New Here - Need Advice - Please

[leilanip]

I have been trying to repair my credit for a just over a year now. I went to the lengths of hiring a credit repair service which they were able to remove quite a few trade lines and inquires off my credit report. I time is up with them and there are a few collection accounts that I want to take care of. The goal of this credit repair is to buy a home within the next 3 months. So I am trying to raise my credit score ASAP.

1) There is an account which apparently I owe 8K too (with interest). Original balance was little more than 3K..maybe 4K. This agency as already filled with the IRS a form 1099-C (which basicaly means they have given up trying to collect the money from me) for a little over 3K. However, still up my credit report which I want to take care of this. I overed them 4K to remove this off credit report. They said they would report paid in full if I pay them 4K and will not remove from my credit report. Should I do this? What else can I do?

2) There is another account which was sold to another agency. The original creditor is showing on my credit report as sold. The new agency is NOT reporting on my credit report. I offered them to pay it if they remove the original creditor off my credit report. They said they can't. Should I pay them? If they can't remove it...why should I pay? This new agency is not reporting the balance....Any advice?

Thanks,

Richard

[LeslieR]

Hello Richard:

1) I believe that when it's possible, that yes, you should pay outstanding debts. It sounds like 4K is close to what the original amount of the debt was. That is the first half of my answer. The second half is that the CA updating the collection to paid will not improve your credit score, but does make your credit profile look much stronger than one with unpaid collections.

2) Has the OC sold this second debt you are talking about? Or is the CA simply collecting for the OC? If the OC still owns it, I suggest you pay them directly and discuss a pay for delete beforehand. The CA, if that's who you asked, cannot remove the OC's tradeline.

What you need to understand in your rush to remove these things is that they ARE your credit history, and that in neither situation are the data furnishers obligated to alter your history if you pay them. All they have to do is indicate that you paid.

Besides believing that it's the ethical thing to do, I would tell you that if you are trying to buy a house, your mortgage lender may overlook a couple of collections (especially if they are old) -- but not if they remain unpaid.

Oh, and welcome!

[Ahntara]

Be aware that any action on these TL's may cause a drop in your score. So tread carefully in these next few months.

1) If you decide to pay this, or if your mortgage lender insists on it, have your broker arrange payment at closing. Paying this beforehand may result in an update to reflect the zero balance. The update may cause a drop in score, possibly raising your interest rate or making you no longer eligible for your loan. That's a bad surprise for someone trying to purchase a home.

2) As Leslie noted, only the DF can remove their TL. My suggestion would be to get your home, then decide what to do about this. Don't dispute the TL or take any other action which might cause this to get updated. Once again, it's the update that potentially hurts your score.

The surest method to gain points is to manage utilization on revolving accounts. Use two CC's each month, pay down the balance to between 1% - 9% of the highest credit reported. Keep a (very small) rolling balance until your loan closes. Avoid closing any other accounts. Limit and control inquiries. Good luck on your house!