A newbie in debt....

iVillage Member
Registered: 06-04-2003
A newbie in debt....
6
Thu, 04-13-2006 - 10:01am

Hello everyone, I’m new here. I’m glad I ran across this board. I need help.

I just pulled all three of my credit reports. I’m panicking about what I see. Most of what I owe are medical bills from when I had my son 1½ years ago. And it just so happens that I’m pregnant again and due in mid-July. I owe about $1,600.00 in medical bills and $300 for a cingular bill and about $83 for an old cable bill. All of these accounts are in collections. I realize that I need to pay them asap but I’m so disgusted at myself for not paying these sooner. My FICO score is very very very low. I have no idea how I’ll raise it. I’m tired of paying high interest rates. I currently own a condo (I bought it under FHA) and I have no problem paying my mortgage and association dues. I’ve been late a couple of times over the past two years. Also, it will be a year before I pay off my car. I’ve been late on my car payment as well but I’ve pretty much paid consistently. I have two credit cards that I’ve been late on several times but I’ve paid them off and the balance on both is zero. I’m a little frustrated that even the bills that I’ve pretty much paid consistently (like my mortgage and car note) still stay stuff like “has been late 30/60 days”. Gosh, can’t they give me a break!?

My questions:
Will my FICO score go up when I pay all my medical/collection accounts off?
The credit cards where my balance is zero, should I close those accounts (one is a master card the other is to a clothing store)?
Is there anything else I can do to raise my credit score?

My husband and I plan to relocate within 6-9 months and I know I won’t be able to get another house w/ my credit but I’m scared I won’t even be able to rent a place with such a low credit score.

Any advice would be greatly appreciated.

iVillage Member
Registered: 03-27-2003
Thu, 04-13-2006 - 1:42pm

Welcome to the board.

Unfortunately, there is no quick fix to getting your credit score up. You just have to work at getting things caught up and then continuing to make your payments on time. You know that you will be relocating and that you will either need to purchase or rent a new place, so now really is the time to start working on the credit issues.

If you are not currently on a budget, do one. Before the paycheck even comes in, sit down with your husband and decide exactly how many dollars will go to groceries, how much to gas, how much for the car payment, how much for old debt, etc. This will help you see where your money is going, plus it will help you make your current payments on time.

I personally would close the clothing store credit card account that you have open but keep the mastercard account open. Don't actually use it, but it looks better on your credit report to have available credit that you aren't using.

Heather

iVillage Member
Registered: 03-27-2003
Thu, 04-13-2006 - 2:56pm

Welcome to the board! We're glad you're here.

First of all, stop kicking yourself. We've all made mistakes, and obviously you want to fix it. And you've come to the right place! Good for you.

When you pay off those collection accounts it will indeed improve your score dramatically. Unpaid collection, charge-offs, etc., are nearly the worst thing you can have on your credit report.

Also, keep those credit cards open. Your score is based on a variety of things, including have a good ratio of open credit and long relationships with your open credit accounts. Closing credit accounts, contrary to usual opinion, almost never improves your score. But get rid of the actual cards themselves.

Make sure any accounts that show 30/60/90 days late are showing those delinquencies within the past 7 years. Anything older than that should have dropped off your record. Also, as those get older, they will affect your score less and less.

And once you've paid your delinquent items, make sure you check to see that the collections, etc. are showing as paid.

If any negative stuff on your report is *not* accurate, then dispute it. The best way to do this is to send a certified, return receipt letter to each credit bureau letting them know that you dispute the item. They'll request additional information, then they are required by law to investigate. They must have written proof of the accuracy of the disputed items within 30 (or 60--don't remember which) days or they must remove the item. Sometimes they won't have proof even if it is accurate, but they'll definitely have to fix anything that is not accurate.

Finally, while your score will improve if you do these things, don't stress too much about the move. If you have to rent for a while, it will give you time to save and fix your score. And you can find places to rent, even with a poor credit score--private renters rarely do a credit check, for instance.

