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I have a crappy credit score. My situation in a nutshell:

  • In the divorce, the ex got the home, which was then foreclosed on. My name was still on the mortgage. That was in 2009 or so.
  • I attempted to buy a house earlier this year, but after being initially pre-approved, the underwriter subsequently significantly lowered pre-approval amount and attached a ton of conditions which made it nearly impossible to purchase a home. Thus the desire to raise my credit score.
  • My score has generally improved since the beginning of the year. It was around 570 on all three credit rating agencies at that point. I subsequently disputed most of the entries on the credit report. On Equifax and Experian, the score slowly improved to 650 and 675, respectively. On TransUnion, the score jumped around madly, at one point reaching 720 before settling at 690. Part of fixing the score included paying off things that my ex has accumulated in the final year of marriage (but didn't pay).
  • Besides the foreclosure, there is still the credit card debt (down to $15k from $60k at the beginning of the year). There is also a collection account from 2008 in the amount of $2,500. In my opinion, it's not mine, but the collection agency won't budge, so for the time being, the entry is on the credit report. I am pondering just giving in and paying it and be done with it.
  • I do have a credit card that I use regularly and pay off completely at the end of the month.

Not sure what else I can share that is relevant.

So, given the situation, what can I realistically do to raise my credit score?

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    "In your opinion" the collection-agency debt isn't yours? That seems like an odd state of affairs.
    – jprete
    Nov 20, 2011 at 15:40
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    @jprete Basically was in a hospital in 2008. Got a ton of bills from various folks (doctors, anesthesiologist, etc...) - the insurance company picked up a lion's share. 2 years later a collection agency tracks me down saying that I owe $2500. I investigated - turns out the hospital billed the wrong insurance company unsuccessfully and eventually turned it over to the collection agency. My health insurance (from 2008) won't pay the charge since it's been over 6 months, so the collection agency wants the money from me. Thus, in "my opinion", since I had insurance, it should be paid by them.
    – NeedAdvice
    Nov 21, 2011 at 0:10
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    @NeedAdvice - It is your responsibility to make sure that your bills get paid. I know it is a difficult situation when you are having surgery and recovering and get swamped with bills. But that does not absolve you legally of your responsibility. You owe for the bill. You may be able to recover some of the costs from your insurer but that will probably require some legal effort. The best thing you can do to show good fiscal responsibility is to pay your debts even those that happened because someone else screwed up.
    – user4127
    Nov 21, 2011 at 16:32
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    @NeedAdvice - don't talk to the hospital billing dept, talk to the patient advocate. Explain your position clearly and you might be able to work out a deal. It is your job to pay your bills, but it is there job to collect them on time, not screw around for 2 years and expect payment in full. They need to be responsible too.
    – MrChrister
    Nov 23, 2011 at 22:03
  • @NeedAdvice That collection might be invalid--if the hospital visit was in network they're likely obligated to bill promptly. If they had the right info and messed up anyway and let the clock run out that's their problem. Check the EOB--does it say the claim is void and the patient can't be billed for it?
    – Loren Pechtel
    Aug 16, 2013 at 20:45

4 Answers 4

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Time: you will simply have to wait because as far as the computers are concerned, you are a credit risk and only time will heal those wounds.

Be credit worthy: during the waiting time you have to build the credit worthiness. Standard things are:

  • Pay your bills on time, every time.
  • Live within your means
  • Fix past mistakes you are responsible for, or work it out with the lender when you are not.
  • If you still have a credit card, use it carefully and be sure to pay it off every month on time. (if you don't have a credit card, visit your local credit union to see what product they have that will best fit your situation.)

Monitor: get your once a year free credit reports. Don't pay for a monitoring service, but watch the yearly ones. I would also freeze your credit to put yourself on hold.

I hate to put it so bluntly, but there really isn't a better way. There are pretty bad reports from people who pay to have their reports fixed, and if what you say is true the rating agencies will certainly mark you down.

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  • you can check your credit report free once per year per credit agency, and you also get to look at your credit report when you place a fraud alert, which lasts 3 months, again, per credit agency. All that to say, you can check your credit report for free almost once a month.
    – antony.trupe
    Nov 20, 2011 at 15:01
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FICO scoring

These are the components of the FICO score. When you analyze this a bit, you see that both Payment History and Length of Credit History are time-based. You can have good payments going forward but only in real time. "Bad" things will take 7 years to fall off the back end.

The 'amount owed' is really credit utilization. If I am going to need to charge say $20K, I should have over $100K in credit lines. This will produce a <20% utilization. And it's actually better than the guy with a $5K credit line who only uses $2K. Even if he pays in full every month and I am making payments, it's what the bill shows each month that goes toward this score portion. On a similar note, the scoring doesn't care whether the $15K I pulled off one card (true situation) at zero interest, went to pay toward my 5% mortgage (it did) or to a wild week in Vegas.

While getting the actual FICO score would cost you, I found that Credit Karma offers a score that's in the range of the 3 major credit scoring agencies. It also offers a report card that shows the pieces making up your score that I discussed here. It was there I learned that zero utilization is worse than having over 40%.

As commented below Quizzle offers a score as well. I've not yet used it. I look to others to comment on accuracy/ ease of use.

Disclaimer - I have no relationship to Credit Karma, other than being a user.

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  • Credit Karma will pull from Transunion. You can also use quizzle.com which will pull data from Experian (although you are only allowed an update every 180 days, whereas Credit Karma will allow a daily update).
    – Scott
    Nov 22, 2011 at 13:14
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I'd consider paying the collection amount. Otherwise, just keep doing what you're doing. Your score will reflect your continued good behavior.

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I have not used this method myself, but I have read online of some success by entering a "pay-to-delete" contract with the creditor. A sample is available.

I would recommend that you think carefully about paying the debt without some agreement from the collections agency that they will delete it from your report. If they simply report it as a delinquent account that has now been paid in full you won't be much better off than you are today.

See also this discussion on metafilter.

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