Anyone actually 'cleaned up' their credit?

[dhjenkins]

Has anyone actually sucessfully cleaned up their credit?

I'm not considering using any of those shady lawyers or credit-clean-up scams; I'm more than willing to settle my debts now, but I just wanna know if it's worth it. I've heard even if you pay everyone you owe completely, nothing comes off your credit so you're better off declaring bankruptcy if you don't need a loan for a year or so...

Anyone with any experience in this?

TIA

 

[atomicbread]

From what I understand, negative credit information stays on your credit report for seven years, bankruptcy stays on for 10 years.
I would try to pay them off now, or make arrangements with creditors. I would reserve bankruptcy as a last resort. Both situations will affect you for a few years, but I would think that future lenders would like to see a pattern of responsiblity, rather than irresponsibilty.

"Okay, this guy messed up, but paid everything off and made a good-hearted effort"

versus

"Okay, this guy filled bankruptcy. Is he gonna do this again after we extended credit to him? Will we get paid?"

I realize there are different types of backruptcy, but I would imagine that settling the debts would be a better choice.


Edit: Also, everyone these days runs credit reports. Banks, apartments, employeers..It seems that everyone bases your ability to do anything on your financial patterns.

Any finance people??

 

[88ZNX]

Atomicbread is right. I worked as a Personal Banker for a few years, and Bankruptcy is NOT the way to go. Call your creditors and you CAN actually settle with them. Just tell them you might owe this $$ amount, but you can only pay $$ this amount. MOST of the time they will settle. IF you only send them $10 a month, they can not touch you. It shows you are making payments.

Now I had myself in debt too, I did use Profina. I dont think they are around anymore, probably called something else now. They did take care of my creditors, and I paid the full amount off. I cut up and CLOSED all of my credit cards. You can close the cards with balances on them, and just pay them off. You are allowed to do that. And it actually helps your Fico score. Credit statements refresh about every 90 days ( some companies ). So you can see what your doing as far as what is still open and have balances on them. When I closed the cards, and paid profina off, I waited 1 year for all of it to settle down. Then I pulled a credit report and my fico was 740! So it does work. Yes you will have the bad credit mishaps on the report for 7 years, but if they are paid off, that is huge. The worst thing you can do, is miss a payment on anything. Thats where it starts. 30 days is passable, but 60 and 90 days late, thats bad news.

Hope this helps
Jason

 

[Kyle F]

This is true, I helped someone repair their credit.


I have been preached at since a young age by my mohter abot how to use credit.

Best thing to do, if you have personal restraint, is to keep all your accounts open. Try to consolidate on your own. Like if you have 3 credit cards try to move them onto one. If they will not let you due to balances, pay them down until you can. Most credit cards only require you pay around 2% of the total balance each month. This makes you have a much more resonable payment to make on time and in the full amount each month. Saving more money for your house payment and needed items. What ou must remember is that you must eat and stay warm an ddry first. Which means take care of the food bills and housing (payments or rents) first in your budget. Other things are just nice to have. You may have to drop your cable and you broad band internet service to free up money to repair other areas. Oftern people get caught in the loop of running cards in the near cresit limit area, so when the interest is compiled, it runs them over and they get charged and over fee, plus have ot pay down to the crefit limit, which makes them late on payment because they didn't have the money, and the cycle repeats.
Though, its easy to say get rid of the credit cards, but these are also the easiest tools to buid credit. Especially for young people. Sometimes no credit history works against you more than a bad credit history. Use the cards, but only rarely, let a small balance carry on it. Pay the interest on those small balances so you get a better rate on your home and car that you will pay on a much higer amount of money for a much longer time.

I could talk about this all day, but then again I have been doing this for many years and I have a 740 credit score, and have Identity Theft protection through Pre-Paid Legal, which helps keep and eye on things for me and sends me reports on credit moitoring. Because as stated above, Apartments, Employeers, even car insurace comapnies run credit reports now. Irresponsibility in finaces doesn't make you a bad person, but studys show it does indicate you will be more likely to be recklous in other areas of life.

 

[XLR8]

You can clean up your own credit. It depends what needs to be cleaned up. If you have any accounts that are past due, pay them current and keep them current and they are "cleaned-up" . Yes they still show the prior lates, but once they are current, your credit score should improve. If you have outstanding collection accounts - call the collection company and settle with them - you can usually do that for a lessor amount than the amount owed. Make sure that after you have paid the collections, the collection company(s) notify all three credit repositories to show the accounts as paid. After your credit has been clean for 12 months (no lates or collections) you are back in the ballgame as far as being able to get lower rates on loans. This is my opinion.

Royal Foster.
Underwriting Manager (Rocky Mountain Region) for SunTrust Bank.