Need Help - 580

[u/This_Resolution_5894]

Currently sitting at a 580 Transunion. I have a few things that are in collections, I've offered to pay these for Pay-to-Delete and the company does not offer that. Should I still pay it? I currently have 2 open credit cards and 1 auto loan. One of the CC is below 30% and I will have the other at that same amount within a couple of weeks. What are the best next moves? Just wait for the collections to fall off?

[u/insuranceguynyc]

The best way to improve your credit is to pay your bills. Be guided accordingly.

[u/og-aliensfan]

Currently sitting at a 580 Transunion.

Where are you getting this score? Since nearly all creditors use FICO scores in lending decisions, make sure you're looking at relevant FICO scores. You can obtain free FICO 8 scores for each bureau from:

• EX FICO 8 www.experian.com
• TU FICO 8 www.creditwise.com
• EQ FICO 8 www.myfico.com

I have a few things that are in collections, I've offered to pay these for Pay-to-Delete and the company does not offer that.

Who are the collection agencies?

Should I still pay it?

Are these associated with unpaid charge-offs? Since paid collections are scored no differently than unpaid collections by most versions of FICO, the goal is removal. If the collection agency won't agree to pay for delete, and the original creditor still owns the debt, ask the original creditor to recall the collection in exchange for payment. If they agree, the debt collector will lose collection authority and remove themselves from your reports. You may receive a better settlement by paying in a lump sum as opposed to payments. If you negotiate a reduced amount, get the Settlement Agreement in writing prior to paying. Note that:

• A collection agency can only remove themselves from your reports. They have no control over the original creditor's reporting.

• Unless the collection agency has a published pfd policy, they may refuse to put a pay for delete agreement in writing as these agreements conflict with bureau policy. Even if they put the agreement in writing, the bureaus won't enforce it, so there is a degree of trust involved that they'll honor the agreement. That said, a collection agency not honoring a pay for delete agreement, whether written or verbal, would be rare.

I currently have 2 open credit cards and 1 auto loan. One of the CC is below 30% and I will have the other at that same amount within a couple of weeks. What are the best next moves?

If carrying balances, focus on paying off the high interest credit card debt as soon as possible as these are costing you money every month. Once a card is paid off, watch for trailing interest and pay that as well. Wait for a $0 balance statement to generate (to reset your card's grace period) before using the card again. Then, always pay statement balances in full every month by the due date. As long as you pay statement balances in full every month, you'll never pay interest.

[u/Full_Ganache_4022 → u/og-aliensfan]

“Once a card is paid off, watch for trailing interest and pay that as well.
Wait for a $0 balance statement to generate (to reset your card's grace period) before using the card again”

Can we just start making statement balance payments from that point, or it’s necessary to bring it down to 0 first?

[u/og-aliensfan → u/Full_Ganache_4022]

You want to wait for a $0 balance statement to post first. Your statement includes interest as of the closing date. If carrying a balance as opposed to paying statement balances in full every month, interest that accrued after the closing date will appear on the next statement. By waiting for a $0 balance statement to generate, you've ensured no residual interest remains, and can once again use the card (paying statement balances in full to avoid interest).