“Dear Steve,

Bad credit score (595), and have a lot of accounts in collections. But I have paid them off for less than the full amount.

The past week I’ve been on a debt relief spree and I managed to take care of 3 of my biggest accounts that were in collections. BUT I settled all of them for less than the full amount. I know that doesn’t help my credit much, but I just wanted to get rid of it for peace of mind.

A couple of questions:

1) how fast will my credit score go up, or will it even go up, since i paid the account for less than the full amount?

2) I applied for a secured credit card before but was denied because i have too many accounts in collections. Since I paid most of them off now, when can I re-apply for a secured credit card?

3) how long will it take to get to a good credit score after this fallout?

Thanks!

Lorraine”

The Answer

Dear Loraine,

I think this post on how to rebuild your credit will answer most of your questions.

The fact you settled the account will still show the amount written off as a bad debt. And if you were late on the account that will appear for seven years as well.

But if you’ve tackled all the past accounts now we really just have to focus on getting new good credit reported to help bring your score up. That’s going to take a bit of time and more than one secured card to do that.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

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