I’m Confused About Rebuilding My Credit Score. – Lois

“Dear Steve,

I’m a little confused my everything I have been reading regarding rebuilding a credit history, so I’m hoping you can help clear things up…My current FICO scores, according to myfico.com is 705 with Transunion, and 652 with Equifax. I have one old charge off account opened in 95 sold as charge off in 2008. Another delinquent account 2007 total on all these accounts is about 1,000 total. I recently opened two credit card accounts with 1,000 limits. I am paying balances in full each month and usage well bellow the 30% range. These accounts were opened two months apart, February 2010, and April 2010

My bank offers a statement savings loan and I was thinking of opening one for 1,000 and paying it off before the term of one year. I would like to have a mix of credit on my report, but is it too soon to open another account? I have read opening too many accounts in a short period of time is not good…

Also, I know I should pay off the old accounts, but last activity is almost two years old. Is it true that paying off old debts with no recent activity hurts your score?

Lois”

Dear Lois,

Before you keep spending time and money on adding new items to your report you really need to address those old, open, and negative items. Pay them off and close the door on them.

Once those items are closed then the new good history plus time will do a lot to increase your score.

I’d skip the statement savings loan unless the bank specifically says they report to all three credit bureaus. Otherwise it is worthless in rebuilding credit.

Please update me on your progress by

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