My credit report, it makes no sense to me.

January 26, 2008 2:16 PM

Help me understand my credit, please?

Still working on fixing my credit so I can buy a house, but I'm confused about some things on my report. I've managed to get my score up 60 points in just a month or so, but I really need at least another hundred to be really happy.

Back story: I was in the Americorps, they didn't send on my forbearance papers to my student loan holders, I got defaulted. Whatever. All that's over with now as I've been paying out the ass to the collection companies to get them under good status now. Also, as a college undergrad, I had a couple credit cards that got away from me. I DID finally pay them all off though, and a couple of them I cancelled before they cancelled me. I currently have 0 credit cards.

A picture of my current debt looks like this:
Car payment
Insurance Payment
Student loan payments
And that's it.

The problem is that a lot of that derogatory stuff is remaining on there and I don't know what to do about it. Example: I got sick and went to the doctor, they didn't ask and nobody thought to update my address. They sent the unpaid balance to a place I didn't live. I got the collections letter and went down and paid it in person right away. It was seriously like $60.

So a picture of my derogatory account info:
There's one credit card still out there. It had a $200 limit and I totally signed up for online only billing circa 2000 and forgot about it. Now they're saying it's a $1100 account. Condition: derogatory

Another card: closed, current, 0 balance.

Another card: closed, current, 0 balance.

Another card (honestly I think it's' the same as the previous one, they're both Citibank cards and I only had 1): closed, current, 0 balance

Student loans still showing as derogatory because the collections people don't update until the 9 months of repayment are over. 2 accounts like this. What stinks is that Sallie Mae's on here AS are the collections accounts. Not only that, Sallie Mae AND their servicing company show up for the same accounts, plus the credit collection accounts. So let's see, 2 accounts valued at like $2500 total show up as 6 negative dings.

Car loan: open, current, ontime over minimum payments for 27 months in a row now.

Something, don't know what it was: closed, paid

Previous car loan: 36 on time payments, closed, paid

Then that medical thing, shows up as paid, but also as derogatory.

I know that's long, I apologize. My score's right under 600 right now, but I think if I can clear up some of the multi-accounts it'll shoot up. Are things like that $60 collection going to stay on there for the full 10 years? WTF?!

Any advice greatly appreciated. Thanks!

posted by TomMelee to work & money (12 comments total)

for starters, keep in mind that it is your responsibility to do many of the things that you blame caused your credit concerns

-make sure doctors, lenders etc have up to date contact info for you
-if you move, update your address

Unless there is something on there that really isn't supposed to be, I believe it takes 3 years for it to come off
posted by Salvatorparadise at 2:20 PM on January 26, 2008

Go to www.myfico.com, http://www.myfico.com/CreditEducation/ and read about how things are counted toward your credit score and how things are weighed.
posted by 45moore45 at 2:22 PM on January 26, 2008

Let me be clear---I'm not saying my score isn't my fault, I'm saying I want to fix it.
posted by TomMelee at 2:35 PM on January 26, 2008

First off, I commend you for not having further debt! Many people out there have thousands and thousands in credit card debt and are in much worse shape than you. Keep that in mind, you're doing well on that end.

However, DO NOT close credit cards--this in fact hurts your credit score. Longer age of account raises your FICO score, for all accounts. This does NOT mean you have to use them. You can just toss it in a drawer and let it sit (make sure there is no annual fee, no maintenance fee etc...).

Try getting those derogatory payments through disputing--such as the medical thing.

I would start at http://www.creditboards.com/forums/ for further specific questions. They help a lot of people raise their credit scores, and are very receptive to situations such as yours.

I would definitely figure out what that $1100 credit card payment is fast and pay it off, balance transfer it to a lower APR or at the least, pay the minimum so you're not further derogatory. Each late payment hurts your credit score.

Credit accounts stay on your credit report for something like 7 years. So a lot of that stuff won't leave your report for awhile.

Best of luck!
posted by djpyk at 2:36 PM on January 26, 2008

It's pretty simple to fix your credit:

1) Get all your accounts current and reporting as current to the agencies.

2) Obtain copies of your credit reports from all three agencies through annualcreditreport.com so you know where you stand, and to verify #1. (Each tradeline on which you are current should say "pays as agreed.")

3) Contest any actual errors with the agencies. This may take some persistence, but any item that isn't substantiated by the creditor will go away.

4) Wait seven years for all the derogatory items to expire off your credit report, making sure never to be late on any bill during that time.
posted by kindall at 3:20 PM on January 26, 2008

Have you spoken with a broker or some other lender yet about getting a home loan approved? We went though a broker and he was absolutely great in giving us advice on what to do to clean up the credit, what to ask for from the agencies we were dealing with and how to get it settled with the scoring agencies. If you don't have a person like that, maybe good time to find one. This stuff is so hard to deal with on your own.

