I have horrible credit and I am only 20 years old. I was dumb enough to get two car loans for my boyfriend, and when we broke up, he stopped paying for them. I had to stop working because of m a complicated pregnancy, and both vehicles ended up being repossessed. Now that I am trying to get back on track, no one will accept me for anything and I am trying to build up my credit. What should I do?
One of the biggest problems caused by the repossession of vehicles is that most consumers end up owing a large sum of money, called a deficiency balance, to the finance company even though the consumer no longer has the vehicle. When a car is repossessed, the lender usually auctions the vehicle and applies the amount received at auction to the balance of the loan. The former owner is responsible for the balance of the loan less the amount received at auction, which can leave the consumer owner many thousands of dollars.
There is quite a bit of info available on credit scoring at: http://www.bills.com/credit/
If you owe deficiency balances on the two vehicles you mention in your question, the first step in rebuilding your credit is to resolve those debts. Having delinquent accounts appearing on your credit reports can significantly lower your credit score, making rebuilding your credit score very difficult. I encourage you to contact the creditors holding these deficiency balances to negotiate repayment terms to resolve these accounts. If you can save or borrow a lump sum to offer a settlement to these creditors, they may be willing to settle the accounts for significantly less than what you actually owe. Frequently, creditors will settle for as little as 30% or 40% of the balance owed. If you cannot raise a lump sum to settle the accounts, you should be able to negotiate an affordable repayment plan with the creditors to bring the accounts current and pay off the balances.
Once you have resolved your delinquent debts, you can start to rebuild your credit. Resolving the deficiency balances may improve your credit enough to qualify you for a standard credit card. If you still cannot obtain a regular credit card, a secured credit card, in which you deposit cash in an account as collateral for the credit line, is a good option to build a positive payment history. Once you have established new credit accounts, you must use them wisely to build a positive credit history. You will need to make charges on the accounts and repay most, if not all, of the balances each month to establish a positive payment history, one of the most important factors used in calculating your credit score.
Also, you should keep in mind that the more time that passes from the time you defaulted on the auto loans, the less impact those accounts will have on your credit score. Even if you are unable to resolve the delinquency balances, you should be able to rebuild your credit score over the course of the next few years, but you must be responsible with any credit that is extended to you.
To learn more about credit and ways to improve your credit score, I encourage you to visit the Bills.com Credit Solutions and Resources page at http://www.bills.com/credit-solutions/
I hope theat the information I have provided will help you Find. Learn. Save.