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When Does Debt Fall On Your Credit Report?

If you’ve experienced a financial setback, like a job loss that resulted in missed payments and collection accounts, you may be wondering how long this will affect your credit. Debt can stay on your credit reports for about seven years, and it usually negatively impacts your credit scores.

It takes time to get rid of this debt. Fortunately, debt will have less of an influence on your credit scores over time – and eventually even disappear from your credit reports altogether.

How Long Does Debt Stay On Your Credit Report?

The length of time a collection stays on your credit report depends on the type of loan you have. Derogatory articles can stay on your credit reports for seven to 10 years or more, according to the Fair Credit Reporting Act. But here’s the good news: As these items age, the negative items have less of an impact on your credit scores.

Here’s how long you can expect derogatory notes to stay on your credit reports:

Difficult investigations 2 years
Money owed or guaranteed by the government 7 years
Late payments 7 years
Seizures 7 years
Short sales 7 years
Collection accounts 7 years
Chapter 13 Bankruptcies 7 years
Judgments 7 years or until the expiration of the state statute of limitations, whichever is longer
Unpaid taxes Indefinitely, or 7 years from the last payment date
Unpaid student loans Indefinitely, or 7 years from the last payment date
Chapter 7 Bankruptcies 10 years

Do I still have to pay the debt?

If you’re wondering how long something stays on your credit report, it’s important to keep this in mind: your debt isn’t just erased once it goes off your credit reports. If you have never paid off the debt and the creditor is within the statute of limitations, they can try to collect the money. The creditor can call and send letters, sue you, or get a court order to garnish your wages.

Even outside the limitation period, collection companies can still try to collect the debt. “Past-due debt” is a thriving business, as it is often sold and resold for pennies on the dollar. Even a partial payment makes a call or letter interesting to the collector.

The only sure way to get rid of debt is to pay what you owe, or at least an agreed portion of what you owe. If you’re looking to put your debt behind you and walk away with a clean slate, contact the collectors listed on your credit report. Before making the phone call, make sure you know:

  • The debt is legally yours.
  • How much you owe the creditor.
  • What you can reasonably afford to pay per month or in a lump sum.

If you are negotiating for a payment that is less than the total amount due, be sure to get the payment agreement in writing from the collector before sending any payment.

How long do collections stay on your credit report?

If a creditor’s information regarding an account default is valid, the collection record will exist for seven years from the date it is filed.

Here’s how it typically works: When a creditor considers an account to be neglected, the account can be turned over to an internal collection department. Sometimes, however, the account debt is sold to an external debt collection agency. This often happens when you are about six months behind on payments.

“About 180 days after the original payment due date, the creditor can sell the debt to a collection agency,” says Sean Fox, president of Freedom Debt Relief. “This step indicates that the creditor has decided to give up getting paid himself. Selling to the collection agency is one way to minimize the loss of the creditor.

At this point, you will begin to hear from a debt collector, who is now entitled to collect payment. Depending on the type of debt you have, various countermeasures exist on behalf of creditors to avoid significant financial loss.

Unsecured debt, like credit card debt and personal loans, is usually sent to a collection agency, or can even be handled in-house. If you can’t pay a secured debt, like a car loan or mortgage, foreclosure and repossession are the most common approaches to get creditors to start recouping their losses.

If a creditor’s information about a collection is inaccurate, a dispute may be filed against the claim. This usually updates the information in the collection but does not delete it. If the information collected is entirely inaccurate or false, filing a dispute may require extensive evidence and even an investigation to remove any misleading reports.

Collection of medical debts

For several years now, the major credit bureaus have treated medical debt owed directly to vendors slightly differently from other types of debt. Some credit bureaus even ignore medical collection accounts that are less than six months old. That’s because they don’t necessarily view medical debt as an indicator of credit risk, according to Fox.

“In addition, this grace period gives consumers time to resolve disputes with medical providers or insurance companies, or to develop a payment plan, before an invoice is considered overdue.” Fox said.

Even after unpaid medical debt is added to your credit report, it may not be as important to your overall credit score as other accounts in collection. However, make sure you understand what constitutes medical debt in the eyes of credit agencies.

“Medical bills only become medical ‘debt’ if the unpaid money is owed to a provider such as a doctor, hospital or laboratory,” says Fox. “If you paid for your medical bills with a credit card, it is not considered medical debt by the credit agencies; it just becomes part of the credit card debt.

Debt collection agencies

Paying off debt that has already been sent to a collection agency will help improve your credit score. However, paying at this point will not remove the collection action from your credit profile.

“Unfortunately, in most cases you will have to wait until the account does not age any more credit reports,” says debt relief lawyer Lesley Tayne of Tayne Law Group.

There are still many benefits to paying off accounts that have been transferred to collections rather than ignoring debt, Tayne says. For example, the discharge of a debt collection may prevent the initiation of legal action for debt collection. Plus, paying off the debt will prevent you from paying ongoing interest charges.

Under certain conditions, the collection agency may remove the report from your credit profile. One of these conditions is known as the letter “pay to remove”.

