I have two questions, the first is, if I have a secured credit card with a 18 “pays as agreed” history and I want to convert it to an unsecured card, and the only way, according to the lender is to close the secured account and open an unsecured account, what would you recommend? My thought is to lower the $2,000 security deposit (credit limit)to $500 so I can get back $1,500 and keep the account open, instead of closing it and cancelling this credit history and just apply for the unsecured one. Any suggestions?

My second question is, if a car loan was not reaffirmed after bankruptcy and I want to turn tha car in, and it is upside down about $4,000, can the lender damage my credit report for the $4,000?

Robert

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Hello Robert,

Answering your questions in reverse order, the automobile’s credit reporting tradeline is required to be frozen as of the date of the bankruptcy case number was assigned.  You shouldn’t have any late pays recorded after that date. 

From a credit reporting standpoint, you’ll want to keep the secured credit card open with the full $2,000 credit limit.  If the credit limit is reduced to $500 it will appear as if the lender evaluated your condition and lowered your ability to borrow.  You’ll get dinged for amounts owed.  My suggestion would be to open an additional unsecured tradeline first and then after six months, open another unsecured tradeline.  After the second unsecured tradeline is open, close the secured account completely.

Thanks for the questions and hope this helps.

Paul

I paid them off in full in Oct 2007 w/out settling for less than what I owed, I just paid off whatever the balance was.

I have some negatives on my credit report (before they were paid off) but they are now PIF.

What Should I do next.

I’ve learned my lesson.

Please help.

Nancy 

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Hi Nancy,

Sounds to me like it’s time for some goodwill letters.  Here’s one of the Broken Credit Bloggers recent experiences with goodwill phone calls and letters. 

Are all of the credit card tradelines closed?  If so, then you’ll want to open some new tradelines.  Secured credit cards may be the easiest route. 

Thanks for the questions and hope this helps.

Paul

I do have a small (under $500) collection and maybe a small hospital bill or two. 

I cant get credit because I dont have a credit score? 

what should i do to get a credit score?

Frank

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Hello Frank,

Secured credit cards are a great way to start building a credit history. 

To generate a credit score under Classic FICO (the version mortgage companies use), you will need one tradeline with a six-month history – so, it is true that you will have no score, but that doesn’t mean that you can’t obtain a mortgage loan. 

If you have been paying rent and utlities for the past twelve months or more then alternative tradelines may also qualify you for an FHA mortgage loan to purchase your own home.

Also, Frank, there is a great deal written on this site regarding collections.

Thanks for the questions and I sent you contact info for a loan officer that can help you with an FHA loan.  Check your email!

Paul

About 3 years ago, my husband and I decided that we wanted to fix our credit report, and logically, at tax-return time we paid off all accounts that were in collections. 

We thought that this would help us, but our credit report seems to have stayed stagnant. 

We got a mortagage since (in 2006) at a decent rate, but only after much shopping (we wanted fixed rate). The mortgage isn’t even helping our FICO. 

All of our accounts that we paid off state Charge off in current status, and Paid charge-off in comments. 

We currently have NO credit cards, no auto loans, and we pay our student loans on time.  We recently tried to get a credit card (hoping to raise our FICO), but were denied. 

What can we do to raise our credit score?  How can we get the creidt that we need to get in order to raise our FICO so that we can get credit?

Thanks,
Pam

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Hi Pam,

Goodwill letter the paid charge-offs and open three secured credit cards.  A credit limit of $300 each is fine.  

Keep in mind that some outfits offer ‘secured credit cards’ that don’t report to the big three CRAs – obviously, that would not be a benefit.  Last I checked, Bank of America, Fifth Third, and Colonial Bank offered decent deals on secured credit cards. 

Once the cards are open, charge them in the first month and then pay them off entirely.  In six months time, your score will be wonderfully improved.

Thanks for the questions and hope this helps.

Paul

P.S. Please report back in six months so that we can add to this post.  The Broken Credit Blog becomes a lonely place otherwise.

Bryon

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Hello Bryon,

Open three secured credit cards – or - two secured credit cards and ask a friend or family member to add you as a joint cardholder.

Thanks for the questions and hope this helps.

Paul

I have recently had some money come available to pay off some looming old debt that is continuing to ruin my credit.  I have read through many of the blogs and had so many questions answered!  One major issue I have is whether or not duplicate entries are hurting my score.  For example:  I had 3 credit cards with capital one many years ago.  They were all in good standing and I ended up consolidating them.  I lost my job and ended up getting slaughtered of course with the debt and although I have paid portions of the capital one debt (they separated it out as all bad debts on my credit report). They have charged off everything and I get the random horrible collectors that harass me.  Anyway, it is showing up like 5 times on my credit report and then 3 separate collection agencies all over the same issue.  Is there anyway to get it consolidated into just the one account prior to me paying them money?

Next up, I have a ton of student loans, none of which I ever recall being delinquent as I have been in school nearly non-stop for 10 years.  Yet, they are showing up as 120 day lates clear back in 2005.  Not to mention, there is about a billion separate entries (20) and of course they are ALL saying the 120 day late.  I have since graduated and had them all consolidated into one payment that is current.  Can I get rid of the other million entries?  

