Bo, my questions are related to small amounts of charged-off debt, so it's hard to find answers - everyone answers questions about $20,000 debts and bankruptcies and reposessions, but I need advice on my small situation.
In 2005 I finally pulled my life together, but I had about $3000 of bad debt from the previous 3 years: 1 $800 credit card, 1 $1000 credit card, and 2 $500 credit cards. Some of these were transferred to other collections agencies and some were not; the $1000 credit card was closed and the rest were charged off. Last month I finally paid off the last one. I had been monitoring my credit and I understood that I could have just waited 7 years and hoped that they wouldn't chase me down, but I wanted to pay it all off and have done with it. Was this the right decision? My credit score has only gone up a couple of points over the course of paying all these old debts. Does my score go up for having paid them off, or do I have to just wait a couple of years and keep paying my current loans/credit cards on time? All the bad information on my credit report is correct, so I can't dispute any of it.
Also, I have an institutional loan from my college that has been transferred to a collections agency. This is the only bad debt left unpaid or unsettled on my credit report. They keep writing me polite letters and asking me for $1000/month payments. My budget isn't even ready for a $200/month payment! Can I let this debt sit indefinitely until I can afford to pay it off more rapidly, or is there some benefit to negotiate and start a small monthly payment now? Since the debt has gone to collections, I'm not sure if they have to report monthly payments like a regular loan, so I didn't think it would help my score to start paying.
I have one credit card, a federal student loan, and a car loan on my report that are all current (yes, more bad debt than good on my report, but all but one is PAID now). My credit score is hovering in the 590's. I plan to get another credit card as soon as I hit 600, so no need to advise me to do that.
In 2005 I finally pulled my life together, but I had about $3000 of bad debt from the previous 3 years: 1 $800 credit card, 1 $1000 credit card, and 2 $500 credit cards. Some of these were transferred to other collections agencies and some were not; the $1000 credit card was closed and the rest were charged off. Last month I finally paid off the last one. I had been monitoring my credit and I understood that I could have just waited 7 years and hoped that they wouldn't chase me down, but I wanted to pay it all off and have done with it. Was this the right decision? My credit score has only gone up a couple of points over the course of paying all these old debts. Does my score go up for having paid them off, or do I have to just wait a couple of years and keep paying my current loans/credit cards on time? All the bad information on my credit report is correct, so I can't dispute any of it.
Also, I have an institutional loan from my college that has been transferred to a collections agency. This is the only bad debt left unpaid or unsettled on my credit report. They keep writing me polite letters and asking me for $1000/month payments. My budget isn't even ready for a $200/month payment! Can I let this debt sit indefinitely until I can afford to pay it off more rapidly, or is there some benefit to negotiate and start a small monthly payment now? Since the debt has gone to collections, I'm not sure if they have to report monthly payments like a regular loan, so I didn't think it would help my score to start paying.
I have one credit card, a federal student loan, and a car loan on my report that are all current (yes, more bad debt than good on my report, but all but one is PAID now). My credit score is hovering in the 590's. I plan to get another credit card as soon as I hit 600, so no need to advise me to do that.
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it is never a bad decision to pay off colletions bills or anything that is past due on your report
already paid the collections so there is nothing that can be done now
you could have negotiated before you paid.
dont be late more than 30 days on any open credit for two years
do something with the college or collection
contact the college before you contact the collection if you can
start paying someone
or take a chance with
a bad credit score for a long time
that is a personal or ability to pay question that you have to decide.
in the end the credit report has to show no late or past due payments to get a score up over 630
you could have negotiated before you paid.
dont be late more than 30 days on any open credit for two years
do something with the college or collection
contact the college before you contact the collection if you can
start paying someone
or take a chance with
a bad credit score for a long time
that is a personal or ability to pay question that you have to decide.
in the end the credit report has to show no late or past due payments to get a score up over 630
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