How to Repair Credit with Multiple Charge-Off Accounts and Build New Credit

How to Repair Credit with Multiple Charge-Off Accounts and Build New Credit

How to Repair Credit with Multiple Charge-Off Accounts and Build New CreditQuestion: Hi, I’m having this issue on my credit reports for years now! My Husband also. We have only negative and closed accounts now, none open and Positive. I got sick the last 4 years and we have fallen on hard times.

We are DESPERATE to rebuild our credit. My Experian is currently 565 and my Husband’s is 560. They go up and down a tiny bit every year. We check our reports every year.

Please help us, I have disputed and have gotten a lot of items removed within the last 4 or 5 years but a lot of times they update it which I read does hurt your credit score. I see accounts that are charged off, sold & transferred and now those account balances are higher and the dates are recent, isn’t this illegal?

Please tell me what to do here, should I call them directly and tell them I know what they are doing is illegal & I need them to fix it immediately? How else can we get these duplicate accounts removed? I was told that the Credit Bureaus are allowed to keep both on your report. Please respond, thank you so much.

Answer:  The dates are probably more recent because every time an activity occurs on an account the date of last activity can be updated. The account balances may increase as collection agencies add fees and interest to the debt. This is legal. But keep in mind debt collectors pay pennies on the dollar for debt. If you were ever to settle a collection debt, start your offer very low.

Charge-off Strategies. In your situation, I would make a list of charge-offs, note when they are due to drop off your report then make a decision as to which charge-offs to tackle. You should read “How to Repair Your Credit” to get overall credit repair strategies.

When disputing old charge-offs and even collection accounts you always run the risk of the date of last activity being updated to a more recent date. This could hurt your credit score.

If there are charge-offs on your credit then mostly likely it was transferred or sold to a debt collector. There should only be one debt collector per charged-off account. Both the charge-off account from the original creditor and the corresponding debt collector who now owns the debt can report on your credit files.

However there should not be duplicate collection accounts. You can dispute duplicate collection accounts and request they be deleted. The following strategy sometimes works with good results:

Dispute the most recent collection account first as a duplicate account. Wait to see if it is removed. If the most recent collection account is deleted from your credit report, dispute the older account as not your account.

Many times older collections are not verified because the collection agency: (a) has no record of the account ; (b) the account has been sold to another collection agency; (c) in some instances, the collection agency no longer exists.

Whatever the outcome, there should only be one collection agency attempting to collect a bad debt. At the very least you will have one collection account removed.

Debt Validation. Deal directly with the debt collectors reporting on your credit report. Request debt validation from the collection agencies. The article entitled “What is Debt Validation” explains how the process works. Many times debt collectors purchase junk debt without any supporting documentation. Unvalidated debt should not be reported to the credit reporting agencies even though some debt collectors may try to get around it.

Rebuilding Strategy. I strongly suggest you monitor your credit report and credit score more than once a year. You are actively engaging in credit repair therefore you need to know what is working and what is not. You want the credit scores which most likely resemble the actual credit scores used by lenders so I suggest you purchase FICO Credit Scores at myfico.com.

Add positive credit to your credit reports. Consumers rebuilding credit should try to create a good credit mix. Creating a good credit mix can be done by adding an installment loan such as a personal, mortgage, auto loan or even a student loan. Other ways to add credit is to get an unsecured credit card like the Credit One Bank® Platinum Card. You can get more ideas on how to add positive credit at “Add positive credit to your credit reports.”

Road to Good Credit Scores. Once you get new credit make sure you use the credit account and keep your balance to 30% or less of your available credit. Keeping your balances low and not maxing out your credit cards will not only help you manage debt it will also give a boost to your credit score over time. It will show current and potential creditors you handle debt wisely.

Pay all your obligations on time. Whatever new credit you get please pay more than the minimum and pay on time. Payment history accounts for 35% of your credit score so on-time payments go a long way in creating a good credit score.

Apply for new credit sparingly. A few applications a month is okay but do not aggressively apply for new credit as it will hurt your credit scores. Good luck to you.

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