Slowlane warning: Credit Repair Question - help needed

[Phil]

Hi, how’s it going?
Very sorry if I've posted this topic in the incorrect place - but it seemed most like the most relevant area.
I'm not too sure how much of this is applicable to you guys as I am british and I'm sure that we have different legislation relating to banking over here to you Americans but...
I have a question regarding Credit Rating/ Score repair that I would really appreciate your help with.
Just over a year ago now I became disheartened and decided to leave my (£25k per annum) full time job in construction to pursue a full time degree in my passion: Business management and Entrepreneurship. Everything went well with the transition into academics (although I am now a broke student); my Girlfriend has been very, very supportive financially, I got the maximum student loan I could and I also got a part time job without too much trouble.
However I still have the responsibility to repay:
Natwest bank personal loan (£12k)
Natwest bank overdraft (£1200)
HSBC bank overdraft (£450)
Alliance & Leicester bank overdraft (£1300)
I then contacted a Consumer Credit Counselling service whom advised me to pay what I could afford to pay to my creditors.
All of my debts were then eventually passed on to debt collection agencies who have accepted these small minimum payments.
I believe that my credit score and rating is in an awful state. I know that I will need to rely on banks to lend me money in the future to leverage my business ideas
So I’d really appreciate your practical advice on…

• How I can improve my credit rating and score?
• Do I have to pay the total balance of my debts to improve my credit rating?
• Would you advise paying off my total debts before starting a business (even though I am currently paying under £20pcm to service my debts)?

Thanks for your help

 

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[Luke12321]

The overdraft amounts, seems quite large. I don't know if this is common practice among college students? Anyway, pay them off.

Do you need to pay off the entire debt? Yes! I mean, if you come to me wanting a loan for a investment and your personal credit says you did not pay off your entire loans and let them go....you are not responsible with your money and too high risk for me.

If you are saying do you need to pay them all off before you start a business venture. No, but it all depends on you. Personally, I don't want to be in a huge amount of personal debt and then starting a business up as well as most starts up are going to struggle in the first years. Imagine the stress with that, to go along with being in debt personally. Plenty of people have done it and many more will in the future...it is just up to you.

Last word of advice, again....take care of your credit!

 

[Caesarion]

You are so right..It can bite you at times when you DON'T need to be bitten the most!

 

[TrendSetter]

• How I can improve my credit rating and score?
  

The first thing you need to do is have all these debts validated. According to the FCRA (Fair Credit Reporting Act), all of these accounts must be documented with signed signatures of all monetaries loaned and received. The collections holders must have these documents in order to legally report negative credit information in your file. However, most collection agencies fail to obtains these documents and can not legally report the debt. You MUST mail these validation letters with certified mail return receipt! After the validation period has passed (allow 45 days), check your credit report again to see if these tradelines have been deleted. If they have not, make sure they have mailed you the validation documents. If they have failed to mail you the documents, which does happen alot, then you will need to contact the reporting agencies to dispute the debt. Your dispute will contain information verifying your mail receipts that the reporting agency has failed to validate and confrim the debt. By law, they must delete these tradelines and have it corrected within 30 days. If you do receive validation of the debt still dispute the debt as "incomplete information" or "verify all acuracy". This is a lengthy process and does take time, however it takes time even if you pay someone to do it. NEVER deal with a collection agency on the phone. All correspondance must be via USPS with return receipt. Keep all receipts and maintain the accuracy of all dates and correspondance. This is just the first step into getting these items removed. To increase your credit score you are going to need at least two lines of credit, both being secured cards that report to all three buerueas. Never charge more than 15% of your credit limit as the main factor going into your credit score is the credit limit/usage ratio. You can initially dispute these tradlines online and you can find links to do this at creditkeeper.com. Some other good sites to check out to get yourself up to par on laws and things regaurding credit are creditinfocenter.com, creditboards.com, and credit.com. In your specific situation I would say that if you got rid of the bad cards and kept whichever ones are secured and have good interest rates then your score should be back up in no time.

