Need help repairing credit

[Miss6]

Hey everyone. I am new here and am hoping to get some much needed credit help. To make a long story short...young, very stupid and made a lot of mistakes over the past few years. I took my credit rating for granted (never really understood how much bad credit can effect you) and I got myself into a big mess. So, now I have decided to finally grow up and be responsible for my actions...it's been a long, hard and expensive lesson to learn. I recently sold my car (one of the many mistakes I had made) and have been putting the monthly payment ($650 -- unfortunately, it was not some high end sports car) towards existing debts. I am just looking for more help on which debts I should start paying now and which ones may be more beneficial to pay sooner to help my credit. I know credit repair is a long process but I would like to atleast get moving in the right direction so in a few years I am able to be that person I envy so much with a good credit score and a manageable budget.

I am not sure what information would be most helpful, I am willing to post my credit report (personal information deleted, of course) if that will allow me to get the best advice.

Any help is much appreciated.

[arthurb999]

List your debts and interest rates.
List your other expenses (rent, cable, etc)
List your monthly income

[Miss6]

Monthly income: Approx $1800-2000 after taxes

Expenses:
Rent: $470 (my half)
Utilities: Approx $200 (including cell phone)
Secured credit card through BofA to help rebuild credit: $300 - almost always near maxed but always paid on time. Minimum payment $15/mo w/ 14.24% interest rate.
Debt arrangement for a previous debt: Balance: $3312, monthly payment of $100
Debt arrangement for another previous debt: Balance: Approx: $3,500, monthly payment of $100

Current FICO score: 473 =(

Collections-
Some I am not sure who the collection is for, I have not contacted them as of yet since I have been paying a lot on other debts -- I plan on contacting them when I can make payment arrangements. This list does not include collections that I have paid off or have payment arrangements on.

Arrow Financial Services - Collections - not sure for what company.
Date opened 6/1/06 Balance: $547

Discover Financial Services - Collections
Date opened 2/1/2005 Charged off Balance: $1710

IHC Healthcare - Collections
Date opened 11/1/07 Balance $105

Jefferson Capital System - Collection Agency, again not sure for what company.
Date opened 10/1/08 Balance: $494

Cash Yes/MetaBank - Collections
Date opened: 5/1/06 Balance: $916

Plains Commerce Bank - Collections
Date opened: 3/1/07 Balance $457

United Recovery Group (for Golds Gym =( ) - Collections
Date opened: 4/1/06 Balance: $672

---

As you can see I did a lot of damage to my credit, the most recent credit report I have does not show the last reporting date so I am not sure which of these are reported most recently -- I was told by a credit counseling service to pay off the ones who have reported most recently as they are more likely to be the ones contacting you soon for payment or judgement.

My goal is to be able to buy a cheap car soon, currently I share with my boyfriend but his schedule will be changing soon and public trans does not run close enough to where we live to make getting to and from work doable. So my goal is to be able to buy a cheap car <$1500 by January or February as well as come up with a game plan for what debts to pay and when.

[minnie1928]

Ok, if my math is correct, you list about $885 in monthly expenses with income of about $1900/month (avg). If you are still maxing out your $300 credit line every month, then you are obviously bleeding money in other areas. You don't mention groceries, clothing, or any other expenses. You need a budget...a complete budget that is a plan for all your money.

Start with some basics. Write down every cent that is spent for the next month, use that as a basis to form a budget. Pare down your expenses to the minimums, look at things critically to determine wants vs. needs. Determine how much you REALLY have each month to put towards your debts/car fund.

You mention the rate on the credit card, what about the rates applied to your other payment plans?

You need to stop using the credit card, Period. Go to an all cash system. It will make you more aware of what is being spent.

I would also spend some quality time over at CreditBoards.com - Credit Help, Credit Repair Tips, News, Forums. They are a great resource of information for how to handle collection accounts. The number one rule is to do/get everything in writing. Since you say you don't have the money right now, I'd use the time to educate yourself.

