Old collection company debts holding you back from improving your credit report.
My credit report is very naked. The only thing good or bad on this report is a credit card that was charged off in March of 2009 and the collection agency that took it over. The amount was $485. It was since purchased by a collection agency and will remain on my report until May 2015. I want to build credit. I will be opening a secured credit card to help build credit but in the meantime I do not know what to do about the charged off card. I have the money available to pay this off. Any other advice on where to get my score up in the next year would be great.
Should I pay off the original credit card company, or pay the collection company, or sit tight for 3 more years when it will be erased?
—Dan
The account was charged off and that damage has already been done to your credit report. If the collection company is also appearing on your credit report with the balance owed, be sure that the creditor is not also reporting a balance owed.
At this point the only way this collection account could do more harm is if you were sued, lost, and a judgment was reported in the public records section of your credit report.
Paying off the old credit card debt to a collection company.
You will get no extra points for paying the now inflated balance in full. Offering a lower amount the collection company to satisfy the debt so that it is reported as zero balance due would accomplish your goal. Be sure you get any settlement documented before you send a dime out.
If the debt was purchased by a junk debt buyer you have no choice but to deal with them as the original creditor has not rights to the debt any longer.
Settling or satisfying a 3 year old account that is now considered somewhat stale would normally have a slight impact to your credit report and score, but you have such a skinny credit profile I would not be too concerned with this in your situation. The “freshness” of the account being updated as paid will wear off in a few months and the way you are going about establishing credit (nearly from scratch), will coincide with the time that the charged off but now settled account will have a neutral effect on you.
If it were me starting from where your at, I would settle the old debt with the collection company for less, get one secured card, wait 6 months and apply for a low limit unsecured card with my bank where I have a checking or savings account.
Who is the debt collector that has your debt?
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
LVNV Funding from Greenville,SC is the debt collector. You believe that I should contact them and settle the debt? Any recommendations on the best secured card to get?
If it were me with your stated goals, yes I would settle it.
Here is a good resource for secured credit card comparisons:
https://www.credit.com/products/credit_cards/
You can also talk to your bank where you have your checking or savings account and ask them if they have any credit rebuilding products like a secured card, or low limit unsecured card. They should have one or two options. Compare those all offers and make a selection.