Raising Credit Score?

[Just Joe]

I have about maybe $3000 of credit in collections currently...my score is around 540. My goal is to get back up to at least 640 again. The only open account I have is my auto loan. I've been getting some settlement letters from former creditors,however I'm only in a place financially right now for smaller payments rather than lump sums. One of the settlement letters stated that even if I make smaller payments it would not count on my credit score...so,do I try for a consolidation loan or what?

[Harry Seaward]

33 minutes ago, Just Joe said:

I have about maybe $3000 of credit in collections currently

Give some more info on this.  How many debts total?  What types of debts?  Are these debts charged off?  Who is reporting the debts on your credit report?

The reason I'm asking is that typically, paying off debts that have been charged off won't help your credit score much.  If the accounts are still owned by the original creditor, and they are the only one reporting the debt, paying it off means they will report $0 owed.  If they have charged off the debt (but not sold it), the charge-off status will still keep your score low for a while, despite the $0 balance reporting.

These are just a couple of examples.  There are lots of possibilities, and more info is needed to really give you a more accurate answer.

[Just Joe]

10 hours ago, Harry Seaward said:

"How many debts total?  What types of debts?  Are these debts charged off?  Who is reporting the debts on your credit report?

The reason I'm asking is that typically, paying off debts that have been charged off won't help your credit score much.  If the accounts are still owned by the original creditor, and they are the only one reporting the debt, paying it off means they will report $0 owed.  If they have charged off the debt (but not sold it), the charge-off status will still keep your score low for a while, despite the $0 balance reporting."

It's a bunch of credit cards,and yes most were sent to collections.

 

 

[Harry Seaward]

So paying these off will leave you with the collections account with a $0 balance.  The collections account itself is what does the most score damage.  Several years ago people had decent success with offering debt collectors payment in full in exchange for removal of the account; called a 'pay for delete' or PFD.  You can give this a try, but it's been a long time since I've heard anyone report success with this.

The other factor is that you're probably better off leaving these alone if it's been more than a year since they have been updated by the collector on your reports.  The more time that passes, the less impact the account has on your score.  If you start poking around, they are liable to send a fresh update to the CRAs, causing it to look like a newly active account.

Are you in a situation where you're in need of a score increase, or is it just a case of niggling?

[Just Joe]

9 hours ago, Harry Seaward said:Are you in a situation where you're in need of a score increase, or is it just a case of niggling?

Yes very much so...I'm looking at trying to get a mortgage and also a possible vehicle purchase in the near future.

[Harry Seaward]

Do you have any active credit accounts in good standing?  If not, that's the first thing you need to do.  The longer a good account is open, the better it will be for your new credit applications (mortgage, auto).  If you have any credit card accounts, those need to be reporting a balance that is 5-10% of the credit limit when you apply for your mortgage.   Once you get yourself set up with good credit accounts, your mortgage lender will tell you what needs to happen with the bad accounts.   Lenders can approve FHA loans with 3.5% down on a 580 FICO or higher.  You'll probably be looking at a 5-6% APR or higher on the loan (today's market).  Most mortgage brokers have their own requirements for a higher FICO, usually 620 or 640 because it makes it easier for them to shop for a lender.  They also usually want to see any collection accounts paid, even if it ends up hurting your score.  The reason explained to me is because lenders don't want to extend credit on a secured asset only to have a creditor come along and slap a lien on the asset right after the loan closes.  My first mortgage, I had a debt that was beyond the SOL, but still on my credit report.  I typed up a letter that explained that even if the debt were legit, they couldn't legally collect it because the statute of limitation for collection had expired.  Some lenders would have required the debt to be paid regardless, and others wouldn't have cared.  It all just depends on who you're working with.  Find a good realtor with good mortgage broker connections.

The auto industry is a different animal.  Dealers just want to put butts in seats, so they will do whatever they can to facilitate that.  If you can hold off on the car until after you get a mortgage, do that and just get a credit card going now.  If you need the car before the mortgage, get the car ASAP (keep your payment as low as possible, i.e. big down payment and cheap car to get you by until after your mortgage closes), and wait a few months before you apply for the mortgage.  Either way, though, open a credit card ASAP.  Cap1 and Citi both have secured credit cards.

