Credit Score

[CoryWM]

So I currently have a 637 credit score at the age of 24. I've Had a ding on my credit report for like 3-4 years now. When I first noticed it, about 3 years ago. I tried to get it taken care of. I'll give a brief description.

A medical bill for 40 dollars, that I swear I never got wind of. Basically I find out, I owe it. Call up the clinic, and they say it's been sent to collections. I call their collections number, they say they dont have it, try the only other agency that deals with them. So I call them. After a long time on the phone, and going to upper management. They basically tell me that I do owe the clinic 40 dollars, but I'm not in their system, and that I should appeal it through the appeal process. So i do the formal appeal process, which means whoever is in charge reviews the case. All said and done, they say I still owe them 40 dollars.

Neither the clinic or the collection agency wants to take my money, cause they both basically say to pay the other person. I let it go at that till now. Is that damage that has been done, done? Or does it continue to hurt me the longer it's on there. Should I just ride it out the 7 years, or will it help me to fight with people until they let me pay it off?

Thanks
Cory

[usnavy_233]

If both parties seem to think it's the other's problem, perhaps you should dispute the charge with your credit agency. Basically, you tell the credit reporting agency that the collection account on your credit report in not valid. They inquire about it and if the collection agency doesn't roger up that it's still owed, the credit reporting agency drops it from your credit report. Happens more often then you'd think.

If that doesn't work, I'd keep hammering the hospital w/ it and find out exactly who pushed it over to collections and when. Then go from there.

[JoyJoy]

I agree with us Navy 233. I would keep hammering the hospital and find out how your bill got in collections! I had this happen to me with a hospital bill. I had no knowledge that I owed the bill until it went to collections. I called and made an appointment with the supervisor in charge of hospital accounts and we went over the whole matter. She saw where I hadn't been billed and no notices were ever sent to me of any kind. The supervisor helped me with not only getting my hospital bill in order, but with the credit bureaus. Her letter carried a lot of weight and I received notification from all three bureaus that this matter had been removed from collections on my credit report. I also made a statement on all three of my credit reports stating I had never been billed for this hospital bill!

[fake_usa]

how much does one unpaid $40 bill really hurt your credit score?

[Vapors]

how much does one unpaid $40 bill really hurt your credit score?

A lot. Maybe as much as 100 points if it goes to collections.

[CoryWM]

Well. I got to pay off this bill today. Basically. They said, that they talked to my dad on the phone once, etc. Therefore I was responsible. Basically what happened, my parents were in charge of paying it. Paid all but 40 dollars. The last electronic payment didn't go through. So I paid it off now. The woman i spoke with this time, seemed like she actually knew her job. Made it a breeze to get taken care of.

My next question is. How should I go about raising my score.

Current options.
Personal Line of credit. I owe roughly 5k or 5.5k. Which this paid for my car in cash. Paying this down will improve my credit score correct?

What about having cash sitting in a savings account?

Should I try and get a credit card now, and do the whole, keep 30% of a balance on it?=

[usnavy_233]

Cory,
Glad to hear that is taken care of. Tell me you got her name and a confirmation number, or better yet, some sort of receipt, right?

As for the boosting of the credit score, there's no magic formula. Pay bills on time, keep your credit utilization ratio under 20-30% and pay off debt.

Now, I would make sure you have a little cushion in savings before you start socking away all your extra money onto the line of credit. While just having money in saving won't help your FICO score, it could save your butt if you have an unexpected emergency pop up. Once you’ve got a little emergency savings built up, then start tackling that line of credit, and any other debts you may have.

Your FICO score is going to be influenced the most by two factors:
Payment history and Amounts owed. Nothing you can do about payment history but continue to improve it. You can always trim expenses and pay down debts (unless you already have none). Best of luck.

About the credit card, if you don't already have one, AND you're sure you can manage it wisely, it might be a good way to establish your payment history faster. You don't HAVE to keep a balance on it at all. Just use it on a regular basis, and pay it off each month. If you're going to do this, look into a good rewards card. I mean, if you're going to use the card for things you would have paid cash for anyway, you might as well get a bonus for doing it. That's my $.02. If you have any other questions, fire away.

[autoxer]

Should I try and get a credit card now, and do the whole, keep 30% of a balance on it?=

NO, don't keep a balance on it. Using a credit card to build good history will help your score, but you don't have to keep a balance on it. Make it a habit to pay it in full each month so that you don't have to pay finance (interest) charges. Utilization does affect your Fico score, but the lower the utilization the better.

You don't have to pay interest to build a good credit score.