How to Improve My Credit Score if I Have Several Accounts in Collections

It'll take some time to improve your credit scores.

Collection accounts are very bad marks on your credit reports, guaranteed to pull down your score. Improving your scores while allowing the collection accounts to remain will be very difficult. However, you do have some options, including establishing new credit that you handle responsibly.

Instructions

1. Pull copies of your credit reports. Visit Annual Credit Reports to get free copies of your reports. According to federal law, you're entitled to one free credit report every 12 months from each of the three major credit bureaus -- TransUnion, Expedia and Experian.

2. Evaluate your credit reports. Make note of any bills that are reporting past due other than the collection accounts. Also look for other negative information, such as charge-offs.

3. Make payments on as many past-due accounts as possible. Do this even if you choose to allow the collection accounts to remain delinquent. Your credit scores will start to improve as you make more accounts current.

4. Check your credit reports for any inaccurate information that may be dragging down your scores. Visit the credit bureau websites to learn how to dispute information on your report. Federal law allows you to challenge any information on your reports, according to the Federal Trade Commission. The information -- even if accurate -- must be removed from your reports if the credit bureau cannot confirm its accuracy. Any negative information that falls off will potentially help your scores.

5. Open new accounts. Adding more positive accounts could also improve your credit score. The collection accounts will act as a red flag, making it difficult for you to obtain new credit. However, you may still be eligible for secured credit cards. The secured cards are full-featured MasterCard and Visa bank credit cards. For a secured card you are required to place money in a bank account that is held as collateral. The bank then issues you the card, with your credit limit generally the amount you have on deposit. Ask your bank or credit union about secured cards.

6. Use your new secured cards but never miss a payment or go over the limit. The responsible use of the cards will also help your credit scores rise.

Tips & Warnings

• Eventually you'll have to address the collection accounts to really improve your credit scores. You may be able to convince your creditors to allow you to settle the accounts by paying off less than the full balance.

References

• Bankrate.com: Secured Credit Cards
• Federal Trade Commission: Building A Better Credit Report
• Federal Trade Report: Credit Repair