[Mr. Mann]

Great questions on these posts! The problem is there is not enough information with many of the issues to give a full rounded answer. I am fully aware that you'll don't know what information is needed. Ill cover some collection info to provide a comprehensive view of how collections work. Most see the collection account comes from the original company, how did it get there? You took out a loan at the original creditor who said you qualify for the loan. You defaulted on the loan by being late, the first late SETS the Statutes of limitations while each state has its own time set to determine when someone can lawfully collect on the debt. In Florida, that time is 4 or 5 years; after those years have gone by, it becomes Zombie Debt (not collectible.) 

The debt CAN stay on your credit for up to 7 years, so now you see there are 2 time periods. 

(Moving back to the Original Creditor) After 180 days (6Months) of non-payment, the Original Creditor moves the balance of the ledger using a 1099-c filing that with the IRS. There are times they will forward a copy to you to file on your taxes since it becomes an asset to you after it is written off their books to ZERO balance. At this point, you will see Charge-Off on your credit and collections in most cases. The OC can still report the original account to the Bureaus up to 7 years but check with your state to see what the SOL show in your state to determine if it can be collected legally. 

To attempt to get rid of either of these accounts, you MUST learn how to find violations in the reporting. Violation=The OC and the collection BOTH can NOT have a balance, Only one of them CAN, but it should be the collection account. Violation: Collection accounts CAN NOT say PAST DUE, or LATE. Look at the Date of last activity and Date of last payment. BUT you MUST have a 3 bureau credit report, WHY? ALL data MUST be the same across the 3 bureaus sine the come from one creditor. When you see, DOLA on trans union 1/2/2020 and Equifax say 12/22/2019 and Experian says 9/7/2020, and these are errors or violations because of its inaccurate reporting. This is not only limited to this area alone, it applies to the whole report. Nothing can be missing, that would be called incomplete. The report should be accurate and complete, you can be missing any information because it can negatively affect the score and cause adverse actions on your report. I'm a real credit service and i love sharing and these are trade SECRETS, BUT i won't give all. YES, repairing credit is real but also lucrative through ripping people off because they don't know the inside rules. There are many styles and tricks, this one is called factual disputing. Start here and read at least 10 times straight, and it will become second nature. Bye, the way this is not a cut and paste instructional, i just typed this, but im going to save it. Lol/.

[Just Joe]

On 4/5/2020 at 9:15 AM, Harry Seaward said:

Do you have any active credit accounts in good standing?    Lenders can approve FHA loans with 3.5% down on a 580 FICO or higher. 

 If you need the car before the mortgage, get the car ASAP (keep your payment as low as possible, i.e. big down payment and cheap car to get you by until after your mortgage closes), and wait a few months before you apply for the mortgage.  Either way, though, open a credit card ASAP.  Cap1 and Citi both have secured credit cards.

No credit cards left in good standing...and btw Capital 1 is one of them. And I can't afford a big down payment either. SOL I know.

[Just Joe]

1 hour ago, Mr. Mann said:

 Most see the collection account comes from the original company, how did it get there? You took out a loan at the original creditor who said you qualify for the loan. You defaulted on the loan by being late, the first late SETS the Statutes of limitations while each state has its own time set to determine when someone can lawfully collect on the debt. In Florida, that time is 4 or 5 years; after those years have gone by, it becomes Zombie Debt (not collectible.) 

The debt CAN stay on your credit for up to 7 years, so now you see there are 2 time periods. 

 

They were all basically credit cards that I ended up in the proverbial quicksand by being late on a payment...then the penalties and interest ate the rest up and so on. Most of these debts were just written off a year or 2 ago so I've got awhile to go...

[BV80]

16 hours ago, Mr. Mann said:

Violation=The OC and the collection BOTH can NOT have a balance, Only one of them CAN, but it should be the collection account.

In regard to an unpaid account, an OC will only report a -0- balance if it has sold the account.  

[Harry Seaward]

15 hours ago, Just Joe said:

And I can't afford a big down payment either.

What's you plan for a down payment on the mortgage? You're going to have to come up with at least 3.5%.

[Just Joe]

On 4/7/2020 at 10:46 AM, Harry Seaward said:

What's you plan for a down payment on the mortgage? You're going to have to come up with at least 3.5%.

