How do you fix your credit rating?

I have a pretty bad credit history, and over the past year I’ve been trying to fix it up. I have a copy of my credit report and I am trying to pay off any debts that are on it, none of which are more than a couple of hundred dollars, but they are all several years old. There are also pleanty of late and slow payments on it. I have a credit card which I use regularly and pay way more than the minimum balance on so I can get a good history with them, but the interest is outragous. I have a mortgage that I pay ontime and try to pay more than the monthly payments on. I did qualify for a car loan, but like the credit card, its from a high interest place. I’m fine with riding this out over the next few years, but does anyone know if there is something else I could or should be doing? Thanks.

Sounds like you’re doing all that you can do… I assume you’re in the US…(that’s the only country whose laws I am familiar with).

Pay off everything, try to establish a better credit history with your credit card, etc. (make sure you pay on time!), and have patience! IIRC it takes 7 years for bad info. to be erased from your credit history. :slight_smile:

I only have another year or so to go!! :smiley:

You might want to have a chat, or write to the creditors that you are currently paying off. Tell them that you have seen the error of your ways. Imply to them that they will get their money more promptly if they ease off on the negative info in the report. Sometimes (if you talk to the right person) they will fudge the records that they send off to the credit reporting bureaus. That and time will heal all wounds.

Oh, and from now on: PAY YOUR BILLS ON TIME. Nothing helps a credit report more than fulfilling your side of the terms when a stranger lets you use their money for a while.

As usual, our longhorned friend is correct, though I would suggest writing every creditor you stiffed in the past and make your best, teary-eyed, golly-gee case that you’ve turned a new leaf and want to rectify matters with them if only they could cut you a little slack.

Of course, while it is true that companies often write off debt partially/entirely, the downside is that they also retaliate by burning those charity cases through passing on the information to the reporting agencies. Creditors absolutely hate unrealiable borrowers and there’s no such thing as a free ride.

Next, obtain a credit report from the three/four major credit reporting agencies and make sure everything “derogatory” that’s listed on your report is based on fact. Mistakes by the agencies are common and challenging every single one is mandatory, though the process may take several months of written correspondence.

Third, exercise control (and accountability) of your spending by using only one credit card. Cut up the rest. (BTW, reporting agencies give lower marks to folks who have lots of credit cards, even if seldom used.) While you’re at it, write to each reporting agency and formally “opt out” of receiving any more credit-card solicitations. Doing this will almost completely stop them and reduce the temptation level.

The derogatory information on your reports should last only seven years–sounds long, but isn’t for a young dude/dudette. Every day your new record stays clean, the better you’ll look to future creditors.

Last, keep remembering there is a huge difference between “must have” and “would like to have.” If your problem is one of compulsive spending, seek professional help.

Not that I have much credibility on this last point…

I’m pretty sure there’s at least one other technique you can employ. I did this years ago and it worked.

You can contest any of the information on your credit report by filling out a form via the credit bureau. If the creditor doesn’t respond to the credit bureau within a certain amount of time (I think it’s like 30 or 60 days)with documentation to back it up, then it gets removed from your records.

This works especially well with older stuff because a lot of companies archive their records after so many years and digging the information out is a hassle, so they don’t end up responding…so it gets wiped out.

Ask the clerk at the credit bureau about it.

The advice is right on target but I got one more suggestion.

NEVER pay a bad debt without talking to your creditor first. Simply say, look my credit rating is bad, so I am NOT paying you anything. IF and ONLY IF you remove that derogatory credit will I pay you.

They will more than be willing to due this.

Second NEVER deal with a collection agency, If you wish to pay tell the agency you will call the original creditor and deal with them directly. Then follow the advice above. Remember the CC companies sell these accounts to collection agencies so if you pay the collection agencies can get up to half. Therefore the original creditor has no incentive to remove any late payments info.

You can often make a deal for cents on the dollar.

And finally do as Krispy suggested DEMAND they back up their negative credit info. A lot of companies will simply not have the manpower to reply or they will have purged their records etc.

