Credit report question?

[RingoIV]

Hello, first timer here. I had a long time credit card debt that I recently was able to finally pay off. The account was not closed but due to being late several times in the past charging priveledges were suspended long ago.

My question is, having paid this off how long will it be before it reflects positively on my credit report (or maybe a better question, how long till it is no longer a negative on my credit report)?

Thank you

[boosami]

Most bad marks on your credit report (such as a paid account having been "previously delinquent") will take 7 years from the date of settlement to drop off your report. It will be seen as a negative, or credit risk, to any potential lenders and your overall FICO score until it drops off completely.

The good news is that the negative effect on your credit score will lessen the closer you get to the 7 year mark. One or two previously delinquent accounts will not really affect your credit much after some time.

How fast your score will recover depends on a lot of factors, like exactly how it is reported on your credit. Was it marked as 30-day late? 60-date late? Collections? As you can imagine, the later the payments were, the harder a hit your score takes and recovery is slower.

Here's an example: More than once I have seen (or heard of) a score of 750 for a person with ~2 accounts that each had 30-day late payments 2-3 years ago.

So don't worry too much about it... You'll recover. Worrying too much about your FICO score is a common issue. It's more important to focus on making good financial decisions and not get into any more situations where you are late on payments.

[RingoIV]

Thanks for the reply. The reason I am concerned about my credit score is that we are wanting to get a home. It's a little complicated but I started my own business several years ago which is when I built up my cc debts while my business was in its infancy (a mistake, I know, but past history). Now my business is on firm ground and doing well and I am paying off these debts. The long term affect was not good on my credit rating. My wife, on the other hand has nearly perfect credit rating, however I am aware that a home loaner will look at the worst of our two scores (mine) especially since my income is 65% of our total income.

I guess maybe a better question from me would be how can I best improve my credit score?

Thanks again.

[boosami]

How many late payments were there on the account, exactly when did they occur, and how long has the account been open?

[boosami]

If you have a long-standing relationship with your creditor, you may be able to request some leeway from them as far as late payments. This is especially true if they occurred a long time ago, and are outside of your otherwise satisfactory account history. This pretty much only works if your account or other accounts are still active with the creditor.

Here's what to do...
1) Make sure your account is current as of now.
2) Write a formal letter and mail it to the creditor. Include the following in that letter:
- Thank the creditor for their years of service.
- Point out the specific late payment(s). Explain reasons for lateness, like your business startup, and explain why those reasons are no longer a problem.
- Note that you take full responsibility for the errors, but more importantly you take your obligations to the creditor seriously.
- Remind them that the late payments do not reflect your ongoing or current relationship with the creditor, and reference your account history as an example.
- Respectfully ask that they give you a second chance at a positive credit rating by revising the late payment status(es).
- Thank them again for any help and consideration as well as years of continued service.

I have seen this work, even in cases where the creditor may say over the telephone that the status cannot be changed. It's worth a try! Remember, The letter should do two things: Thank the creditor for their services, and ask if they will revise your payment status.

[RingoIV]

Thanks again. would such a letter also be good to use if requesting a lower interest rate from the same creditor?

[boosami]

If it is the same creditor, be sure to keep simultaneous requests separate. They will likely be handled by different departments and may both be approved in a situation where they may not otherwise be approved together.

For revolving credit accounts (like credit card), you can often cut interest rates simply by talking to them over the phone and asking in the right way.

Call and say: I have been a loyal customer for years, but have some offers from other credit card companies that can give me a lower interest rate. If you can offer me a competitive rate, I will stay with you. Otherwise, I will cancel my account and switch companies.

If your current rate is in the high 20's or above, I'd ask for a 10-15 point drop, or whatever you original rate was with the account if that is acceptable. If you ask for too much, they may counter with a more realistic amount.

If they say they can't do it, ask for a supervisor or manager and try again. If you still get a no, call back in a few days and try the whole thing again. If after a few attempts you get nothing, write a formal letter. State that you asked on numerous occasions but they did not budge and it is their last chance to keep your business before you transfer the balance to a competing company.

Credit counseling companies can also negotiate on your behalf with even better results, but they may want a fee or require other stipulations before doing so. It's best to try yourself first--It can be surprisingly effective.

[RingoIV]

If you have a long-standing relationship with your creditor, you may be able to request some leeway from them as far as late payments. This is especially true if they occurred a long time ago, and are outside of your otherwise satisfactory account history. This pretty much only works if your account or other accounts are still active with the creditor.

Here's what to do...
1) Make sure your account is current as of now.
2) Write a formal letter and mail it to the creditor. Include the following in that letter:
- Thank the creditor for their years of service.
- Point out the specific late payment(s). Explain reasons for lateness, like your business startup, and explain why those reasons are no longer a problem.
- Note that you take full responsibility for the errors, but more importantly you take your obligations to the creditor seriously.
- Remind them that the late payments do not reflect your ongoing or current relationship with the creditor, and reference your account history as an example.
- Respectfully ask that they give you a second chance at a positive credit rating by revising the late payment status(es).
- Thank them again for any help and consideration as well as years of continued service.

I have seen this work, even in cases where the creditor may say over the telephone that the status cannot be changed. It's worth a try! Remember, The letter should do two things: Thank the creditor for their services, and ask if they will revise your payment status.

Would there be a particular person or department that you would specifically address such a letter to? Thanks

[boosami]

Just address it to the bank and "To Whom It May Concern."