Step 4: Old Negative Credit Old Negative credit affecting your credit score? You may have been told to pay off the old stuff... or to work with "credit repair" companies. Important Note about Credit Repair Services... Buyer Beware! Most of them offer the same level of service you can provide yourself... and for a lot less money! You can write the credit bureaus and challenge everything just like they do. However, to get something off your credit for good, you must provide proof that the dispute is for real. You can challenge everything without proof, but you will end up where you started, or worse. And despite their claims, majority of these credit repair firms barely provide a temporary fix at best. How are your scores calculated? Your credit score is made up of many factors... types of credit, amount of credit, payment history, length of time, etc. However, consistently you will find that what has happened during the past 24 months will weigh the most in your score. Also try to avoid the finance companies (you know, ones with 23% rates) as credit scores typically don't like that type of credit account! How will paying old stuff really affect scores? Not as you expect! You see, most old negative credit is just that... old. Although it is still showing up on your credit report (and will for 7-10 years), if it is one to two years old (or more) it may not be really affecting your score. Paying off that old credit, while it sounds like the right thing to do, may bring your score down! Because the past 24 months mean a lot, by paying something off you will update the last activity date... so that old collection from 2 years ago that wasn't affecting your score now gets a newer date and gets factored in again. And although it's a paid collection... it's still a collection weighing into your scores. If you are considering buying a home, leaving that old account alone for now may be better. Plan to pay off those collections after you close on your home! The Bottom Line: Most folks with credit issues simply give up on credit and are afraid to get new credit. Since a major factor in your score is payment history over the past 24 months, a lack of current credit hurts scores. By continuing on this path scores can drop or even disappear. You must have Positive Credit working hard to overcome the negative credit in order to improve your scores! Don't give up.. you can get your credit back where it needs to be and get everything in life you need. Patience and persistence will make all the difference. Best of luck to you! |
