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Getting Rid of Collections

April 19, 2009 by PlasticEconomy.com · Leave a Comment 

When lenders analyze your credit report, collections listed can affect you in a negative way. The older a collection is, the less it will hurt your credit score, however collections do stay on your credit report for a whole seven years. During this time anyone who pulls your credit report will see the collection account.

The recommended course of action for this common credit problem is to remove the collections from your credit report. There are several ways to do this depending on your individual financial situation and why the collections are listed in the first place.

You may notice debts that are not yours listed on your account. This happens more often than you might think and it’s possible to have these erroneous listings removed. You can file a dispute with the credit bureau and request they remove the incorrect listing from your report. Another thing you can do is ask the creditor to validate the debt, which requires them to prove the debt is owed by you. Within a certain period of time if the creditor does not respond or cannot validate your collection it must be erased.

After seven years, collections are supposed to be removed from your report. The FCRA states collection accounts can only stay on your report for this long. However, some creditors will try to keep the debt on your report longer by making it look as if the collection went on your account later than it really did. This is called re-aging an account and can keep the collection on your credit unless you dispute it with the creditor and credit bureau.

Any documentation you have proving the true age of the debt will be helpful.

Another way to have collection debt removed from your credit report is by disputing after your original collector has sold your account. Because collections are sold and transferred to other agencies, the agency on your report may not be the one trying to collect the debt. It is possible to have items that have been switched from one collector to another removed by disputing the account.

Finally, you can pay the collection accounts then write to request the paid accounts be marked paid in full or deleted from your report.


Avoid Credit Repair Scams

April 19, 2009 by PlasticEconomy.com · Leave a Comment 

If you have poor credit it’s very possible you want to fix right away and with as little effort as possible. Most people don’t feel they have time to go through the steps associated with repairing their credit. Many people have bad credit, and are vulnerable to scam artists who promise to repair your credit quickly and easily.

It is important you don’t fall victim to credit repair swindles that take advantage of consumers with low credit scores.

The Credit Repair Organizations Act is a federal law that governs organizations who handle credit repair. These repair services are required by law to meet certain specifications and obligations to their clients. Always make sure any credit repair company you are considering complies with this act and follows all the federal guidelines.

There are ways you can tell if a credit repair service is a potential scam.

For example, you must be provided with a document called the Consumer Credit File Rights Under State and Federal Law. This document explains your rights, how you can get your credit report and how you can dispute information that is not accurate. Also, you should be given a copy of any and all contracts the company wants you to sign. Read them in detail before signing anything.

In addition, there are certain things the contract should clearly state.

Your contract from any credit repair service should declare how much you are charged for the credit repair, what kind of services are being done for you, the amount of time needed to provide the credit repair services, both the name and address of the service and a statement that allows you to cancel within the next 72 hours.  Also, you should not be asked for payment before the credit repair agency has performed their services.  Additionally, you should be aware that these companies cannot remove accurate information from your report. If they say they can, definitely steer clear.

When investigating credit repair companies you should know that you can do everything that one of these companies can do. The reason you may want to choose a credit repair agency is because the disputing process can become complicated and time consuming, with a a good agency able to take care of this for you.

Before finally deciding on a credit repair service, check their status with the BBB to make sure no complaints have been logged against them.


Keep Your Credit Cards!

December 4, 2008 by Shawn · Leave a Comment 

A sensible way to clean up your credit is to keep your credit cards.  Notice that I said keep, not use.

It’s smart to cut up a credit card or put it where it’s not easily accessible (like in a block of ice, seriously).  A person in debt may also think that’s it’s a wise decision to close the account — which is wrong! As far as your credit score is concerned, closing a credit card (balance or not) can be very detrimental.

You should not close down the following credit card accounts:

  • If your credit card has a balance, your credit report will show your available credit as 0, but your balance will remain.  Unfortunately, the ratio of how much debt you have to your available credit reflects 30% of your credit score — so when your available credit for an account is $0 and you have $2,000 worth of debt on there, it looks like you’re beyond maxed out.
  • If you close your only credit card, it may be the only revolving credit account type you have on your credit report.  Generally, a more diversified credit report with a variety of different types of accounts has a better credit score.
  • Cards that are old.  The age (the length of time you’ve had accounts) is factored into your credit score.  Lenders also look at your credit history for the ability to pay a debt for the long-term, that’s why retirees are able to get loans easier than younger adults.  It’s not because the lending institution has a biased against young folks, it’s because the older you get, the older your accounts are.

Of course, there are perfectly logical times when you should close your credit cards.  If it’s a newer card or you have many more, that’s fine.  Also during situations of identity theft and fraud, you may be instructed to close your accounts to limit any damaged caused.


Goodwill Adjustment Letter

September 26, 2008 by Shawn · Leave a Comment 

This letter is intended to be sent to a representative of a company that you are currently in good standing with but is currently reporting one or more late payments on your credit report.

YOUR NAME
YOUR ADDRESS LINE 1
YOUR ADDRESS LINE 2

MONTH DAY, YEAR

THEIR NAME (OR DEPARTMENT)
ADDRESS LINE 1
ADDRESS LINE 2

THEIR NAME,

I know you’re extremely busy, but I hope you can find time to consider this request for me. I have been a COMPANY NAME customer since YEAR and during that time, I have enjoyed my experience with your company.

I am contacting you today to see if you would be willing to make a “goodwill” adjustment to your reporting to the three credit agencies. I have NUMBER late payments on the above referenced account that date back NUMBER months. Since that time I have been an exceptional customer paying every month on time.

Because of my overall exceptional payment history with your company over the last NUMBER years, I would like you to consider removing the negative payments from my credit report. I have been a very happy customer in the past and hope to continue a long relationship with COMPANY.

I look forward to your reply.

Sincerely,

FIRST AND LAST NAME


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