Anyone who has had to deal with disputes, inaccuracies and others items on their credit report know that it is not an exact science. Closely monitoring your credit report is a must and trying to nip any problem in the bud is very important. Logic does not seem to always work in figuring out what just happened or what is most likely to happen.

Personally I treat everything with a healthy dose of suspicion. Case in point, if I call up a credit company and request removal of a 30 day late. My argument could be that it was a mistake and otherwise I have a very good payment record with them – a good will approach. Say as a result they promise to remove the late payment. First I will ask for a confirmation number and if they do not have one I will make double sure that the conversation was noted (in their system) as far as removing the late.  After that I will watch my report like a hawk, waiting for the late to come off and follow up if necessary. Usually it takes 1 to 2 months to remove. This is just a simple example …

Below I have highlighted a number of situations that might surprise you as far as personal credit is concerned. They show that personal credit is not an exact science and that experience, knowledge and caution count for a lot.

1    Try your best to get your debt interest rate as low as possible. Initially you might accept almost any rate but gradually you want to lower the rate. Other than the obvious reason of paying more, if you use high interest credit sources your credit score will dip.

2    Do not close your oldest credit card (no matter how bad the terms of the debt) if you do not have a long credit history. The oldest will show ‘age’.

3   Paying of a charge-off account will not really increase your credit score. Just the presence of a charge off account depresses your credit score irrespective of its statues. Hence do not be surprised if you spend money to pay off a charge off account and the score does not change.

4   If a judgment or a collection account is paid off (or settled by a partial payment agreement) do not automatically assume that the original creditor will also indicate that the account was “Paid” or “settled” etc. The credit bureaus do not make these into one account. So the original delinquent debt will most likely remain and remain for the length of the SOL (Statue of limitations, see my other article, click here) if nothing is done about it.

Having said that when an underwriter is involved, like in certain loans or mortgages, he/she will look at the report carefully and will see that the two accounts are the same. They can see that the account(s) have been settled.  Problem is that two ‘bad’ accounts are more likely to depress your credit score and as a result your case (loan/mortgage request, credit report etc) might be rejected on the bases of a low credit score. Meaning an underwriter might not even get a chance to see your report . A higher credit score is always better.

At the very  least, it is best to get a “Delete account” letter AND a “debt settled” or “paid” letters as you negotiate the settlement (see previous article, click here).   Quite simply make it clear that you will not move forward with any negotiation unless they agree to provide those two letters on payment of any settlement amount.
5  Paying off installment loans or student loans will not necessarily increase your credit score, all else being equal. In fact most likely your score will not change at all. It seems that only revolving credit account repayments increases credit score.

6  Closing unused credit card accounts seems to almost always lower credit scores. Plus if you can, try leaving some balance on your credit cards, even if little, when the creditor is making money off you, the creditor is happy.
Here are some more useful tips:

1  Remember you can dispute anything on your credit report. Anything. They have 30 days (30-40 but ask the specific company) to answer and if you send in another request before the 30 days are up the time is just extended. It is better to wait for the allotted 30 days to pass before placing another request.

2   Sending all letters certified mail? Certified mail requires signatures so if you send everything using certified mail some of the items might not go through especially if mailed to the original creditors. Certified mail is only really needs to be done for debt validation with a collection agency.

3  Credit reporting agencies love to ask you for your bankruptcy papers if you ever mention that you are planning to file bankruptcy. Never mention that you want to fill bankruptcy and which accounts you would include in the bankruptcy.  More of this in later articles.


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