[snafu]

I have the impression that a significant sum is spent on personal care whereas you need both an emergency fund and savings to enable you to buy a car.
What are you willing to give-up to meet your goal? Are you willing to create a budget and stick to it? Once the sum is used up in a given category...the spending stops! Do you have potential to earn more income with PT job in addition to current employment? You have dug yourself a rather large hole and it will take perseverance to climb out! Are you game?

[Miss6]

Thanks for the replies, I guess I wasn't too clear with this -- that's what I get for trying to do it at work while multitasking. Before giving up my car I was spending $650 a month on my payment, now that I no longer have that I have been using the extra money for paying down debts. October will be the first month since June that I haven't had an extreme amount to pay and so I only listed my expenses moving forward. Previously I had been putting $500-$700 a month towards debts which is why I have yet to pay off the secured card or have a savings. Sorry for the confusion, if I had $800 a month in bill-free money previously I def would have that puppy paid off.

To give a better understanding so it doesn't look like I'm blowing $800 on misc things here are the debt amounts I have paid each month up until Oct 2nd (finishing off one arrangement tomorrow =D ):

The catalyst for all of this happened between January and March where I was forced to pay off a $1324 judgement, this caused a domino effect on my finances and threw me into a tailspin. Between here and June I was scraping by trying to keep my head above water and keep my car. In June another debt came up totaling $645, they were willing to split it into 3 payments (June, July, Aug) but at this point I was behind on my car payment and I couldn't seem to catch up...finally I made the choice to give up my car. It was a very hard decision, cars are my passion, but on days I regret it I look at the numbers and I realize giving it up was the best decision I have made in a long time. Anyways, enough rambling and more numbers...

Mind you this is debt only, this does not factor in anything such as rent, utilities, misc items...completely debt:
June: $619
July: $1005
Aug: $784
Sept: $624

The main reason for the large amounts is due to creditors/agencies contacting me, either not willing to accept a more spread out payment to avoid further collection actions or some who were willing to settle for a lesser amount but I would lose that settlement option if I did not act quickly, I had one collection for $425 that was settled for $106 and another for $375 that was settled for $117. Now that I am not being contacted by creditors (which I'm sure may change) I have the ability to slow down a bit and try to get some money into savings and some or hopefully all of that SCC paid off.

Also, I have been paying $100/mo since December 2008 to the mentioned account that currently has a $3312 balance, so from December to May that was an additional $600.

So since December 2008 I have paid a total of $4956 in debts, $3032 of that being since June. Hopefully this helps, I would've laughed too if someone was complaining about being in debt but blowing $800 a month on misc items.

Something I will be doing tomorrow is organizing all of my expenses using my bank account and seeing how much is really spent on food, gas (I give gas money to the BF for lugging me around), etc. so I can truly see in realtime where my money goes.

Anyways, thanks again everyone.

Also, a quick mention, the debts I currently have arrangements with (the large $3K+ ones) have stopped accruing interest and will only begin accruing interest again if I default on my payment plan.

[boosami]

First, as mentioned, figure out how much you spend and what you have left over to put toward debts. After that...

Keep up the minimum monthy payments on the debt that is not accruing any interest to keep it that way. Pay off the balance on the secured card to zero, and stop charging anything on any card, including the secured one. It isn't going to help repair your credit with all those negative remarks on there at this point. Each month, save the left over money for future debt payment. Do not spend it on other things except in a real emergency.

Order your collections from newest to oldest:

1. Wait until your debt savings are enough to pay in full for the first one in the list.
2. Call the agency and ask if they will DELETE the collection from your credit report for immediate payment in full. If they agree, pay them and cross them off your list.
3. If they disagree, try to SETTLE for about 30% of the amount, negotiate and come to a mutual agreement if possible. Hopefully you should be able to settle for ~50% or less. If not, hang up, save more money, and try again a couple weeks later. If you are getting nowhere, move on to the next collection in the list and start this over. Come back to the difficult agency after settling the subsequent one and try again.
4. Repeat for the next agency in the list.

