Can I just pay someone to fix my credit?
December 26, 2012 6:33 AM   Subscribe

My credit is kind of a mess, but I have a good income and no real debt -- can I just pay someone to fix it for me?

I have a bad habit of forgetting to pay bills, and I've got a few small debts that are hanging out on my credit report and holding it back (it's in the low 600s). I'm lazy and/or busy, but I have some extra money to spend right now -- can I just pay someone to take care of all the outstanding debts floating on my credit report? And if so, who can do this for me, and how much should I expect to pay for it (aside from the cost of paying the bills)?
posted by anonymous to Work & Money (12 answers total) 7 users marked this as a favorite
Yes and no.

Yes, you can probably hire a financial planner and/or credit counselor to assist you with the logistics of tracking down and satisfying any outstanding debts you may have. This will likely cost you a few hundred bucks, but there are many non-profit credit counseling agencies that might be able to do this for free, if you qualify for their assistance.

But no, this isn't going to repair your credit right away. The failure to pay a bill on time remains on your credit report even after the bill is paid, and it'll stay there for years. Only time--and not incurring any more late payment records--will fix that.
posted by valkyryn at 6:44 AM on December 26, 2012 [2 favorites]

Can you pull a copy of your credit report, look at the dings in it and then, you know, contact the creditor and find out what you owe and settle it up? It might take an hour or two total of your time, including writing checks and sticking stamps.

Do this as soon as you can, and just keep on track of stuff from here on out. That, and a consistent amount of time doing so alone, will fix your credit mess. No one person can wave a magic wand - you have to do it. Your credit score is essentially a marker of your behavior and how you handle the responsibility of being trusted with credit.

If you're having trouble keeping track of bills, either set up a spreadsheet, set up automatic bill pay or I am sure there's an app for that.
posted by jerseygirl at 7:02 AM on December 26, 2012

If you negotiate any settlement with a creditor for debts which appear as collections on your credit board, do not make any payment without a written agreement that they will remove the entry from your credit board. The difference between an unpaid debt and a paid debt on your credit report is not significant. You need the debt removed. Google "Pay For Delete".
posted by doomtop at 7:15 AM on December 26, 2012 [5 favorites]

[Folks no need to make giant wall-of-text copypastes. Please just answer the question asked.]
posted by jessamyn (staff) at 7:27 AM on December 26, 2012

The difference between an unpaid debt and a paid debt on your credit report is not significant.

This is absolutely not true. I had a mortgage lender absolutely refuse to lend to me until I paid an unpaid debt that showed up on my credit report. They seemed to think that "never pays debts" and "eventually, even way, way late, pays debts" was quite significant when they were deciding to lend me $530,000.

But if the number of debts you have outstanding is small, say 10 or fewer, it will probably be easier to just call each debtor listed on your credit report and pay them directly. They are generally very easy to deal with when you actually want to give them money.
posted by tylerkaraszewski at 7:38 AM on December 26, 2012

To clarify, since we are not talking about specific lenders, who will have varying criteria that matters more or less from one to another, my advice is based specifically on what will affect your FICO credit score.

Changing an unpaid debt to a paid debt will not significantly increase your credit score.

And in any situation, no entry of a debt on your credit report is going to be far better than an entry of a paid debt.

If they absolutely refuse to "Pay For Delete" then you might consider paying the debt anyways if you are applying for a loan. But once you pay the debt, you lose any leverage you have. Removing the entry is not difficult for them to do, you just need to talk to the right person who understands what you are asking for. I have talked to representatives who think that removing the entry is impossible. It is always possible. Talk to their supervisor and keep going until you get someone who isn't just following a script on a piece of paper and can actually consider your request from a business perspective.

Given the choice of removing the debt entry or never collecting on the debt, most creditors/collections will remove the entry. They aren't in the business of reporting your credit history to other creditors, that is the credit bureau's job. They don't care whether you get another loan or line of credit somewhere else. They are in the business of collecting the debt. If they won't remove the entry when you make it clear to them it's the only way they are collecting anything on the debt, they are not doing it right.
posted by doomtop at 7:58 AM on December 26, 2012 [1 favorite]

The "credit fixer" industry is so full of shady characters that if I were doing this I'd really want to do it myself. If you must outsource this, I'd get a attorney - perhaps a bankruptcy attorney, even though that's not your situation, because they're experienced in dealing with these matters. However, most "family" or small business attorneys should also know how to settle debts with people who have referred people to collections or filed notifications on your credit report. Just don't let them talk you into filing bankruptcy - some bankruptcy attorneys kind of like to do that, seeing as how that's what they know.

I ended up with past-due medical bills 5 years ago and found that a) people who are getting paid in full or for a reasonable settlement will often take the info off and b) it should really help your score a lot.

The more I type, the more I think an attorney might be worth it, if you plan to borrow money any time soon.

Also, speaking as someone who naturally forgets stuff. Get organized. It's a shame to have bad credit for no good reason. Quicken, electronic banking, auto-draft on monthly bills. Use it, live it, love it.
posted by randomkeystrike at 8:20 AM on December 26, 2012 [1 favorite]

The "credit fixer" industry is so full of shady characters that if I were doing this I'd really want to do it myself.

