chelslancast

First time posting/Need guidance!!

15 posts in this topic

Hello! This is my first time posting and I would appreciate any and all guidance that I can get! I apologize in advance if I break any of the forum rules, I will learn as I go.

I made some mistakes during college that are coming back to haunt me -- but as an adult I am trying to clean up my mess and learn from my mistakes. My family and I are trying to buy a house, so its very important that I get my credit report cleaned up and my score higher. I realize this is going to take time, effort, and probably a lot of $$$ but I am ready to start this process.

Here is a brief summary from when I last pulled my credit report:

--I have a car loan in good standing
--I have a student loan account that was past due but am working to get it to be current
--I am a cosigner on a credit card with a high balance
--I have an open credit card that has a zero balance
--I have 2 closed credit cards that were closed by my request
--I have a closed credit card that is 'paid charge off' (I have a JUDGEMENT on my credit report for this CC even though it has been paid)
--I have a small medical bill in collections that is PAID
--I have a credit card in collections that is unpaid (They will not accept a pay for deletion - this debt is 6 years old)

I am honestly trying to figure out where to start, and what to do. Like I said, I am willing to work hard at this, I just need guidance. The goal, like many of us, is to get my credit score up.

Anything you can offer is appreciated!

Thank you!

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This is the order I would do things.

1. Go over your credit reports with a fine toothed comb and look for ANYTHING that is inaccurate (date, balance, etc) and then send dispute letters to all 3 credit reporting agencies to dispute the inaccuracies of the credit card in collections, the charged of credit card and associated judgment, and the medical collection.  They will probably just get updated with corrected info.  Go over that info and be sure it's correct.

2. Get current on the student loan to stop accumulating lates.

3. Pay the credit card with a high balance down to $0.

4. Pay as much as you can on your car loan every month to get that balance as low as possible.

5.  Keep an eye on your reports for the 6-year old debt to fall off.

I'm going to guess that most of the other derogatory info won't fall off before the 7-year mark, but as long as you don't accumulate any additional derogatory info in the next year, you should be in decent shape to get a home loan. 

Have you talked to a mortgage broker?  They can give you your score and tell you where you need to be to qualify.

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Harry - thank you so much for the info. I have pulled my numbers (Equifax 544 poor, TransUnion 571 fair, Experian 559 poor)

It sounds like you are saying to focus mostly on my current debts (car loan, CC, student loan) and maybe not focus as much on the old debt ? I do have the one credit card that is 6 years old and still unpaid - should I just leave that alone? I wish I could get the judgement and other collections off my credit report since they were paid a long time ago.

Any other tips or suggestions are highly appreciated.

Thank you!

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Time and age are the key. Newer derogatory info kills your score. As time passes it has less and less impact to the point that the age of a collection account can actually help your score more than the collection itself hurts.

So you want to stop the bleeding by getting current on all of your accounts. Then you can start paying down your balances while the negative info ages away. 

I think you should certainly try to get the other collections and negative info removed, but I don't think they're hurting your score all that much.  Certainly not as much as the late payment from your student loan that dings your report every month, anyway. 

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10 minutes ago, Harry Seaward said:

Time and age are the key.

Unfortunately not anymore.  The new FICO9 scoring model now takes into account when a collection is updated.  Now collection agencies and JDBs are updating trade lines monthly to keep that score suppressed.  It used to be the more aged a collection was the less impact it has but the information we are seeing today is that if the collection status is "open" and they update monthly it does ongoing damage.

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3 hours ago, Clydesmom said:

Unfortunately not anymore.  The new FICO9 scoring model now takes into account when a collection is updated.  Now collection agencies and JDBs are updating trade lines monthly to keep that score suppressed.  It used to be the more aged a collection was the less impact it has but the information we are seeing today is that if the collection status is "open" and they update monthly it does ongoing damage.

He said his collections were paid a long time ago. I haven't seen many debt collectors updating paid collections on a monthly basis.

But I was also trying to impress the idea upon him that the longer it takes him to get his student loan current, the less 'good' history will be there when he goes to apply for a mortgage. 

