Beware Of Credit Repair! - Page 3
If you have larger debts you may be able to settle the debt. If the debt is charged off and with a collection agency your chances are better. Why ? Because they get the accounts and they get a percentage of what if recovered. They like it when they don't have to spend a lot of time and money to recover the money. I have seen them accept anywhere from 80% down to 30%. It depends on the agency and the age of the account. BEWARE BEWARE. If you settle with an agency you still may hear about the debt in the future. Let me explain why.
The original creditor assigns it to the agency. You settle with them. The account is sent back to the creditor. The creditor isn't aware it was settled, just that the balance is lower. In some cases it gets reassigned to a secondary agency who is also unaware that it was settled. So they attempt to collect on the lower balance. If you settle a debt make sure you get documentation that it was a settlement. Make sure your credit bureau is updated to reflect that. Make sure you KEEP that documentation. If you are ever contacted by another agency in the future you will need that to prove that you settled that debt.
That bring us to credit repair companies. There are some that are legit and honest and some that are just a rip-off. Be careful. They will promise you that they will fix your credit, get you new credit, the sun will shine, the grass will grow and the birds will sing and the flowers bloom yada yada yada. They use the dispute process with the credit bureaus to do this and it isn't always effective. You can also do that for yourself. They may know a little more about it though. If you use one I would find out how they plan to fix your credit, can they negotiate settlements for you, can they refer you to getting new credit established and most important, will they refund your money (less any actual expenses) if they fail to improve your score.
It is possible to establish new credit without going through the steps I mentioned. You can get secured credit cards. www.cardreport.com These cards do report to the credit bureau but they are secured. Typically they open an account for $250. The fees they charge usually come up to the same amount. So they aren't really assuming any credit risk. But they will report to the bureau. Make your payments on time or ahead of time. Also pay more than the minimum. There are other variations of the secured card. The best one is one secured by a bank account since you aren't just giving money away to get a credit card.
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