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zproram

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Better to pay off debt sent to collections before starting to build credit?
I have about 7000 in debt all sent to collections due to loss of income over the past couple years. I now have a job and my number one priority is to build my credit back up. My score is currently 523. So would it be more wise to try and somehow get all that collections payed out and then work on building my credit or try and build my credit and pay it off. I was thinking something along the lines of a loan to pay it all off then pay back that one loan and that would help but trying to get a loan for 7000 with my credit score? I do not think that is possible.
I am not terrible money and my score actually went up 14 points recently (yay) So really any advice would be great!

Thankyou,
Zachary

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Pay collections=improved score.

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Believe it or not, paying those collection accounts will improve your credit score.  Yes, they are a negative right now but making the payments regularly until they are paid in full will show that you do care about your reputation in credit.   You don't want to wait on those accounts because the negative remarks will build the longer they remain unpaid.  This amount of collection accounts scould be paid off in about 2-3 years, depending ono how much you can afford to make in payments.  The larger the payment (even just $5), the faster the payoff.

In the meantime, if you want to take an additional small step in improving your credit, get a secured credit card and pay it off in full when you receive the statement.  You won't have a high credit limit since you have to deposit funds in the issuer's bank, but it will be a very managable amount that will show good credit usage. Use it for things like gas for the car.  Your credit score will increase gradually.

Hope this helps. 

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