Hey guys, so I’m trying to figure out the best way to repair my credit in the next year so I can buy a house. Credit-wise, we don’t have much debt—just one car we’re still paying off (about 19k left) and two credit cards we just opened to help raise our credit. The limits are super low, and I’m keeping utilization low. The only stuff on my report is some really old collections that keep getting re-sold. I’m a bit confused about whether I should pay those off or not because I keep reading mixed information. Any help would be much appreciated.
If you have active collections, your score won’t improve. You should negotiate a settlement with the agreement that they remove the bad credit remarks. You might not qualify for a loan with active collections, or you could end up paying a higher rate on your mortgage.
Credit is a marathon, not a sprint. It’s all about how well you manage debt over time. A few things you can control: pay your bills on time because a history of non-payment looks bad to lenders. Also, keep your credit card usage under 30%, ideally under 10%. It shows you’re not overly reliant on credit for regular bills.
Be careful about adding credit lines suddenly. Large available credit might raise red flags for lenders. The two new cards could be a potential issue, but don’t cancel them. Just keep them open for now. Credit age matters too, so having those new lines could hurt your average age of credit.
You really should get copies of your credit report. Check for any errors and dispute anything that’s not yours or has incorrect balances. Clearing up errors is your best bet in a year. Also, resolve any collections or judgments if you have them on your report.
Repairing credit is usually a multi-year effort. If you have old collections, it’s often possible to negotiate a settlement for less than what you owe. You might find some good advice on YouTube from financial experts like Dave Ramsey. Just follow specific steps when negotiating.