DF's credit score - 477
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| Wed, 09-28-2005 - 1:14pm |
Hi, I've posted here before a while ago. I used to have a lot of credit card debt but thanks to CCCS I'm now done with that. I have some questions about my DF's credit though. I was hoping to get some answers here.
We're planning on buying a home next year when our lease is up in June. My credit is really good, last time I checked my scores averaged 760. His credit, however, is horrible. I just pulled his Equifax report. He's never had a credit card. He currently has no Open Accounts and only 3 Closed Accounts which are all delinquent. They are all utility companies. The total he owes on those 3 accounts is $1,415. They are all showing as charged off. Not too bad. BUT, then he has 5 accounts in collections! Three are hospital bills, one is from a water company, and one is from Progressive Insurance. The accounts in collections total $2,086.
What I find odd about his report is that his Nextel account isn't listed. Also, his current car insurance company isn't on there either. Maybe they would show up on the other two agencies reports?
So, my real question to you all is how do I go about getting this all cleaned up and how do we start to build his credit so that next year, it'll be in better shape? I pay all the bills now including his Nextel and car insurance. They are always paid on time and in full. All the utilities in our apartment our in my name only, as is the lease. We have a joint checking account that his paycheck gets direct deposited into.
So, where do we start?
Thanks in advance for any advice!
Winnie

I say, start by paying off all those old accounts--even those that say "charge-off." A charge-off is one of the worst things you can have on your credit report. Basically it means that the creditor has given up hope of collecting from you, because it has been so long since the last time they've made any progress with you. It does *not* mean that you are not still legally responsible for the debt--just that the creditor has decided, for now, that it's more expensive to pursue you than it's worth.
Once the accounts are paid off, your credit score should go up considerably. You might also consider negotiating with the companies up front. For instance, instead of paying in installments, you could wait until you have the money to pay them in full, then call them up and tell them something along the lines of "I have enough cash to pay you in full today, but I've got a couple other creditors to pay out of that amount as well. If you'll remove the charge-off from my credit report, I'll pay you first, the full amount." Make sure you get the agreement in writing.
Once they are paid, your accounts will show as "charge-off--paid in full" (unless you negotiated it to remove the charge-off status altogether). In this event, as you get more time between you and the charge-off, his score will continue to improve.
You can also make an attempt to get the marks removed from his credit report altogether. To do this, dispute the accounts. The credit bureaus are required to investigate and provide written documentation proving that the account belongs to you and that the disputed details are correct within (I think) 60 days. If they are unable to do so, they must remove the disputed item.
Since most companies are electronic, they often do not have the written documents to back up their records, and so simply disputing an item is often enough to get it taken off the report altogether. We did this with a charge-off and a collection item on dh's report, and the only evidence left of either is that the charge-off shows up (as paid) on one of the three major credit reports.
However, if you try to dispute before the accounts are paid off, you're less likely to succeed--because creditors keep written documentation for open accounts more often than they do for closed accounts. As long as the accounts are not paid, they are considered open accounts.
The other thing your dh will need to do is start building a positive history. I recommend a secured credit card with a limit of $100 or $500 (however much you can set aside--a secured credit card requires a deposit in the bank in the same amount as the credit limit on the card). He should set it up to automatically pay one or more of his monthly bills, and then set up his bank to automatically pay the card in full each month. This way, he won't risk carrying a balance from month to month, but he'll be establishing a regular, reliable payment history for his credit report.
Good luck, and keep us updated.
Blessings,
Heather
How old are the account on your DF's report? If they are close the the 7 year mark, it might be better not to do anything with them. Heres a link to a great article on MSN
http://moneycentral.msn.com/content/SavingandDebt/P59862.asp
Here is an excerpt:
"If a creditor has already charged off an account and sent it to collections, paying may not help your credit score and might hurt it.
Arranging a payment plan or even inquiring about an old debt can restart the statute of limitations in some states, allowing creditors to sue you.
Simply contacting a creditor about a past-due account can revive its interest in trying to collect, leading to harassment and hardball tactics.
Unethical collection agencies may promise to upgrade how your debt appears on your credit report in exchange for payment -- then not follow through or make matters worse by making the debt seem more recent than it is."
They only way I know of to rebuild credit is to manage it wisely. Have a very low balance credit card or some kind of loan that you pay religiously.
Good luck.
I agree with both postings. I have also heard about trying to clear up old debts actually working against you. There was a story on the news a few months ago about a guy that got in over his head with a car, the car got repoed, and was sent to collections. He hadn't thought about it until recently when he was trying to buy a house or something, and this showed up on his credit report. His car being repoed was like 17 years ago, so he figured now that he was older and wiser he'd clear up the debt, but it ended up backfiring on him in some way, and the consumer reporter said he was better off letting it, the charge off, sit on his report than to actually pay it off. I wish I could remember the whole story.
I'll have to tell my husband about the disputing of the debts. His ex-wife had run up some bills years ago that have recently come back to haunt my husband. We have asked the collectors in writing to produce any evidence that my husband signed as primary or co-signer for any of the items or accounts, because even though this is a community prop state, he was not capable of signing any documents of any kind for five years because he was in prison--for assaulting the man he caught in bed with his (then) wife! (Long story, but my husband really is a pussycat!!) Just asking for that information has made a huge difference.
Hugs--