Reader’s Question
Hi there,
I had a bill due around May 2nd, but was not able to pay the bill until May 29th. However, the creditor reported it on my credit report as a late payment. I heard that the creditor only shows deliquencies after 30 days. Am i correct?
My Response
Hi [name removed],
Generally it is the case that creditors only report late payments that are 30+ days late. However, this is not a rule and the creditor could technically report it late at their discretion (given that the payment was indeed late). Nonetheless, I would at least give them a call and ask if they will give you a break and remove the negative entry –you might be surprised.
Hope this helps,
Ashley
Reader’s Question
Dear Ashley,
I did not give a debt collector my bank account number, but I saw they tried collecting from my account. Is there any other way for them to get my account information, legally? Or should I pursue legal actions against them?
My Response
Hi [name removed],
There are a couple of things you should do before pursuing legal action. First, you need to verify and be certain that it was actually this company that was attempting to collect from your bank account. I say this because unless you gave them your bank account information, there is no way they could have legally obtained it. Furthermore, they need your permission before they can take any funds from your account. Second, if you have determined that it was indeed this company, I would call them and yell at them for awhile about this issue. I would do this before pursuing legal action because lawyers aren’t cheap and you don’t want to be hasty about getting a lawyer and filing suit.
Hope this helps,
Ashley
Reader Question
Hi Ashley,
How soon will my credit score improve after I pay off my debt?
I am trying to figure out what is important. I was hoping you might be able to give me some insight.
Thank you in advance.
[name removed]
My Response
Hi [name removed],
I wouldn’t expect a huge jump in your credit score after paying debt off –the FICO score is, of course, largely based on you having debt. However, this is not to say your score won’t raise after you pay off debt. This is because you will be lowering your debt to credit ratio. Your debt to credit ratio should remain low if you want to maximize your credit score.
Hope this helps,
Ashley
Reader’s Question
Hi Ashley,
If you sell a property using a short sale, how does this affect your credit score? How many pionts will it reduce your score? Would I be better off credit-wise by just letting the house go into foreclosure?
Thanks!
My Response
Dear [name removed],
A short sale will destroy your credit — anywhere from 50 – 100 points. A short sale won’t hurt your credit as bad as a foreclosure but the difference isn’t that much. If you can get the lender to do a short sale, I would do that.
-Ashley
Take Home Point
A short sale is when a mortgage lender agrees to basically lower the amount due on a loan. This usually happens when the amount due is more than what the house is worth and the homeowner is unable to pay their mortgage . When this is the case, the lender lowers the loan amount so the home owner can sell the home for market value. You might be asking yourself, why would the lender do this? Well, they do it to avoid a foreclosure. Keep in mind that in the event of a foreclosure, the lender would then be responsible for selling the house and even then, they are likely only to get market value for the house. Therefore, a short sale will in the end cost the lender less than a foreclosure.
Reader’s Question
Dear Ashley,
A majority of my credit reporting issues are, unfortunately, alot of medical bills I’ve been unable to pay over time. Not sure how these are seen in terms of the statute of limitations, but I recently received a letter from the collection agency that owns all of my accounts, and that partial payments were no longer accepted. Strangely enough I had previously paid off two of the accounts, online, with receipts for each.
Even more strange, of the 5-6 accounts they listed, their 2nd page showed a totally different amount as ‘principal’ due, excluding interest to date, from the first page listing all the accounts. The oldest debt being reported is 2006, which I believe may very well be close to it’s statute but I’m not sure. I’m not sure if I should respond, correcting these folks of their totals, or dispute it in general.
My Response
Hi [name removed] -
The statue of limitation is 6 years in most states [edit]. Also, a collector who says that “partial payments” are no longer accepted is lying. Collectors are, for the most part, scum –they will tell you anything to get you to pay. They are simply trying to scare you and I bet would be more interested in cutting a deal with you if you were to say, “Well then I suppose you get nothing”. Keep on pushing them and they will eventually take an offer.
In regards to the paid off accounts and the incorrect account balances. You need to print out the receipts you have and any other documentation that proves these accounts are paid off. Mail these documents to the collection agency and tell them that by federal law you have the right to request that they provide solid proof that the debts are yours. In many cases, they simply cannot do this –either because they were lying or because they don’t know how to do their books. Hang in there.
Best,
Ashley
I received the following email from Monica on behalf of the Federal Trade Commission. I think this information is important. While she doesn’t specifically mention any particular sources that claim to provide a free credit report, I will: freecreditreport.com is NOT where you get your free annual credit report! Freecreditreport.com will require you to sign up for credit monitoring service and pay a monthly fee in order to get a credit report.
Her email in full is posted below.
Hi Ashley,
I hope this note finds you well.
My name is Monica, and I’m writing on behalf of the Federal Trade Commission’s Bureau of Consumer Protection to let you know about two new videos highlighting the differences between AnnualCreditReport.com – the only authorized source for free annual credit reports – and other sites that only claim to offer “free” credit reports. You and The Better Credit Blog readers know the importance of checking your credit report each year as a step towards improving and maintaining your credit, which is why I thought you might be interested in the videos and in learning more about AnnualCreditReport.com.
