Dear Liz: I did everything to increase my credit scores, which were horrendous. I see medical bills on my credit reports that look identical. Should I try to challenge them or just let them go? I’ve heard that if you try to dispute them, it allows the creditor to start the clock over to pay them off, potentially keeping them on your report for another seven years.
Reply: Fortunately, you misheard. Disputes do not extend the time limit for which negative information can be reported.
You might be confusing the seven-year period for credit reporting, which is part of federal credit reporting law and limits how long negative information on a credit report can be stored, with statute of limitations. States.
Statute of limitations are supposed to limit how long a creditor can sue you for a debt. (The key phrase is “supposed to do.” Collectors sue over old debts, hoping the debtor won’t show up in court to report it.)
Limitation periods can range from two to 15 years, depending on the state and type of debt. In some states, it is possible to revive the statute of limitations by making a payment on a debt, or even by acknowledging that the debt is yours. (In California, the statute of limitations is four years for most debt.)
You’ll want to avoid one or the other until you’re sure the bills are correct. You can start by disputing the bills with the credit bureaus.
If this does not remove the duplicates, you can contact each collection agency in writing. Ask them to validate that the unpaid invoice belongs to you and that they have the right to collect it. Mention that if they can’t post the debt, you want the bill removed from your credit reports. Also ask the collector to respond to your letter within 30 days.
Removing duplicates can help your scores. In fact, paying for collections usually won’t. It’s up to you whether you want to try and settle the debts and risk reactivating the statute of limitations, or just wait for the debts to disappear from your credit reports after seven years.
To sell or not to sell this collection
Dear Liz: You have twice advised collectors to sell their collections during their lifetime, rather than leaving the task to an executor who will not have the collector’s intimate knowledge of the market for these items. Collectibles bring joy to the collector and are probably more appreciated as the end draws near. It would bring sadness rather than joy to unload them at this point in life. Right now I’m trying to declutter my house and even things that have been molding in boxes for decades hurt a bit to let go. I am named executor in a friend’s trust and will have to move his tools. Even though his old arthritic hands can no longer operate the lathe, he looks at the machine and I can see the memory of turning a bowl in the expression he wears. I say, fully accept the responsibility of an executor.
Reply: If you haven’t been an executor, you might not understand how daunting and time-consuming the task can be, even without having to manage a large collection.
No one is suggesting that people completely divest themselves of a popular collection. But letting go can be extremely liberating, as well as a real gift for those we leave behind.
If you need the motivation to continue decluttering, consider reading Margareta Magnusson’s book, “The Gentle Art of Swedish Cleansing to the Death: How to Make the Lives of Your Loved Ones Easier, and Your Own Life More Pleasant.”
When Paying Debt Hurts Your Credit Score
Dear Liz: You recently replied to someone whose credit scores dropped by more than 30 points after paying off a mortgage. You mentioned that the big drop was probably because the mortgage was the person’s only installment loan. Credit scores like to see active use of both types of credit, installment loans and credit cards. Because this person’s scores were so high, they almost certainly were still actively using credit cards. But you should remind people that if they stop using credit they will eventually lose their credit score.
Reply: Consider them remembered. It is not necessary to wear balances; it is enough to regularly use credit cards.
A few other readers have written suggesting that the author of the letter obtain a personal loan in order to increase his scores. While personal loans can be of great help to people who acquire credit, there is no point in increasing scores once they go over around 760 on a scale of 300 to 850. Higher scores only give you bragging rights, and it would be a little silly to pay a lender unnecessary interest to get it.
Liz Weston, Certified Financial Planner, is Personal Finance Columnist for NerdWallet. Questions can be sent to him at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.