Credit Repair

[Josh Tonecha]

I know this dead horse has been beaten plenty of times, but as stated in my only prior post I am just beginning my investor career. I am finally in a place where Ive been paying all bills on time for 4+ years, my wife and I have decent income and we are saving on a regular basis and keeping our expenses well within a reasonable area. The only problem - old collection accounts on my report, and my wifes income is stead but part time. Because my score was 616 I couldnt be on the loan it would have to be her alone, Im fairly confident we will be denied, even though I know we can afford what we are looking for. My debts are old but they still hurt me so I've been researching credit repair. What does anyone know about Pay for Delete (PFD) letters or other avenues to not restore this debt but find a way to satisfy it sooner without extending the time it lingers on my account. I want to pay the debt now but I'm afraid this will only cause me more suffering.

Sorry for the long story but I need some guidance here.

[Ken Gurta]

Josh, I was in your situation a few years ago. I had trouble refinancing because of a low Fico score. The first thing I did to improve my score was to get a copy of my report from Annualcreditreport.com. I then disputed anything that was derogatory, even if it was a legitimate balance or statement. The creditors had 30 days to provide information to the credit bureaus in order to substantiate the negative items I had disputed. 2 items were removed from my report, one that was legit and one that had been paid off years before.

I Knew that I had to also change some bad behaviors on my part. So, I signed up for credit monitoring, followed all of the advice, paid all of my bills on time, and waited. It took around 2 years to get a fair to good score. I still use credit monitoring today to help make sure that there are no new surprises to my credit report.

If all of the negative items on your report are over 5 years old, I am not sure that I would pay them off unless a lender required you to do so. While having an account paid in full will improve your score, You will probably need up to 2 years of good behaviors to get your score where you want it anyway. Those items will fall off at 7 years. Pay off anything that is less than 5 years old.

Good luck on your progress!