“A ‘pay to delete’ letter is a negotiation tool in which the collector or lender agrees to delete the account from credit reports in exchange for paying the debt – usually more than the amount owed,” says Tayne. “This strategy is best suited for small lenders because most large lenders are not open to this type of negotiation and it is not something you should reasonably expect.”

A goodwill letter to a creditor is another option that can sometimes help remove the negative element from a credit profile. This can be successful if the unpaid debt is an isolated event and you have a long history with the lender, explains Tayne.

What happens to your credit score when derogatory notes disappear from your report?

Most negative items should automatically disappear from your credit reports seven years after the date of your first missed payment, at which point your credit scores may start to rise. But if you use credit responsibly, your score can bounce back to where it started within three months to six years.

If a negative item on your credit report is more than seven years old, you can dispute the information with the credit bureau and request that it be removed from your credit report.

Can you ask creditors to report debts paid?

Positive information on your credit reports can stay there indefinitely, but it will likely be deleted at some point. For example, a mortgage lender can withdraw a mortgage that has been paid as agreed 10 years after the date of last activity.

It is up to the lender to decide whether to share your account information with the three credit bureaus. This includes your debt which has been paid as agreed. You can call the lender and ask them to report the information, but they could say no. However, you can add positive information to your credit reports by using your existing credit responsibly, such as paying off credit card balances each month.

What are some other ways to improve your credit score?

You can build healthy credit over time by starting with these steps:

  • Make payments on time. It is one of the most important factors that affect your credit scores. If you think you can’t afford a payment, contact the lender immediately. They may be willing to work out a payment plan and keep your account in good standing.
  • Check your credit reports. It will help you understand and track your overall financial health. Also check for errors, such as incorrect credit card balances, business lines that are not yours, and accounts that are incorrectly marked as overdue.
  • Challenge and correct errors. About 20 percent of consumers have an error on at least one credit report, according to a Federal Trade Commission study. Removing an error can improve your credit score.
  • Consider a debt consolidation loan. A debt consolidation loan combines all of your debts into one balance, often at a lower interest rate which can save you money. A debt consolidation calculator can help you assess whether this type of loan is right for you, as debt consolidation can temporarily hurt your credit.

Open a Bankrate account to analyze your debt and get personalized product recommendations.

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Your credit report could interfere with your job search. Here’s what you need to know

These days, your credit history is almost as important to your personal finances as your bank accounts. This is because it can impact everything from your ability to get a loan to your ability to find a job. Yes, it’s true: your credit can have an impact on your job search.

One of the most common job search myths is that your potential employer can see your credit score. If you have a low score, it can definitely cause anxiety.

The good news is that employers can’t see your credit scores. However, there’s also bad news: Employers can check your credit reports, or at least a limited version of them. And, depending on the employer – and what they find – your credit history could lead to a denial letter.

What your potential employer can actually see

Employers can’t see your credit scores and don’t get the same version of your credit reports as lenders. But they still receive a fair amount of information about your financial situation.

An employer version of a credit check may include your:

  • name
  • Social Security number
  • Address
  • Current debts
  • Payment history

In most cases, your potential employer probably already has your personal information such as your name and Social Security Number (SSN), which is often needed to complete the background check in the first place. Other than your SSN, personal information on your credit reports is available through a basic background check that includes a search of public records.

So really, it’s your current debts and payment history that form the crux of the report. This can include mortgages, auto loans, personal loans, or credit card accounts. Your credit reports will show the last balances reported, as well as whether you are up to date with your payments.

One thing to note is that employers – and potential employers – need your consent to check your credit. Many companies will include this as part of the initial job application.

Some industries may care more than others

How much weight an employer places on your credit history – or even whether they check it – can vary widely by industry and company. For example, if you’re looking to work at a local drive-thru service, your credit card debt probably isn’t an issue.

However, if you are applying for a job with a bank or credit bureau, your credit history could have a big influence on the hiring decision. After all, if you don’t consistently manage your own finances, a company may not want to hire you to manage theirs. Excessive debt can also be a red flag in some security-sensitive jobs, as some employers may think those with excessive debt are more likely to be manipulated from the outside (such as bribery).

If a business plans to reject your application based on your credit check, they are required by law to notify you – in writing – that they are taking “adverse action” because of your credit. The company is also required to send you a copy of your report so that you have the opportunity to dispute any incorrect information.

The best ways to clean up your credit reports

You have three major credit reports, one from each of the three major credit bureaus: Experian, Equifax, and TransUnion. You are normally entitled to one free credit report from each bureau each year, although you can get weekly reports until April 2022 due to the pandemic. You can access your free reports at AnnualCreditReport.com. (The site is secure and managed by the credit bureaus.)

As long as your credit history is in good shape – that is, you don’t have late payments, maxed out cards, or defaulted accounts – you probably don’t have to worry about knowing if an employer verifies it. However, if your credit history is not at its best, you may be able to clean it up.

The first thing to do when checking your reports is to make sure everything is there. If you do not recognize any accounts or if there are other errors in your reports, you can file a dispute with the credit bureau to have the information corrected. You will need to file a separate dispute for each incorrect item with each office.

