I Need to Pay Off a Balance on a Closed Account and Repair My Credit, Help Me Please

Years ago, I did one of those “apply for a store credit card today and save 30% on your purchase” things at Kohl’s. I paid for the purchase on my debit card, and then threw the credit card away. (I know, I know, but I was young and didn’t know how the world works.)

Anyway, I recently decided that it was time to get a credit card because, hello, adulthood! And I kept getting turned down. I looked up my credit score info, and apparently it’s bad because of a $30 charge at Kohl’s five or six years ago. I’m fairly sure I just received the card in the mail and tossed it, so I suspect someone found it and used it, but it doesn’t really matter. I would just like to pay the debt and start building up my credit. But since the account is closed, how do I pay it off? Do I just contact Kohl’s and send them some moolah?

And how do I build up my credit from there? My phone bill is combined with my parents’, and I pay them directly for it (same with car insurance) and I’ve heard those are two good ways to build credit. Same with rent — I pay my roommate directly. I have decent savings and don’t spend beyond my means, so it irks me that I can’t build credit. Any advice? — G.

The answer to this one is pretty simple: The way you pay off a closed account is contact a customer service rep and ask to pay off the remaining balance (the toll-free number for Kohl’s Charge Card Customer Service can be found here). Since it’s been a few years, you may have racked up a bit in interest and fees, and if the balance is too much for you to manage, you can try negotiating for a smaller payoff settlement, or at the very least, get the fees deducted. Kohl’s may have sold the debt to a collection agency, and you’d have to get in touch with the agency to settle the payment, but if this were the case, it’s likely that the collection agency would have already tried getting in touch with you (they like hounding people).

The first step to building back your credit will be getting your Kohl’s account settled. Next, since you can’t get a credit card because of your poor credit record, you can try getting a secured credit card, which requires you to pay a deposit upfront to use, and which generally has low credit limits, meaning they’re mostly useful for things like buying groceries, or dinner, or filling up at the pump. Another option: Since your parents already trust you to pay your phone and car insurance with them, you can ask them to co-sign on a credit card with you, or add you as an authorized user on their own card (I covered secured cards and piggybacking in a previous post). Piggybacking with your parents (as long as they have good credit!), would be the way I would go.

Once this is done, all you have to do is make regular, on-time payments on your card and your credit score should slowly repair over time. Don’t max out any of the cards you’re given. Set yourself a reminder every month so that you don’t miss any payments. Pull your (free) credit report every year to make sure you’re on track.

If you’re interested in finding more tips, our pals at Credit.com have tons of pieces that can help you.

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