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Question about debt reduction… credit counselors please read!?
Question : Question about debt reduction… credit counselors please read!?
I’m about $ 4000 in debt currently. My rating is somewhere between 525-580 depending on the credit firm. My question is that is it better to pay it all back now or make payments to my creditors (not credit cards, more like hospital bills, payday loans, old acocunts) over a six month period? Which (or what) will help my rating rise quicker? I’d like to get it 700 by the spring. Is that possible? I may follow up this depending on the answers. Thanks!!!
debt reduction loan
Best answer:
Answer by OC1999
It sounds as if these are valid past due bills that are with collection agencies. So what you need to do is negociate with them to remove the collection account once you pay it in full. Send them a letter stating that you will pay off the account in full, if they remove the collection account. Make sure that they send an agreement in writting back to you before you send ANY money.
Then once you pay it off, they will remove the negative account. This is going to help you the most, as it will be like it never happend. If you pay them off but the accounts remain as paid, they are not going to help your report a lot.
Once you get them paid and they remove the account, it will depend on the rest of your history as to what your score will be. But if you have no other positive credit there is a good chance you will not be anywhere near 700 by spring.
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#4 written by Go, I 1 year ago
If the accounts in question (your hospital bills, payday loans and old accounts) are in collection or charge-off status, it doesn’t matter how you settle your debt. You can either pay each bill in full or you can attempt to settle the accounts for less than what you owe. Either way, paying off the negative accounts will not raise your score. The only way to raise your score is to 1) pay down your current debt to less than 40% of what you can borrow and 2) make on-time payments.
Having said that, you can always negotiate to pay less than what you owe. If it’s signifigantly less than the original amount, they might ask for it in a lump sum as oopposed to putting you on a payment plan, so be prepared for that. If they do say that they will accept less, make sure you have them put it in writing. Then send your money and ask for a letter or a receipt stating that the balance is 0. Hang on to this for your records – you might need to make a copy of that and send it to the credit bureaus in order to have them update the status of your accounts. The accounts will not be removed until it’s been 7 years from the date of last delinquency. But they can still update it to say paid collection or paid charge-off.
I don’t know if it’s possible for your score to get into the 700s by spring. But in order to raise your score, here’s my advice: *Make on-time payments with your current accounts. It makes up 35% of your score. *Reduce your debt. Pay off or pay down some credit cards if you are carrying a large balance on them. That will help. *Apply for credit only as needed. Inquiries lower your score, so only have people pull your report if you absolutely need it (pulling your own report does not hurt your score).
I hope this helps you!
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#5 written by Smoovy Loco 1 year ago
I would agree with OC, but he forgot to mention a few important things that could help you even more. It’s called the statute of limitations for collecting a debt. I know that you’re willing to pay them off, or make payments, but before doing that, it would help to know whether or not the collector is even legally entitled to a full payment. The statute of limitations is the timeperiod a collector has to seek payment in full in a court of law. Once that statute expires while morally you’re still responsible for the debt, legally the debt can’t be enforced. Just knowing this information alone can help settle payments for much less than the original amount in exchange for having the debt completely removed from the report. For more information on this, click this link ===> http://www.creditinfocenter.com/debt/settle_debts.shtml (the information is too long to be copied and pasted in here
I strongly suggest reading the article I posted in order not just to payoff your debts, but to pay them off, at a lower amount, and get them removed from your report.
To get your score in the 700 range by the spring will be stretching it. It takes a good mixture of open installment and revolving accounts paid on time, and time itself to get there. Hopefully with the information that you’ve gathered you can at least get yourself well on your way
Good Luck!
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#6 written by bdancer222 1 year ago
Forget about those debt reduction companies. Most will charge you and do very little. Your credit will be trashed almost as bad as a bankruptcy.
It’s better for you to do it your self. Pay all your current bills on time and tackle the old debt one at a time. You can negotiate settlement of old debt but make sure you get it in writing before you send money and ask the creditor to remove the negative. Even if they won’t remove the negative, a paid bad debt is much better than an open one.
If you can clean it up over 6 months, that would be great. Your score will start to improve but it will probably take more time to get your score up to 700. You’re going to need a couple years of good, on time payment history to get there.
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Ok, first off…..Financial institutions are no longer allowed to negotiate credit bureau reporting for payment on a debt. This federal law was put in place several years ago. It depends on how old and how much these old balances are. If they are over a few years old and bouncing from agency to agency, you could probably settle for somewhere around 10-30 cents on the dollar. If there is absolutely any minor mistake on these, dispute them immediately with the three major credit reporting agencies. By law, the creditor must validate the debt within 30 days or the trade is deleted from your credit report. Getting this debt ratio down or deleted will improve your scores. Oh, by the way, see when these trades were charged off, they fall off your credit report in 7 years anyway, so I wouldn’t bother with anything that was charged off in late 2000 or early 2001 unless it is a significant balance that is worth suing you over.