If the problematic items on your credit reports are legitimate (in other words, if you really missed that payment, or if you missed that account), you won’t be able to get them removed through litigation. Instead, you might just have to wait for them to age your intercourse. Most negative items will automatically disappear from your credit reports after seven years.

While you are unlikely to lose most jobs due to your credit history, it is good to know where you are at and the potential red flags you may be facing. And, given the importance of your credit to your finances in general, this is information you should have even when you are not actively looking for a job.

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We strongly believe in the Golden Rule, which is why the editorial opinions are our own and have not been previously reviewed, endorsed or endorsed by the advertisers included. The Ascent does not cover all the offers on the market. Editorial content for The Ascent is separate from editorial content for The Motley Fool and is created by a different team of analysts. Ally is an advertising partner of The Ascent, a Motley Fool company. Brittney Myers has no position in the stocks mentioned. The Motley Fool owns shares and recommends Ethereum. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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Error on your credit report? 6 steps to follow

The information on the pages of your credit report helps determine the interest rate you will pay on a loan. It may also impact the ease of:

  • Buy insurance
  • Rent accommodation
  • Get the job of your dreams

That’s an awful lot of power for a three-digit number, but it’s there.

The scary thing is that one in five Americans who check their credit reports find a mistake – one that can change the course of their financial life.

So what should you do when you find an error on your credit report? How can you fix it? It all starts with ordering the three free reports at annualcreditreport.com.

Typically, you are entitled to a free copy of your report from each of the three major credit bureaus once a year. Due to the pandemic, Americans can order a free credit report every week until April 2022.

Then go through the report and look for errors. This may include:

  • A credit card you don’t recognize
  • A bill from a place you’ve never lived
  • An invoice that you have paid in full but still has a balance
  • An address that does not belong to you

Every mistake, no matter how small, can have an impact on your credit. Highlight anything that doesn’t look right.

Now is the time to dispute any mistakes.

How to dispute errors on your credit report

Credit bureaus and any company that has provided incorrect information are legally responsible for correcting errors at no cost to you. Your only job is to dispute the mistakes. Here’s how:

1. Contact the credit bureau

It is possible that an error on one credit report does not appear on others. All you need to do is contact one of the three credit bureaus to initiate the dispute process:

2. Send a letter of explanation

You don’t have to worry about getting fanciful with the letter. A credit bureau only needs the following information:

  • Your full name
  • Your date of birth
  • Your social security number
  • Your current address
  • Any other addresses you have had in the past two years
  • A copy of your driver’s license or state ID
  • A copy of an invoice (to prove that you are who you say you are and live where you say you live)

The important thing is to dispute inaccurate information. Print the dispute form from the office’s website, fill it out, and attach it to your letter. Or include a list of every item that is wrong. Make sure to include the account number and the reason why you think it is incorrect. Be as detailed as possible, and if you have any supporting documents, include them in the letter.

Some mistakes are easy to correct. For example, if you were born in 1980 but your credit report shows a mortgage taken out in 1982, it is quite easy to see that this is a mistake. If you find a credit card that has been fraudulently withdrawn in your name, the process may take a little longer, but you can still have it withdrawn.

Note: Send all correspondence by certified mail and pay for a “return receipt”. This is important because it proves that the credit bureau received your dispute and the date it was received.

3. Keep copies of everything

If you find more than one error on your credit reports, it may be helpful to create a separate file for each. Keep everything from correspondence to your evidence in this file. So if a question arises, you can answer it quickly.

4. Wait 30 days

According to the Federal Trade Commission (FTC), the credit bureaus have 30 days to investigate your dispute. If your complaint is unfounded, they will stop investigating. Even so, they should inform you of the reasons why they stopped the investigation and give you the opportunity to provide further evidence.

Suppose your dispute is about a late mortgage payment. During the 30-day investigation period, the credit bureau forwards the evidence you submitted to your mortgage company. If the mortgage company believes you are correct, they should notify the three credit bureaus so that the information can be corrected on all of your records.

5. Examine the results

After 30 days, the credit bureau must provide you with the results of its investigation in writing. If the dispute resulted in changes in your credit report, you also get another free copy.

If you ask, the bureau should send a correction notice to anyone who has retrieved your credit report in the past six months. If you have been refused a loan or offered a higher interest rate due to an error on the credit report, the credit bureau should send a corrected credit report to that lender after you requested it.

You can even request that a corrected credit report be sent to an employer if you’ve been turned down for a job because of your credit report in the past two years.

6. If things don’t go the way you want them to

If the outcome of the investigation does not resolve the issue, you have the right to include a dispute statement on your credit report. For example, if you think the late payments shown on the credit report are incorrect but you cannot convince the credit bureau of this, include a note explaining why you think it is wrong.

Now let’s say your payments were late, but it was because you were in the hospital with a fatal illness or because of a job loss. Include these statements because they help creditors see your credit report in a broader, real-life perspective.

Ben Franklin said, “In this world nothing is certain except death and taxes. If credit reports had existed at the time, it’s fair to imagine that Franklin would have added them to his list.

