Tracy Winters
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Most important, get it on writing!
First, a 50% lump sum is not such a good deal for a debt this age. You can settles for less, between 25% – 35% of the original debt. Remember – they probably bought your debt for a few cents on the dollar.
The damage to your credit is already done, and paying the debt won’t raise your score. Unlike credit card debts which are reported by both the credit card company AND the collection, medicals bills are reported to your credit report only by the collection agency. This means that if you can negotiate a Pay for Delete Agreement, it will improve your credit. If you agree for 50% settlement, demand a pay for delete.
In any case, have them send you a written and signed agreement. The people who get more demands from collection agencies after making payments are the ones that do not have a written agreement. Pay only with Money Order or Cashier’s CSheck. Never give them your checking account number. Keep that agreement and your payment proof forever. See how-to-pay-off-debt.html for more tips on dealing with debt collectors.
Who owns the account?
As an individual you cannot report anything to the credit bureaus. How did the debt got there in the first place? Surely you didn’t report it to the credit bureaus yourself?
My guess is that your former tenant debt went to collection, and it’s the collection company that reported it.
Under what name your former tenant debt is reported? This is the entity that owns the debt, and he should do all negotiations with them.
In any case, even is he pays I doubt if they will remove it from his report, and it won’t raise his credit score.
See why-pay-off-debts.html and how-to-pay-off-debt.html for a more detailed explanation.
Your credit score is not bad. You simply don’t have a credit score, yet.
Your bank account, rent, utilities, cell phone and similar bills are NOT extensions of credit. They are not reported to the credit bureau and do not appear on you credit report (unless you default and the debt is turned to collections, and then it’s the collection agency that reports your debt to the credit bureaus).
Credit scores are based on your credit history (i.e. on everything that appears on your credit report). Since you have no line of credit, you have no credit history and as a result no credit score.
It reads 0 because it means no score at all. Fico runs fro 300-850, so even the worst credit score cannot be lower than 300.
In order to build your credit you will need to use some kind of credit, either a credit card or a loan. If you’re under 21, you will find it very hard to get a credit card (you’ve been turned down already – probably because lack of credit).
You will need to provide proof of at least 12 month of consistent employment and sufficient income to qualify for a credit card. A part time job might not be enough. You’re only option may be to start with a secured credit card. Use the card for small purchases, wait for the statement and pay the balance in full every month. That will build your credit and avoid interest.
Good luck
Absolutely
Like so many people, you are confusing between the statue of limitation and the credit reporting time limit.
Derogatory items age off your credit report 7.5 years from the date of first deficiency, whether paid, settled, or unpaid. That doesn’t mean you no longer owe the debts. It just means it can’t be reported to your credit file.
The Statute of Limitations (SOL), which is the time frame to bring lawsuit, is governed by state laws. While the SOL for most debts is less than 11 years, some states have much longer times (Use this Complete list of Statue of Limitations by State to check the SOL for your state).
So they have plenty of time to file a law suit long after the debts fall off your credit report.
Some debt collectors will continue to attempt to collect even after the SOL has expired. They’re hoping you don’t know about the statute of limitations and you’ll pay up if they threaten you enough. They may even file a lawsuit against you, but then you can use the SOL as an affirmative defense.Another very important issue – every time you take an action with an account, the SOL is restarted. Making a payment, making a promise of payment, confirming your debt, negotiating a settlement or entering a payment agreement can restart the statute of limitations on an account. When the clock restarts, it restarts at zero, no matter how much time had elapsed before the activity.
You need sufficient income (usually above 18K)
The new regulations that went into effect a couple of years ago require that people under 21 must provide proof of sufficient income to qualify for a credit card. You also need a parental co signer.
Most companies will want to se a STEADY job record of at least 12-18 month prior to the application, plus sufficient income, usually above 18K. In most cases a part time job (freelancing probably included) won’t suffice.
What card have you been trying to get? You stand no chance with a regular credit card. You may qualify for a secured credit card. They are easier to get. Try Capital One.
Since your parents help you, why not ask them to put you as an authorized user on their card? It’s called credit piggybacking, and it’s the best way to build good credit. See credit-piggybacking.html for more information.
BTW, do you have student loans? If you do – they build credit for you as well.
Good luck.
It may help a bit
A second credit card would expand your history, which may help a bit to raise your score. But don’t get your hopes to high. It takes time – you will need at least 24 months of consistent, timely payment history to improve your score. Those timely payments are what actually build good credit.
Naturally, you will need to use both cards. Just having a card won’t help a bit, so use both credit cards for regular purchases, wait for the statements, and pay the balance in full every month. That will build your credit and avoid interest.
Just for your information, if the student loans are reported to the credit bureaus and appear on your credit report, they count in your credit as well. Any reported debt counts in your score.
