I am trying to refinance my home on my own (going thru a divorce... long story) Anyway, I pulled my credit and my scores are horrible. LOTS of old medical bills (some I am disputing - I don't think they are mine) My question today is to see what is in my best interest to pay off first to boost my scores quicker. I have 12 tiny accounts which total $158, I also show an account for $538, $1100 and $800. Which is is best to pay first? Should I wipe out the little ones? Any advice is appreciated! Thanks
It's important to realize that paying off old debts won't necessarily improve your FICO scores in the short run. In fact, it could even hurt your scores. If these are all collections or charge offs, a "paid" account isn't really any better for your credit scores than an "unpaid" account. That's how the credit-scoring models work, so in settling these accounts you should try to negotiate complete removal in return for payment. Dispute the old medical bills that you believe are incorrect through the CRAs, and hopefully they'll get deleted from your reports. Now, as far as which debts to pay off first, I would recommend tackling the highest interest valid debts first. That will save you the most money in the long run. Other people prefer to just tackle the smallest debts first for some quick wins before building up to the larger debts.
A collection that has been on your credit report for over 24 months doesn't impact your credit score as much as a collection that was just reported last month. So when you paid an old collection it will refresh the active date for that collection making it seem like it just reported therefore lowering your score. If you goal is to qualify for a home loan. Depending on how many points you need to qualify you could ask a family member or friend to add you as an authorized user to one of their existing credit card accounts. Make sure they can maintain a low balance (10% or less of the credit limit) and their card has a perfect payment history. You could also try and settling your old debts and get them completely removed from your credit report and then you will see an increase in your credit score. Good Luck! Heather with BoostMyScore.NET
So, who do I negotiate a complete removal in return for payment with? The collection agency or the credit bureau??
You would need to contact the collection agency. Go to the learning center on Creditnet website. This should help you through the credit repair process. Good Luck! Heather with BoostMyScore.NET
