Credit and Credit Scores: A short lesson

[A S U]

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Could anyone explain how to do this yourself? Around 98-00 I got myself into some bad credit issues. I was in college and effed it bad. I had 2 CC's, one for like $500 and one for $700. Maxed them both out and never paid them off, they went to collections=My score suxs.

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believe it or not it's a good thing you never paid them back. if you contact them you may be able to work out a deal where you pay back some amount (50-100%) in exchange for them removing the entry from your report.

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While you could that, it would be dumb at this point as far as your credit report goes. The S.O.L. on the debt is way past (meaning they can't and will never try to collect) and it should be falling off your credit report any day now never to return.

Some unscrupulous collection agencies sometimes try to revive these old debts and mark your report, you owe nothing and the marks can be removed easily with a dispute to the credit reporting bureau.

Now if it was 2 or so years old, negotiating a payoff would be worth it. I've seen them go as low as .30 on the dollar.

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Wow seriously? Accounts were opened in 98 and all effed up by 99. Probably went to collections in 00. So all I have to do is get a copy of my credit report and have them remove the marks if they are 7 years old? Awesome.

Also are there companies that will handle all this for you? Any recommendations?

[Dave I]

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Wow seriously? Accounts were opened in 98 and all effed up by 99. Probably went to collections in 00. So all I have to do is get a copy of my credit report and have them remove the marks if they are 7 years old? Awesome.

Also are there companies that will handle all this for you? Any recommendations?

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They will be removed automatically after 7 years starting from the date they went to collections. So, figure sometime this year. Some of the credit reports tell you the date they will be removed from your report. I think Trans-Union is one that does this. That date will be the same for all 3 reports even if it's not listed on them. You don't have to do anything.

Get a copy from all 3 bureaus to see what is listed. All this can be done online and by yourself. No need to involve any 3rd party. In fact, you can dispute an item online at all 3 bureaus as well if needed.

Here is another tip. The creditor who put the mark there only has 30 days to verify a disputed item. Many can't verify and the bureau has to remove it. The older the debt the more likely this works. There are a lot of fly by night collection agencies out there. I would dispute any mark made by a collection agency and not the original creditor. The original creditor will almost always be able to verify it.

My credit is perfect now but when I was younger I messed it up bad. I have dealt with all the scenarios mentioned in this thread and all the credit reporting bureaus.

Also, here is a link for the S.O.L. for collecting debt in each state. Almost all are 3-4 years.

[A S U]

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Wow seriously? Accounts were opened in 98 and all effed up by 99. Probably went to collections in 00. So all I have to do is get a copy of my credit report and have them remove the marks if they are 7 years old? Awesome.

Also are there companies that will handle all this for you? Any recommendations?

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They will be removed automatically after 7 years starting from the date they went to collections. So, figure sometime this year. Some of the credit reports tell you the date they will be removed from your report. I think Trans-Union is one that does this. That date will be the same for all 3 reports even if it's not listed on them. You don't have to do anything.

Get a copy from all 3 bureaus to see what is listed. All this can be done online and by yourself. No need to involve any 3rd party. In fact, you can dispute an item online at all 3 bureaus as well if needed.

Here is another tip. The creditor who put the mark there only has 30 days to verify a disputed item. Many can't verify and the bureau has to remove it. The older the debt the more likely this works. There are a lot of fly by night collection agencies out there. I would dispute any mark made by a collection agency and not the original creditor. The original creditor will almost always be able to verify it.

My credit is perfect now but when I was younger I messed it up bad. I have dealt with all the scenarios mentioned in this thread and all the credit reporting bureaus.

Also, here is a link for the S.O.L. for collecting debt in each state. Almost all are 3-4 years.

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Great info, thnx for the help.

[RunDownHouse]

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Anyone heard of Dave Ramsey?

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If you'd started your post this way it would have saved me from reading the rest of it. Anyone with a college education - maybe high school, these days - should understand why going into debt is a good thing.

[James Boston]

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Anyone with a college education - maybe high school, these days - should understand why going into debt is a good thing.

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RDH,

Really? I don't agree with the poster you're responding to, but I also wouldn't call having alot of debt "a good thing." Could you elaborate on why that is your position?

[Fast Food Knight]

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Anyone with a college education - maybe high school, these days - should understand why going into debt is a good thing.

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RDH,

Really? I don't agree with the poster you're responding to, but I also wouldn't call having alot of debt "a good thing." Could you elaborate on why that is your position?

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I think what he's trying to say is that it's difficult to build a good credit score without incurring some amount of debt. Therefore, the debt is helpful for your longterm plans such as buying a house, starting a business, etc. I don't think he's referring to having "a lot" of debt.

[James Boston]

FFK-

Yeah, if that's what he meant, then I just took his post the wrong way.

However, I pretty sure debt is not a must for buying a home. If you have enough income, assests, and the down payment, getting a mortgage isn't impossible with a sub-par credit rating.

[PokerFox]

The correct ratio of debt to assets is very, very healthy. If you manage your debt correctly, you can afford things you never would be able to if you had to pay full price up front (obviously).

A great example is home equity loans or lines of credit. If you are 10-15 years into a 30yr mortgage on your house at x% interest rate, and you apply for a home equity loan equal to the remaining amount of money on your mortgage at a lower interest rate, you then pay off the mortgage with the loan and continue paying the loan at the lower interest rate.

BTW, the CD example was completely last-resort and something for people who have absolutely ZERO credit set up. Most people can't use credit cards responsibly; hence the CD option.

As a closing thought for right now, remember, rich people think of their home as an ASSET. Poor people think of it as a liability.

[Bartman387]

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Anyone heard of Dave Ramsey?

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If you'd started your post this way it would have saved me from reading the rest of it. Anyone with a college education - maybe high school, these days - should understand why going into debt is a good thing.

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Please explain this to me. I would like to hear elaboration.

Also, if you have fuctional eyes you should have been able to see that sentence while reading the first.

[BradleyT]

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They will be removed automatically after 7 years starting from the date they went to collections.

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Actually the removal date is 180 days after last deliquency + 7 years but close enough.

One thing people should avoid is re-aging bad accounts. Like if ASU found his old collection letter from ~2000 and contacted them and said, "I'll pay you $200 for this $1200 I owe" it would show as a paid collection for seven years from TODAY.

If someone for some reason felt obligated to pay, get the collection agency to agree in writing that they will delete the tradelines from your credit report in exchange for payment.

If your accounts are 3-4 years old and you don't need major credit in the next 3-4 years you can pretty safely ignore all your collections. I got a car loan at the best rate available and I had 3 collection/never paid items on my report (but mine were 6 years old).