I really don't know,I'll just have to see what I can get. I've heard about first time homebuyer programs,but they usually require a score of 640.

[Harry Seaward]

You can probably get your closing costs rolled into the loan, or have the seller pay them, but $0 down isn't a thing in real estate outside of USDA (typically rural property) or VA loans. FHA is the traditional 'first time home buyer' program for non-vets, but FHA is minimum 3.5% down because the gubmint wants you to have some skin in the game. For any loans with less than 20% down,  you'll have to pay $100-$500/mo for mortgage insurance as part of your monthly payments (actual amount depends on a thousand variables).

[Elaine0630]

I had declared Bankruptcy 6 years ago, so I have been working hard to rebuild my credit! I just got a new lease so I had the inquiry from the dealeship and from Nissan, I also had an inquiry from the SBA for a loan with this Covid-19 but my credit dropped 28 points??? No idea why I took such a hard hit? Any suggestions how to help repair this I only have two credit cards with very low balances??? Thank You Elaine

[Clydesmom]

1 hour ago, Elaine0630 said:

No idea why I took such a hard hit?

28 points is not a hard hit.  You took the hit because you applied for two different types of new credit.  

1 hour ago, Elaine0630 said:

Any suggestions how to help repair this I only have two credit cards with very low balances?

There is NO repair to be done with this type of drop.  You simply manage your debt and don't let anything negative report.  The score will bounce back in a month or two when the newness of the inquiries wears off.

[Elaine0630]

Thank you...

[Harry Seaward]

@Elaine0630 Hard inquiries are scored by FICO for 12 months.  It's true they have less impact over time, but you're not going to get the 28 points back in 'a month or two'. Especially with two different types of credit applications so close together. 

In addition to the inquiries, the other thing that caused your score to drop  is the new auto lease account. Eventually the good payment history will outweigh the newness of the account, but that will also take a several months. 

[Elaine0630]

Thank you....

[Robby8900]

On 4/6/2020 at 6:03 PM, Mr. Mann said:

Great questions on these posts! The problem is there is not enough information with many of the issues to give a full rounded answer. I am fully aware that you'll don't know what information is needed. Ill cover some collection info to provide a comprehensive view of how collections work. Most see the collection account comes from the original company, how did it get there? You took out a loan at the original creditor who said you qualify for the loan. You defaulted on the loan by being late, the first late SETS the Statutes of limitations while each state has its own time set to determine when someone can lawfully collect on the debt. In Florida, that time is 4 or 5 years; after those years have gone by, it becomes Zombie Debt (not collectible.) 

The debt CAN stay on your credit for up to 7 years, so now you see there are 2 time periods. 

(Moving back to the Original Creditor) After 180 days (6Months) of non-payment, the Original Creditor moves the balance of the ledger using a 1099-c filing that with the IRS. There are times they will forward a copy to you to file on your taxes since it becomes an asset to you after it is written off their books to ZERO balance. At this point, you will see Charge-Off on your credit and collections in most cases. The OC can still report the original account to the Bureaus up to 7 years but check with your state to see what the SOL show in your state to determine if it can be collected legally. 

To attempt to get rid of either of these accounts, you MUST learn how to find violations in the reporting. Violation=The OC and the collection BOTH can NOT have a balance, Only one of them CAN, but it should be the collection account. Violation: Collection accounts CAN NOT say PAST DUE, or LATE. Look at the Date of last activity and Date of last payment. BUT you MUST have a 3 bureau credit report, WHY? ALL data MUST be the same across the 3 bureaus sine the come from one creditor. When you see, DOLA on trans union 1/2/2020 and Equifax say 12/22/2019 and Experian says 9/7/2020, and these are errors or violations because of its inaccurate reporting. This is not only limited to this area alone, it applies to the whole report. Nothing can be missing, that would be called incomplete. The report should be accurate and complete, you can be missing any information because it can negatively affect the score and cause adverse actions on your report. I'm a real credit service and i love sharing and these are trade SECRETS, BUT i won't give all. YES, repairing credit is real but also lucrative through ripping people off because they don't know the inside rules. There are many styles and tricks, this one is called factual disputing. Start here and read at least 10 times straight, and it will become second nature. Bye, the way this is not a cut and paste instructional, i just typed this, but im going to save it. Lol/.

