Need help with my bad credit please.

[NewBodySoon]

I have a $10,000 in debt in credit cards and one loan with lots of late or no payments. I was out of work for four months so I hardly paid any of the bills. Someone has sent me to collections prior to this debt (about three years ago). I believe it was the last bill from my old cell phone. I have a few questions if someone knows about this please.

1. If I pay off all my debts, including the one in collections, how long will it take for my credit to be good again?

2. I know have a job that will allow me to pay off the debt within 4 months. Should I pay it or should I file for bankruptcy?

3. How do I go by checking who has sent me to collections?

Any help would be greatly appreciated please!

 

[David Schwimmer]

I believe your credit is wiped clean within 7 years. If I were you I would call one of those non-profit credit assistance companies and talk with one of their people about the best course of action.

By the way, if you could pay this off comfortably in 4 months I say stick it out.

 

[gymrat]

It's better to have poor credit for awhile, then having no credit, and the stigma of "bankruptcy."

 

[NewBodySoon]

But isn't bad credit in the same level as bankruptcy, especially if you have been sent to collections? If you try to get a loan, they will reject you for this reason. And, from what I have been told, your credit will take seven years to be cleared. If it is going to take seven years, then why not file for bankruptcy and avoid the $10,000 debt? My credit will not get better untill seven years have already passed in either scenario (from my understanding).

 

[thx9000]

Your credit will take a while to recover, and it really depends on how bad it's gotten. If you got current on all debts (ie: paid all past dues and in collections) TODAY then the first real signs of improvement would be seen in 6mo. Maintain 2yrs of continuous good payments than you will probably have at least passable credit by that time. It will be a full 7yr before everything is off your report.

Bankruptcy is not a good choice at all. It will remain on your credit for 7yrs and you are obligated to discolse it forever hereafter on applications for employment (if asked) mortgages and other secured loans. Although it does get removed from your credit, it is still part of the public record.

You should absolutely pay off your debts if you have the ability. If you declare bankruptcy you will be questioned about you motives and resources. Creditors don't like to give money to people that cheat.

You can request your credit report. There are a few ways. Simpley go to www.myfico.com and get their consolidated report. This will show you your credit history with all three major US reporting agencies along with your FICO score. Unfortunatly this costs nearly 40 bucks. Another choice is to go to on Experian, Trans Union or Equifax individually and pay for your credit report it should cost $12. A final approach is to simply apply for and get denied credit. This will entitle you to a free credit report. It has the unfortunate side-effect of further diminishing your credit score though. Your credit report will have info on all accounts including how close you are to collections action, how deliquent, etc.

You can use a credit assistance NPO. There are drawbacks, though, as creditors don't always like to see their involvement. If you decide, years down the road, to apply for a competitive mortgage you might be asked if you had turned to one of these services and the reaction may not be positive.

All the couseling services are going to do is to negotiate directly with your creditors. Tell them you cannot make full payment, ask for differment of principal or suspension of payment for 90 or 180 days. They have modest luck on your behalf and are really only doing the work that YOU should be doing. If you don't have too many accounts charged off or in collection, you really aren't in an unsalvagable position. Call your creditors and ask how you can get current and what they will to to "meet you half way" for say 3 or 6 months.

 

[thx9000]

But isn't bad credit in the same level as bankruptcy, especially if you have been sent to collections? If you try to get a loan, they will reject you for this reason. And, from what I have been told, your credit will take seven years to be cleared. If it is going to take seven years, then why not file for bankruptcy and avoid the $10,000 debt? My credit will not get better untill seven years have already passed in either scenario (from my understanding).

No, not the same. You would rather have a credit report full of charged off accounts that you then settle on over the next few years than to declare bankruptcy. Credit scores generally range from 400 to 800. Crucial scores for loans are 525, 580, 620, 660, 720. A few charge-offs and multiple deliquent accounts will generally put you into the 500's which can be turned into 620+ in two to three years. Bankruptcy will basically decimate your credit, for a long time.

 

[jenscats5]

Actually BK can report for 10 years, bad credit usually 7 unless the company chooses to re-report bad credit, then it can be on your report longer.

Be careful about credit counseling services as you are not allowed to accumulate more debt while with them. We see a lot of people applying for car credit & we have to turn them down cuz they are with CCCS.

Make sure you pay the big things like house & car on time. Cell phone stuff isn't that important in the big scheme of credit. Watch making the min payments on stuff cuz you will get screwed with interest charges.

 

[white boy]

yep

 

[[email protected]]

If I pay off all my debts, including the one in collections, how long will it take for my credit to be good again?

7 years from the last day the account had any activity. Meaning, if you haven’t paid it for 3 years then in 4 it comes off your report. If you pay them something today you “re age” the debt and it starts at 7 again.

2. I know have a job that will allow me to pay off the debt within 4 months. Should I pay it or should I file for bankruptcy?

With 90 day + no pays your FICO is worse then if you just filed for bankruptcy. In 3 years your FICO usually only shows a 30-35 point drop for a discharged bankruptcy.

3. How do I go by checking who has sent me to collections?
You can order your credit reports from all 3 bureaus and they will be on them.

Here is something to consider. Collections can only harass you. If they were sent from the original lender to collections then the original lender has already charged off the debt. You can send them a cease and desist.

I just wouldn’t pay any of them. If you pay your credit will not get better. All the late pays will still remain and the collections accounts will still remain. For the few points you may recover for the stamp PAID on them it’s not worth it. If it’s a thousand here and there no lender will invest money into the court system for money they may never recover.

Get a big garbage pail and wait out the remainder of the 7 years. A lender has only 6 to legally collect a debt. The last collection agency holding your debt in year 5 will try like hell to get you to pay anything as the clock ticks.

 

[[email protected]]

unless the company chooses to re-report bad credit, then it can be on your report longer.

That's re-aging a debt and that is illegal.