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im 21 and have a credit score of 525. i’d appreciate help on understanding it.
i owe almost 0 to a phone company who "charged off" the bill. [what does that even mean?]
and i owe ,077 on an auto loan who repossessed the car.
my life’s circumstances changed drastically [moved back home, going back to school, you know.] and i’m trying to get my credit to do the same. i know it takes time, bu what should i do to help it? i wont have a job until next summer when i finish school, and i don’t know what do do about it.

after paying off the phone bill, would getting a pre-paid credit card help any? i know if you make positive payments it will help your score, but i dont know if it’s enough to counter-balance the negativity from the other two items i owe money on.
does the car and phone-bill continue to ding my credit? or is it as low as it’s going to get?

2 Comments »

1. 

   1. Pre-paid credit cards do not help anyone’s credit, ever.
   2. The only type of credit card that you are likely to be able to obtain that might help your credit is a "secured" credit card.
   3. "Charged off" means that they recognized that you were probably never going to pay and that they had lost the money. However, they can sue you for it, if they want.
   4. The car loan and the phone bill will continue to keep your credit low, but should not make it become even lower.

   Comment by StephenWeinstein — November 21, 2009 @ 9:02 am

2. 

   As far as the phone goes, a charge off is a accounting term that simply means that the creditor has determined that the debt is non collectible and written it off as a loss for tax purposes. They most likely will sell it to a collection company and they will come after you for it which will result in another ding on your credit.

   The repossession is much worse, your lender will or has sold the vehicle at auction for much less then you owed on it and you are liable for the difference plus all fee’s for towing, storage, reconditioning, interest, lawyers, auction fees and anything else they can think of. This will amount as you can see to several thousand dollars.

   Two things can happen either they can sue you or they can sell the account to a collection company and they can sue you. Either way when it goes to court they will win and a judgment will be issued by the court and at that point they can attach your bank accounts, garnish your wages (if your State allows it) and file liens on any real property you may own like cars, boats, land and homes.

   All of these will show for 7-years on your credit and make it very hard to get approved for any other type of credit or loan for several years without making massive down payments, paying huge fee’s and State maximum interest rates.

   All of the above, charged off accounts, collections and judgments are considered major derogatory when it comes to your credit score. And they will continue to show on your credit even if you pay them.

   Yes a credit card (not a pre-paid) will help because it will start to establish a good payment history but in the long run your going to have to establish a minimum 24-month pay history before your score even starts to turn around.

   Comment by SPIFIMAN1 — November 21, 2009 @ 9:02 am

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