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We strongly believe in the Golden Rule, which is why the editorial opinions are our own and have not been previously reviewed, endorsed or endorsed by the advertisers included. The Ascent does not cover all the offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts. Ally is an advertising partner of The Ascent, a Motley Fool company. Dana George has no position in the stocks mentioned. The Motley Fool recommends InterContinental Hotels Group. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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3 reasons to regularly check your credit report

Here’s why it’s important to stay on top of your credit report.

There are certain tasks in life that need to be accomplished, even if they aren’t the most fun or engaging. For example, we all have to file our taxes, have our cars serviced, and take the time to have an annual medical check-up to monitor our health.

But just as you need to fit these tasks into your schedule, it’s also essential to set aside time to regularly check your credit report, ideally three times a year. Here’s why.

1. To stay on top of your finances

Your credit report is to a large extent a snapshot of your financial health. While this report won’t tell you how much money you have in savings or how well you are doing in your brokerage account, it will tell you how you manage your debt.

Specifically, your credit report will include a list of your open credit card accounts and loans, as well as your various balances. It will also show you how much of your available credit you are using at a time so you can see if you have a reasonable amount of debt or not.

2. Be on alert in the event of fraud

These days, no one is immune to financial fraud. Even if you follow smart practices to protect your personal information – like shredding sensitive documents rather than throwing them away – a criminal can still get a hold of your credit card or social security number and open a tab on it. one of your accounts or open a new one in your name. Checking your credit report regularly could help you find out this information as early as possible and minimize the damage.

Suppose a criminal opens a credit card in your name. If you see this account listed on your credit report and it doesn’t sound familiar to you, you’ll know you need to take action. But without checking your credit report, you might not discover this account until you start receiving default notices in the mail – by then your credit score might already have been affected.

3. To make sure you are in a good position to borrow money

You may be preparing to apply for a mortgage or other large loan for an important purpose. Checking your credit report first will help you determine if this is a good time to apply, or if it is better to clean up your credit history first and then move forward with these. plans.

Suppose your credit report shows that you have two delinquent accounts. This might cause you to delay your borrowing plans and deal with credit issues first so that they don’t prevent you from getting approved or getting a competitive interest rate.

How to check your credit report

Right now you are entitled to one free copy of your credit report every week until April 2022. But normally you can get one free copy per year from every major information bureau – Experian, Equifax and TransUnion. You can go to each office’s website and request a free copy of your report, or visit annualcreditreport.com for a copy of all three reports. It doesn’t matter how you access your credit report, as long as you make sure you do it regularly.

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We strongly believe in the Golden Rule, which is why the editorial opinions are our own and have not been previously reviewed, endorsed or endorsed by the advertisers included. The Ascent does not cover all the offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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Henry County gets a good credit report; Martinsville establishes a flushing program; Patrick County Sheriff Gets Grant | Local News

Residents are warned to avoid washing their clothes if they know that standpipes are emptied nearby. Although the lifted sediment has been disinfected by chlorine in the water supply, dirt can still stain clothing if it is sucked into the washing machine in sufficient quantity.

Flushing times will be announced later for the remaining parts of town.

The PCSO obtains an Alzheimer scholarship






Black-smith


Photo of the bulletin file


The Alzheimer’s Foundation of America has awarded a grant to the Patrick County Sheriff’s Office to expand its Project Lifesaver program, which provides safety technology to families whose members suffer from dementia-related illness and tend to wander .

The program allows caregivers to register loved ones with dementia or autism to wear a small wrist or ankle transmitter that emits an individualized tracking signal. If this person is missing, the caregiver informs the sheriff’s office, who will send assistants.

A grant of $ 6,000 will be used to purchase new and improved transmitter kits, bands and batteries, as well as to train more officers on the program, a statement from the Alzheimer’s Foundation said. The sheriff’s office estimates that an additional 20 families can be accommodated at no cost.

“The Project Lifesaver program saves lives, and this grant will allow us to continue to protect those who are unable to protect themselves,” County Sheriff Patrick Dan Smith said in the statement.


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How I corrected an error in my credit report and increased my FICO® score by 112 points

It takes years to build credit, but one mistake on your credit report can take your score down.

Credit scores are an important part of our life. That three-digit number can impact everything from the credit cards we qualify for to the rate we get on a mortgage. Sometimes it can even affect whether or not we get a new job or a new apartment.

But making payments on time and paying attention to how you handle credit is only part of maintaining your score. You should also be careful of errors on your report. Here is how an error caused my score to lose more than 100 points.

It started with a pop-up notification

I have worked hard to build my credit history and achieve a great credit score. One tool that I have found useful is Mint, an app that allows me to store all of my financial information in one place. No matter what stage you are at in your financial journey, the best budgeting apps can help.

I was surprised when Mint alerted me to a drop in my credit rating. I did some research and got a free copy of my credit report from each of the three major credit bureaus, Experian, Equifax, and TransUnion. I discovered that my credit score had dropped 112 points due to a new debit / collection account on my credit reports.

Collections? It couldn’t be …

I always pay my bills the moment I get them, so this was a shock. Something was definitely wrong. Aren’t collection companies known for relentlessly harassing their debtors by phone, email and any other means in an attempt to get their funds back? I had never received a single communication from someone saying I owed money.

