I'm good for it... I swear!
August 10, 2010 9:07 PM Subscribe
CreditFilter: What is the best way to improve credit, when facing bad credit that does not involve credit card debt?
I have some credit issues. Namely, I have none. I have no substantial credit card debt (around $400 dollars, spread over 3 cards), just outstanding bills from my years as a stupid kid. I am a student, about to finish my second BA and start applying to law schools, and I am going to need to straighten out my credit. I DO have some student loan debt, but all of that is fine and current.
I will soon be receiving my final financial aid disbursement, and I have some other funds coming in, so this is the best time possible for me to resolve all my old debt and work on building some good credit. I am not even certain what all I owe, because it is all piddly little amounts from around a decade ago. I doubt I have total debts over $2k, and I doubt any single debt is over $400-500. Most of the research I have done seems to point to resolving CC debt, and not so much little outstanding bills. Ideally, I will find a way to figure out every red cent I owe to anyone, and pay it all off at once... thing is, I am having trouble finding a way to gather all of the info.
I also know that sometimes, old debts can be settled for a portion of the original amount. Will going that route further damage my credit, or is it all the same once the debt is officially "settled"? I have looked into several Consumer Credit Counseling services, but again, these seem to focus mostly on people with severe CC debt and upside-down mortgages. Are there ways to: 1) find out what I owe, and to whom I owe it... 2) remove late payment reports from my record... 3) re-establish some positive marks?
Thanks hive!
I have some credit issues. Namely, I have none. I have no substantial credit card debt (around $400 dollars, spread over 3 cards), just outstanding bills from my years as a stupid kid. I am a student, about to finish my second BA and start applying to law schools, and I am going to need to straighten out my credit. I DO have some student loan debt, but all of that is fine and current.
I will soon be receiving my final financial aid disbursement, and I have some other funds coming in, so this is the best time possible for me to resolve all my old debt and work on building some good credit. I am not even certain what all I owe, because it is all piddly little amounts from around a decade ago. I doubt I have total debts over $2k, and I doubt any single debt is over $400-500. Most of the research I have done seems to point to resolving CC debt, and not so much little outstanding bills. Ideally, I will find a way to figure out every red cent I owe to anyone, and pay it all off at once... thing is, I am having trouble finding a way to gather all of the info.
I also know that sometimes, old debts can be settled for a portion of the original amount. Will going that route further damage my credit, or is it all the same once the debt is officially "settled"? I have looked into several Consumer Credit Counseling services, but again, these seem to focus mostly on people with severe CC debt and upside-down mortgages. Are there ways to: 1) find out what I owe, and to whom I owe it... 2) remove late payment reports from my record... 3) re-establish some positive marks?
Thanks hive!
Best answer: Bear in mind after seven years many things drop off your credit report and are literally uncollectable by law. This depends on what kind of debt it was (I know student loans don't work that way for obvious reasons) but bear that in mind before you shove $200 or so at that old credit card you haven't had for ten years.
If you settle a debt for a portion of the original, it's settled. They say 'Okay, we're good' and you never have to hear from their slimy asses again.
Once you get some things cleared up, you're more likely to be able to get a credit card. Keep a low limit, don't go anywhere near that much, buy something like a tank of gas a month and pay it off right away so the CC company tells the bureaus you're paying on time.
It'll take time to get your credit back up, but once you do start paying off current debts HOUND THE CRAP out of the companies that have the debt until they report it as paid to the credit bureaus. Some of them get downright lazy about reporting.
posted by Heretical at 9:24 PM on August 10, 2010 [2 favorites]
If you settle a debt for a portion of the original, it's settled. They say 'Okay, we're good' and you never have to hear from their slimy asses again.
Once you get some things cleared up, you're more likely to be able to get a credit card. Keep a low limit, don't go anywhere near that much, buy something like a tank of gas a month and pay it off right away so the CC company tells the bureaus you're paying on time.
It'll take time to get your credit back up, but once you do start paying off current debts HOUND THE CRAP out of the companies that have the debt until they report it as paid to the credit bureaus. Some of them get downright lazy about reporting.
posted by Heretical at 9:24 PM on August 10, 2010 [2 favorites]
Best answer: Find out if you are eligible to join a credit union, perhaps through your university or community. Their customers are considered members and shareholders and many would be glad to help a member learn about and establish good credit. They also offer financial services like credit cards and loans and might be inclined to issue you a card sooner than elsewhere if they are already working with you.
posted by Anitanola at 9:48 PM on August 10, 2010 [1 favorite]
posted by Anitanola at 9:48 PM on August 10, 2010 [1 favorite]
Best answer: Good advice so far. Just to be clear, Hertical's advice to get a credit card is a good one because having accounts that show current (as in not unpaid/deliquent) every month for years is the main way to establish a record of good credit and improve your score. You actually don't even need to use the card, as long as the account stays open every month you will get another month marked as current on your credit report and your average account age will improve.
posted by burnmp3s at 9:53 PM on August 10, 2010 [1 favorite]
posted by burnmp3s at 9:53 PM on August 10, 2010 [1 favorite]
What sort of debts are these and how old are they? Without more detail, there's no way to state accurately what would be best for your credit. You say you have $400 of credit card debt. What are the limits of your three cards? If all of them are utilized less than about 33%, they're helping things.
