build a cash reserve!.

It is all about perspective and belief and there certainly is always room for disagreement when opinions are being served. But there are also some pure mathematical facts that are usually not spoken of when it comes credit and how powerful it really is. It seems it is more about the power to have what you want how you want it when you want it in these times than about true fiscal intelligence. In the end The Man rules.

Its a fools folly…but the path was so very downtrodden and clear we followed it not knowing it dropped off the cliff in the end.

Good for you, Trudi, sounds like you have it all figured out.

In the real world, people need credit. They don’t want it, but they need it.

Ya know, sometimes when your kids teeth are falling out, you need a loan. Sometimes when medical bills exceed your insurance, you need credit.

Sometimes when you have a job that requires good transportation, you need credit to get started…to buy the car, some suits and set up a home office.

You are being extremely narrow-minded by applying your situation in life to everyone else. It doesn’t work that way.

Some would label you an ignorant fu-k for not paying bills that people are collecting on.

You are extended credit everyday, from when you call long distance, or use your heat, dip$hit. The bill comes at the end of the month. They lend you the service.

Thanks for you insight, Trudster

Never said I had it all figured out but I have learned a great deal along the way

Point of agreement: People have financial needs.

But Philster, the basic question here is: What DO you do when you can’t meet them using credit?

I dont believe my life situation was the basis of my post, more the information gathered out of past experience that can either be used or tossed depending on what you believe the “real world” is all about. But since you brought up the word “situation”…

The situation I faced with the credit system (note past tense) didnt have a thing to do with *not paying * bills, (an amazing assumption that can only be made from the outside looking in) but had to do with not being able to pay them fast enough for the credit bureaucracy. I paid my bills and continue to pay my bills, along with any and all late fees added upon them to make it oh so much easier to achieve. :rolleyes:

Anyhow I started a business, got transportation, paid childrens emergency bills, (ummm no medical insurance!) set up my home office and stayed peaceful and sane through it all *without * credit after loosing everything that credit had provided me in the first 15 yrs of adulthood in one fell swoop. So I guess I didn’t really NEED it after all. And I did all of that in REAL WORLD.

I wish it was just me and my life situation, but unfortunately I have lived the reality that millions of people live everyday who dont have a passing chance at accessing the credit system to solve their financial quandries and I have also lived the priveleged life of taking it all for granted that the doors opened oh so easily for me in the start. It is in being placed in the situation where credit is NOT AN OPTION, that I along with so many others face the very reality that drives the rest of the population running on the credit treadmill, for fear of having to deal with finding a different solution when they truly believe that there isn’t one.

Perhaps we are all becoming a bit paranoid here, but I find it extremely narrow minded to think that when life throws you a financial need, credit is even a possible way to meet it. You must not be aware of the priveleges life has handed you that afford that way of thinking. Maybe applying your life situation to everyone elses is actually your narrowmindedness. I remember when I was standing on that side of the fence and didnt know there was a whole different experience out there.

I find it ironic that the statements made in your post only serve to prove my point that the credit system as a power paradigm has become far to onerous to ignore. I remember the days when you didnt have to be “worthy” to have phones, lights, heat on “credit”. Today, if you aren’t creditworthy, you pay a hefty deposit, in effect reversing the tide so that you are now extending credit to them as a consumer. Scary to me.

So in the end I stand my ground outside the Credit Matrix and say, if you dont like my humble opinion fine, it doesnt make any difference to me. I have already been through it and I am standing in damn fine company. Thanks for inciting the passion Philster.


And I did it without calling you a single name like “dip shit” and “dumb f**k!”

Philster, this is IMHO, not The BBQ Pit. Try to keep that in mind, please.

Yeah, if you wanna beat up on [pb]Philster** you can do it here.

As far as I’m concerned, my credit has only one purpose… to get me into a house, for as little interest as possible. (The difference between a good interest rate and a bad one is literally THOUSANDS)

I don’t need a new car. I can think of lots more fun things to do with that $300+/mo (Like save up for a house)…and if things go to crap and I lose my job, I don’t have to worry about how I’m going to make the payment…because I don’t have one! And as long as you do your homework you can get a good used car cheap that will last you for years.

That being said, we try not to use our credit… but we take care of it. Because if something happens, I want it to be there, and as inexpensive as possible to use.

Malkavia, never forget that as you get older these things tend to repair themselves- even though it can seem a long way off. No one could have been more financially irresponsible than I was all those years ago, and here I am in my dotage feeling quite comfortable. You do get to a stage where you save money as a challenge, not because you need to.