Usually, Federal student loans are NOT reported unless you fail to pay. Private student loans are generally reported whether paid or not. The reason for this is that the government is helping you tp “hide” your debt load, so that you are not rejected for other loans because of high debt-to-income ratio.
Best to contact TdBank
First, I assume that the debt does belong to you. You should know that paying won’t erase it from your credit report, and will not improve your score.
What paying does is to change the status of the item to “Paid”. When applying for a loan, it looks much better than unpaid debt (See why-pay-off-debts.html).
If TdBank sold your debt to a collection agency, the balance of this entry should show $0. They negative entry itself remains on your report. It will age off 7-1/2 years from the date of first delinquency (default).
You should be able to see that same debt under a name of a collection agency. I’m surprised you do not mention it. It may be that they have just sold it, and the collection agency didn’t report it yet. It will probably appear on your next report. That is just the way it works.
BTW, it’s unusual that TdBank sold the debt. They have their own in-house collection dept and are very aggressive. They normally just sue rather than sell the debt.
I’d try to contact TdBank and inquire with them. If it didn’t actually go to collection, settle it with them.
It doesn’t raise fico score
A charge off is one of the worst things that can happen to your credit score and credit report.
Paying off a default account in itself will not remove it and will do very little improve to your FICO score. If you pay or settle the account, at best it will get updated to a Paid R9 charge off status with a $0 balance…..a tiny bit better but still bad.
A much better way to raise fico score is to negotiate a settlement in which you agree to pay all or some of the account in return for the collection agency removing the charged off account from your credit report.
See why-pay-off-debts.html and how-to-pay-off-debt.html for a more detailed explanation.
Just remember to have them send you the terms in writing before you pay them.
Unlikely, though you could try the good-will approach
I’ll try to make it as clear as I can, although you’re missing a crucial piece of information: You didn’t say who reported the account to your wife’s credit report? It can be the Hospital (not likely), the collection agency or both!
Usually, hospitals simply sell unpaid bills to collection agencies, which then become the owner of the debt. Usually they are the ones that report to the credit bureaus, and they are the entity you are supposed to pay to.
Once the unpaid bill is sold to collection, the hospital no longer owns it and should therefore refuse to accept your money. You must inquire about this, because, regardless to your question about the derogatory item and the credit score, you may find that you still owe money to the collection agency (as the legal owner of you debt) ALTHOGH you’ve paid the hospital (which should have rejected your payment).
Paying off debt in itself does nothing to improve your credit score. Your credit report will show that the debt is paid, and creditors can use it in your favor, but your credit score itself will remain unchanged. The only information that goes into the credit score formula is your credit history, so the fact that you had a collection account is not deleted when you pay off your debt!
In general, correctly reported negative information cannot be legally removed from your report. Most negative information remains on your report for 7-1/2 years, no matter what, and only the passage of time can remove it. There should have been no exceptions to this rule, but there are a few:
Pay For Delete
Collection agencies (or any other entity that reports to the credit bureaus) are not allowed to delete/remove information about certain accounts, even after they are paid.Some collection agencies are willing to risk their relationships with the credit bureaus and will erase a collection account from customers’ reports if they’re willing to pay off their debt in full. It’s called a Pay for Delete Agreement.
In your case however, since the debt is already paid – this solution is N/A.
Goodwill Letters
Another approach is to write a letter to the debt owner, asking for his forgiveness and good will in removing the account from your credit report. This approach works well with companies you have long relationship such as utility providers, banks, cc companies, cell phone providers etc.You can try this approach with a hospital, but not likely with a collection agency. Naturally, you must pay the debt in full BEFORE sending a good-will letter.
Add a consumer remark to your credit report
The last option available to you is to add a short explanation (a.k.a Consumer Statement) to your credit report, explaining all potential creditors why a certain derogatory item is on your credit report. It will do nothing to improve your credit score, but potential creditors that actually read your credit report (most do) DO take it into consideration. Credit score is important but is only one factor out of many in the lending decision.See credit-repair-self-help.html and how-to-pay-off-debt.html for more information.
All the best.
Most likely – it won’t…
speeding tickets (like so many other unpaid bills) do not simply appear on credit reports. While being late on you credit card payments, car loan or mortgage will show immediately on your report, unpaid bill will only appear there if they have been sold to collection.
Usually, it takes about 6 months for unpaid bill to be sold to collection, so since in your case only 5 months have passed, mu guess is that it didn’t went to collection yet. However, you may need to pay more late fees. Pay them on time…
Keep the payment receipt forever. Even make another photocopy of it. In case that your ticket had gone to collection and will surface in the future, you’ll be able to dispute it. You’ll need that payment receipt.
Best regards.
