Help me clean up my credit - Long but need help.

Factual Questions
1

I didn’t want to hijack the other credit thread, so I’ll ask here, maybe it will be informative to other people as well.

I’m a 30 year old who is has finally started caring about life past 30. :I’m also holding down a decent enough job to start paying back what I owe to society. :smiley:

I want to clean up my credit, and would appreciate any advice on where to start. I don’t owe any big stuff such as college loans or divorce settlements, and I would be very surprised if I collectively owed more then $2,000 bucks (discounting my credit card). I just don’t know if interest from little bills 10 years ago will be a million dollars and stupid things like that.

I was in my first apt at about 20, and what I’m worried about are the years mostly between 20 - 25 or so. Typical first apt stuff like the phone was cut a few times, the electricity was cut a few times, the gas…,well, everything was cut a few times :stuck_out_tongue: We changed the names, but the collection agencies still came after me for the money (usually a $100 or so) but I threw the bills in the garbage.

The last 5 or so years have been much better, with the noticable exception of my credit card, I’ve paid my bills on time and nothing has been cut. I’ve been able to get a cell phone, and the electricity is in my name again.

Here are the big things that may work against me.

Years ago when I didn’t have insurance I went to the emergency room when I wasn’t feeling well. I got a bill, I never got around to paying it, either because I was broke, or being the old fiscally irresponsible World Eater. Last time I got one in the mail ( 12 months ago?) it was $597 or something. Obviously I should pay this as soon as possible.

Years ago unable to get credit, I got a secured mastercard with a $500 limit. For years I was fine with it, and several years later applied for, and received a card from a different bank with a $2000 limit.

The $500 card was maxed, and after missing payments for 6 months or so (because I was paying the new card) the account was closed. I didn’t bother to contact the bank and assumed they used my $500 deposit to pay off the account. This was about 4 years ago.

The other card for years fluctuated up and down, but generally was on a slow up trend because I do things like charge $100 and pay back $80. About 2 years ago the card hit it’s $2000 limit, and while the card was gathering dust on the shelf, I got into a bad habit of making minimum monthly payments. My girlfriend opened a bill last December (I’d been keeping the balance mentally :p) and the balance was $3000 bucks!

I’ve since paid $1200 on the card and brought it back under the limit, and I am determined to bring it down to zero by the end of the year…

The deal is, I want to clean my name up, I know it will take 7 years or whatever, but one day I want a house and I want a Dodge Viper, and I want to take my wife and kids on a nice vacation. One thing is for sure, this will be a lot tougher if my credit is shit.

:Sorry this was long winded, I just wanted to provide as much info as possible.

2

The first step is getting your credit report from the three major bureaus, TransUnion, Experian and Equifax. Almost all credit decisions about you will be based on data from those reports. You can actually get all three reports from TransUnion’s website for $35.

Next, note every derogetory mark on each of your three reports. You are entitled to dispute any derogetory mark with the credit bureau, and the bureau must, by law, investigate it. Even if the mark is true, if the bureau cannot confirm the debt with the original lender, it will be erased from your report. Many lenders do not keep records of small debts and late payments for more than a few years. This is a good way to get niggling little debts off your report, even if you do owe them in fewer than seven years. (Your conscience plays a factor here, obviously.) You can contest derogatory marks through each bureau’s website very easily. (Took me about half an hour to get rid of some late payment records.)

After this process (it will take a few weeks to get all the disputes settled) you will be left with your confirmed debts. Start paying those off. Contact each creditor (many of them will be collection agencies) and offer to pay. The good collection agencies will work with you to set up payment schedules and stuff.

Keep your balance on your existing credit cards fairly low and always pay more than the minimum amount (the whole balance once in a while is good too!)

The Credit Education page on myfico.com is also an excellent source of information. (FICO is the mathematical model that your overall credit score is based on.)

Good luck.

3

Another good resource: Credit and Debt Management from about.com (beware popups.)

4

Very, very helpful, I appreciate the info.

I owe you a beer. (Don’t worry I won’t charge it) :smiley:

5

I agree with freido except with one small caveat. If the debt is about to "fall off’, that is it is over 5 years old (they can only go back 7 years), it is often better to NOT pay it off, rather to rile them up, and possibly start the 7 years all over again. I have seen it happen.

And, keep checking! Very often what was disputed and came off sneaks back on.

Also, if you do pay off an old debt, bargain with them a bit- offer to pay it off in full if they promise to remove all derogatory info.

6

Once you have all that taken care of, buy or lease a car (and make all the payments on time). I bought a car about a year ago (had terribly credit at the time, couldn’t get a credit card from anybody), and now I have gone from terrible credit to ok but still not great credit. I just got a credit card with a $1,000 limit and pretty good rates. I’m also thinking about refinancing my car (if that’s possible) because I now qualify for a much lower intrest rate on the loan.

Just my $.02, I’m not a lawyer, nor do I know anything about credit problems and solutions, etc, etc…

7

Ok, well just got the 'ol report from Transunion. To my amazement, I appear to be much better off then I could have hoped. The strange thing is I only have one collection on there, for a pager company from 1999 that went under years ago in the amount of $125 bucks. The real thing that is working against me is my Chase card that has had that high rolling balance on it, but I’ve been getting it down.

Now I must admit I was under the impression that all those times my phone and electricity were cut would work against me here, yet I don’t see anything. (if it doesn’t go to a collection agency does it even pop up on here?)

One other question. The $597 from the hospital didn’t show up anywhere on the report. It’s been delinquent for a few years, why isn’t it on there?

8

Because they either haven’t delivered it to a collection agency, the collection agency they did deliver it to hasn’t decided to ding your credit, or they lost the record (happens more often than you might think).

The thing to remember is that these things can be ticking timebombs. Just because something falls of your report doesn’t mean that they can’t renew reporting on it, if it remains unpaid. That is why I heartily disagree with DrDeth on letting sleeping dogs lie. Do your best, go through old records, and try to find out who you owe money to that you haven’t paid. Contact them, and give them their money. I do agree with DrDeth that bargaining to get them to remove negative info is good, but even when the company is completely comitted to rectifying something, it’s often difficult to get done. I recently had a false mark on my credit report, and Household Bank was VERY helpful in getting it resolved, but the credit bureaus were less so. I eventually had to get it investigated, even though the supposed creditor was no longer reporting it negatively.

Cutting off service doesn’t necessarily impact your credit report. It’s all up to the creditor. If they didn’t report it, they won’t come back to do it now.

My first steps ould be to track down those you owe, and pay them. Pay off your credit card and don’t use it except for, like, gas or something. Check your credit report every six months, and deal with issues as they pop up. Develop responsible spending habits. Then go ahead and go get some more credit and act responsibly with it. I wouldn’t go out and get a loan immediately. Clean your stuff up first.

Be prepared for this whole process to take a LONG time, and cause you much anguish. It CAN be done, though. My credit score was right around 500 seven years ago; it’s over 720 now.

9

Yeah, I definitely plan to be proactive about it, and go pay the hospital bill and the pager bill, because I know I owe them. I guess I was kind of stunned, because I thought it would be fire and brimstone with getting my utilities cut and and all years ago.

I guess the best strategy is to deal with what’s on my credit report (the single collection for $125), and get my chase card down to zero, then be nice guy and call anyone else I think I may owe money to.