If you can put aside only $200 a month I could see you having all the collections settled in a year. The more you can put toward it, the faster you can get rid of them. Eventually, you will have settled all your debts and hopefully some will have been deleted off your report. Then it just takes time for the collections to be farther in the past and your score will slowly recover. Put the extra debt money toward the remaining debt payment plans until they are paid off.

*****Note: When settling, always get everything in writing, and never give them access to your bank accounts. Send a money order or something to pay or they will screw you.

[boosami]

Theoretical example with saving $200 for extra debt payments a month:

Ordered List:
Date opened 10/1/08 Balance: $494
Date opened 11/1/07 Balance $105
Date opened: 3/1/07 Balance $457
Date opened 6/1/06 Balance: $547
Date opened: 5/1/06 Balance: $916
Date opened: 4/1/06 Balance: $672
Date opened 2/1/2005 Balance: $1710

M1 Savings: $200
M2 Savings: $400
M3 Savings: $600 - Settle (~50% $494) $247- Settle (50% $105) $52= $301
M4 Savings: $501 - Settle (~50% $457) $230 = $271
M5 Savings: $471
M6 Savings: $671 - Settle (~50% $547) $275 = $396
M7 Savings: $596
M8 Savings: $796
M9 Savings: $996 - Settle (~50% $916) $458 = $538
M10 Savings: $738 - Settle (~50% $672) $336 = $402
M11 Savings: $602
M12 Savings: $802 - Settle (~50% $1710) - $802 = $0

That is based off 50% average settlements, and I fudged the last number by about $50, but you can see how it would be possible.

[Miss6]

Thanks for the advice. $200/mo for debt seems really reasonable and manageable, then I can throw the other extra money I have towards a car and a savings. I would like to be out of debt faster than a year but having a savings would be a really nice change as well. I look forward to finding a happy balance with income and expense and not having debt.

[boosami]

Thanks for the advice. $200/mo for debt seems really reasonable and manageable, then I can throw the other extra money I have towards a car and a savings. I would like to be out of debt faster than a year but having a savings would be a really nice change as well. I look forward to finding a happy balance with income and expense and not having debt.

Keep in mind $200 was just an example. I would recommend you put as much toward the debt as possible because it will be paid off that much sooner. But it's up to you to decide how much you want to save vs. throw at the debt. Either way, it sounds like you're on the right track. Good luck and keep us updated!

[dczech09]

First, as mentioned, figure out how much you spend and what you have left over to put toward debts. After that...

Keep up the minimum monthy payments on the debt that is not accruing any interest to keep it that way. Pay off the balance on the secured card to zero, and stop charging anything on any card, including the secured one. It isn't going to help repair your credit with all those negative remarks on there at this point. Each month, save the left over money for future debt payment. Do not spend it on other things except in a real emergency.

Sound advice. The key here is that Miss6 needs to stop the bleeding before any credit repair will be possible.

Order your collections from newest to oldest:[*]Wait until your debt savings are enough to pay in full for the first one in the list.

[*]Call the agency and ask if they will DELETE the collection from your credit report for immediate payment in full. If they agree, pay them and cross them off your list.

This is called "Pay for Delete" and it is illegal. Remember: the credit bureaus are required to report ACCURATE credit information. Same thing with creditors. An accurate negative item will remain on your credit report.

With that said, it does not hurt to ask if they will delete the collection remarks from your credit report, Miss6. Just do not be surprised if they do not work with you. They are actually NOT supposed to make these types of deals.

Another thing to note is that only the original creditor (who reported the collections) or the credit bureau can remove this collections remark from your credit report. The debt collection agency does NOT have this power unless they posted the remark.

If you make this type of deal with a debt collector (even if it is in writing), it will not help if they did not report the collections remark to the bureaus. So PLEASE beware of this before you try to make this deal. Many people get into trouble with Pay for Delete, or even worse, find out that they do not have a deal when they thought they did.

In all likelihood, the collections remarks will stay. However, once a debt in collections is paid off, the credit report will reflect that and a debt in collections that was paid off will look better than just a simple debt in collections.

