Need Advice About Rehabilitating My Credit

I've got some old debts lurking on my credit background, and I have the money to pay them off in total. My plan is to go to my bank. Get my credit report. Then, pay off my remaining creditors.

Should I do it this way? Or, should I do it another way? I do want to pay off my debts in full, and I don't want to declare BK.

many CC companies will settle for 75%.

I can pay them off in full.

make sure to ask for confirmation of account closure so that you can present them to your credit report in case of error.

paying in full trumps settling everytime. and paying off many accounts at once will give you a good credit spike. which will get you many credit card offers in the mail. :/

TearForger

old debt is good. It shows you like to pay interest for years, years and more years...

bad debt, well that's something else.

And make sure you have documentation to that effect. Then ask them to report to the credit bureaus (all three) that you have paid your debt in full, as agreed. That is what you should ask them for -- the "as agreed" part.

...be sure to monitor my FICA score and credit report to be sure my debts have been registered as cleared. The FICA score may rise a small bit. Be sure to report it if your records are not cleared up, and get them straightened out. Also be sure to report any old or unwarranted black marks that have not been cleared off your report.

I would not try settlements, they do not reflect well on the record.

Then, I would to try to take out a small loan on something...a loan I can easily handle...and pay it off on time or ahead of time. I'd also apply for a credit card and use it, but pay off each balance monthly and never carry a balance over.

These latter moves will start to build a credit rating back up.

I use my credit card for everything I buy during the month, but I make sure not to go over what I can pay off each month. Man, the score is good!

My compliments to you for wanting to do this! We have some tough economic times coming as a nation, and you will be one of those who is better prepared for them when they arrive. I would suggest you also start to save a fixed amount each week for a rainy day, even if it means you must cut discretionary spending like eating out to do it. Those rainy days are approaching.

I have two other old/bad debts that I've been delinquent on. My plan is to pay off the other two, and then my payments on my big loan will clean up my credit.

Also, I'm not trying to clean up my credit because I want to borrow more money. I just want a clean credit report.

My suggestions about small and easy loans and/or using cards but paying the monthly balances off each month are because that builds your credit score for the future. Sooner or later, you will need to borrow again for a car or house or something, and that is when your score comes in handy. Continuing to pay the one loan and clearing the others won't build your creditworthiness much, just clear your history up.

Example of what good credit can do: Last summer, I bought 11 acres of land at zero down with 5.9% interest for $196 TOTAL closing costs.

You can't get that kind of deal unless you have built your credit. And the only way to build it is to use it. Just make sure you use it in a way that is manageable. The cards are a good way, as long as you do not carry a balance.

I'm not the professional, just passing this along from one...

1. Student loans are generally considered "good debt" in that they are a solid investment (you can make a higher salary) and they are generally the lowest interest loans out there.

2. After you pay off your credit cards do NOT close the extra accounts. Cut up the card or whatever, but closing lots of accounts at once has a negative effect on your FICA score. This is because your score is based (among other factors) on the RATIO of debt to available credit.