But, really, if you start now you should be able to fix it well enough in the meantime. Dh had a score of around 570 when we first started looking at mortgages. Six months later, after paying stuff off and disputing a few items (we had a collections item and a charge-off removed because they never showed it as paid, and when we disputed the status they couldn't even produce proof that the accounts ever existed, and therefore had to remove them altogether--woo-hoo!), his score was in the high 600's. It's now, four years later, near the top of the bracket (there are a few old 60 day lates still showing, but otherwise it's clean).

Good luck and welcome!

iVillage Member
Registered: 06-04-2003
Thu, 04-13-2006 - 3:23pm

Thank you so much for your response Heather. I've tried to stop kicking myself since I don't need this stress while pregnant. See, I knew these items needed to be paid but it was on the back burner. It's totally different when you get your report and you see what you owe (and know that others that inquire about you can see it as well).

I've created a schedule that I'm going to use to pay off my collection accounts. It's a pretty aggressive schedule (everything paid by the end of June) but I'm going to use some tax refund money as well as paycheck money to pay it all off quickly. I hope to see my score improve when I pay this stuff off. I'll probably pay 'em off and then wait 30 days or so and try to get them removed.

Open accounts - I'll keep the 2 credit cards open since my balance is zero and it's not really hurting anything. Every month that I don't have a late payment is good right? If I don't have a balance on the card then how could I have a late payment? ;-)

Sadly, most of my delinquencies are within the past 2 years. There are some things on there that are pretty old but I don't think they're having that much of an effect on my score.

After I pay off all of my collection accounts I plan on disputing whatever I can. Hopefully I'll have a leg to stand on if I pay off an account but the credit report doesn't reflect that. I've even thought about using a law firm (Lexington) to see if they can remove some items. I'm hearing though that this is something that I could do myself.

I'm so glad you hear about your hubby - so it IS possible to get stuff removed. That is such good news. I'd be so happy if my score was in the 600's.

iVillage Member
Registered: 01-06-2006
Thu, 04-13-2006 - 8:33pm
Congratulations on taking the first steps to improving your credit score. You can do it and this board is a great inspiration and cheerleading team should you feel discouraged. I have been with this board since January and feel much more positive about my debt journey being here. An idea for the future is don't get all 3 creit reports at one time, since each credit beauru (sp?) must give you a free credit report once a year. Order one now then the next 4 months later and the third four months after that. That was you can keep an eye on it, making sure no incorrect information shows up, remains on their files, watch out for identity theft etc. I made the same mistake when I ordered all 3 of mine in November the next week I hear a radio program talking on the subject saying space it out over the year. Doh! As for the lawyer, I don't think you need it. You can write letters and dispute inaccurate information and the ladies on this board can tell you what to do next if you have questions.
Good Luck.
Pam

Proud sister of a Marine:

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iVillage Member
Registered: 03-27-2003
Thu, 04-13-2006 - 9:43pm

You're welcome! Yes, actually, it's much easier than most people realize to get stuff removed. And it's actually *better* if you do it yourself rather than hiring someone. The reason is, it's kind of a hassle for the bureaus to research and prove items on your report, and most of the time, they won't go to much trouble about it. But if they see the letters are from a lawyer, they assume you have hired one of those "clean up your credit report" agencies, and they don't like them (they create a lot of work for the bureaus). So they'll go to a lot more trouble to prove themselves right.

And you're right to wait until you've paid the items off to dispute them. Once they're paid off, chances are that the creditors will dispose of their paper files--paper is expensive to store. They'll keep the electronic data, but by law, the proof has to be written--on paper. So between the time constraints, the cost of keeping paper files, the expense of mailing the documentation, etc. etc., you've got a good chance of getting stuff removed.

Good luck, and stick around. This group has helped me more than I can express.

iVillage Member
Registered: 06-04-2003
Mon, 04-17-2006 - 1:40pm
Thanks for the idea of getting only one of the three reports every few months. I'll begin that next April when it's time to get my free ones again!