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Horrible credit score, statute of limitations, and repairing it all

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  • May 13th, 2015 9:52 pm
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[OP]
Deal Addict
Dec 12, 2014
2328 posts
2718 upvotes
Toronto, ON

Horrible credit score, statute of limitations, and repairing it all

Personal finances during my life were not really something of a priority. I'm now 26, in Ontario, and want to make sure when the adult decisions come about, that my finance rating would not be a negative factor of influence.

I live with parents as I work part-time and studying currently towards a diploma to supplement my bach. The only bills are the Fido account, a gym membership, and a netflix account and my expenses are reasonable/low when going out ($20-$60/wk) which includes movies, drinks, and restaurants. I don't usually spend that much and spending habits have been controlled for the past two years and completely unlike the uni days.

I've recently decided to take action on my overdue personal finances after years (university years) of carelessness and not worrying about it, very idiotic in hindsight. I've decided to retrieve a credit score and while the results are not unexpected, they are low and should be repaired for the sake of the future.

Equifax has ranked my score at a dismal 488 with only have 3 accounts listed.

Credit Information from the site
1) OSAP (Student Loans):
- Date Opened: 2007-09
- Payment History: 2 payments 30 days late, 1 payments 60 days late, No payment 90 days late
- Payment history: One payment past due (2015-02), Two payments past due (2014-03), One payment past due (2014-02)
- High Credit/Credit Limit: $37,422.00, Balance: $34,670.00, Past Due: $0.00
- Status: Paid as agreed and up to date

2) Fido
- Date Opened: 2007-08
- Payment History: No payment 30 days late, No payment 60 days late, No payment 90 days late
- Past Due: $0.00
- Status: Paid as agreed and up to date

3) Scotiabank Visa
- Date Opened: 2007-08
- High Credit/Credit Limit: $1,230.00, Payment Amount: $1,229.00, Past Due: $1,229.00
- Status: Bad debt, collection account or unable to locate
- Comments: Acct assigned to third party for collection, Account Closed
- Date of Last Activity: 2013-03

- Collection Accounts Page:
No Collections information on file

--------------------------------

Don't really have any clue on personal finances besides some basic understanding, so need you guys' experience and advice on this :)

I'm not really sure how much the student loans affect the credit rating if the status is good (aside from the 3 late payments) but clearly the brunt of the rating is coming from the Scotiabank student visa I had with a credit limit of $1,000. According to the Ontario laws regarding debt, the statute of limitations on debt is 2 years from last activity and which is come and gone by 2 months now for that Scotiabank Visa.

- Should I try to settle with the collection agency or let it be as the limitation date has passed? Would it still continue to affect my rating?
- Should I start to apply for one low-limit credit card to start improving rating or with a score of 488, would I even be glanced at?
- Any tips/advice to recommend?
8 replies
Deal Fanatic
Apr 11, 2012
5822 posts
3079 upvotes
Winnipeg
for credit card you can get a secured one with say 1000$ deposit. Once your credit score improves, then you can get a better one.
Deal Addict
Apr 13, 2015
1108 posts
214 upvotes
Your Visa disaster is going to torture your credit report for atleast another four years. Very surprised there is no collection entry for it. Find out whose collecting it. Make payment arrangements and pay it back as quickly as possible. That one entry destroys 65% of your credit score. Atleast by paying it down, you'll improve your utility ratio. That alone would bump up your score a lot.

No bank will give you a secured credit card while that account is unpaid and while you have only a part-time job. A secured MasterCard with Capital One is your only hope.

How much spare income do you have to pay your debt? Student loan payment amount?
Newbie
Mar 20, 2015
91 posts
31 upvotes
Toronto, ON
Learn from us who have been through it.

1. Get a secured credit card. Don't waste your time trying for an unsecured on. Capital One won't even touch you right now, because it's still new. I'd do Home Trust for $1000. You probably won't default on that amount again. Also, Home Trust will eventually increase your credit limit if you use the card a lot, and don't carry a balance.
2. Pay off that Visa. You have 5 more years with that nightmare. Pay it off over then next year. Send post-dated cheques. You're lucky you don't have a collections item on your bureau.

If you do this right, you'll have a great score when the default drops off.
Deal Addict
User avatar
Dec 26, 2010
1736 posts
774 upvotes
Calgary
The key here is to take ownership of your past behavior (like true ownership) and work to be a better person. No amount of advice will help if the same habits get you back into the same position.

You should pay back your VISA. There's a very knowledgeable person on the forum that deals with credit (Mike I believe?), and he always suggests doing this. Some think that the damage is already done. I'm of the opinion, if you're looking to take true ownership for your past behaviors, you'll pay it back.

