How to repair a bad credit score

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Posted 2/13/2012 by Credit_Help_98 in NSBR Board


PeaNut 543,284
February 2012
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Posted: 2/13/2012 2:41:26 PM
Okay, I admit that I'm being a coward by posting anon, but I think that some stuff is a little scary to put out there under your real name.

Anyway, my dh and I have terrible credit scores. They are really low, like in the 400s. I know this is awful and inexcusable, but I need some help on how to repair it. Is there somewhere you can call that's on the up and up that will help you for low cost?

Our score I believe is so low due almost exclusively to late payments on things, which is really the most ridiculous reason to ruin your credit there is I think. It's all due to laziness, procrastination and poor planning/organization.

Here is our situation: We have a house we've lived in 5-10 years. We have a 30 year mortgage and we pay it one time every month. We even pay an extra payment a year (it's taken out of our checking account automatically--this is when we have the most solid payment history). We owe about $120,000 on the house and our payments are about $1300). We make between us about $100,000 and we live in the midwest where cost of living is decent. We have two school-aged kids. We have three vehicles: my car that's paid off, his truck that he paid cash for awhile back, and a car that only has five payments left on it. We only have one small credit card for a department store--it has about $150 on it. We always seem to run slightly behind on our bills, all of them that aren't auto-deducted (cable, phone, electric, and gas). Plus charge cards (we used to have more). We do have another charge card that is closed that we owe about $800 on (I forgot about that). I don't think we live extravagantly at all, but I don't think we live carefully or always responsibly. On paper, I would think we look good, but I just am not sure how to approach getting our score back to a decent level. I can't get a credit card right now, I know, I've tried.

Where do I begin?

Captain K

PeaNut 247,594
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Posted: 2/13/2012 2:46:22 PM
I would strongly recommend!!! They are going to have a lot more information and be less judgmental than here. I'd just go post there what you posted here

Best of luck to you. Good for you for trying to fix this.

I don't think any of your numbers are sooooo out of whack or you seem to have that much debt. It sounds like your issue is more behavior based. It is crazy to pay a bill late when you have the money!!! So I think you will have to find a system that works for you, be it auto pay or paying on a certain day of the week or what. Those little things you just can't let slip.


PeaNut 31,018
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Posted: 2/13/2012 2:47:09 PM
Paying your bills on time
Not using more than 30 percent of your available credit

See if your bank offers a prepaid line of credit on a card. You pay them $1000 and they apply it to the card. You can charge on it and then pay back the balance. After a time the bank will just open the line of credit for you and the money on the card goes back to your account. But it shows like a $1000 limit on it.

Cards with less than $500 limit are considered "toy" cards and will lower your credit.

Another thing is to open a steps card with someplace like Capitol one. They start with a small limit then after you've paid on time for a set period they automatically increase.

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PeaNut 198,401
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Posted: 2/13/2012 3:30:58 PM
I used to be a mortgage loan processor.

You state that your credit score is low due to late payments, from laziness on your part. You have the money to make the paymetns, correct?

You do not need to contact anyone to up your credit socre.

What you need to do is make payments on time, period. It will take at least two years before you notice a difference, but from here on out, I would make a schedule as to when things are due, and if you are mailing your payments, make sure you mail them at least a week ahead of time, so it has time to arrive to it's destination.


PeaNut 543,284
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Posted: 2/13/2012 9:04:52 PM
Captain K, you hit the nail on the head. It is behavior based. It's a long-standing pattern with me: procrastination, avoidance, etc. I really have to figure out how to break the pattern. I know I have it in me. I keep trying different systems to keep me on track but I haven't been completely successful yet.

As far as the question about do I have the money to pay the bills, the answer is sometimes I do and sometimes I don't. I know that when I try to do a budget, take a look at the bills and what's coming in, I can see that I have enough. So even when I don't have the money to pay the bill when it's due, I realize if I had planned better I would. So sometimes payments are late due to laziness and sometimes they are late due to poor planning.

Two years really? To see any difference at all? I mean if that's what it takes, that's what it takes. I'm going to do the work regardless of how long it takes. It's just that I've watched home buying shows (and I realize this sounds incredibly naive) where they've worked with people who had low scores, they started making changes and it seems like the score starts moving up slowly, but it does start within a few months. Is that all lies just for tv? It just seems crazy that it would take two years to make any difference. I realize I've gotten myself into this but man, I DO make the payments--always. I have never filed bankruptcy or walked away from anything. Not to mention the fact that credit card companies have made a killing on our late fees. And there are lots of payments I have never been late on--my mortgage, my car insurance, etc. I guess it is what it is.

Oh, and I don't mail any payments, everything is online.

Thanks for the advice so far. If anyone has any other advice or suggestions, I would still really love to hear them.


