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Old 11-29-2012, 08:50 AM
 
3 posts, read 7,140 times
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Default How should I begin to fix my credit? Secured card or paying off my old debt?

How should I begin to fix my credit? Secured card or paying off old debt?
So straight out of high school, I got so many credit cards and of course I was irresponsible with them. I didn't pay them off and now they are unpaid and some are charged off. I also have a unpaid ATT account thanks to my mom who put my name on the account and a old Sprint account that was unpaid.

I checked my credit report this morning and I have like five charged off accounts.

Name: BANK OF AMERICA Credit Limit: $ 0 Date Reported: 01/24/2012 Date Opened: 10/02/2007 Balance: $0 Past Due: $0 Acct Status: CHARGE-OFF Date Major Delinquency First Reported: 03/2010

this is a example of how they look, it says balance zero.

Some of the charged off accounts I'm really unsure of because they don't say credit card names, they have names like Midland Funding which I've never heard off.

I have like 7000 or more in debt. I'm 23. Where should I start? I'm confused at this whole credit thing but I want to get it right.
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Old 11-29-2012, 10:07 AM
 
Location: Keosauqua, Iowa
5,402 posts, read 5,178,250 times
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I'd focus on paying down the debt as quickly as possible. Applying for a secured credit card would be like taking aspirin for a ruptured appendix at this point.
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Old 11-29-2012, 12:15 PM
 
103 posts, read 98,274 times
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I would seriously pay down your debt, like aggresively. Trying to build credit while you still owe money to credit card companies is kind of backwards. If I were you I would pay off all of my "necessity" bills and then put every last penny I had towards my debt. This way you can be debt free and in a sense have a clean slate, so it'll be easier to try to rebuild and manage your credit.
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Old 11-29-2012, 03:38 PM
 
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You don't want any secured debt.
If you get behind, they come get what you used to "secure" it.
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Old 11-29-2012, 03:59 PM
 
Location: Keosauqua, Iowa
5,402 posts, read 5,178,250 times
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Quote:
Originally Posted by howard555 View Post
You don't want any secured debt.
If you get behind, they come get what you used to "secure" it.
I didn't get the impression that she really wanted to use the card, just get one to try to build up her FICO score. Bad idea either way.

She posted in another forum that she wants to move to New York and expects to have $8-10K saved to help with expenses by Spring. I wonder if that's after paying the debt? If not, and she can save up that kind of money that fast, this $7K should be easy to clean up. In fact if she can save up the money and offer lump sums she might be able to settle for 60% or less.
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Old 11-29-2012, 04:05 PM
 
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Go to:

creditboards.com

They give good advice on fixing credit and finances.

Last edited by PerspicaciousE; 11-29-2012 at 04:11 PM.. Reason: Wrong Website Cited
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Old 11-29-2012, 04:30 PM
 
Location: Great State of Texas
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Suggestion..pay the smallest one off first. That gives you a psychological boost and confidence.
Once you see one paid off that is the incentive to pay off the rest.

Then go get the secured card. That can be used to build back up your credit.

But it's going to take time. You can't rebuild your credit up until you have cleared out the old debt.

Contact each of them and arrange payment...try to get the smallest payment possible (so you can still afford to live).
The debt with the smallest balance..add an extra $20 or $30 to the min payment to pay off quicker.
Then move to the next lowest debt..pay the min plus everything you used to send in to the first one that is now paid off.
You won't miss the money because it was going out anyway to pay a bill.
Do that for each debt as you pay off one. You'll be debt free in no time.
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Old 11-29-2012, 04:37 PM
 
Location: Florida
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Start paying your debt off, time to grow up and becoming a responsible member of society.
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Old 11-30-2012, 08:06 AM
Status: "Never really know a killer from a savior..." (set 22 days ago)
 
Location: Tampa, Florida
10,551 posts, read 8,790,952 times
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You haven't got very good advice here. The simple answer here is that getting yourself some new credit (by way of secured cards or otherwise) is the correct path.

First, paying off old charged off debts will do NOTHING to help your credit score, and it can actually make it worse. How, you ask? FICO's model weights it's scoring based on how recent an entry is, and paying an old charged off debt will force the creditor to update this account, making it appear more recent and thus tanking your score.