Yes. Be very careful of companies that advertise credit repair or quick solutions. This all takes TIME and CONSISTENCY to resolve.

Now, to answer the question directly, YES you can certainly hire a bookkeeper or accountant to whom you would pay a monthly fee for the service, on top of the actual cost of the bills. I have no clue how much this would cost, whether the cost would be prohibitive to you, or whether it would be worth it. But I was in your shoes once and that option was very tempting to me. If you go this route, my (seat-of-the-pants-non-expert) advice would be to just call some local accountants and see what they say.

Now, to expand a bit into the bigger picture that others of tread on, maybe my experience will give you some encouragement.

After my divorce about 7 years ago, my credit was in the toilet. I had numerous medical bills incurred by my ex which had gotten turned over to collections. As part of the settlement, she was supposed to pay these all off, but that didn't happen, and I was left with no practical recourse. I was also paying off IRS debt incurred due to my ex not adequately reporting income. (Long story, just understand that, like you, I had secure, decent income and no consumer debt like car loans or credit cards.) My credit rating was in the low 500s.

Like you, I didn't want to deal with all of this. I just wanted someone else to do it for me. I am not super organized, and not great at budgeting or planning money matters. I would have gladly paid someone a couple hundred dollars a month to do all the legwork for me. So I knew the first step was that I would at least need an accurate snapshot of where things WERE at that point. So I got my credit reports through Annual Credit Report. This is the ONLY official free yearly credit report website. The others may give you a free report, but they require signing up for paid services.

Once I printed out all my reports, I went over them and highlighted anything I had a question about. I actually found quite a few inaccuracies, and requested them to be updated or removed. I got a lot of info from Credit Boards about how to proceed.

To cut to the ending: it turned out that the act of getting the info together in order to find an accountant got me jump-started on the process of just doing it all myself. I realized that a lot of what I was doing would be the same effort whether I had an accountant or not. I just worked on it as I had time, and didn't rush. Little by little, it all got done. Within a few months, my credit score started improving. It's still not fantastic, but has gone up enough that I was able to get a car loan on a late model car, something that was impossible before, as well as a credit card. After years of rejection, followed by years of not even trying because I knew it was a lost cause, it feels really great to be approved for credit, and to know my accounts are up to date and I have a nice car.

So, yes, you can certainly hire an accountant, and you may find it worthwhile. But you will still have to do a lot of the work. One advantage may be that the accountant will be non-emotional about it, which can help you do the same. And you may find it easier to write one check a month, even if it includes additional fees, than to keep track of multiple accounts, amounts, and due dates.

Once the old bills are taken care of, it doesn't take long to pay your normal bills. I pay my utilities and credit card online, and have my car payment automated. I have to write a check for my rent and water bill, but those the only ones I write. It all takes 5 minutes per month.

No matter which way you go, I just want to encourage you that within a short period of time, things will start looking up, and you will feel a burden lifted from your shoulders.

Good luck!
posted by The Deej at 8:56 AM on December 26, 2012 [5 favorites]

tylerkaraszewski wrote: This is absolutely not true. I had a mortgage lender absolutely refuse to lend to me until I paid an unpaid debt that showed up on my credit report. They seemed to think that "never pays debts" and "eventually, even way, way late, pays debts" was quite significant when they were deciding to lend me $530,000.

Mortgages are something of a special case, but they don't really care whether you actually pay the debt or if the "erroneous" entry just goes away somehow, they only care that you are not presently showing delinquent accounts on your credit report. As others noted, the problem with paying debts without getting a PFD is that you then have no leverage with which to get the entry removed.

Worse still, the payment resets the date of last activity, meaning the damn thing won't drop off your report for a full seven years after the date you paid the account off, even if it was due to drop off your report in a couple of months due to age. Also, it kinda sucks to pay a debt you no longer legally owe (in many states the statute of limitations is shorter than the period of time the account can be reported) and get absolutely nothing for it except warm cockles.
posted by wierdo at 9:51 AM on December 26, 2012

Just a quick feel-good story - I followed the advice of the people above and got my credit from 636 to 750 (no kidding) in approximately a year. So yeah, it's possible.
posted by Riton at 1:10 PM on December 26, 2012 [1 favorite]

No. Sit it out for 7 years. No contact absolutely with any collection agencies. They will try to say that they will solve your debt for half price etc. but will run away with the money and your account will be turned over to another agency and the cycle will repeat again and again.

Paying off collection agencies will NOT change your credit. Stop all contact now. Dispute them vigorously. Once again, no contact with anyone who contacts you about it (phone, email, mail etc.)

(if you can, you may contact the original lender, only then and only with them you should resolve the debt and get it in writing. Any attempts to resolve this with others will only restart the chain events and you will forever have it on your record).
posted by pakora1 at 3:13 PM on December 26, 2012

I used to work for one of those shady credit repair companies.. and believe me, you really do not want them handling this for you.

It's really not that difficult to repair yourself, but it will take some time and effort.
posted by secretdawn at 6:46 PM on December 26, 2012

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