I found the name of the collection company reporting the debt and contacted them. Without going into details, there was some confusion when I had blood tests done over a year ago. The lab had my correct name, but everything else was wrong – including my address, phone number, email, etc. So they’ve been sending me invoices and notifications for a while, but not to me.

I explained that I had lived in the same house for over five years and had the same phone number for 15 years. The doctor’s office had all of my correct information on file, so this clearly wasn’t a mistake I could be held accountable for. The collection company contacted the lab’s billing company. He agreed to withdraw the collection report as long as I paid the invoice in full.

Cover my bases with the credit bureaus

It was the first time something like this had happened to me, so I didn’t really want to leave the fate of my credit rating in the hands of a collection company. I followed the following steps:

  • I have filed disputes online with each of the three credit bureaus.
  • For each dispute, I had to indicate which part of my report was incorrect, explain the problem and attach documentation to support my case. I have attached copies of all my correspondence between the collection agency and the lab’s billing company, including any invoice paid in full.
  • I was informed that a file had been opened and that I would receive a response within 30 days.

A few weeks later, I received the first of three responses: A bureau had found in my favor and removed the collection account from my credit report. Within a week, I had received the same response from the other two offices. All the frustration and anxiety that had built up from a small credit report error was finally starting to dissipate.

Don’t expect an overnight solution

I had assumed that my credit score would immediately be restored to its former glory. After all, the error had been removed from my three credit reports. But that was another good lesson. When it comes to credit scores, nothing happens overnight.

It took a few more weeks before the missing 112 points were restored, putting me back in excellent territory. The sad thing is that this type of situation is not unusual. Up to 1 in 5 people have errors on their credit reports. The best way to protect yourself is to check your credit report regularly. This way you can make sure that no mistakes are going against you.

Currently and through April 2022, you can get a free weekly copy of your credit report from each of the credit reporting bureaus. Many of the best credit cards also give you access to your credit score in your online account. And many personal finance apps provide this information as well. They will even notify you if your score has changed.

As I’ve learned the hard way, these types of mistakes can and do happen. But if this happens to you, there are steps you can take to address it. Do your due diligence and immediately file disputes with credit bureaus. With a little time and effort, you can permanently remove the error from your credit report.

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We strongly believe in the Golden Rule, which is why the editorial opinions are our own and have not been previously reviewed, endorsed or endorsed by the advertisers included. The Ascent does not cover all the offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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Elements of the credit report that matter most to lenders

Have you ever wondered what it was like to look at your credit or loan application from across the desk?

When lenders review your credit report, “these really are common sense decisions,” says Rod Griffin, senior director of consumer education for Experian, one of the three major credit bureaus.

“Creditors and lenders find it really boring to be exciting and sexy,” he says. “Anything unusual is scary. “

When you apply for a loan or a credit card, lenders very often check your credit rating, your credit report, or both. If they don’t like what they see, you will be rejected or approved, but on less favorable terms.

And it’s not just new candidates who are being scrutinized. Credit card issuers, for example, also periodically review their customers’ records.

If you want the best deals and terms, here are seven things you and your lenders don’t want to see.

1. Late or missed payments

This one gets to the heart of what lenders really want to know: “Are you going to pay your bills?” says Francis Creighton, president and CEO of the Credit Data Industry Association, the member organization of credit bureaus.

What You May Not Realize: Anything not done on time, minimum payments are viewed by creditors and lenders as missed payments.

“What matters is that you make the payment on the due date,” Griffin explains. “If you’re only making a partial payment, in terms of the minimum payment due, that’s a bad sign. Partial payment is late payment.

When it comes to your credit score, making timely payments is the most important factor. It counts for 35% of your credit score.

2. Foreclosures and bankruptcies

These are the two worst things you can have on your credit history – and both will give future lenders a break, Griffin says.

So how could these events prompt a lender to extend credit?

“Somewhere between pretty scared and terrified,” he said. “Especially if it’s recent.

Seeing these items in your history “doesn’t mean they won’t make that loan,” says Creighton. “But they can price it differently.”

The foreclosures stay on your credit report for seven years. Chapter 7 bankruptcies (total liquidation) stay on your credit report for 10 years. Chapter 13 bankruptcies, where consumers reorganize to pay off some or all of their debts, stay in your credit history for seven years.

If you had a short sale, you won’t find those exact words on your credit report, Griffin says. Instead, it will say “settled” or “settled for less than originally agreed”.

Like foreclosures, short sales also stay in your credit history for seven years. And that’s seen by creditors as “a little better than foreclosure,” he says.

That said, the longer a foreclosure, bankruptcy, or short sale has taken place and the more financially the consumer has recovered, the less impact it will have on their credit, Griffin says.

3. High balances and maximum cards

“A high balance, relative to the credit limit on your cards, is the second most important factor in your credit score,” says Griffin.

The portion of your credit that you use is roughly 30% of your score.

And high balances or maxed out cards are “an indication of financial hardship,” he says. “Ideally, you would pay your card in full every month and keep your usage as low as possible. What we are seeing is that the people with the highest score have a higher utilization rate. [the balance divided by the credit limit], 10 percent or less.

