CHARGE OFFS & COLLECTIONS:
Obviously these items are affecting your credit worse than anything but they are also liberating in
that once they are charged off, there affect on your credit will not become worse.
If an item is in a Charge Off or Collection status this must become a low priority item
UNLESS IT IS A UTILITY WHICH COULD FACE DISCONNECTION. You never want any utility to disconnect because you will
have to pay the total arrears plus a reconnect fee and possibly a deposit. Credit cards or store creditlines in
these status' should only be addressed if they offer you a low settlement amount - usually the report will include a number
that you can call to negotiate a settlement. Negotiated settlements are not good for your credit but they will
help somewhat so if you can meet the terms it would be a good idea.
ACCOUNTS OVER 60 DAYS LATE:
You need to identify accounts that are reading currently 60 days or more late (indicated by a 3 in the
payment history column, 2 means 30 days late, 4 means 90 days late, 5 means over 120 days late). You need to see
which accounts you can realistically get up to date. If a $100 payment will get a credit card up to date, by all
means do it because you need accounts that are reporting on-time payment. If however the minimum payment column
is reading $565 on a credit card, then this debt may be "terminal". A terminal debt is one that you can't get
to a current status with an amount of cash that wouldn't compromise paying other necessary expenses.
This is where you go into your credit report like a surgeon - you must make careful and
painful decisions as to what debts you realistically can "cure" and which ones you will have to "amputate".
DEBTS THAT ARE OKAY OR "CURABLE":
You must try to find as many salvagable credit lines as possible because the only cure for bad credit
is good creditlines. The last thing you want to do is pay off all of your good credit, then they won't report
good payment. A store creditline with a $150 balance will be a great help in bringing your credit up - the same
creditline is almost worthless with a zero balance.
If you don't have at least three good credit lines that you can salvage showing on your free
online credit report you will need to go out and get some. I have found several credit cards and credit lines
that anyone can get, they all report to the credit bureaus so they can buoy your credit in no time...just put a small balance
on them and forget them, except to make a tiny payment once a month that will rebuild your credit score in a matter of months.
That is STEP 3. Proceed.
