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Pay Off Bad Debt in Your 20s and 30s
Most people purchase their first homes somewhere in their 20s or 30s, and it is at this time that most discover they may have bad debts on their credit reports. What are bad debts? These are items that were not paid in full, nor were they “charged off” by the credit grantor and so they sit on the credit report and pull the overall score down. Luckily there are many ways to address the issue and consolidate debts, but it is all up to the individual to make it happen. This can involve some serious dedication of time and effort, but is well worth it.
The first step is to get copies of all three major credit reports. These are issued entirely free of charge once every year and will contain all instances of bad credit or negative issues on the consumer. With this information in hand the individual should make a comprehensive list of all the negative items, and even all the outstanding debts, to get a strong picture of their credit history. They should then identify all of the companies who are currently maintaining the bad debts on the credit reports and contact them in order to find out if the debts have been sold to a credit collection company. Most of the time the credit report will illustrate if this has happened.
Organize the outstanding bad debts from largest to smallest amounts and then begin contacting each one when you are able to pay them in full or to the largest extent possible. For example, if you owe one company less than five hundred dollars it is best to make the total payment, but if you owe significantly more you may be able to negotiate a payoff amount that removes the item from your credit report.
If you do negotiate a settlement amount ask for a copy of this in writing before issuing the payment, and then pay only by check. This ensures that the company will have to acknowledge their willingness to settle and that you have paid the agreed upon terms. Sometimes this may come up at a later date and it is crucial to have all of the evidence of the negotiation.
Attack each debt on an individual basis, but using this same approach. This can take a significant amount of time but the returns are incredibly valuable.