And that goes for both individual cards and the collective total of the consumer’s credit lines and card balances, he adds.

A basic rule of credit score was to keep the utilization rate below 30%. “But 30% is the maximum, not a goal,” Griffin warns. “It’s the cliff. If you go beyond that, the scores will drop sharply. Conversely, “the more you are below 30%, the less likely you are to default,” he adds.

Point: As your usage rate changes from month to month, your score will also change.

Griffin remembers a family vacation where he put everything – travel, meals, gifts – on plastic. Its utilization rate increased by 7% and its credit rating fell by 40 points.

In January, he paid the bills for the card in full and his score returned to normal. “So don’t panic about it if your score is good,” Griffin says.

4. Someone else’s debt

When you co-sign a credit card or loan, all of the debt is written on your credit report. So as far as lenders go, you carry that debt yourself, and it will be included in your debt load when you apply for a mortgage, credit card or any other form of credit, says John Ulzheimer, a former lender of the lender. credit industry. executive and chairman of the Ulzheimer group.

If the person you co-signed for stops paying, misses payments, or pays late, this will likely be reflected on your credit report.

So if a friend or family member who needs a co-signer tells you it’s painless because you’ll never have to part with it, tell them it’s not true. Co-signing means agreeing to repay the obligation if the borrower defaults and allowing that debt, along with any late or non-payment, to count against you the next time you apply for a loan.

Co-signing for a friend or family member works well at the Thanksgiving table, says Ulzheimer, “but it doesn’t work well in the underwriting office.

5. A history of minimum payments

Creditors make money when you keep a balance, but lenders don’t like to see only minimum payments on your credit report.

“This suggests that you may be under financial stress,” says Nessa Feddis, senior vice president of the American Bankers Association. “You may be at a higher risk of default. “

Sometimes paying the minimum doesn’t signal a problem. For example, paying minimums in January, after spending vacation time, is understandable. But consistently paying minimums month after month indicates that you might be struggling to pay off the balance. Lenders who see this on a credit report may be reluctant to extend additional credit.

6. A flurry of loan requests

This won’t scare lenders so much as it causes them to reconsider what’s going on in your financial life, Griffin says.

For someone who pays all of their bills on time and has no balance, a flurry of demands could be perfectly harmless. But for someone making minimum or late payments and transferring balances, it’s a sign of financial stress and a drag on lenders.

“The inquiries suggest something to lenders,” says Creighton. “And that is valuable information.”

New credit inquiries stay on your credit report for two years and affect your credit score for one year. In the FICO scoring model, the new credit counts for 10% of the score.

“They’re the least important factor in credit scores and the last thing creditors are going to look at,” says Griffin.

Point: Certain types of credit applications (mortgages, auto loans, or student loans) are aggregated and counted as one application by the credit scoring formulas. That’s because when it comes to those big purchases, lenders know you’ll want to shop, and that’s smart.

While the new scoring formulas group similar loan applications together if done within 45 days, older versions only have a 14-day window. And you have no way of knowing which version potential lenders are using. For added security, keep all requests within 14 days.

7. Cash advance on credit card

“Cash advances, in many cases, indicate desperation,” says Ulzheimer. “Either you lost your job or you are underemployed. Nobody makes cash advances on a credit card because they want money in a bank somewhere. You usually borrow from Peter to pay Paul.

Here’s how a cash advance will send a wake-up call to lenders who review your credit report: First, the cash advance is immediately added to your debt balance, reducing your available credit and your credit score. credit for all potential lenders.

Second, large card issuers regularly reassess the behavior of their customers. They do this by pulling credit reports, FICO scores, and accounts receivable histories and running them through their own credit scoring systems, explains Ulzheimer. Many rating models penalize cash advances because they are considered risky, he says.

If the card issuer lowers your credit limit or cancels your account, it can damage your credit score and make other lenders more wary.


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Can You Pay To Remove A Bad Credit Report?

A bad credit score can work against you in a number of ways. When your credit is low, it can be difficult to get approval for new loans or new lines of credit. If you qualify, you may have to pay a higher interest rate to borrow. A low credit score can also result in the payment of higher security deposits for utilities or mobile phone services.

In these scenarios, you may want to consider a tactic known as a pay to delete, in which you pay to have negative information removed from your credit report. While this may sound tempting, it is not necessarily a quick fix for better credit.

Key points to remember

  • Pay for delete is an agreement with a creditor to pay all or part of an unpaid balance in exchange for that creditor removing derogatory information from your credit report.
  • Credit reporting laws require that accurate information remain about your credit history for up to seven years.
  • Credit repair involves paying a business to contact the credit bureau and report anything on your report that is incorrect or false, then requesting it be removed.
  • You can do your own credit repair at no cost, but it can be labor intensive and time consuming.

Pay to delete defined

First of all, it helps to understand what it means to pay to have bad credit information removed. According to Paul T. Joseph, lawyer, CPA and founder of Joseph & Joseph Tax and Payroll in Williamston, Michigan, “Pay to delete is basically when you are contacted by your creditor, or you contact them, and you agree. to pay some or all of the outstanding balance with an agreement that the creditor will contact the credit bureau and remove any derogatory comments or indication of late payment on the account.

