I had a problem with a credit card being sent to collections. The card had a small limit, but the fees that were added kept going up and up, and I just couldn’t afford it anymore. I am devastated that I let it go that far, but any time I talked to Chase, they were never willing to reverse any fees unless I paid them upfront, and I really couldn’t afford to do it. What do you suggest I do to help improve my credit?
This is kind of problem I get all excited about! Why? Because it’s totally solvable. Unlike a broken heart or medical mystery, a bad credit situation can be transformed into a good one just by taking specific and proven actions.
collection account is hanging over your head and bringing not just your credit rating but your mood down. So I’ll give you a three-point plan to bring both up.
But first, let’s review why you’re in this mess. You had a Chase credit card, and somewhere down the line you overcharged with it (whether by spending too much or because of an
emergency). The requested payments became too much, and you stopped sending money altogether. In response, the bank applied late fees and upped your interest rate, which added costly finance charges to what you owed.
I can imagine that while this was happening, you were getting increasingly upset. Clearly you didn’t have the money to pay, so why was the bank punishing you by adding fees and then refusing to drop them when you tried to make good on the debt? It seems so unfair.
Ah, but that’s the way it works. When you received the account, you signed a contract promising to adhere to the terms. You broke the agreement, and Chase took action. Banks are under no obligation to accept less than what is legally owed to them. Some will cut a deal and
accept a settlement (which is what you asked for when you requested the chance to pay less than what you actually owe), but not all will.
As for your credit, it began to free-fall the day you missed your first payment cycle. In the beginning, it wasn’t so bad. Thirty days late on a smallish balance doesn’t do too much harm. However, as the months passed and the debt grew, the damage deepened. The final blow was when Chase cut its ties with you and the collector took over.
So that’s the past. Here’s the plan that will improve your present and future.
Deal with your collection account. A paid debt looks better than an unpaid one, so send what you owe. Or contact the collection agency and ask if it will accept payment installments that will delete the entire debt in a certain number of months. Unlike your original creditor, the collection agency may even accept a settlement, in which you pay less than the amount due. To “find” extra funds, consider getting a second job or sell something of value. How you scrape up the money is up to you, your creativity and commitment.
Get a new credit card. Once your delinquent debt is resolved, consider one of the many credit cards designed for people who are trying to reestablish their credit after messing it up. Check them out and apply for the one that seems right. When you get the card, use it responsibly. Your credit rating will improve with each month that you charge and pay in full and on time. Such positive activity will begin to overshadow the negative.
Wait. As the paid-off collection account begins to age, it will become less important to your credit score. After seven years, all evidence of it will be removed from your reports, and no one will ever know what happened.
Think you can follow this plan? Sure you can! That’s why I happily suggested it.
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