Need Help with rebuilding advice.

Need Help with rebuilding advice.
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Hello everyone,

I decided to open up about my credit history with the online community as I am reading so many things on the internet that is leaving me very confused as to what I should do to rebuild my credit.

A little back story, I had good credit about one year ago, it was around 650 and I was able to get a car loan for 15,000. I had a total of 7 credit cards and also a personal loan for 6,000. I would say that things were going pretty well and I was making my monthly payments, although I had high balances. Even though I had high balances I was managing to make aggressive payments until I lost my job, personal issues that directly affected my chances to work and my car having major fixes that had to be done. This all happened around Feb of this year, (2019), so I moved back in with my parents and I was not able to keep up with my CC or loan payments. I didnt even have a phone due to the financial hardship so I never got any calls from collections or anything, although I’m sure they were reaching out.

Fast forward 7 months and I was able to sign back into nerdwallet to check my credit score and as expected, I have missed payments since February, and all of my credit cards were either charged off or sent to collections. My phone bill as well and the personal loan I had went to collections.

Total debt probably amounts to about 15k more or less and my credit score stands at 450.

I recently got a job and it’s a big relief knowing that I can make anywhere from 3000 to 3500 a month. I hate that I’m in this situation now, I was doing good with payments and credit was good and I had zero negative marks or missed payments through all of my credit history, which isn’t much since I started having credit in 2015.

So with this new job, I plan to start rebuilding my credit, and getting out of a poor credit score. I am planning to move out of my parents home in about 6 months time and would want to be able to rent my own apartment, but I’m worried that my credit will affect my possibilities.

I’ve researched on debt settlement agencies, since all of my credit accounts are in collections I figured I have nothing to lose at this point, because it’s not like I need to miss anymore payments to have the chance to settle.

One last thing, I recently got accepted for a Citi Secured card with an initial deposit of 200. I hope that making payments for the next 6 months, my credit will begin to improve.

So after looking at my background, my questions are the following :

Is debt settlement a good option for me ? I personally feel like doing it on my own will be an extreme hassle.

Will I ever have good credit to be able to rent an apartment ? My main goal now is to save and move out, but I want to be able to in the first place, I have collections, derogatory marks and missed payments on my score, how can I get passed that when applying for an apt ?

Also, out of all of my accounts that have been closed or charged off, only one has been reported to collections. Should I be expecting to receive more reports and have my credit suffer even more?

I plan to use which is a credit building loan, will that and the credit card help my credit, knowing that I will make the monthly payments on time ? I don’t plan on having any more credit cards until I have a much more solid standing.

I apologize that I typed so much, I’ve just been reading so much online and nothing I read seems to apply to my personal situation.

Thank you so much for anyone who takes their time to read and reply.


Hey, welcome back @mc2030. So sorry to hear about the rough time you went through.

Debt settlement has some drawbacks you need to be aware of before you proceed. It can be time-consuming, it can be costly if you pay a company to do it for you, and you can be taxed on the amount of debt that’s forgiven. Here’s an article that lays out the pitfalls of debt settlement.

Have you considered bankruptcy? It is designed for situations like yours, where you have overwhelming consumer debt and simply need a fresh start. A good rule of thumb is to consider bankruptcy when non-mortgage debt is 40% or more of your annual income. When problem debt is that high, you risk struggling for years in what is an unwinnable battle — meanwhile, important goals like saving at least a little for retirement and establishing an emergency fund go unmet.

The good news is that credit scores can rebound rather quickly after bankruptcy, especially when using a secured card and / or a credit-builder loan. Check out this look at why bankruptcy can be the best option by NerdWallet columnist Liz Weston. We also have this explainer of Chapter 7 bankruptcy so you can see what steps are involved.

If you decide bankruptcy is not for you, consider delaying your plan to move out of your parents’ home. Spending nothing on rent means you can pour most of your income into debt repayment.

No matter what route you take to resolve your debt, it sounds like you have a good grasp of the rebuilding steps: start with secured cards and credit-builder loans, keep the amount of your credit limits you use very low, pay all bills on time every month. Best wishes on your rebuilding journey!


Hi there,

Great work taking control of your finances. Anyone can wind up in a situation like you did, and it’s great that you’re looking for the best ways to the resolve loose ends and put yourself in a stronger financial situation.

Khinson’s advice here is a really strong start. One thing I would add on is that, before you talk with a debt settlement company, you should consider getting a free consultation from a nonprofit credit counseling agency. These organizations exist to help consumers struggling with credit and credit card debt, so they would be able to help you understand your options and any potential consequences of them (like having a tax bill from a settlement).

Here’s an article on credit counseling and how it can help you:

Hope this helps! And please don’t hesitate to follow up if you have other questions or as you make progress.