[*]If they disagree, try to SETTLE for about 30% of the amount, negotiate and come to a mutual agreement if possible. Hopefully you should be able to settle for ~50% or less. If not, hang up, save more money, and try again a couple weeks later. If you are getting nowhere, move on to the next collection in the list and start this over. Come back to the difficult agency after settling the subsequent one and try again.[*]Repeat for the next agency in the list.

Settlements are more difficult than they sound. Usually, it never works this way. Settlement usually requires A LOT of negotiating and A LOT of rejection before a deal is set.

It is extremely difficult to get a settlement approved if you are not in a position where bankruptcy is a fear. Miss6, you are not bankrupt. So trying to get a settlement is going to be very difficult.

Do not be surprised if a collector asks for financial statements drafted by a CPA before they approve a settlement. They may want you to PROVE an inability to pay the full amount before settling.

If you can put aside only $200 a month I could see you having all the collections settled in a year. The more you can put toward it, the faster you can get rid of them. Eventually, you will have settled all your debts and hopefully some will have been deleted off your report. Then it just takes time for the collections to be farther in the past and your score will slowly recover. Put the extra debt money toward the remaining debt payment plans until they are paid off.

Like I said, settlement is difficult. The collection agency will only accept less if they have a reason to believe that you cannot pay. OR they will accept less if it make sense for them to take a lump sum early rather than taking installments.

You can try settlement, but it is not so simple. The best bet is to throw as much money at these debts as possible, clean them up, and of course STOP borrowing!

*****Note: When settling, always get everything in writing, and never give them access to your bank accounts. Send a money order or something to pay or they will screw you.

Sound advice.

Miss6,

In all of this, I do not mean to scare you away from trying these different tactics. You just need to be aware of all that is involved. Especially the whole Pay for Delete thing. Not a lot of people understand that Pay for Delete is actually illegal. Just like lying to the credit bureaus, you can get yourself into BIG TROUBLE if you are not careful. So please understand everything before you try any of these "credit repair tricks." And do not do anything that you read on the internet without first consulting credible sources such as the credit bureaus themselves.

There is a reason why I recommend repairing your credit the HONEST way: it will not land you in a courtroom!

As you have said earlier, credit repair is a long process. You know this, and that is half the battle! It takes time. Your credit has already taken the hit, so it is unlikely to get any worse (unless of course you miss payments and fall back to your old ways).

In order to repair your credit, you will need to make your payments on time and never be late again. Over time, the bad remarks will become so old that they fall off of your credit report. They will be replaced with positive remarks.

You may be a different person now than back when you racked up these bad debts. However, your creditors don't care. In their eye's, you have been a *for lack of a better word* deadbeat. And while you have turned a new leaf, it will still take time to remove your history of deadbeat status.

Kudos for getting back on the straightened arrow! You will clear this up and be in better shape before you know it!

Once you do clean up your credit REPORT through the process of time and effort, please do not fall into the trap of praying at the alter of FICO the Great. Your credit SCORE only matters if you plan on borrowing (which hopefully you have learned your lesson). Your credit REPORT is very important, however. Know the difference

If you have any questions about anything I have said, let me know!

[williamsnancy]

Better to look for a financial advisor. They will help you achieve your financial freedom.

[dczech09]

Better to look for a financial advisor. They will help you achieve your financial freedom.

This will not help the OP. Financial advisors sell investments; they typically do not provide credit advice.

This is really not that complicated of a situation.

[fowlerandfowler]

For repairing your credit, 1st make a credit reports from any credit repair companies or credit agencies,Then review that report whether the informations are correct or not.Online you can get the information about the companies who provide free report as well as give you good credit score.You can also reduce by less use of your credit card ,reduce your expenses for daily basis and pay monthly interest of credit.

Remember don't cancel any of your credit cards! Pay them off, don't use them (or don't use more than you can pay off each month), but keep the accounts open.Because "Canceling a credit line can drop your score by 30 points or more and it can take years to recover those lost points".Hope it may help you.