How to request payment for deletion

To request payment for the deletion, you will need to send a written letter to the creditor or the collection agency. A letter of payment for deletion must include:

  • Your name and address
  • Name and address of creditor or collection agency
  • The name and account number you are referring to
  • A written statement stating how much you agree to pay and what you expect in return from the creditor removing negative information

You’re essentially asking the creditor to remove any negative remarks they might have added to your credit report related to late or missed payments or a collection account. By paying some or all of the outstanding balance, you hope that the creditor will show goodwill and remove the negative information from your credit report for that account.

Important

Generally, exact information cannot be removed from a credit report.

Is Paying To Remove Legal?

The Fair Credit Reporting Act (FCRA) governs credit laws and guidelines. Anything a debt collector, creditor, or credit bureau does regarding a credit report will be FCRA-based, says Joseph P. McClelland, consumer credit attorney in Decatur, Ga.

Credit bureaus are required to produce accurate credit reports, and consumers have the right to sue creditors and credit bureaus in certain cases. Specifically, this includes inaccurate information that continues to be reported after a consumer initiates a dispute that the creditor or the credit bureau failed to investigate.

Technically, payment for deletion is not expressly prohibited by the FCRA, but it should not be viewed as a blanket card without credit. “The only items you can remove from your credit report are the ones that are inaccurate and incomplete,” says McClelland. “Everything else will be at the discretion of the creditor or the collector. ”

Important

If you spot an error or inaccuracy in the credit reports, then you will need to file a dispute with the creditor or the reporting credit bureau to have the information corrected or deleted.

Remove collection accounts from a credit report

The success of your removal payment attempts may depend on whether you are dealing with the original creditor or with a debt collection agency. “As for the debt collector, you can ask him to pay for the deletion,” says McClelland. “It’s completely legal under FCRA. If you go that route, you’ll have to get it in writing, so you can apply it after the fact.

What to keep in mind, however, is that paying to delete with a debt collector may not remove negative information about your credit history that was reported by the original creditor. The creditor may claim that his contract with the collection agency prevents him from changing any information that he has reported to the credit bureaus on the account. That said, some collection agencies are taking the initiative and requesting that negative account information be removed for customers who have successfully settled their collection accounts in full.

Before taking this step, think about the impact that collection accounts can have on your credit score. The FICO 9 credit scoring model, for example, does not take into account paid collection accounts in credit score calculations. So if you have paid or are planning to pay a collection account, you may not need to pay to delete if your only goal is to improve your credit score.

Important

If you wait for a debt to be time-barred. that is, after the limitation period in which collection actions can be applied, it is important to avoid restarting the clock, which can happen if you make a promise to pay.

Remove Bad Credit History With Credit Repair

Hiring a credit repair company is another option to pay for removing bad credit information. “Credit bureaus basically do the job for you by contacting the credit bureaus and objecting to errors in the report or requesting that false or incorrect items be removed from the report,” McClelland explains. In this case, you do not necessarily pay off the outstanding balances. However, you will have to pay a fee to the credit repair company to act on your behalf and remove the negative information.

$ 30 to $ 100

Typical monthly fees for a credit repair business

The fees charged by a credit repair company can vary. Typically, there are two types of charges: an initial setup charge and a monthly service charge. Upfront fees can range from $ 10 to $ 100, while monthly fees typically range from $ 30 to $ 100 per month, although some companies charge more.

When considering fees, it’s important to weigh what you’re getting in return. According to the Federal Trade Commission, there is nothing legally credit repair companies can do for you that you can’t do on your own. You just need to be prepared to spend time reviewing your credit reports for negative or inaccurate information, contacting credit bureaus to dispute that information, and following up on those disputes to make sure they do. under investigation.

If you decide that the time saving aspect of working with a credit repair company is worth your money, then do a thorough research on any companies you are considering to make sure that you will be working with one of the best repair companies. credit available. Joseph says that most credit repair agencies are legitimate, but if you come across one that makes promises that sound too good to be true or uses methods to repair credit that are not covered by FCRA, that is is a red flag that the company could be a con.

Also consider the timing before pursuing credit repair services. “After several years of being on your report, the negative impact on your credit score has probably passed,” says McClelland. This is because negative information can eventually automatically fall on your credit report.

Important

Late payments and collection accounts can stay in your credit history for up to seven years. A Chapter 7 bankruptcy filing can stay on your credit report for up to 10 years.

Fix bad credit yourself

If you’d rather not pay to remove or pay for a credit repair business, there are a few steps you can take to start getting your credit back on track:

  • Review your credit reports for negative information that is inaccurate. File a dispute for inaccuracies or errors online with the credit bureau reporting the information.
  • Consider asking someone you know with a strong credit history to add you to one of their credit cards as an authorized user. This can transplant that person’s positive account history into your credit report.
  • Look for credit loans and secured credit cards as additional credit building options.
  • Make a habit of paying your bills on time every month. Payment history has the biggest impact on credit scores.
  • Weigh the pros and cons of debt settlement to resolve collection accounts or write-offs. Debt settlement allows you to pay off debts for less than what is owed.
  • Focus on paying off the balances of any credit card or loan accounts you have opened to improve your credit utilization rate.

advice

You can get a free copy of your credit report from each of the three major credit bureaus each year through AnnualCreditReport.com.

