Shery asked in Business & FinanceCredit · 6 years ago

Most efficient way to fix credit?

We got into nightmare of life-trouble for a year or so and could only afford food & shelter. Honestly, gave up for a while, on the financial frontier. We have a car loan that was late on about 4 payments due to situation. Whats worse, is that both of us have about 3 credit cards that went into collections during this period. :'( The upside is that we have no repossessions, foreclosures or bankruptcies.

Credit scores are in the dumps, and they deserve to be. Low 500's now. Wondering how to start cleaning up this mess now that the worst has passed. If credit cards collection companies are paid, will they stop reporting negatively? How much of an effect would a secured credit card have, and how long to bring score up? What should we do? Would like to buy a home someday...


The CC's in collection are within the last year.

4 Answers

  • 6 years ago
    Favorite Answer

    The damage to your score took place when the accounts went severely delinquent. Paying them now will not improve your scores, but it will protect you from further collection efforts, such as being sued. Once they are paid, they will show a $0 balance, but the derogatory history will still remain.

    What you need to do, as you suggested, is to establish new credit and show that you use it responsibly. A secured credit card is a great place to start.

    Catching up on the car payment and keeping it current moving forward will also help your score.

    Ideally, you want at least three positive accounts reporting. If you get a secured card and get the auto loan caught up, after about six months, apply for a gas station card or an unsecured card that is geared towards people with fair credit (or worse). The interest rate may be higher, but if you pay it in full each month, the rate is not important.

    If you take all the right steps, you can have a very good credit score in about 18 months. As the minimum credit score for an FHA loan is 580, from some lenders (Wells Fargo just announced it dropped its FHA minimum credit score to 600, from 640), you should be able to qualify for a home purchase in the not-too-distant future.

    Good luck!

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  • Charm
    Lv 6
    6 years ago

    Secured credit cards are no more than a savings account. They are not affective in building credit. At the end of the day, the real key character is how much of your debt can you payback. Are you able to get ANY credit cards....Walmart, Furniture, something....something needs to bring that credit up...If the finances are their, you have hope. Best is to call everyone owed, and work out an agreement and what you can do.Ex: You owe Capitol One 1500..offer $700 to close out the debt. Most companies are willing to work with people. Instead of being out 1500, their out 800.

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  • 6 years ago

    Hey Shery,

    I find this article, in my source, to be really useful for your situation since it can give you some useful information and advices on how to improve your credit score. You can check out the other articles too. Hope it helps!

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  • 6 years ago

    They will not stop reporting negatively. The only way not to have something be reported negatively is to pay it on time. Once it is over 30 days late, it is too late not to do anything to stop it from reporting negatively. It will report negatively for 7 to 7 1/2 years, and it will stop at the same time whether you pay it or not.

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