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to pay off any derogatory items that legitimately belong to you, including the two accounts you mention. While paying off these accounts will not make them fall of your report, it should improve your credit by reducing the amount of delinquent debt reporting to the bureaus and preventing the accounts from continuing to be reported as delinquent. If your only goal is to improve your credit score, the best thing to do would likely be to pay these debts off in full as soon as possible. Ideally, you would pay these debts off in a lump sum; however, if you cannot afford to do so, the creditors or collection agencies should be willing to establish an affordable repayment plan. I recommend that you pay as much as possible each month toward the balance of these debts, as the sooner you pay them off, the sooner the negative influence they are currently having on your credit score will begin to diminish.

Saving up money to settle with the creditors is certainly a viable option. Frequently, creditors will settle delinquent accounts for 50% of the balance owed, or sometimes much less; as you can imagine, such a settlement could save you a significant amount of money. However, most creditors will require that settlement offers be paid in no more than a handful of payments; many require that they be paid in a single lump sum. From your question, it sounds like you do not have immediate access to the funds necessary to settle these accounts. You could begin saving money toward a possible settlement; however, the more time that passes without these accounts being paid, the more damage they are likely causing to your credit score. You will need to weigh the potential savings of settling the accounts against the potential of additional reduction of your credit rating. Because I do not know what other items you have counterbalancing the negative impact of these derogatory items, or the other

aspects of your credit profile, I cannot tell you how much waiting to settle will lower your credit score. However, I can tell you that, given of the size of the accounts, and the fact that they are already delinquent, waiting a few months to settle the accounts will probably not be detrimental to your credit. To read more about how to negotiate with your creditors, I invite you to visit the Bills.com Debt Negotiation page.

Once you have dealt with you derogatory accounts, you should begin paying down any other accounts you may owe to reduce your debt to available credit ratio. You can safely carry some debt, but carrying too much debt month to month demonstrates that you are financially strapped, and should not be extended more credit. Ideally, your ratio of debt to available credit should be no more than 33%. In addition, if you do not already have a long, positive credit history, you should begin to build one. You can start by opening a few small credit card accounts, making charges on them, and paying off most, if not all, of the balances each month. By doing this, you will show yourself to be a responsible user of credit, and your credit score should improve with each month you continue to show a positive payment history. If you find that you cannot obtain a traditional credit card because of credit problems, a secured credit card, in which you deposit cash in an account as collateral for the credit line, can help build a positive credit history. Again, I cannot tell you how much or how quickly opening a new credit account will improve your credit rating, but building new positive trade lines is the key to improving your credit score over the long term.

To learn more about credit and strategies to improve your credit score, I encourage you to visit the Bills.com Credit Solutions and Resources page.

I hope that the information I have provided helps you Find. Learn. Save.

Best,
Bill
www.bills.com

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