October 13, 2017. You have bad credit. Maybe even very damaged credit. People all over the internet tell you to fix it, what to fix, how much to fix, and how fast to fix it. But the question remains as to bad credit – fix it or wait it out? Sometimes credit should be fixed, and sometimes it should not. The premise of always fixing bad credit needs to be reviewed.
Bad Credit – Fix it or wait it out?
Cases when damaged credit should not always be fixed
You have joint accounts with someone and they are not paying them. Have a conversation with them. Trying to fix that bad credit right away is premature. If a Partner or Spouse was responsible for paying an account and does not, it will damage your credit if it is a Joint account. There may have been a household verbal agreement that the Partner or Spouse was responsible. That does not matter on the credit report. Late payments will show up for both of you.
Other questions first need to be addressed. Will you stay with your Spouse or Partner and are they communicating and working with you on the non-payment?
If you are not working together, then there is not much point to try fixing the credit right away. Closing the Account may be the first step. If they are working with you then make a plan on whether or not it will be paid, by whom and when. Decide if you want to keep the Account open. Then later, derogatory reports can be disputed. These issues need to be handled differently if the derogatory credit issues are with a business partner.
The bad credit is already old
Bad credit, late payments, charge-off’s, foreclosures, and other derogatory items on your credit that are already 5 years old or older are not worth the cost and effort to try to remove them. This includes 30, 60 and 90 day late reports. After 7 years, many items drop off automatically. For those items, it does not make sense to manually try to remove them.
Federal and State Tax liens
These are much harder to remove. It is also much easier to pay them and get a statement of “released” placed on the bureau just below the item rather than trying to get Tax Liens removed. If you have a payment arrangement, keep a copy of the payment arrangement and provide it to anyone that will look at your credit report. Tax Liens on which there is a payment arrangement are looked at far more leniently than Tax Liens that do not have a payment arrangement in place.
Looking at some of these issues can help you decide on bad credit – fix it or wait it out?