PeaNut 77,792
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Posted: 2/13/2012 9:14:11 PM
I would suggest a simple system to keep track of when thing are due.
Maybe get a calendar and every single time a bill comes in, open it immediately and write down the bill and amount due on a calendar square a week in advance of the due date, so there is time for it to arrive. That just becomes YOUR due date to go on line and pay it.

Keep the calendar in your kitchen or someplace where you look at it every single day. Then you can tell at a glance how much is due on what date. Do you think that would work for you?

Sequin Sewer

PeaNut 140,337
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Posted: 2/13/2012 9:34:31 PM
Breaking the procrastination cycle is as simple as not thinking about it so much. The more you think about something, the bigger it becomes in your own head. You need to be on autopilot, to some degree, while you break this habit. Thought enters head, "Oh hey, I need to XYZ" and action follows immediately, without stopping to think about it too much. In the immortal words of some nike marketer, "Just do it."

You need a very simple budget, and you need to pay as soon as your paycheck hits the bank.
Our budget is just an excel spread sheet that I update periodically.
It includes the pay date and expected amount, then under that is a list of the bills to be paid from that check, the amount normally due each month, and the due date.
Here's a simplified example (amounts and bills changed for privacy. )

2-1-12 $1300
850 Rent 2/4
100 Electric 2/12
100 Car Ins 2/16

2-15-12 $1550
150 Cell Phone 2/18
300 Car Pmt 2/24

etc etc etc

As we go through, we just mark each one "pd" where the due date is. If it's auto withdrawn from our account, we mark it "autopd" when it comes through.

Budgets don't have to be complicated or hard to work with. Nor do they have to involve accounting for every single nickel and dime you spend. Keep it simple.

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PeaNut 16,299
June 2001
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Posted: 2/13/2012 9:54:40 PM
If your score is that low, I would assume there is more out there than just some missed or late payments. The first thing to do is get a copy of your credit report. You can go to a local credit union for help, or you can get it online at This is the only site where you don't have to pay for the report without signing up for something.

Make a list of everything that you have to pay monthly (mortgage, car, credit cards, cable, phones, etc). Then list what your actual take home pay is. There should be enough left over for groceries, gas, clothes, etc.

If you have collection accounts listed on your report, start contacting them. You can negotiate a settlement. It is not the same as paying in full, but it is a start. Get current on all bills listed on your report and keep them current PERIOD!

One strategy is to pay the bill when you get paid, especially if you are paying online. Use your own bank's bill payment system rather than having the company pull from your accounts. For example: if your minimum payment on a card is $50 and you get paid biweekly, have a payment of $25 sent every two weeks. That way you don't have to worry about having the full $50 when the due date comes around.

It takes some time and effort, but worth it. While your score will not be A+ credit overnight, you will see it start to move upward. I have work with people in similar situations and it is not uncommon to see a score move 50-100 points in 6-9 months. My employer has sponsored a Savings Challenge for Members(customers) for the past four years and have awesome results with families reducing debt, increasing savings and raising credit scores.

Good luck. You didn't get in this situation overnight, so be patient with turning it around. On step at a time


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PeaNut 153,017
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Posted: 2/13/2012 9:57:36 PM
Wow, you are in MUCH MUCH better shape financially than us, yet your scores are much lower than ours. Are you sure they are accurate - have you checked them recently? I mean we've even been through bankruptcy, often have our mortgage 1-3 months late, etc. and our scores are much higher than yours. I guess I don't know as much about how the scores work as I need to!

You've got a lot of good advice on this thread, but it sounds like the disorganization is your biggest problem and if you can get on top of that, you'll raise that score quite easily.

Make a list of the bills you have to pay each month, and next to each one, mark down the day of the month it is due and how much it is. Put them in order of the day they're due.
For example, my list for March starts like this:

01 Chase Home Finance $1902.87
01 Plymouth Rock Insurance $65.20
03 Sears Card $220.00
10 Virgin Mobile $15.90

and so on. It includes everything that I will be paying by check or online and also all the auto-payments (such as Virgin Mobile, Netflix, etc. - that comes out automatically but I still list it so I can check that it does happen correctly).

At the bottom of my list each month I put the bills that aren't "monthly" but that have come in and are due that month. This month so far I have an oil bill b/c we got an oil delivery recently, a trash collection bill because it's quarterly and this is one of the months we have to pay it, and our excise tax bills that just came in.

MAKE SURE YOU PUT DOWN THE DATES EACH ARE DUE, AND HAVE THE BILLS LISTED IN ORDER! Keep your list where you can check it every day or every few days to make sure you know when the next payment is due and make sure you aren't late. If you would rather pay them all at once on the first of the month, or pay the first half at the beginning and the second half in the middle, great. But make sure your list is detailed if you aren't organized by nature - then you'll have no excuse for being late. You won't forget one or be late if they're all right there for you to see on a list.