Also, when dealing with collections and old debts I feel like the appropriate starting point to take with them -- especially if you don't have good or sufficient records -- is that you don't owe what they say you owe. Sometimes, you don't! Or, you can get it reduced or handled in some ways that is more amenable to you. Anyway, get advice from a professional -- someone who has a vested interest in securing the best possible loan for you would be your best bet.
posted by amanda at 4:22 PM on January 26, 2008

Thanks, and good advice all! Thankfully I'm in a position where even with crappy credit I should still be able to afford a mortgage w/o much issue, assuming I can get approved. I just don't want to enter into this arrangement thinking "I need to refinance this ASAP", especially with the current instability. I'm going to give other people the opportunity to chime in before I pick bests, but I think most of them so far are bests.
posted by TomMelee at 5:01 PM on January 26, 2008

Your credit is my credit, circa about 9-10 years ago. You can get a credit card, probably with a lousy limit. You can get a car loan, but with 17 percent APR. Though it doesn't work exactly the same, your mortgage options in this credit range will also be not so great.

Though they'll take you with a 620, you really have to be in the high 600s to get the best mortgage deals, lowest int. rates, etc. Better to be in the 700s.

Obvs, pay off all the collections, many don't fall off your credit report after 7 years, as is widely believed. Instead, they're rolled over by being sent to new collections companies, then you start all over again. If you have to, get a loan to pay them off. The credit union, for instance, will probably give you one, even though you have poor credit, provided you have collateral - your paid-off car.

Get another credit card, and use it lightly, for things like gas and pay it off entirely every month. Get your student loans consolidated, if you haven't already, so you're only making one payment to one company. Do these things, then roll along with no late payments on anything for 3 years, and you'll be into the 700s, provided you have a steady income, etc.

At the end of 3 years, head to a mortgage broker and be preapproved with no problem, no subprime "special lending program" etc. Enjoy the highs and lows of home ownership.

If you try to get a mortgage now, you're going to be offered products that aren't very financially beneficial to you, and you have no idea whether you'll be able to refi years from now.
posted by M.C. Lo-Carb! at 5:43 PM on January 26, 2008

Hehe, fantastic advice. I don't have three years....I've got 6-9 months at the outside. If have to move in a rental situation, I honestly won't be able to get out of it. Rental rates around here are completely ridiculous. I can wipe all the debt but the student loans within 3-6 months no problem. One of the things I need to find out is if a potential lender will call those places to confirm my payment of them since they might not have updated on my credit report just yet.
posted by TomMelee at 7:00 PM on January 26, 2008

You need to get those debtors who you are paying off to notify the credit reporting agencies. Or, you need a letter from them stating that you have paid them off in full -- fax that to the credit reporting agencies and give one to your broker. They'll call if they don't believe you but you really need to get that stuff reported properly. That's why you need to talk to a broker before you go any further -- they will help you figure out how to do this stuff. I don't remember all the different things we did to get things "cleared" up when we were doing our house loan but the broker was right on top of all that stuff. After we went one round of this he pulled up a fresh report and there was another ding on it! So we had to deal with that, too.

If you had talked to a broker you would also know that you do not need to be debt free to have a mortgage -- student loans are generally considered to be "good" debt.
posted by amanda at 7:17 PM on January 26, 2008

What M.C. Lo-Carb! said. You're not going to clean up your credit in 6-9 months. So your best bet is to have a 20 - 25% down payment. Look for an owner-financed house. There are a lot of desperate sellers out there right now. Some would rather cut a deal with a somewhat shaky buyer than lose their house outright.

If you have a decent down-payment, you will definitely find a house. It's just a question of under what terms.
posted by clarkstonian at 7:34 PM on January 26, 2008

One of the things I need to find out is if a potential lender will call those places to confirm my payment of them since they might not have updated on my credit report just yet.

This is unlikely. Also, even if you pay the derogatory accounts, they will remain on your credit report--it will reflect that you paid them late, and this will damage your score. This is by design--it's supposed to be an indicator of whether or not you pay things both on time and at all. You can dispute these, both through the creditors and the credit reporting agencies, but getting your report squeaky clean in 6-9 months is probably not going to happen.

creditboards.com has a great deal of information about disputing debts. Sometimes you can get them removed on technicalities, such as the collection agency not having a proper license or not proving they own the debt. How long these remain on your report depends on your state--you can see a nice table here.
posted by almostmanda at 7:25 AM on January 28, 2008