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Posted in Auto Loans
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Question By
Shay006

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I have less than $1000 in collections for medical debt, from less than 3 years ago, what should I do
I want to get a car loan. I was in an accident in September of 2013 and totaled my vehicle, which I had my grandmother co-sign for. My credit is a 530, and I have about $740 in medical collections. I can only afford to make payments on it at this point but I read that if you acknowledge it, that the 7 years will start from the time of acknowledgement. So the 3 years that it has been in collections will not count. I was going to get a credit card, use it for gas and pay the minimum payment to build credit while I pay off my debt but I don't know that this is the best option to raise my score. As of right now, I only pay rent, my cellphone, and cable/internet. So I owe way less than I make a month. What do I do to get to where I can be approved for a car loan?

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The rule is that a collection account can only stay on your credit report for 7 & 1/2 years from the DATE IT WENT DELINQUENT.  Nothing you do can change that date, so if you are making payments, it does not re-age the account, the drop off date remains the same.  Getting a credit card is a great idea for building up your credit, but leave a tiny balance on it at all times to really drive up your score (1-3% of the credit limit).  It will take about 6 months to see a positive benefit.  Best of luck!

Reply by
Maeson68

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The account is deliquent, but the reporting of the debt to credit bureaus can be reset with a payment or any other acknowledgement of the debt being valid.  However, the debt will always remain there.  It may not directly affect your credit score, but collections can hound you as long as they can afford to pay people to harrass you for a living.

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