Check each one off as it is paid so you're keeping correct track of them.

When the list is done at the end of the month, don't throw it away until you copy down the whole list again for the following month. That way you won't forget about one.

This sounds pretty low-tech, I realize, but if you're disorganized enough to be late a lot even when you do have the money for your bills, maybe this low-tech "notebook paper" type list will be what you need.

Good luck!


PeaNut 18,334
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Posted: 2/13/2012 10:02:34 PM
and it seems like the score starts moving up slowly, but it does start within a few months. Is that all lies just for tv?

Much of it is just for tv. But some of it depends on WHY the person has a lower credit score, what options they have to make changes and how much it needs to come up.

Carrying debt can lower a score so if someone has a fair amount of disposable income they can use to pay off the debt their score is going to bounce back much faster than someone who is needing to create a whole new track record of being able to pay on time.

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PeaNut 31,018
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Posted: 2/13/2012 11:15:56 PM
Our low score was a result of Paying off debt and not opening anything new

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PeaNut 421,228
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Posted: 2/13/2012 11:47:40 PM
I'm going to 2nd everything candleangie said. Make a list of all your bills and when they are due. When you get paid, see what has to be paid now, that can't wait until next pay day, and pay it. Use whats left to budget groceries, gas and anything extra. DO NOT SPEND any money until the bills have been paid. Even if it means eating potatoes every day for a week. If you do it this way, you only have to think about the bills on pay day and they are always paid on time.

Once you're caught up, add "contribute to savings" to your bill list so if something comes up you don't have to charge it again. Get a credit report, like others have said, and check for errors. Once ours showed that we had defaulted on a car loan and had an outstanding balance of 150.00 on it, but we had traded it in several years earlier and the dealership should have taken care of it. I managed to get it removed.

A more than 30 day late payment is a big red mark on your record, and they take a long time to fall off. Dh was laid off for a few months and we had to juggle, paying some things late, but I never let anything go past 30 days. We traded our car a few months after he was working again and our credit score had actually gone up 15-20 points (3 different scores) since it was ran when we bought the house a year ago.


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PeaNut 522,402
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Posted: 2/14/2012 9:58:43 AM
We pay our bills on the 1st of every month. It is a reflex now; it's the first day of the month, so it's time to pay the bills.

When the bills come in, they get put in a basket on a shelf that holds a checkbook and stamps, and then on the first, we sit down and write checks and/or check to make sure that the ones on autopay have gone through. Takes less than 10 minutes.

The first month you do it, you may be paying some bills well in advance of when they are due, but once it's set up, you'll never miss a bill again.

Why do you need your credit score to go up so quickly? It seems like you need to focus on spending less money (so that you have enough left over to pay bills) and paying down your debt. If your take-home pay is $100K and your mortgage only amounts to $15,600/year, you must have some seriously high utilities/car payments/credit card bills if you "sometimes don't" have enough money to pay all of your bills each month.


PeaNut 543,284
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Posted: 2/14/2012 10:44:25 AM
Thanks for all of the advice. Some really concrete suggestions, which is so helpful. And some hard words too. It's all helping to light a fire under me. This is something that is so within my power to fix, but for some reason I feel powerless over it. It keeps me awake nights and makes me sick to my stomach. I don't know why I don't just ACT, but I really am going to.

I ran the credit report at the site someone suggested. Thank you, I knew there were free credit report sites but I wasn't sure where they were and I've ordered expensive ones in the past, long ago. They didn't provide a score though, just a list of info. Do I want the score, is it important to have that? Apparently that does cost extra: $7.95, but I'll order it if it's a good idea to do it.

According to the report there were 11 negative things to report. I might as well put it all out there.
* Two accounts in collection for a total of $275. Okay, I can take care of that. I have the numbers to contact them
* One credit card that is closed and I still owe $200, I've been paying on that, so almost done.
* Five accounts that are closed and paid in full, but had late charges while open.
* One account closed that was my husbands and I was on jointly. That one is closed and there was a write-off I believe. That one I'm pretty ashamed of.
* One account that is open. It's the only charge account I have and is a small one (a "toy" one as someone called them). That has a small balance, has been paid on regularly but has late payments.
* One tax lien that has been resolved. I have the paperwork. I called on this just now and they said I need to take the paperwork that I have to the court and $35 to file and this will be cleared.

That's all of the negatives.

I have nine positives. Seven accounts that have been paid in full (no longer open) and were never late. I have a mortgage paid in full, never late, and a current mortgage open and never late.

I also wanted to make the correction on our salary, someone said $100,000 take-home pay. This is NOT our take home salary. It's our gross salary. Take home is more like 70,000. I have expensive health insurance and put 6% in my 401K, plus I have a loan from my 401k (I know, I know, not a good idea).

It still sounds doable. I just need to make some changes and I think some of the suggested ones are good.