Have the credit cards ever been late? How long have you had them?
As others stated, the first step is pulling your report and figuring out what, if anything, that is on there is actually a valid debt. (IOW, something that is actually yours and not some other random crap thrown on your report)
Also, for maximum leverage, you must never promise to pay the debt without an offer, in writing, from them to remove the item from your credit report. Promises to pay (and payments) restart the reporting clock (and the statute of limitations!) and put you in a worse position than when you started.
Speaking of the statute of limitations, if it has passed, you are no longer legally responsible for the debt. Period. Some people choose to pay debts that are no longer legally enforceable whether out of a sense of moral obligation, in an attempt to get off a creditor's sh** list, or to satisfy some morals requirement to get a professional license, security clearance, or whatever.
If any of your debt is medical debt, those entries are required to be removed from your report once the debt is paid. This is a side effect of medical privacy laws here in the US.
I strongly suggest you read the forum over at Creditboards.com for advice. A lot of people there are dealing with non-revolving debt just as you are.
If you already have credit cards, you're actually in pretty good shape. You don't have to worry about what can often be the most difficult and demoralizing part of building a good credit history. Once you get the bad stuff off, you'll be in fine shape.
posted by wierdo at 10:35 PM on August 10, 2010
Have the credit cards ever been late? How long have you had them?
As others stated, the first step is pulling your report and figuring out what, if anything, that is on there is actually a valid debt. (IOW, something that is actually yours and not some other random crap thrown on your report)
Also, for maximum leverage, you must never promise to pay the debt without an offer, in writing, from them to remove the item from your credit report. Promises to pay (and payments) restart the reporting clock (and the statute of limitations!) and put you in a worse position than when you started.
Speaking of the statute of limitations, if it has passed, you are no longer legally responsible for the debt. Period. Some people choose to pay debts that are no longer legally enforceable whether out of a sense of moral obligation, in an attempt to get off a creditor's sh** list, or to satisfy some morals requirement to get a professional license, security clearance, or whatever.
If any of your debt is medical debt, those entries are required to be removed from your report once the debt is paid. This is a side effect of medical privacy laws here in the US.
I strongly suggest you read the forum over at Creditboards.com for advice. A lot of people there are dealing with non-revolving debt just as you are.
If you already have credit cards, you're actually in pretty good shape. You don't have to worry about what can often be the most difficult and demoralizing part of building a good credit history. Once you get the bad stuff off, you'll be in fine shape.
posted by wierdo at 10:35 PM on August 10, 2010
Good advice so far. Just to be clear, Hertical's advice to get a credit card is a good one because having accounts that show current (as in not unpaid/deliquent) every month for years is the main way to establish a record of good credit and improve your score. You actually don't even need to use the card, as long as the account stays open every month you will get another month marked as current on your credit report and your average account age will improve.
Actually, I think using them and paying them off every month improves your credit score. The idea is that if you want someone to extend you credit, you need to have a history that shows you won't be a risk to them.
posted by gjc at 3:15 AM on August 11, 2010
Actually, I think using them and paying them off every month improves your credit score. The idea is that if you want someone to extend you credit, you need to have a history that shows you won't be a risk to them.
posted by gjc at 3:15 AM on August 11, 2010
If you settle a debt for a portion of the original, it's settled. They say 'Okay, we're good' and you never have to hear from their slimy asses again.
While you won't hear from the creditor again, on your credit report a bad debt that has been paid isn't much worse than one that's unpaid. Negotiate a written promise to delete before settling the debt(s).
posted by doomtop at 8:34 AM on August 11, 2010
While you won't hear from the creditor again, on your credit report a bad debt that has been paid isn't much worse than one that's unpaid. Negotiate a written promise to delete before settling the debt(s).
posted by doomtop at 8:34 AM on August 11, 2010
Sorry, that should be: a bad debt that has been paid isn't much better than one that's unpaid.
posted by doomtop at 8:36 AM on August 11, 2010
posted by doomtop at 8:36 AM on August 11, 2010
This thread is closed to new comments.
You credit report should show what debts you have outstanding, so you can follow up with those creditors.
posted by rancidchickn at 9:12 PM on August 10, 2010