Cancel it
It is true that closing a credit card may have a small adverse effect on your credit score, but if you’re not using it anyway, than it has no effect on your credit score anyway.
Inactive credit cards do nothing to build your credit score. There is also $30 annual fee that goes down the drain.
Closing credit cards is not recommended for two reasons:
- It lowers your total available credit, so your credit utilization goes up
- It make your average credit file “younger”
Both (higher utilization & younger file) may impact your score.
However, in you case it will make no difference.
You credit utilization will not go up because you don’t carry any balance on your active card, so your utilization is 0% anyway
Closing your oldest account may impact your score a little, but if the account our closing is less than 4 years older than your open account, it won’t make much impact.Closed accounts in good standing remain on your credit report for at least 10 years. Although they don’t count much in your score as open, active accounts, you wouldn’t notice any difference because unused card do nothing to your score either.
Lastly, keeping unused accounts open poses a security risk – they are more susceptible to fraud and identity theft.
My recommendation – close the old unused card via letter. Request a written confirmation that the account is closed and 0 balance. Keep that confirmation forever. This account is certainly not worth the annual fee.
It’s not up to you to decide
You’re missing the whole point of a cosigner, which is to have someone with good credit to offset your credit problems or lack of credit, and share responsibilities & liabilities in paying the loan.
So you see, someone with bad credit simply cannot be a cosigner. A cosigner with bad credit has no value to the creditor.
The second thing to understand is that the decision is not yours. If the creditor approves you w/o a cosigner – good for you. If they want a cosigner, chances are that your mother won’t qualify.
What you need to do is to try and pass it yourself. If they’ll insist on a co-signer (chances are that they will) then you’ll need to find a cosigner with good credit in order to get a student loan.
It’s only an advertisement
You didn’t get pre-approved, only pre-selected. It only means that you met their basic parameters to go on the mailing list for such offer.
If you read the fine print, somewhere it says something like “up to”, which means that if you don’t qualify for the offer, you could get lesser terms (lower limit, higher interest, no rewards). You could even be denied completely.
The Fair and Accurate Credit Transactions Act gives the credit bureaus permission to sell your credit history information to credit lending companies, which screen potential clients and put them on mailing lists.
When National Bank pulled you credit file, it generated a credit inquiry. If you pull your report you should be able to see their name in the inquiry section.
However, it has zero effect on your credit score. Although the (Soft Inquiry) appears on your file, because it was NOT initiated by your search for new credit, it is NOT considered by the Fico formula.
Consumers have the right to exclude themselves from receiving such pre-approved mailing offers.
You can tell the 3 major credit bureaus to exclude your name from lists for pre-approved, unsolicited credit and insurance offers by calling 1-888-5-OPT OUT (1–888–567–8688).
It used to work, but no longer
Authorized user accounts only count in FICO scores for spouses and kids. It’s called Credit Piggybacking, it’s perfectly legal and Fico recognizes it.
Authorized users do not benefit directly from the credit score of the primary card holder. Credit scores are individual. But the credit card account will appear on their credit report, so when the primary card holder makes timely payments it builds credit for the authorized users as well.
If your aunt adds you as an authorized user, the account will appear on your credit report, but Fico will ignore it and it won’t build any credit for you.
In the past the practice was exploited by “credit clinics”. People would pay thousand of dollars to be added as an authorized user of a complete stranger with a stellar credit score. A few years ago Fico blocked it, but kept it open to close family members.
If your parents can’t add you to their credit card, you may have to start building your credit with a secured card. See establishing-credit-history.html for more information.
There are two downsides to credit piggybacking:
- The same way it build your credit, it can ruin it if the primary card holder stops making payments
- The credit card debt counts in you debt-to-income ratio, so it may make it harder to get new credit
For this reason I always advise people that down the road, after they have established their own credit, ask the primary card holder to remove them from the card.
At this point in time settlement is not an option
The credit card company will ever agree for a settlement while the account is still open. They will never settles for less than a full payment on active accounts.
You can try to negotiate a settlement only on accounts that has been charged-off and are closed. This is, needless to say not a desirable situation because a charged off account is one of the worst things for your credit report. Not to mention that you won’t be able to get a new credit card with a fresh charge off on your report.
You need to act fast, because credit card companies typically charge off accounts after 120 days of delinquency.
What I would do is talk to the credit card company and ask how much you need to pay to go current. Expect to pay more than the original balance because of late fees and interest.
As for charged off accounts – the damage is already done, and your Fico score will not increase whether you settle or pay in full.
However, as potential creditors examine your report in the future – “Paid in full” looks better than “Settled” when it come to making a lending decision.
When negotiating a settlement, be sure to get all terms in writing before you pay. Any promise over the phone about any settlement deal is worthless. Never deal in “good faith” with debt collectors.