Of course if you owe someone big like Chemical or Bank Of America they are so big they will have the records. Another reason to only deal with the little guys.

Thank you, yon rider of big friggin’ waves, for my brand-spankin’ new sig:


While this hasn’t been a problem lately, I’m going to
print this out and hang it on the fridge, in the
checkbook, near the phone…

Its not a lot of money. Its only a few hundred dollars
here and there. All the debts are valid and I don’t
want to get out of it, I just want to fix it.

I only have one credit card, my wife has two, both have
low limits. The only reason I even have them is to
build up some positive credit. I prefer cash or debit
Thanks for everyones suggestions and advice. Being
such an idiot with money, its good to know I’m on
the right track.

OK- if they have already “written off” the debt (it will say so on the credit report- there is no use paying it- in fact it will actually make the “DEROG” stay longer- it is counterproductive*. UNLESS, you make a deal with them as Markxxx said. Offer to pay the original balance in full (without late fees, etc)- if they agree, in writing to remove all derogatory info- and give you a 'clean slate".
Again- never deal with Collection agencies- it does your credit no good at all to pay them. By the time it is turned over to a Collection agency- it is a 'write-off" and you have already been reported as a 'dead-beat". Paying will not change that.
On anything that you are not sure of- contest it as Krispy says. Also- contest anything that might be 7 years or almost old- some companies have nasty & illegal habit of “updating” an old “DEROG” so it never disapears from your records. I have had this tried by several large companies. Also- some debts may not be yours at all.

Once it is REALLY bad- ie almost to the write-off point, many debtors wil accept a ‘deal’- which I recommend the “original balance in full” as being fair.

*as being that late- no matter paid or not- it is a “DEROG”, and paying just keeps it "active’- ie it stays 7 years after the last activity- and thus, your paying extends the date it can be reported. Silly, no?

I have nothing to add, but I’m curious: Why are you interested in cleaning this up? It sounds like you already have all the benefits of good credit: a mortgage, a credit card, a car loan… I don’t mean to be detracting here; it’s a great thing you’re doing.

I’m trying to clean it up because I want to get a house soon (I currently have a condo), and my interest rates on my credit card is 24.99% due to my previous problems. I’m not sure what the interest rate on the car loan is because I’m in the process of getting it. I can’t even get on the service plan for my oil company, with auto delivery & service included. While I prefer using cash, there are times when credit could really help, like when the furnace needed to be repaired a week before Christmas. Also, its just something I feel like I need to do.

Oh yeah, one more thing. Not to sound dumb, but whats a “DEROG”?

“DEROG” = derogatory. That is, it’s a note (or comment code) that your creditor puts on his accounts receivable data that he submits to a credit agency that says, in effect, “This person pays slowly” or “This person has not paid” or something to that effect.

I work in business credit, so I don’t have much information on consumer credit. Business credit uses slightly different rules, but the concept is the same.

One thing to remember when you’re cleaning up your credit report. (Note: This is for lines that do not belong on your report; not valid claims.) Let’s say you get your gredit report from Experian. You see a charge that does not belong to you, so you call the 800-number and have it removed. You should also contact the creditor who reported it and have them correct their records. Otherwise, they’ll send the same record in the next time they send data (probably the next month) and the line will reappear. If you get your report again you’ll call Experian and say, “Hey! I already called you people about this! Take it off!” But it’s really the creditor’s fault for sending the data in again.

Also be aware of merged files. (That’s where your credit information and someone else’s credit information are mixed together.) I got my credit report and there were lines for charges I never made and addresses where I’ve never lived. It seems there is another person in my area who has the same name as I have. I called Experian and had them remove the charges that were not mine. I also had them remove the bad addresses and the incorrect Social Security Number. These lines did not reappear on my report. Of course, they have a “data correction” program that can unmerge merged files. This has nothing to do with the creditor reporting you as described in the previous paragraph.

And now a bit of trivia: If you know someone who works for a credit reporting company, that person can’t “fix” your credit. They’re not even allowed to pull their own credit reports just to look at them. To do so would result in their immediate termination.