Bouncing Back from Bad Credit

iVillage Member
Registered: 01-02-2005
Bouncing Back from Bad Credit
2
Wed, 03-15-2006 - 5:07pm
I know that there are no shortcuts or quick remedies for a poor credit score. I understand that a good payment history over time will go a long way in improving a score. I am curious as to how long it has taken some people to go from bad credit to decent credit - was it 2 years, 5 years? I know that there are tons of variables for every situation, I am just trying to stay positive.
iVillage Member
Registered: 03-16-1999
Wed, 03-15-2006 - 5:49pm
I guess it would depend on your definition of good credit. I found that after a year of no late payments, never going over my limit and always paying at least a little over the minimum my credit greatly improved. There were a few things (late payments on medical bills) that simply had to time out on my credit report. I know this doesn't work for everyone but two things that really gave a boost to my financial health was arranging to have a number of things deducted from my checking account and online bill paying. I was one of those people who would forget to pay bills even when I had the money. The payment would be late... there would be charges, my crdit score went down and people wanted to raise my interest rate on cards. It wasn't pretty.I use online bill paying so I sit once a month and authorize payment of the bills for the month. I have had no problems with this method. It does take some planning and discipline but has been worth it.
iVillage Member
Registered: 03-27-2003
Wed, 03-15-2006 - 6:59pm

I think it depends on your definitions both of good credit and bad credit. I can't answer for your specific situation, but I can tell you that we turned dh's around pretty quickly from 590 or so to around 680--just in a matter of a few months.

We were applying for a mortgage, and we already had a clean record for the previous 18 months. Dh had had a charge-off and a collection item, and we had been over our limit on various cards. We had paid off the charge-off and the collection, but they were still showing on our record. We had also paid off a considerable amount of debt, but one of our cards was very near the limit while we were focusing on paying off the other cards.

One thing we did was to focus our efforts on that high card, to bring its ratio down close to 50% (i.e., so that we owed only 50% of the available credit--apparently, creditors like to see that you have more available credit than you're using, and 50% is something of a magic number).

I think the most important thing we did, though, was to contest the collection and charge-off items. Although those items were ours to begin with, they had not begun to show as having been paid. We sent a certified mail (return receipt requested) dispute to each of the three credit bureaus regarding each of the items (six letters total). We were deliberately vague in our description, saying only that the items were reported incorrectly.

When you do this, the bureaus may then request additional information. When you provide that information, they then have 60 (or 90 or 30--I forget the numbers) days to investigate and provide *written* proof that those items are correctly reported. "Written" means ON PAPER--so if all they can turn up is electronic data, it's not good enough. They have to either update the information as requested, or wipe it from your record.

Because we were deliberately vague about what we wanted done with those accounts, and since they were unable to turn up written proof of their accuracy, they were wiped entirely from our accounts (except one item on one report, which is at least shown as paid). Had we stated specifically that we wanted them to show as "paid," that could have been viewed as their written proof that the accounts at least belonged to us, and while they would have been updated, they would not have been wiped off.

Anyway, having had those items removed from our reports, our credit score got a huge almost-instant boost.

I don't know what the score is now. I no longer check it. We've been on our debt repayment journey for four years now (it's been nearly two years since we bought our house, and longer than that since we applied for our mortgage), and our credit looks pretty good. I no longer worry about the number, because I know it's good enough for the best credit offers. We no longer use credit anyway, so it doesn't make much difference anyway. We pay everything in cash.

I don't know if that helps answer your question, but I hope so. I recommend everyone take a close look at their report and dispute any derogatory information that is not correctly recorded. It can work wonders.

Blessings,

Heather