Cleaning up Credit

[bell]

Greetings,
I have an average fico of about 650. I have a couple of negative reports from a credit card and school loan. Even if I pay off these debts the negative reports stay on for 7 years is that correct? If so, will paying off these debts improve my credit rating?

Thanks!!!!

 

[Bunny_roses]

paying off your debt is always a good idea. NOT paying it off just makes it worse and your credit just keeps going downhill. the 7 year thing is partially right. sometimes a company will remove it after you pay it off. Some don't. Even if they don't however they will show that you have payed it off.

hope that answered some of your question

 

[Albey]

I do know that by paying it off, alot of creditors or load sharks will over look them since they are paid off. Even the little 3 or 12 dollar ones are enough to make them say no, since its such a small amount.

 

[mamab]

My suggestion is that yes, you need to pay them off. But after you have done so, send a letter in writing requesting that they "Close" the account, and mark it as having been paid in full. Then, if they refuse, send a letter to reporting agencies and ask them to put a note on your files that the accounts have been closed and paid in full. That way, if anyone looks, they will see that they have been taken care of, even if they are not reported that way.

 

[Melos]

I completely agree with mamab on this one. By all means pay off your accounts, but make sure to get the credit reporting agencies to report that the balance has been paid and the accounts are closed.

 

[taiarain]

7 years is a yes and no thing.

The reality is, every month that you have those debts, your credit worthiness takes a hit. Once they are paid off, you stop taking those hits. Paying everything off today won't mean waiting 7 years for a magic, new credit score. Paying everything off today means gradual improvement in your credit worthiness beginning tomorrow.

 

[Penguin]

7 years is a yes and no thing.

The reality is, every month that you have those debts, your credit worthiness takes a hit. Once they are paid off, you stop taking those hits. Paying everything off today won't mean waiting 7 years for a magic, new credit score. Paying everything off today means gradual improvement in your credit worthiness beginning tomorrow.

But on the other hand, if you have *no* credit... your "credit-worthiness" seems to be lower than if you have a little bit of credit...

 

[hemisync]

In the mean time while waiting for your credit to improve, you can get a secured credit card from the bank. This will help you start to establish better credit. The more you can do while waiting, the better your credit will look as well.