Despite the deceiving jingles and musical claims of some TV commercials, the only authorized source to get your free annual credit report under federal law is AnnualCreditReport.com. Other sites require users to pay hidden fees or agree to additional services in order to get a free credit report. If consumers don’t cancel the service during a short trial period, they’re likely to pay membership fees. The FTC encourages consumers not to pay for something they can get for free.
The Fair Credit Reporting Act guarantees consumer access to a free credit report from each of the three nationwide reporting agencies – Experian, Equifax, and TransUnion – every twelve months. With AnnualCreditReport.com, visitors have access to truly free credit reports, with no hidden fees or trial memberships. As mentioned, the FTC has released two videos highlighting the differences between AnnualCreditReport.com and other sites that claim to offer “free” credit reports. Both videos are available at www.ftc.gov/freereports and on YouTube .
I hope you’ll check out the videos, and please feel free to post and share them with Better Credit Blog readers. I’m sure they’ll appreciate knowing about the authorized and free way to get this important information, especially in these difficult economic times.
Please let me know if you have any questions or if you would like more information.
Thank you,
Monica [last name removed]
on behalf of the Federal Trade Commission
Reader’s Question
Hi,
I read your blog and thought that it was interesting regarding secured credit for people with imperfect credit. I am currently in the process of repairing my own personal credit from a student loan default and they are in the rehabilitation process. I am extremely interested in located a secured card that doesn’t report as secured on my credit report. Can you please suggest some to look at?
Thanks!
[name removed]
My Response
Dear [name removed],
Absolutely. I recommend that you check out some of cards offered on Credit.com. Most of these cards will not show up as secured on your credit report. Here is a direct link to their secured cards.
Hope this helps,
Ashley
Take Home Point
If you have ever said to yourself, “How am I suppose to build (or repair) my credit when no one will issue me a credit card”, the answer is a secured credit card.
Secured simply means that the credit line is secured by you (i.e., you have to deposit the money before they will issue the card and when you close the account, the money is returned to you). Thus, the credit card companies will issue the card to people with poor credit because it doesn’t represent any risk. The advantage to you is that they (in most cases) report monthly as simply a credit card on your credit report.
I used a secured card as my first “credit repair card” and kept it open for two years to accrue some age on the account. This is a great way to start the credit repair process.
Reader’s Question
Ashley,
I have 120 days past due with my GEMB/LOWES Card so they sold it to another lender who I am paying through a debt counseling co. GEMB/LOWES is reporting my PAY STATUS as 120 days past due although I have not missed a payment with the lender who bought my debt. Can I get this statement removed to read PAID AS AGREED?
Thanks!
[name removed]
My Response
Dear [name removed],
It sounds like you’re using a debt settlement company to pay off your debts. The problem with debt settlement companies is while they will settle your debts (eventually), your credit gets destroyed in the process.
The way it usually works is that you basically setup a savings account with the debt settlement company and pay them an amount you can afford on a monthly basis. Once you have enough money in that savings account to settle debt, they will attempt to negotiate with the collector on your behalf for settlement. The problem is that the debt settlement company requires that you stop paying the debt to the creditor while you are paying them. This is what destroys your credit. I’m afraid that unless you take matters into your own hands and stop paying this company, your credit will only continue to get worse. Trust me, [name removed], you can do this on your own if you follow the steps outlined in my blog.
Best,
Ashley
Take Home Point
Many people arrange for their debts to be handled by a debt settlement company falsely thinking that all of their credit problems are going to be fixed overnight and all they have to do is give the debt settlement company a small percentage of the amount successfully settled. The fact of the matter is that going this route is not easy –in fact, its painful because when you stop paying your debts directly to the creditors, the late payment entries pile up. Remember, the business model of debt settlement works by telling their customers to stop paying their debts and start saving money in a savings account with them. While this is good if you absolutely cannot afford your debt payments (the debt settlement companies will adjust your savings amount according to your affordability), they will not pay ANYTHING to the creditors until they think they can settle the debt.
Reader’s Question
Dear Ashley,
I have an old Verizon bill for $44 that I didn’t know about. Verizon has sold the account to a collection agency. And the collection agency is listed on my credit report (they list Verizon as the original creditor) I have attempted to negotiate a payment in full for delete with the collection agency but they flat out refused. I have called Verizon and they informed me that the account no longer belongs to them and I should contact the collection agency.
I can still log on to the Verizon account website using my old log on. If I pay the bill on the Verizon website can I then dispute the collection account with the credit bureaus as “not my account” or “paid with original creditor”? If so will this then make Verizon add a paid collection account to my credit report?
My Response
Hi [name removed] -
While I like your creativity (which is usually required when improving your credit), I would not suggest doing this. It won’t work. The collection agency will eventually take your offer if you are persistent. Keep up the good work and don’t give up — you will eventually win
Best,
Ashley
Take Home Point
Persistence, persistence, persistence is the key to repairing bad credit! I know all too well (from experience) that dealing with collection agencies is about the most miserable activity on the planet. Nonetheless, I hope all of my readers will kindly keep in mind that being persistent is the one thing that will enable you to win!
Reader’s Question
Dear Ashley,
Once divorce, does my ex-husband’s credit score get better since the bad debt was under my name?
My Response
No, credit scores and marriage are not tied together. If you are getting a loan together, they may take both credit scores into account, but that doesn’t mean your actual credit score is affected by your spouses credit.
Best,
Ashley
