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Overwhelmed! I don't know what to do first to raise my credit score??
Do I take care of my accounts that are in collections first? I don't know where to begin to make the greatest impact on my credit score. Can anyone offer some advice please?

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Here are somethings I did and it flew up over nigjt.

  • stop applying for anything that causes your credit report to be ran, inquiries hurt your score.
  • make sure active credit card are current, even if it means paying the minimum payment.
  • for not, focus on paying off debt instead of collections.
  • put all card and balances on a spreadsheet and sort highest to lowest
  • start paying paying off lowest cards first (as much as you can), still make payments on higher cards too (min pymts).
  • once you pay off that card, leave it at home to avoid usage
  • take what you were paying on lowest card and put it ALL on next lowest plus the min that you were paying before.
  • pay an extra $10 or $20 (or more) on all cards btwn monthly payments if you can
  • keep spreadsheet updated so you can see progress being made
  • use cash or debit card for everything.

you will see a dreastic change in your score as the balance is reduced, the trick is get them below 20% usage.

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Paying off Cedit Cards & other bils

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FIRST     --  CUT UP YOUR CREDIT CARDS!!! In order to get out of debt, you have to stop spending BLINDLY.

Second  --  A spreadsheet is a great idea. MAKE A BUDGET!!! At the top of the page write down your TOTAL MONTHLY INCOME!!

Third      --  List ALL credit cards LOWEST TO HIGHEST Why?  Read on ...

Fourth   --  ADD to the spreadsheet --  ALL BILLS,-->> rent/mortgage, utilities, food, car loans, car expense (gas, maintenance, etc.), any remaining bills.

Fifth       --  Put the money in an envelop labeled for what the money is to be used for. Envelope #1 Lightfs, #2 Rent/Mortgage, #3 Food, #4 Car Expense, Etc. ...

Sixth      --  Pay rent , etc. FIRST with Check or money order. NO CREDIT CARDS!! 

Seventh --   Pay minimum payments on all credit cards except LOWEST CARD.


                                 IT'S CALLED A "ZERO BUDGET". "Dave Ramsey" Talk Radio (this is part of his plan, it works!!!!)

If you follow this path, you will find that you will be able to pay off your bills faster! This plan helped me get out of debt! Anyone who is SERIOUS about getting out of debt can do it with Dave's Plans.

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DO NOT CUT UP THE CARDS/CLOSE ACCOUTS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
If you cut up/close card accounts it will hurt your score. Scores are effected by how much credit limit you have. Lets say you have 5 cards and have a total limit of 15,000. If you decide to close one card you now only have a limit of 12,000. You just dropped your score. On top of that your debt just increased. Scores are also based on debt to limits. So lets say you had 8,000 in debt when you had all 5 cards, you are using 53% of your credit limit, when you close an acoount now your debt is still 8,000 but your limit is less, your credit usage just jumped to 67% and that also drops your score. The best thing you can do is ask for credit limit increases, it will make you look less in debt and help increase your score that way. Jumped my score 15 points in a week. Note that credit card companiesonly update every 30 days to the major credit bureas meaning it can take up to 60 days for anything to be reflected on credit Karma even though its updated every week. Certian card companyies are slower than others.

Credit usage is calculated by your current debt (balances you owe) divided by your total limits (add up all the credit card limits). Easiest solution is pay of your cards as fast as you can, avoid any added spending.  If you have collections, usually if you pay off the collection in the first 30-60 days (depends on the collection agency) they will remove it from your credit history upon full payment (this is what I did) it liiterally jumped my score 50 points in 2 weeks. Also call the collection agency they only want their money are are usually nice.

Use the card once a year to keep it open and dont spend more than you can pay back in 30 days, a billing cycle. My rule is if I cant pay it off in 2 pay checks (weekly pay) I can't get it, its helped me a lot. 

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Helpful to 8 out of 9 people

Your credit score will slowly begin increasing after collections get cleared off. You need to be responsible and pay your debts. Never apply for credit or loans you can't comfortably afford. Paying interest throws you further into debt and is wasted money. Have the collection creditors offered a settlement amount? You may wish to look into a debt settlement company such as Lexington Law to assist you. I used them  years ago when I was overwhelmed by debt and my creditors refused to lower the interest  rates so I could get ahead.  You may find it beneficial to take on extra work for added income to help pay your debts.

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Hold off on the accounts in collections.  There may not be any debt owed on those!  There's a chance the original lender sold off the debt (and) took a loss and tax write off.  If you are being contacted by a collections agency, they may not have the right to collect anything from you.  Don't send them anything until you read about Debt Validation first.  Credt Infocenter has a good debt validation article.  Try searching for that.

I saw an account in collections on my report once (from a parking ticket i didn't know about) and i had a credit bureau question the collector for me.  The "account in collections" went away.

Otherwise, all the advice about the budget and debt snowball is spot on!

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Credit Cards to improve scores

Helpful to 2 out of 2 people

I'm a bit confused. I want to purchase a house next year. Right now my credit scores is poor, however they were improving as of early this year my score was near 600. I notice my scores dropped drastically recently. INot sure if it's because I disputed some things but a lot of collection accounts were removed. Now Credit Karma and the mortgage company I'm working with recommend getting a secured credit card to improve my scores.  I currently don't have any credit cards and haven't had any in several years. I too read Dave Ramsey's book on financing and he recommends not using credit cards or applying for them. 

My question... If credit cards are not good to have,  why do I need them to improve my credit scores? 

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I highly suggest posting your question separately.  This thread is for helping the original poster. 

Posting yours separately will give YOU specific answers to YOUR problem.

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Try online tools

Helpful to 2 out of 2 people

Try online tools like READY FOR ZERO. They can be immensely helpful in figuring it all out. Helps with the stress of not knowing where to turn or what to do next.

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I agree with skippy927

Helpful to 1 out of 1 people

Sending DV letters or even disputing directly from each credit reporting website is the way to go.

Even if you find out they are yours, look at the dates they're due to drop off.  I had some years ago & they all had 3 or 4 years until they were due to fall off.

I contacted each one & made payment arrangements.  This was before I learned about PFD (pay for delete).  If you can, search around for the email for the CFO (chief financial officer) for each creditor.  I wrote to them all, even after mine had been paid in full.  Sent them what is called a "goodwill letter".  You're basically asking for a measure of good will & asking them to remove derogatory statement (entire collection acct) from your report.

This is 100% legal.  When they report, the info MUST be correct.  Collection agencies & even OC (original creditors) are not bound legally to report anything.

I had 2 paid collections, one OC acct and a bad school loan (all PIF) removed early.

Make that letter short & to the point.  Whether you're asking for a PFD, or a GW removal, these CFO's are busy, but want their $$.  Best way is to send letters via US mail. CMRRR (Certified Mail Return Receipt Requested.)

Not my first rodeo...playing the credit game for many years!!

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Helpful to 0 out of 1 people

Yes you'd like to pay collections off first, they seem to compact your credit score a lot. Then try working on your debt with creditors.

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