Someone asked why I need my score to go up so quickly. I guess I don't need it to go up quickly, but I would like to get a credit card again with a decent limit. It's kind of scary to not have any type of credit to fall back on. Or even a credit card for things that require a credit card and a debit card won't do. I know that's what for emergency savings fund are for, but until you get one built up or if something huge should come up that exceeds your fund, I would like to have a back-up. It's just another thing that worries me. I think that's part of the reason I don't pay some bills on time, even when I have the money. I'm afraid of taking my balance down too low and then something coming up that I need money for. I realize this creates a vicious cycle.


PeaNut 488,494
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Posted: 2/14/2012 11:11:39 AM
If you would like help in setting up a budget, there's a neat program named "You Need A Budget" that I've been playing around with. I found it through MSN Money, which is a great resource, and I do like it a lot. The website is here:

You Need A Budget

There's a free trial download of the software so you can play around with it, and their forums are also very helpful. I think it's great software, I'm just so used to using my Excel spreadsheet (which does the same thing) that I haven't fully transitioned to it.

You've gotten some great advice here, and the best is - start paying your bills on time. Really. Don't stick your head in the sand, pay them. That will go a long way to rebuilding your credit. If you have any further questions, please peamail me - I'm an Education Ambassador for one of the big three credit companies.


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PeaNut 52,841
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Posted: 2/14/2012 11:12:25 AM
I agree with Candleangie about creating a simple budget. You can make it more complicated later if that helps but I think budgets can be hard for people who are not used to making them if they are trying to account for everything.

Nor do they have to involve accounting for every single nickel and dime you spend.

I don't agree with this initially. It sounds like you have the income to be able to pay these bills that you are not paying. I would write down EVERYTHING you spend for a month or two......EVERYTHING is the key word here. Even if it is only a $1, write it down. This way, you can figure out where your money is going and determine where you can cut back a little. I would get all of the small negatives on your credit report cleared as quickly as possible.

(it's taken out of our checking account automatically--this is when we have the most solid payment history

I would get every bill that I could set up for automatic payment. How much are you throwing away every month with late payments? The credit cards that you are paying late usually have significant late payment charges.

You said you were putting 6% in your 401K. Is that how much your company will match? In other words, if you stopped that temporarily, would you be throwing away free money? I would not throw away free money but if that money is not matched, I would stop it temporarily and get all these little bills taken care of if that is the only extra money you can find. However, I also think that if you wrote down where all of your money is going, you will find that you could take care of the little stuff fairly quickly because it sounds like you have the income to do it.

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PeaNut 161,211
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Posted: 2/14/2012 11:37:51 AM
I would recommend reading Total Money Makeover by Dave Ramsey! Our family lives by his method (although 5 years in, we are now tweaking it to our needs).

That is where we started and then we went to his seminar Financial Peace University at a local church (not all are held at churches). It was life, marriage and future changing.

I highly recommend taking FPU as it gives you little chunks of the big picture to work on each month. We also have recieved so much moral support by making friends in our class. ALSO, learning from those in your area - where deals are, whose services to trust, etc - was priceless.

You can do this!!!!


PeaNut 148,015
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Posted: 2/14/2012 12:36:36 PM

Our score I believe is so low due almost exclusively to late payments on things, which is really the most ridiculous reason to ruin your credit there is I think

Since you put it out there, this:

* Two accounts in collection for a total of $275. Okay, I can take care of that. I have the numbers to contact them
* One credit card that is closed and I still owe $200, I've been paying on that, so almost done.
* One account closed that was my husbands and I was on jointly. That one is closed and there was a write-off I believe. That one I'm pretty ashamed of.

is probably the reason your credit score is very low. These things will drop you very quickly. Yes, late payments certainly don't make it better, but these are pretty major. They will take 7 years to come off your report and there isn't much you can do about that. You've received some excellent advice, and I agree you really need to get this into check now so you can start repairing the damage done and prevent more damage from occuring.

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PeaNut 16,299
June 2001
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Posted: 2/14/2012 1:01:17 PM
If your tax lien is paid, go file it with the clerk of courts/registrar as soon as possible. A judgement/lien that is unpaid according to the credit report can really affect the score. Once it is filed it will still show up on your credit (as stated above - for 7 years). However the change from Unpaid to Paid will make a big difference.

One of the Positive areas that can backfire is the types of "good" credit that you have. It looks like you will have the mortgage and then revolving or credit card accounts. Your score is made up of several factors and types of credit is one of them. Since your car is almost paid off (or not on the report) you ar not reporting any open installment loans.

I would recommend that once you get the derogatory items corrected and have a solid budget, that you look to have a good mix of types of credit - by not overextend. This will help especially if you will be in a position to "NEED TO BORROW" again (buying a new home, car, refinancing, etc).

I would save the $7.95 to get your score and wait until you have taken care of the items listed.


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