The only guaranteed method to repair your credit is to pay off the old bills and get your derogatory balances to $0. "Well that isn't very helpful" is probably what you are saying. Since none of us just have cash laying around to do that there are other things you can do that are guaranteed to increase your FICO score practically overnight and start rebuilding your credit. It's actually very simple. Sign up for Millennium Secured Credit Card and send them $300. Buy $90 worth of groceries on it and make the payments. Keep the balance under $90. Then sign up for Rebuild Credit | Unsecured Bad Credit Card | Credit Rebuilding | Guaranteed Approval Credit and get a $10,000 unsecured credit card, buy something and make the payments. Do a google search for USA Shopping Club and sign up with them for $12,500 unsecured credit card buy something and make the payments, Eclub USA and get your $3,500 credit card and finally Horizon Gold and get your $500 credit card. Once all of these companies report to the credit bureaus you are going to see an immediate increase in your FICO score. Guaranteed. Then you can work on getting the bad marks paid off and removed. It's much easier to get them permanently deleted if you don't owe them any more money.

• Do I have to pay the total balance of my debts to improve my credit rating?

Yes you do, BUT only pay them after all of your debts have been validated via send/return receipt. If they dont have proof that they (the collection company) own the debt, or that the debt is yours, and do not have the required documents proving so, then you wont be paying the debt, dont pay a debt until it is indeed validated to be your debt.

• Would you advise paying off my total debts before starting a business (even though I am currently paying under £20pcm to service my debts)?

Normally I would say yes, pay off your debt before you start your business, however it all depends how well you are at managing your finances. It sounds to me that you are still somewhat young and still in school. In this case I would continue to pay off your debt and fix your credit and save a good chunk of coin in the meantime all while perfecting your business model before you actually start putting money into the idea/concept/model. Remember, failing to prepare is preparing to FAIL. I would use the time you have no to fix your credit and pay off all your debts, stay on top of it and dont let it get out from under you, if you do then all the work you put forth will be lost and you will still have the debt you started with. The good thing about all this is that after you fix all of your debt you will be able to help people with they're own issues and its a great asset to carry in my opinion.

Hope all this information that is somewhat out of order helps you, good luck!
-Jami​

 

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[Runum]

Let me get this straight, you quit a paying job while you had outstanding debts that you legally accepted and signed for? You want us to give you an out to not paying your obligations? You quit the job to go to college to learn Business Management and Entrepreneurship? Are you kidding? Do you have a wife and kids? How far are you into this education program?

Sounds like to me that you really need to get a grip on what you want and figure out how to honor your obligations. Most of us here have worked at crappy jobs to pay the bills while attending the school of hard knocks in order to build our businesses and investments. You sound like you are looking for the trick of the month to me. Sorry if this sounds harsh, just call them as I see them.

I wish you well in your pursuits but PLEASE do not sign any more notes you have no intention of honoring.:cheers:

 

[Russ H]

Wow, Runum, sounds like you're full of man juice today.

I have to agree, unless I misread the above:

If you want to improve your credit rating,

1. PAY OFF YOUR DEBTS as you promised you would, and
2. KEEP YOUR WORD-- don't take out loans you don't intend to repay EXACTLY as you said you would.

There are other ways to improve your credit rating:

1. Adopt the identity of someone who is deceased (but had good credit)
2. Kill off your identity and go on the lam somewhere
3. Buy lotto tickets in the hopes you'll hit it big.

I don't recommend ANY of the last 3, I'm afraid.

Best of luck to you. As we like to say around here: Get your *ss in gear. :fastlane:

-Russ H.

 

[Cat Man Du]

Let me get this straight, you quit a paying job while you had outstanding debts that you legally accepted and signed for? You want us to give you an out to not paying your obligations? You quit the job to go to college to learn Business Management and Entrepreneurship? Are you kidding? Do you have a wife and kids? How far are you into this education program?

Sounds like to me that you really need to get a grip on what you want and figure out how to honor your obligations. Most of us here have worked at crappy jobs to pay the bills while attending the school of hard knocks in order to build our businesses and investments. You sound like you are looking for the trick of the month to me. Sorry if this sounds harsh, just call them as I see them.

I wish you well in your pursuits but PLEASE do not sign any more notes you have no intention of honoring.:cheers:

The real problem is his intention. That needs to be addressed first--- before going into business. Take stock of yourself and get your own house in order !:smx6:

 

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