Your issue here is not exactly simple. First, I see you are in Florida. Our statute of limitations here is 4 or 5 years depending on the accounts. Since you said this happened right out of high school and you're 23 now, you're probably past or close to this point, though we'd need to get more information from you to be sure.

Because some of these may not be past the SOL, you have to tread carefully here. You didn't mention if you've been getting contacted about these debts, but if you begin going through some of the steps to repair you can awaken the sleeping giants and cause yourself some trouble, especially if the balances are high enough.

The ones that say things like Midland Funding, are collection agency accounts. There should be a line that lists the original creditor. These are the ones you have to be careful of. The ones that show charged off, with a zero balance, are the original creditor's accounts.

If you want to take a shot at getting rid of some of the old delinquencies, here is what you can do. Send a dispute letter (by certified mail, return receipt) to each of the credit bureaus disputing the old charge offs listed by the original creditor, not the debt collector. If you have any questions, post the entry on your credit report and we can tell you which one it is.

These entries will probably come back verified, though you might get lucky and have one or two go away. Don't worry though, this hasn't been a waste of time. Disputing with the credit bureaus allows you to file a "623 dispute" under the Fair Credit Reporting Act, and these tend to be alot more effective.

Let us know if you want to go down this road, and we can walk you through it.
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Old 12-01-2012, 07:36 AM
 
75 posts, read 60,143 times
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To support and add onto what Bosco55David said...

There is no purpose in paying off a "charged off debt". In fact it will only make your credit worse, by changing the date on your credit report to a more recent one and just keep it there 7 years longer. It will just show you paid off a charged off debt which still looks bad.

Any debt that was "charged off" was written off the creditors taxes as an uncollectible debt. Often the creditor will sell those debts to Collection Agenicies for pennies on the dollar. If the Collection Agency can get you to pay the debt, they get the money not the original debtor. It is quite common for Collection Agencies to turn around and sell your debt to another Collection Agency, even if the debt is old and past the SOL. This can result in duplicate entries for the same debt on someone's credit report. There is no reason to pay a Collection Agency a debt that was actually owed to a Original Credit, especially when they get the money, bought the debt for pennies on the dollar and it only makes you Credit Report worse by keeping the entry there longer.

You need to try to get those off your credit report, if you can. And to do
so you need to understand the FCRA and FCDPA laws and use them in your favor. The FCRA is The Fair Credit Reporting Act. It maintains that your credit report must contain "accurate"
information. If you find inacurrate information, it is your legal right to dispute that with the individual credit bureau.

The FDCPA law deals with collection agencies. They often break the law, so it is easy to nail them by writing them via registered mail and NEVER on the phone. You would be amazed how easy it is to get these off your credit report, especially if they never served you with a validation letter. But, as Bosco55David said, you need to understand your state's SOL laws. You do not want to awake a sleeping lion, if the debt is large and they think you now have the money and willingness to pay. But, you can send Collection Agencies letters asking them to validate that you own them the debt, under the law there is a long list of things they must provide with, and if the debt is old often they cannot provide you with information. There is something called the 1-2 Punch, on creditboards.com. You dispute the debt in writing at the same time with the Credit Reporting Agencies and the Collection Agencies, both have 30 days to verify the information and if the Collection Agency cannot provide you with the "validation" you need they have to remove the entry from your Credit Report.

And yes, Midland is a notoriousally nasty collection agency. And that entry probably refers to another debt from an original creditor who sold it to Midland. Midland often never sends out Validation of Debt letters.

The whole process takes time to learn, so do not be impatient and jump into it without understanding the law. And you start cleaning up your reports by disputing old addresses first. If your debt is tied to an old address and you can get it off your credit reports, it is harder for the debt to come back as verified if you dispute it. But, as I said before the forum creditboards.com will explain how to do this. If you cannot get certain things removed, just now that they will "naturally" fall off your Credit Report in 7 year. A bad debt can only stay on someone's credit report for 7 years, late payments for 3 years and judgements, liens and bankruptcy for 10 years.

In the meantime, get yourself a secured credit card and begin rebuilding your credit. Make small purchases and pay it off in full each month. If someone close to you has good credit and can add you as an authorized user to one of their established credit cards, that helps a lot. But, don't use their card.

Last edited by PerspicaciousE; 12-01-2012 at 08:21 AM..
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