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Here's the situation....my credit score a couple years back was in the upper 600 range. Considering I was a college student with little history and massive amounts of loans, I thought that was pretty good.
Then I went over my head....there are about four things in collections right now, or that may be in the future. A total sum of less than a couple thousand. Seeing as I am in college, money like that doesn't come along too often. But, all should be paid within the year.
Now my credit rating is in the mid 500s. I'm still young so the goal is to build enough of a credit rating so I can look into getting into a house by my 30s...
That, coincindentally, is about the time those blemishes will fall off my report.
But, I want to both solidify that standing, and speed it up if possible.
So is letting four accounts going into collections. Funny how that works, isn't it?
Best things you can do for yourself is (1) work with your creditors 90+ days delinquent isn't going to look good, but it's not going to be as bad as going to collections. The other thing you can attempt to do is bribe the creditor with a larger settlement in exchange for deleting the derogatory remark from your credit report. Sometimes they'll play ball on that, but usually not.
(2) Keep whatever credit you have open active. You're not going to be getting any more of it in the short-term, and it's very difficult to build your credit score/worthiness without credit.
Other than that, it's just time. While it'll still show up on your credit report for seven years, the negative effect on your credit score does slowly wear off. Focus on what you can do. Keep a mix of credit types (student loans, credit cards, maybe a car loan or personal loan), pay your bills on time, keep the credit card utilization low. It really doesn't take that long to go from abysmal (low 500s) to mediocre (mid/high 600s). In two to three years it shouldn't be a problem. At the low 500s, you basically can't even get credit. Get it up to 650-680 (mediocre) and you can get financing, it'll just cost a bit more than someone who had good credit.
Like Pitt Chick said, pay off your debts. And/or try to get derogitory marks taken off. This would be short term.
If your plan is long term, and you have self control, open a few more credit cards and keep them away, using them once every few months. Or other financing accounts. This will ensure you build up the #of accounts, increase your utlization and give you more 'on time' payments on your record. It will also build up your age of credit which if youre 21 now will be exceptional by the time you are 30, assuming you dont close them or open new accounts closer to 30.
There is no way to speed up the process, other than to settle your debts as soon as you are able..
This^^. There's no way your going to improve your credit ratings until you pay everything off, or get everything caught up. Sorry, that's just how it works. Once you accomplish this, your credit rating will rise accordingly.
The answer was unacceptable only because it answered one part of my question.
I can't speed it up...what can I do now to ensure that it's at the appropriate level to secure a mortgage in the coming decade?
How do I give myself an edge?
Are a lot of credit accounts better than a few? Does paying back a loan in a one time lump sum manner help or hurt your credit score, as opposed to making the minimum payment required for as long as possible? At what level should I expect a decent mortgage rate? upper 700s? 800s? What is my target credit score? Does paying the collection agency or the institution itself matter? Does suing and losing count against you, or is there nothing to lose, really? Does the institution's reputability come into play should I dispute it? Is there any software you know of that indicates credit scores given hypothetical future scenarios? Any software at all that you'd recommend? etc etc.
So, yeah, I know, the speeding it up part may or may not be possible, that's why I included an 'if possible' qualifier at the end of the expression of that sentiment. You know my goal (to secure a mortgage at a decent rate in the coming years), tips (other than it takes time, because I have that)? What type of credit should I be looking to get? I mean, I don't really need a huge chunk of money at all except for a house...I'm ok with driving beaters and my expenses beyond that are minimal. But, buying a house outright is an impossibility, I'd think...so is credit a necessary evil? Is there a work around? Should I look into financing a vehicle just for the history, even though I don't really need to? Is it ok to finance and pay it off almost immediately, or is that not technically 'credit'? Should I do airline credit? Does that even count? Or should I focus on business based credit like Best Buy and Target? Or just do regular bank credit? How much of a difference does the type of credit make? I mean, honestly, I don't need to buy anything off of credit...nothing is important enough that it can't wait the 2 weeks or so it would take to get the money together for it...assuming I didn't have savings to dip into in the first place. Is there another way to buy/build a house that I don't know of (other than outright..)?
So many questions....lol
Last edited by dub dub II; 07-20-2013 at 08:04 PM..
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