Repair Credit Score

Question: Best way to repair credit?

I established a credit history starting 7 years ago, and for the most part, it was always in good standing. However, I would say that I have one blemish, and it happens to be a big one, a credit card charge off, yikes. Not sure how I let this happen, but it did happen. I am going to pay this in full ASAP, and not settle. What are the chances that the company would erase it from my Credit Report, I know they have the power, but are stating otherwise. I just pulled my Credit Score, and on an Experian scale 330-830, I scored 530, which is awful, I know. What is a realistic time frame to bring it up to 700? 1,2 years. In the next few months, I am going to pay the charge off in full, and pay off all my other credit cards. Thanks for your help. The good thing is that I am not looking to buy a car, or house anytime soon. How much did the charge off hurt? I swear, last summer, my score was over 725.

Answer: 530 is about as low as it gets before they simply score it 0. Pay the charge off account as soon as you can. Try to deal directly with the lending institution if you can as they are not a rough as third party collectors. If it is already with an agency DO NOT PIF. The agency bought the debt for anywhere from 70% to 30% and will try to get you to pay as much as they can to increase profit. If you settle with the lender they will report as settled while an agency most likely will report just paid. Make sure you are clear as to who you are dealing with when paying off the debt.

As for the credit you have, do not pay it off right away. You need to show the ability to handle a revolving account and you already have a big derogitory account. Pay your revolving debt down, but not off. If you have 5k available in credit cards, revolve no more than 1k. Most importantly, pay on time. If you miss a due date by a day or 2 you will get a late fee, but proably not reported as late. It is usually the second late payment that gets reported.

If you continue to pay on time you should be fine in 9-12 months and could get into the 700s in a year or two.

couple of tips
Do not have a lot of inquires on your file - it can drive down the score - be careful if you go car shopping as the sometimes pull credit on you

pay on time

do not have more than 25% of you income as revolving debt

do not use more than 25% of the revolving credit available to you

you can tell how you are doing by the offers you get in the mail. As you score improves, so wil the offers

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