Paying off collection accounts while repairing credit history
Q: I just got married 3 weeks ago and am wondering how my poor credit and the 3 accounts that I have in collections will now affect my spouse's and our joint credit. I had financial problems earlier and not nearly enough knowledge regarding the world of credit, being late too many times with the payments while I was a college student. Now I have the financial ability to pay-off all my accounts in collection, which total about $4,500 and have been working towards building good credit. Should I simply pay-off the outstanding balances immediately or should I look to a credit-repair agency to help get my credit repaired while paying off the amount owed. My main concern is to pay these debts off, but also to do this quickly.
A: Your credit problems are not going to affect your spouse's credit directly. It may however affect your joint borrowing ability as many banks won't let you be on a mortgage application, so your income can not be used to qualify for a larger loan. As far as your credit, if you f.e. want buy a house, and your spouse income is larger than yours, he or she could be a primary borrower and you are co-borrower, even if your scores are not good. Again, some banks won't take you even as co-borrower, some will. But if you get on the mortgage as a co-borrower, it will improve your credit scores. As far as paying the collections, first try to renegotiate these $4,500 with every Collection Agency involved in the debt collection. Tell them that you are willing to settle, start with 50% of your debt, and see how they respond. Also you can try to request so they remove the negative accounts from your report, once you pay an agreed settlement. It is a long shot and all the promises must be in writing. If you want to simply pay it off and move on, just do that. Negotiations can drag, so if several hundreds or even a thousand isn't a life or death situation, just do it. You don't nee any credit repair agencies to repair your credit. What you need to do is to get few new credit lines, which could be a secured credit card or even high interest car loan which can be refinanced later. To put it simply, you have to overlap bad credit with good credit. Read Reestablish Credit. As far as credit scores, they will go down initially after paying those debts, from my experience it is like an admission of guilt. It will take likely a year, may be two, depending on how bad it is. Again, credit repair agencies won't do anything different from what you can do yourself except charging you fees. Check the following pages -
- Debt Collection
- Debt Collection Time Limits
- Debt Settlement
- Charge-off Negotiation Letter
Wed Aug 1, 2007 02:08PM | Copyright: www.bad-credit-advisor.com | More in Credit Repair Tips | Comments (1)
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