Repairing Credit The Right Way
hat is the right way to clean collection accounts and gain FICO® fast? (Remember – Work from a TRI MERGED credit report!)
TAX LIENS – BACK CHILD SUPPORT – JUDGMENTS
The easiest step begins with Tax Liens, Back Child Support and Judgments. Settling these account is almost universally required and will increase your credit score. No if, ands or buts about it.
In instances where the amounts are significant, establishing a repayment plan will allow you to qualify for an FHA, VA or Sub Prime loan, but will have no positive impact on your FICO® score.
REVOLVING – INSTALLMENT – MEDICAL – OTHER
For these account types, the most important date you can look at is the “Date Last Reported“. If the last reported date is older than two years on a debt, settling this account may indeed have a negative initial impact on your FICO® score and take 90 to 120 days or more to recover from. Don’t settle this old of an account “pre contract” without first reviewing it with your Lender, Broker, Banker.
Revolving Charge Offs – Ignore duplicate listings from multiple collection agencies. Focus on the most current owner of the debt. If the date last reported is within the last two years, settle these accounts as cheaply as possible!
Installment Charge Offs – Ignore duplicate listings from multiple collection agencies. Focus on the most current owner of the debt. If the date last reported is within the last two years, settle these accounts as cheaply as possible!
Other Charge Offs – These include, cell phone, utilities, etc. You should again, Ignore duplicate listings from multiple collection agencies. Focus on the most current owner of the debt. If the date last reported is within the last two years, settle these accounts as cheaply as possible!
By the way, NEVER settle on government insured student loans. Pay these in full and if possible, attempt to reactivate the account or reestablish the loan as active under a payment plan.
Medical – While a conventional lender may require large medical collections to be paid, this at the underwriters discretion. Typically, you can expect to pay any medical collections when using conventional financing unless you have an accepted dispute on the debt.