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lml369

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Needing advice for people who know nothing about fixing a credit score?
I just want to start off by saying that my husband and I know next to nothing about this kind of stuff so if you have some advice for us, please put it in layman's terms and also please excuse the dumb or incorrect questions. I don't even know what all to ask to make sure I get the correct info. That being said, let me explain our situation. My husband and I are wanting to buy a house within the next few months. My score is not so good but my husband’s is okay-ish and we would like to get both of our scores up as soon as possible. We do not have any credit cards and the only loan we have at the moment is a car loan. We purchased the car back in December of last year and have been making payments on time every month since. According to Credit Karma, all of the stuff that we have on our credit is pretty small and manageable. We could have it all paid off within a month, maybe two. Originally we got excited and thought we'd just start calling all of these credit companies paying the stuff off and boom we're done! But after some research, it looks like it won't be that easy at all. According to a lot of the things we've read, it's not a matter of just paying it off, you also have to seemingly FORCE the credit companies to remove the negative marks on your credit score. Another thing we noticed was that a lot of people said, if possible, to just wait it out and let it fall off your credit. But, in our case, we can't do that because some of these things are only 3 or 4 years old and, as I mentioned earlier, we are wanting to get our score up within a few months so that we can purchase a house. So we have a few (okay a lot) of questions on what we can do to get the ball rolling.

1. Where the heck do we begin? According to Credit Karma, most of our debts are owned by multiple companies, namely TransUnion and Equifax. Do I just contact them directly when we are ready to pay? Can I pay each thing separately such as the $60 thing here, the $140 thing there? If I pay it off at, say Equifax, will it also come off of the TransUnion account? How do we ensure that they will actually take the charges off of our credit score to make it go up? Is that even how it works? How long will it take for the score to go up IF we are able to get everything taken care of correctly?

2. How do we ensure that the creditors take these things off of our score? While looking at other questions here on Credit Karma, a lot of people said that if you don’t handle it correctly, the credit companies will take the payment but will not take the charge off of your credit score or will just mark it as ‘paid’ which essentially does nothing to actually make your score look better. So how do we handle that? Do we get a letter on company letterhead saying that the charges will be taken off before we make a payment like some people said? What do we do if we take these precautions and they still don’t take it off? If they do take it off, how long will it take to show up on our score and how much will it raise it?

3. What are other things we can do to help our credit in the meantime? A lot of sources that I looked into said it would be a good idea to get a small credit card, one with like a $200 limit or so, and then use it ONLY to get gas or something small once a month and then pay it off each month. Is that a good idea and is there any specific way to do that to make sure it positively affects our score? Should my husband and I each get one or can we sign up for one jointly and if we do it jointly, will it positively affect both of our scores?

Like I said previously, my husband and I really know nothing about this topic and we’re really just needing some good advice to get us going. Thank you so much for any advice you have to offer us!

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sounds like you've done a little homework, so good. fico 8 ignores collections under 100$, so if you have small ones they aren't hurting you if a lender uses that model. most mortgage companies use models older than fico 8, so in your case, this might not be of benefit to you. you mention equifax and transunion because CK uses those two, but there is a third agency, experian. most likely they also have accounts reported to them. these are three seperate agencies who collection information on all of us. their information could be same, could be different. not all creditors report to all three, some just to one etc. 

you are correct in saying that just paying these things off won't help you right away. it will probably hurt you. you have to negotiate a pay for delete. this is done in writing and they will delete the account and then it's as if it never happened. this is really the only way to boost your scores right away by paying off the collections.  if you do get them to pay for delete, they will report it to all agencies, so you're good there.  if you get all the accounts deleted, your scores will jump up right away! as long as it take them to report it, 30-60 days. the only faster way is the dispute process, but since they are your legitimate debts, i don't see a dispute working (disputes can be settled in just a few business days most times, and your score could jump in a week!). 

in the meantime, i would open more credit. get it joint, in both your names, and then it will report as such on both you and your husbands reports. i'd aim higher than 200, it's not uncommon to get 5K + credit limits with income of 40K. with both your incomes a 5K credit limit is reasonable. cap one is known as kind of subprime credit card issuier, so you might want to try them. 

a question for you, if your husbands scores are better, does he earn enough to qualify for the home himself? if so, it may be an option to leave you off of the mortgage. you can still be on the deed, but if your scores hurt the application and you don't need your income to qualify, having the loan in his name may be a way to get it approved. mortgage companies usually require payment of all collections prior to closing, but wait! you're better off getting qualified, then settling the debts at the closing table, if you can get qualified. if you pay them early you run the risk of hurting your credit as you've already learned. 

how to deal with credi cards:  keep an eye on your monthly statement end date. the balance at the end of that statement is the amount they report. i like to pay mine off before the end of the statement date, that way they report a zero balanace, with a postiive payment history. this is the best of both worlds. if you let your credit card get jacked up with a high balance, it will hurt your credit. 

hth's 

Reply by
lml369

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Fantastic! Thank you so much for the advice! I do have one question. When you say pay for delete, that means we call the company tell them to send us a letter on letterhead saying that it will be deleted once we pay and then make the payment, correct?

Also, we most likely will need my income to qualify for a loan so that's why I want to get mine cleared up as well. Not to mention, it will bring a certain peace of mind to my life. 26 with a great credit score can be a rare thing these days! 

Thanks again!!

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