The next step would be getting some sort of positive on your credit report. Be it secured or not credit card. Pay your bills on time. And suffer credit ostracizing you'll receive for the next few years. During that time, you can focus on being a better person. That means getting your personal finances in order, learning how to manage them better and improve your financial position, by making more money.
Indexer, non-yield chasing, low cost, broad based, as simple as possible investor.
[OP]
Deal Addict
Dec 12, 2014
2328 posts
2718 upvotes
Toronto, ON
Thanks for all the replies :)

I don't have enough spare income to do it all at once and since my visa debt is under the hold of a collection agency, should I save up and pay it all in full or try to settle for an amount? I don't want to give them some by month, have the statute of limitations reactivate, and then have them go for the full amount/court (even if amount low) etc... i.e getting screwed further.

Towards the end of the year, I received a collection letter with a settlement of $900 on the $1,900 Scotiabank visa debt. Though for some reason, Equifax's report from today is saying my visa debt is $1,230. So I'm not really sure what's going on there.

I've been doing some reading all afternoon. Regarding a credit score, is there a difference between paying it in full or paying a settlement to the collection agency? Also does giving them the payment (full or settlement) result in the record removed and a higher credit score or does the score remain the same but just the record is removed? Should I request a letter of deletion and settlement terms before paying?

I'll be going in tomorrow at my TD branch and talk to one of the info counter reps regarding credit cards. I'm checking around right now at secured credit cards and the two (HomeTrust/CapitalOne) mentioned above.

Again, I really appreciate the help all!
Deal Fanatic
Aug 3, 2014
5953 posts
4015 upvotes
TD won't even give you a secured card before that VISA is paid off.
Deal Fanatic
Apr 16, 2007
8132 posts
3476 upvotes
Financial District B…
wm009 wrote: The next step would be getting some sort of positive on your credit report. Be it secured or not credit card. Pay your bills on time. And suffer credit ostracizing you'll receive for the next few years. During that time, you can focus on being a better person. That means getting your personal finances in order, learning how to manage them better and improve your financial position, by making more money.
^Good advice here.
Adding a positive tradeline as soon as possible to any tarnished credit profile will help shorten the negative impact of Provincial allowable statue of limitations reporting time limits.


blackston3 wrote: Thanks for all the replies :)

I don't have enough spare income to do it all at once and since my visa debt is under the hold of a collection agency, should I save up and pay it all in full or try to settle for an amount? I don't want to give them some by month, have the statute of limitations reactivate, and then have them go for the full amount/court (even if amount low) etc... i.e getting screwed further.

Towards the end of the year, I received a collection letter with a settlement of $900 on the $1,900 Scotiabank visa debt. Though for some reason, Equifax's report from today is saying my visa debt is $1,230. So I'm not really sure what's going on there.

I've been doing some reading all afternoon. Regarding a credit score, is there a difference between paying it in full or paying a settlement to the collection agency? Also does giving them the payment (full or settlement) result in the record removed and a higher credit score or does the score remain the same but just the record is removed? Should I request a letter of deletion and settlement terms before paying?

I'll be going in tomorrow at my TD branch and talk to one of the info counter reps regarding credit cards. I'm checking around right now at secured credit cards and the two (HomeTrust/CapitalOne) mentioned above.

Again, I really appreciate the help all!
Pay or bribe to delete or remove derogatory trade data is not permitted here in Canada.

Collection agencies are not allowed to add fees, penalties, interest to the defaulted account. Its possible the collection is still being pursued by the original creditors recovery and collections divisions. The difference in amounts is the account owing at date of last activity that's reported to Equifax and maybe some added fees by the original creditor who had to perform skip tracing or pay for other location services to locate you. You can contact them for clarification.

On this forum you may get lots of members who will advise you to continue to skip the account until the tradeline purges off your bureau. DLA = 2013-03
If you have no desire to seek credit in any form until that time then you can do this if you wish. If you're under the employ where they don't perform credit checks or ERC's for employment purposes then you can also continue to skip.
Make note that nowadays many entities from credit to employment to insurance products to consumer mobility and utility accounts now rely of your credit bureau system to perform various risk assessments and evaluations.

Another note. People who wait out the purge timelimits will almost always become ghost bureaus. A ghost bureau is and can be viewed as worse as someone who's had a R9 card that's paid with zero owing.
----------------------------Licensed Credit Bureau member, S1, FI Automotive, CCP forums most banned = x 13 and counting, guess who that is?... stomped to the curb once again
Deal Addict
Aug 31, 2014
1505 posts
560 upvotes
YVR, BC
your Scotia bad debt will stay for 6 yrs (2019) - just as bad as a collections. you won't get anything until it's gone.

if you are still dealing with Scotiabank, call them and pay it - at least it will be reported as paid.

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