You are being faced with a question i've seen for years as not only a Certified Credit Counselor through NFCCC, as an approved trainer of the Freddie Mac curriculum "Credit Smart", financial director of education with CCC Centers, but also a Realtor that personally instructs and guides my clients with their lender's advice.
The crux of the whole thing is even Fair Isaac Corporation (FICO) does not release their formulas as to how scores are calculated. Everyone is simply doing as much homework as they can and trying to "break the code". And some are getting very close, for example.. it now can be proven that by having a Capital One credit card can actually hurt your credit even if it's current and never over the limit.
By past due accounts you are referring to revolving consumer debt (credit cards) or installment debt (car payments), then almost always the right thing to do would be to bring those past due account current and/or pay them off (again... even that can be tricky.. it's a fun credit game).
Or by "past due accounts" you are referring to old collections (any account turned over to an outside company for collections), then the answer is not as clear.
This is where it really helps to have a mortgage lender (one that really knows what they are doing and can understand credit) and seek advice from them. Typically, they will consult with their underwriters on what exactly they would like for you to do. It's truly your best answer. Remember, you are only concerned about your credit so you can obtain more of it (ie Mortgage), therefore consult w/ the actual lender you are looking to obtain a mortgage through. It's much better to get it "straight from the horse's mouth" then try and stab away in the dark by listening to everyone's opinions on what you should do. Unless they are willing to step up and give you the loan (I'm even talking about the credit repair company here), then I would seek counsel from the source.
Best of luck and God bless you on your venture
You can do it your self or work with a professional.
Let me know if you need further help.
Office: 281-583-0674 Fax: 713-400-8915
1. Pay current bills on time.
2. Reduce credit card balances to less than 50% of limit.
3. Pay off past due accounts and charges offs. Start with smallest first.
Don't pay to do this, use the money to keep current and pay off debts.
First of all, here's a reliable source: http://www.myfico.com/CreditEducation/ImproveYourSCore.aspx
Second, as in many things in life, there is no quick fix or magic pill that will heal all ills.
1. Pay your bills on time from now on, reduce the balances on as many of your accounts as possible, but don't close any accounts.
2. Go through your credit report line by line, and correct any errors that you can. Understand that no government backed lender (FHA/VA/Freddie Mac or Fannie Mae) will even process your loan if you have outstanding disputed issues on your report. That's because the old way to "fix" credit was to dispute everything in the hopes that the company would delete it rather than spend the time to investigate it. That doesn't work any more.
3. Don't open or close any accounts, unless your lender instructs you exactly how to go about it to improve your score. If you don't have any accounts open, you may want to open an account, borrow a little, pay it off and keep it open. Of course, accounts that are OLD have more weight.
4. Be careful about making changes relating to OLD accounts and chargeoffs. They don't carry much weight any more, but paying them off or changing them may refresh the data and make it current news.
The best thing you can do is to find a solid, experienced lender who will work with you to get these resolved. Most of us REALTORSÂ® know one or two who will do a great job.
Doc and Ellen Stephens, REALTORS
Keller Williams Realty
10999 IH-10 West, Suite 175
San Antonio, TX 78230
(210) 696-9996, ext 409
The short answer? Maybe.
Your best bet is to speak to someone who a) knows credit issues inside and out and b) won't rip you off in the process. If you're looking to get your credit up in order to get a home loan, I would interview a few lenders. Look for one who knows something about credit re-scoring. I would speak to more than one lender as it's a rather critical issue and paying the wrong bill can hurt you more than help you.
If you're just looking to repair your credit, talk to a credit repair expert or a qualified CPA.
Hope that helps!
Matt Stigliano, Realtor (r)
For example. I have seen people pay off old collections, making the date of last activity recent.... which lowered scores.
Read the book in this link.
So if you need your score improved today the best way to settle an account is with the creditor removing or deleting the credit item off the credit report.
Justin Werner, ABR, CDPE
Accredited Buyer Representative
Certified Distressed Property Expert