Does this include all remarks must be the same across all 3 reporting agencies. 

[Harry Seaward]

3 hours ago, Robby8900 said:

Does this include all remarks must be the same across all 3 reporting agencies.

What remarks? Are these your consumer remarks, or what the creditor has made?  Give us an example. 

[Robby8900]

2 hours ago, Harry Seaward said:

What remarks? Are these your consumer remarks, or what the creditor has made?  Give us an example. 

On credit karma on an account under transunion there is marks such as "Dispute resolved but consumer disagrees" then on Equifax it says "Dispute resolved meets FCRA requirements" 

[Harry Seaward]

2 hours ago, Robby8900 said:

"Dispute resolved but consumer disagrees" then on Equifax it says "Dispute resolved meets FCRA requirements" 

You really have to stop throwing spaghetti at the walls to see what sticks.  You can instruct them to include your own statement in your own words, but short of that, they can put whatever they want (or nothing at all) as long as it's accurate. They key is accuracy.

[Robby8900]

1 hour ago, Harry Seaward said:

You really have to stop throwing spaghetti at the walls to see what sticks.  You can instruct them to include your own statement in your own words, but short of that, they can put whatever they want (or nothing at all) as long as it's accurate. They key is accuracy.

Thanks. 

[cedric_86]

On 4/6/2020 at 6:03 PM, Mr. Mann said:

Great questions on these posts! The problem is there is not enough information with many of the issues to give a full rounded answer. I am fully aware that you'll don't know what information is needed. Ill cover some collection info to provide a comprehensive view of how collections work. Most see the collection account comes from the original company, how did it get there? You took out a loan at the original creditor who said you qualify for the loan. You defaulted on the loan by being late, the first late SETS the Statutes of limitations while each state has its own time set to determine when someone can lawfully collect on the debt. In Florida, that time is 4 or 5 years; after those years have gone by, it becomes Zombie Debt (not collectible.) 

The debt CAN stay on your credit for up to 7 years, so now you see there are 2 time periods. 

(Moving back to the Original Creditor) After 180 days (6Months) of non-payment, the Original Creditor moves the balance of the ledger using a 1099-c filing that with the IRS. There are times they will forward a copy to you to file on your taxes since it becomes an asset to you after it is written off their books to ZERO balance. At this point, you will see Charge-Off on your credit and collections in most cases. The OC can still report the original account to the Bureaus up to 7 years but check with your state to see what the SOL show in your state to determine if it can be collected legally. 

To attempt to get rid of either of these accounts, you MUST learn how to find violations in the reporting. Violation=The OC and the collection BOTH can NOT have a balance, Only one of them CAN, but it should be the collection account. Violation: Collection accounts CAN NOT say PAST DUE, or LATE. Look at the Date of last activity and Date of last payment. BUT you MUST have a 3 bureau credit report, WHY? ALL data MUST be the same across the 3 bureaus sine the come from one creditor. When you see, DOLA on trans union 1/2/2020 and Equifax say 12/22/2019 and Experian says 9/7/2020, and these are errors or violations because of its inaccurate reporting. This is not only limited to this area alone, it applies to the whole report. Nothing can be missing, that would be called incomplete. The report should be accurate and complete, you can be missing any information because it can negatively affect the score and cause adverse actions on your report. I'm a real credit service and i love sharing and these are trade SECRETS, BUT i won't give all. YES, repairing credit is real but also lucrative through ripping people off because they don't know the inside rules. There are many styles and tricks, this one is called factual disputing. Start here and read at least 10 times straight, and it will become second nature. Bye, the way this is not a cut and paste instructional, i just typed this, but im going to save it. Lol/.

I just found this and this is good information.  Once you find violations, such as 2 Bureaus have one thing, and the 3rd has something different, what are the next steps.

Is this used as leverage for them to correct it, or remove from your credit report?  What are your next steps?

[Clydesmom]

35 minutes ago, cedric_86 said:

Is this used as leverage for them to correct it, or remove from your credit report?

They are only required to correct the errors not remove the trade line. One trap that consumers fall in to is sometimes the trade line will be removed while the creditor sorts out the facts.  It CAN be re-inserted and that is not a violation.  Be VERY careful of that post you quoted.  They are engaged in the credit repair business which is largely a SCAM.