Starting Over

hello,

       I’ve been reading your website that last two days and decided to finally write for your opinion.
I am 25 year old single mom who just a had a baby boy.I have a HORRIBLE Credit Report and Im not sure my next step to take.The last two years I took the approach to start paying off my collections on my credit report to bring up my score. Which to my surprise it did raise it because I was able to buy a car in July of 2007. I also went and got 2 credit cards.When I was 18 i went and obtain creidt and didnt know how to handle it. Now because My car note and my debt took the best of me. My credit score plummet down to the floor when I bought my car my credit score was 640 now its below 500.My car was repossessed and my credit cards are in collections. i want this to be clear and not showing credit settled on my report when i Pay my debts.

Question 1
will paying off my collection debt and repo help my credit score

QUestion 2
If no to question 1 how can i raise my credit score.

Question 3
How long should i wait to purchase a house for my son and I.

I already have 3 arrangements with collection agencies to pay off the debt. Was this the right thing to do

PLEASE HELP

Francesca

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Hi Francesca,

1) That’s not an easy answer.  If, for example, you were to pay it all off with a lump sum now, then ‘yes’ it would improve your score because the repo [car bought in July 2007] and collections are recent.  On the other hand, if you were to enter into a payment plan on these items [absent re-aging the credit cards – which would help] then you may find that the account is continually updated to the bureau each month and the repayment plan isn’t really helping your credit score.  Both of these statements are general statements and not absolutes for your particular circumstances.

2) Save & Settle.

3) Two years of continual employment, Two years of verifiable rent history, and post save and settle. 

Thanks for the questions and welcome to the site!

Paul