Last question…I promise…I was married 3 years ago to a person with perfect credit and I have done everything in my power to not let my credit hurt his.  I am trying to rebuild my credit as quickly as possible and have no revolving accounts or trade accounts.  We have been living off of his credit.  I am going to do as I read in the blog and get a couple secured cards. But, I was told recently that I should get added to a couple of my husbands trade accounts that have a long history of perfect pays as it will boost my score…is that correct.  I DO NOT want to harm his credit.  I haven’t even reported to any CRA that I was married out of fear that it would somehow hurt his credit.  Any advice would be revered!

Thanks-  Sarah

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Hi Sarah,

The duplicate accounts [and particularly for the student loans] are likely a reporting error.  In the situation you’ve described, you shouldn’t have duplicate original creditor derogatory tradelines reporting for the credit card.  You can file a dispute with the credit bureau(s).  Student loan late payments are another story.

The collections should be present on your report only if they are actively collecting.  Many times, a collection agency leaves the account on the report after the account has been returned to the original creditor.  This too is a credit reporting wrong.  Here is a letter from CDIA instructing collection agencies to delete their tradeline when they are no longer collecting.  That can be disputed as well.

Sarah, it is possible to have duplicate collection accounts for the same item if the original creditor sold the account to a junk debt buyer and then the JDB outsourced to another collection agency.  If this was the case, then the original creditor’s tradeline should have a zero balance.  Looking at your report, you would know whether or not this appears to be true. 

Based on your knowledge of your credit report’s accuracy/inaccuracy and what has been written above, prepare a dispute letter and send by CMRRR to the credit bureau(s).  If the collections come back as verified, then request debt validation.  In the end, what remains and is valid, deal with through a pay for delete.  Always keep in mind what happens when you pay a collection in the absence of a pay for delete.  Also, while we’re on this subject – settle all of your bad debts [whenever possible] in one fell swoop.  Debt collectors will look at your report to evaluate a settlement offer and in that regard, it’s good to look bad.  Get all of your letters for pay for delete together beforehand and then settle.  

OK, so now down the road in about sixty-days or so, your credit report is looking better.  You’ve waited to add secured credit cards or any other tradelines until after you’ve deleted those pesky collection accounts.  It’s now time to be added as a joint cardholder on your husband’s credit cards.  It’s more of a commitment than an authorized user.  No, in so doing, you won’t “hurt his credit”; but, if he doesn’t make the payments on-time then it will surely hurt yours.  That’s what a marriage is: for better or for worse.  In this case, I’m sure it will be for better. 

Thanks for the questions and hope this helps.

Paul

Kisha

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Hi Kisha,

Rent builds credit and the trades that you’ve listed are considered alternative tradelines.  Secured credit cards are an excellent way to establish credit references that impact the FICO score.  Keep in mind there is an advantage to having bad credit when it comes to debt settlement.

Thanks for the questions and welcome to the site!

Paul

At the moment, I cannot afford to do anything with the charge offs, and about half of the collections accounts are more than I can pay in the near future, but the other half are small enough that I can pay them off in the next couple of months. If I do a pay for delete (or whatever the exact term is … I’m new at this) will this probably cause at least some halfway decent improvements?

Any recommondations for finding some secured credit cards that won’t cost a fortun in fees, so I can start doing some building on the other side of things?

And any advice for trying to reduce the burden of a state tax lien that was originally only for about $50, but with penalties has become more like $1800?

I have been almost perfect at avoiding anything to make my credit -worse- for almost three years (getting responsible), so now I’d like to start getting some improvements without waiting another four or five years.

John

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Hello John,

Whenever possible, it’s best to save up a war chest of funds and settle all (or many) of your accounts at the same time.  Debt collectors review consumer’s credit reports and use that information to evaluate a settlement offer.  In other words, having an ugly credit report bodes well for you when negotiating settlements.  Yes, pay for delete is the way to go and tax liens can be settled for less.

Thanks for the questions and hope this helps.

Paul

P.S. Bank of America, Colonial Bank and Fifth Third Bank offer secured credit cards at a reasonable cost.

Read, learn, write, mail, negotiate, write, mail and Raise Your Credit Score!

Tanisha

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Hi Tanisha,

You have asked a tough question – a really tough question.

It’s difficult (closer to impossible) for me to know your credit profile and how it will be impacted in six-months time based on two sentences, although before I award you with the golden key for having Stumped The Experts, I’ll answer your question this way. 

Yes, it is possible for a credit score to go from a 496 to a 600 in six-months.

I read: “I have already closed everything on my credit report”.  Does that mean that the negative entries were closed and paid to a zero balance?  If so, then you are in tremendous shape.  If not, and the negative items are original creditors (and paticularly if they are recent) then deal with them this way, and if the items are collection agencies then deal with them this way.

What will be lacking and needed at the time that you apply for a mortgage loan, will be active and open positive tradelines.  My recommendation is two secured credit cards and one authorized user account.

The mortgage industry is going through a change at present and the guidelines are becoming more and more stringent.  The credit score alone is no longer the determinant for mortgage loan approval – the underwriters are also looking for tradelines.  The secured credit cards will help in that regard.  Also, make sure you are paying your rent payment with a personal check each month.  The rental verification can count as one of the required tradelines.

Have you considered a lease-purchase? 

Thanks for the questions. 

Paul