AboutGina Boykin Expertise Financial planning, debt management & credit cards, and money-saving tips for adults and teens. Saving vehicles such as CDs, treasuries, bonds, and money-market funds. I provide honest, objective and relevant information to help you made the best decision for your money.
Experience Over 10 years of combined experience in accounting, audit, investing, entrepreneurship, real estate.
I am the CEO of Atlanta Y.E.S., a nonprofit organization dedicated to financial literacy for youth.
Education/Credentials B.S. Accounting, 10 years of experience in accounting, audit, and investing
Question I am a single mother with 3 children at home and I have alot of charge offs and collections from the past. I have current cards that I have closed and am still paying on. I also have a loan that the credit union granted me (with my van for collateral) to pay for repairs. I have not been late on any of these so I was wondering, is the present that I am paying compared to the past history going to make a difference if I keep on paying on these cards? Or would it not matter?
If it doesn't really matter, I am going to declare bankruptcy. I am living on public assistance and it is all I can do to keep food on the table. I have special needs children and I am trying to get through community college.
Hypothetically, what are your thoughts on this? I have had my good payment histroy for about 8 months now.
Answer Having a good payment history is actually one of the best things you can do to improve your credit score. Your credit score is made up of 4 things. Credit history makes up 35 percent of your score, and is the largest factor affecting your score. The other parts are:
the amounts you owe - 30 percent
length of credit history - 15 percent
new credit - 10 percent
types of credit used - 10 percent.
If you chose not to pay any of these cards, and have further charge offs, this will hurt your credit history and score. Even though the accounts are closed, it is important to pay them because not only are you building a good payment history, but you are reducing the balance, which was the 2nd largest part of your score. However, if you are struggling you do have the option to negotiate with these lenders. You can either ask for a lower rate or a reduced settlement. Contrary to what you may believe, you can do this on your own. There are websites designed specifically to help you do this, by even giving you a script to tell you what to say when you call. If you are really uncomfortable, or if you try several times (and it will take multiple calls) and don't succeed, you also have the option to seek credit counseling. The National Foundation for credit counseling, which is at nfcc.org, helps people and lenders work together to get your debts resolved. They have affiliates throughout the country.
You may want to also try Credit Karma, which is at creditkarma.com. This site provides your credit score and they have tools so that you can see what effect different actions have on your score (like paying on time for 6 months or letting an account go to collections). This service is free.