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1 hour ago, Harry Seaward said:

He said his collections were paid a long time ago. I haven't seen many debt collectors updating paid collections on a monthly basis.

I should have been a little clearer but I was referring to the student loan and the one unpaid collection/charge off he has.

8 hours ago, chelslancast said:

--I have a student loan account that was past due but am working to get it to be current

--I have a credit card in collections that is unpaid (They will not accept a pay for deletion - this debt is 6 years old)

Those two items under the new FICO 9 scoring model will damage his rating more especially when combined with a high balance credit card.

Until the last item falls off and that loan is brought current AND those late payments fall off his FICO score is going to take a hit.

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My family and I want to be clear on something -- will paying down a high balance CC that I am an authorized user on help MY credit score, as well as the primary card holder? Thank you!

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1 minute ago, chelslancast said:

My family and I want to be clear on something -- will paying down a high balance CC that I am an authorized user on help MY credit score, as well as the primary card holder? Thank you!

NO.  Paying down that balance will not help your FICO one bit.  They do not calculate an AU card into your FICO anymore.  It will help the actual card holder.

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That is great info! We have a car loan that I am a co-signer for,  my credit report says it is a 'joint account' -- would I be better off spending my efforts paying down the car loan as opposed to the high balance credit card that I am authorized user on?

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37 minutes ago, chelslancast said:

My family and I want to be clear on something -- will paying down a high balance CC that I am an authorized user on help MY credit score, as well as the primary card holder? Thank you!

It seems an AU account is in fact scored by FICO but there is some debate as to how much weight it has.  Some have reported that it is scored the same as a regular account, others have reported it showed up as a 'new' account with no account history, which would actually hurt a FICO score initially.  And yet others have said it only shows up if the main user and authorized user share the same last name and address, as in a spouse/significant other.   In any event, I haven't read anything that says the AU account has zero effect, provided it reports to the CRAs.

So here's what I would do.  I would see if whoever has the account can start paying the balance down, because the high balance being reported on your reports certainly can't help you.  If you get to the last couple of months before you apply for your mortgage, have a mortgage broker run your reports and see where you're at.  If you're in good shape, don't worry about it.  If your score is still too low, but the balance on the AU account is still high, try to have the credit card company remove them from your reports (or dispute as "not mine" with the CRAs) and then run your score again to see if your score went up.  I wouldn't try to remove the AU account if the balance has been paid down, though.  If it is in fact helping your score and you end up removing it, you may not be able to get it added back on.

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47 minutes ago, Clydesmom said:

Paying down that balance will not help your FICO one bit.

What's your source on this?  I've read several things that say AU accounts are still being scored (albeit debate as to how much) and the only time it has no effect is when the account isn't reported to the CRAs.

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Yes I would like to know where we could legally find a clear answer. Just wanting to firm up which is better for my credit score -- paying down high balance CC that I am an AU, or paying down car a joint car loan.

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1 hour ago, Clydesmom said:

NO.  Paying down that balance will not help your FICO one bit.  They do not calculate an AU card into your FICO anymore.  It will help the actual card holder.

Being an authorized user still factors into the Debt ratio, which does, in fact, effect the fico score.  If you are an authorized user on a maxed out card, that high usage will indeed reduce your score still.

@chelslancast What is the SOL for credit card debt in your state?  If that old, unpaid card is past the time they are able to sue, then I would start with that one by doing as @Harry Seaward suggested and going over all 3 credit reports with a fine tooth comb to see where the incorrect information regarding that account is.  I would then dispute it.  If that doesn't get it removed, I would wait a month and then dispute again for being too old to report.  Many times, the CRAs remove accounts over 6 years old rather than try to count out the exact weeks or months left on the 7 year period and risk a potential lawsuit for being wrong.

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1 hour ago, chelslancast said:

Yes I would like to know where we could legally find a clear answer.

I'm not sure what you mean by "legally".  You're not going to be able to file a lawsuit against anyone if you get wrong info.  So I would just treat the AU account as the last in a long series of priorities.  Tackle everything else first and then worry about the AU account if your score isn't where you want it.

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