How do I restore my credit in 2.5 years?

July 7, 2007 11:12 AM

Beyond the obvious (Google and MeFi searches have been done), what can I do to restore my credit over the next 2 and half years?

I am recently divorced. My ex-wife had numerous health problems, not the least of which was hypochondria. Add to that her gambling problem, and her lack of desire to work, and, even after insurance paid their cut, I was left with more medical debt than I could keep up with. This resulted in scores of medical bills being turned over for collection. The bills will soon be totally retired, but meanwhile my credit is worse than bad. (Hint: I couldn't even qualify for a high-interest credit card that HSBC kept pestering me to apply for!) For the next 2.5 years, I am paying spousal-maintenance (don't get me started on the fairness of that), so I will have to get by with my current car for now (1992 Saab). At the end of the maintenance payments, I want to buy a nicer car, which will require getting a loan. So I want to take steps now to be ready to reward myself with a nice car in February 2010.

Random data: My salary is a little above average, plus I have additional income from freelance design work. My teenage daughter lives with me full time, and I receive no child support. I have no credit cards, car loans, or other loans. I rent an apartment (and have no interest in buying another house any time soon). 100% of my debt issues are medically related. No consumer debt. In the past, I have owned several homes. The medical debt was nearly all on behalf of my ex, even though I am the responsible party, if that matters.

So, I am looking for "beyond the obvious" insight, particularly your own tales of credit rehabilitation, or if you work in the credit industry. Any little-known hints, tips, tricks that can maximize my efforts? Thanks in advance.

posted by The Deej to work & money (9 comments total)

Go to the CreditBoards forum. I'm not derailing, rather, that's a pro-consumer forum has gone far, far beyond critical mass for what you need to get info and help on your problem. I consider that site to be a one-stop source.
posted by rolypolyman at 11:48 AM on July 7, 2007

Doubling, tripling, quadrupling, pentupling the Creditboards.com recommendation.

That site has singlehandedly enabled me to raise my FICO scores from the high 500s to over 700 (I finally made the "700 club" a month ago!) in almost 2 years.

Spend a LOT of time there, reading and soaking in everything. There's lots to learn (including the secret phenomenon/technical glitch known as "*b*", which allows you to manually knock off inquiries off your credit reports by yourself), but it's so worth it.
posted by melorama at 7:38 PM on July 7, 2007

Thanks for the site recommendation. It's now in my bookmark list, ready for use.
posted by The Deej at 8:44 PM on July 7, 2007

You have some specific rights under HIPAA laws. You might want to try some legal advice to ascertain exactly what you truly have to pay that might effect your score and what your rights are.

You need to read this...
http://www.brokencredit.com/?p=171

and this...
http://www.brokencredit.com/?p=317

and this...
http://www.brokencredit.com/?p=489

As I understand it, if the doctor/provider accepted your insurance, as you stated, that is all you are responsible for. They can not, legally, bill you the difference- it is illegal. Read through the links, do some research and see where you stand. You might have a refund coming. You can post at the site mentioned so I would give it a shot and let them have a crack at your current situation. Good luck.
posted by bkeene12 at 8:51 PM on July 7, 2007

Hmmm, bkeene12, I have never heard anything like that at all. Obviously, that would be fantastic because I have paid tens of thousands of dollars. Amounts they have consistently billed me for. I won't get my hopes up, as my insurance agreement includes co-pays and deductibles. But it's worth looking into. Awesome link and info, though, regardless of how it all shakes out. Thanks!
posted by The Deej at 9:10 PM on July 7, 2007

Just a thought but I would give you a chance as a lender on prosper.com you might be able to get a decent loan on that site if you tell them your story which seems to be believable. They also report to the credit agencies which would help your credit score.
posted by tke248 at 10:46 PM on July 7, 2007

Thanks tke248!
Let me clarify: you are suggesting that I go ahead and apply for a loan on prosper.com as a method of increasing my credit score? (Like, a smaller loan since I won't be able to even afford the "good car" payments until 2010.)

Hmmmm, interesting. That may indeed be a way to go.
posted by The Deej at 6:09 AM on July 8, 2007

Oh, I should have said in the "data" info in the original question:

Good thing: I have been employed by the Federal Government for over 22 years with no break in service.

Bad thing: My 401k (which they call Thrift Savings) has been entirely raided due the divorce, so there is nothing there.
posted by The Deej at 6:35 AM on July 8, 2007

Follow-up:
Thanks for the answers.

rolypolyman: Excellent resource. I'll be spending a lot of time there over the next couple years.

bkeene12: Your link regarding the illegality of charging the difference between the insurance payment and the total bill applies only to Medicare, not regular insurance. However, the other links have information regarding statute of limitations on collections, and the site itself looks like an excellent resource to bookmark, so you also receive the highly-coveted "Best Answer" designation.

tke248: Fantastic info. I had heard of prosper.com years ago, but forgot all about them, and frankly never considered using them. I have signed up for an account, and I am hoping it will help me kill 2 birds with one stone. First: I can request a small loan (under $3000) to catch up on some post-divorce bills of $1000 or so, and then either repair my current car, or get a more reliable cheap car to get me by. Second, the payment history will be a positive mark on my credit history for the future. Once my spousal maintenance payments are over, if my credit is still not good enough for a standard car loan, I can request a loan on prosper.com and see what happens. In any case, it looks like a winner, as I have been concerned about my current car making it for the next few years and have no other way to get a reasonable loan to repair or replace it. Again, many thanks.
posted by The Deej at 11:56 AM on July 8, 2007