My second mistake: I didn’t check my credit report
Everyone will tell you this, but I am going to tell you again: Don’t do anything until you have your credit report in your hand and you’re looking at it.
I didn’t do this and later it came back to kick me in the ass. I went around the house and grabbed all of the letters from creditors and started paying off the small ones first –the debts I knew were for a large amount had been left unopened for months because I was too nervous or depressed about the situation to open them. If you are reading this, there is a good chance you know the feeling. The same goes for phone calls from creditors
Here are some reasons why you should check your credit report before paying any debts.
- Some of the debts may have not yet gone to collections.
- Even if some of the debts have gone to collections, there is a chance that the debt has not yet been added to your credit report. (keep in mind that once a debt has been added to your credit report, by law, it can stay on there for 7 years –even if you pay it off. I will talk more about this later.)
- Most debts (unless they are for an extremely small amount) can be negotiated –this brings up a whole new topic that I will cover in another post, so for now just note that point.
I will briefly speak to each point listed above.
- Any debt that has not yet been to collections SHOULD BE PAID FIRST. I cannot say this loud enough. It’s pretty easy to find out if a debt has gone to collections without having to call them –just check your credit report and then look through your letters for two separate companies demanding payment for the same debt. Dealing with deceptive and nasty debt collectors should be avoided at all costs.
- If a charge has gone to collections but hasn’t been added to your credit report (an unlikely scenario in all honestly), pay it. The point here is that why pay off debts that are already on your credit report (and likely will be for 7 years) before you pay off debts that have not yet been added to your report?
- Negotiations skew into a topic that is very important: negotiate with creditors. This point is so important that I will dedicate a whole (or a couple) posts to it. For now keep in mind that sometimes you can get a creditor to remove a debt from your credit report completely by simply negotiating!. However, if you can’t wait for some ungodly reason check out my resources section. I have created some sample credit removal letters in Microsoft Word format to guide you.
How do I get my credit report?
The good news is that most people can get one free credit report every year (in some states it’s two). Check your state here
Also, and this is important: there is only one website that is truly authorized to provide this free credit report, and it is www.annualcreditreport.com. I am sure you have seen that commercial for freecreditreport dot com (I won’t even dignify this wretched company with a link). It has that corny idiot saying something like, “I happen to be thinking of a number. Do you know what it is? It’s my credit score, and it happens to be a 740!”
As a matter of fact, I read a few weeks ago that they got themselves in big trouble for deceptive practices –if you look at the bottom of their new commercial there is a disclaimer that says (and I’m paraphrasing), “the credit report is free but you have to pay us a monthly fee for some other crappy product”.
If you have already used up your free credit report or for some reason you can’t get it at www.annualcreditreport.com, I recommend getting one from one of the 3 credit reporting agencies: Equifax; Experian; or Transunion. I will talk more about the 3 credit reporting agencies in another post. Personally, I would go with Equifax for the simple reason that it is the most popular, and thus is probably the most accurate (because this will likely be the first credit reporting agency a creditor will report to). Also, if you are doing this for the first time, I recommend paying the extra money to get a 3-in-1 report. All of the credit reporting agencies offer this report, and for the extra $10 or so you will get a credit report that shows entries from all 3 agencies.
You can get your credit score or credit report over the phone, if you are worried about security
Here are the phone numbers:
- Equifax: 1-800-685-1111
- Experian: 1-866-200-6020
- TransUnion: 1-800-888-4213
Take home points:
- Get a copy of your credit report before you do anything.
- www.annualcreditreport.com is the only truly authorized website to get your free credit report.
- Pay debts that haven’t be added to your credit report first.
Got your credit report?
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