The bottom line

Bad credit doesn’t have to be a permanent situation. There are things you can do, including pay to delete, to help get your credit back. Paying to get bad credit removed can be effective, but it’s worth exploring other options if you don’t have the money to pay off an outstanding balance or cover expensive costs that a credit repair company does. can charge.


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Understanding your credit report and credit score

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Understanding your credit report and your credit score can be essential if you want to keep your personal finances healthy. This means you can apply for credit with confidence, or even know if you’ve been the victim of fraud.

What’s on your credit report?

Your credit report is basically your financial resume. It is a record of your financial life, including the accounts you hold, the money you have borrowed, and information about your identity. It is there so that lenders can confirm that you are who you say you are and that you are a reliable borrower.

So what exactly is on your credit report? Let’s break it down:

  • A list of your credit accounts – bank and credit cards, utility company loans and debts
  • Details of any person financially related to you, therefore any person with whom you have taken out a joint loan
  • Information such as CCJs, repossessions, bankruptcies and IVAs
  • Your current account provider and your overdraft details
  • Whether or not you are on the voters list
  • Your name and date of birth
  • Current and previous addresses
  • Whether or not you have committed fraud, or if someone has stolen your identity and committed fraud

You will find all this detailed information in your report. It is therefore worth checking that all the information in the file is correct.

All details on fraudulent actions will be kept in the Cifas section. Cifas is a national fraud prevention program and it can place markers on your credit report to highlight if you’ve been the victim of identity theft.

How to check your credit report?

There are three Credit Reference Agencies (CRAs) in the UK: Equifax, Experian and TransUnion.

You might be wondering why there is more than one ARC. Well, not all lenders share their data with all three rating agencies. It is therefore worth checking your credit report with each one as they may differ depending on the lender who shared what information.

It is possible to check your score for free, as all credit rating agencies are required to provide you with a copy of your credit report without charging you. Alternatively, each of the agencies offers some sort of full credit monitoring service that you will usually pay for after the initial trial period.

Is a credit report different from a credit score?

In short, yes. Your credit report is different from your credit score. In fact, you don’t have a universal credit score.

If this just blew you away, let me explain. A credit score is an assessment by a particular lender of whether or not you are at risk in lending. It is based entirely on their own evaluation criteria.

You may find that the credit rating agencies provide you with a “credit score”. But in reality, this is only an indication of what your credit score might be with a lender based on the information they have.

If you have a “good” credit rating, there is no guarantee that your application will be accepted and that you will be offered the full rate. It just depends on the lender and whether or not they are happy to lend to you. That being said, the better your credit rating, the greater the chance that you will be able to borrow money.

How do I understand my credit score?

As we have seen, there is no such thing as a universal credit score. So figuring out this can be quite tricky. The scores you get from each of the credit reference agencies will all be different.

So here’s a look at how each ARC presents scores:

  • Experiential – Scores are divided into five categories: very bad (0-560), bad (561-720), fair (721-880), good (881-960) and excellent (961-999).
  • Equifax – The scores are over 900. Good is 400-474 and excellent between 475 and 900.
  • TransUnion – TransUnion has a slightly different system. The scores are over 1000 but are accompanied by your credit rating. So your “overall creditworthiness” will also be noted as a number from one to five.

If you are unhappy with your credit score, there are ways to improve it. Check out our article on how to improve your credit score.

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How to correct an error on your credit report

Eeven small mistakes on your credit report can cause big problems. A typo in your home address could make it difficult for you to get a copy of your credit report, for example. A bigger mistake, such as a creditor misreporting your financial information, could cause more serious problems.

This is why it is essential to check your credit report at least two or three times a year. When you do, check it out for errors, either in your personal information or in information reported by your creditors. If you find any errors, follow these steps to correct them:

First, find the errors

Due to the Fair Credit Reporting Act, you are entitled to a free copy of your credit report every 12 months.

You can get a free copy from each of the major reporting companies. So you could get your Equifax report in January, your Experian report in May, and your Transunion report in September. Repeat the following year and you will stay on top of your credit report.

You can get your free report online at www.annualcreditreport.com, by phone at 1-877-322-8228, or with the annual credit report request form.

The three ratios may be somewhat different. Although all of your major financial information is the same, sometimes there are discrepancies between your credit reports.

If you find a major error on your Equifax report, for example, you might want to extract your other two reports to see if they contain the same error. Even if you don’t have a free report available from the other two companies, it’s not too expensive to buy a copy.

The basics of correcting errors

When you correct a mistake on your credit report, document everything. While a minor mistake is unlikely to send you to court against a creditor or a credit bureau, strange things have happened.

You can better protect yourself by keeping everything in writing. Sending letters about the error – and keeping copies – is a good place to start. If you end up making phone calls, take lots of notes with each call. Be sure to mark dates, times, and other relevant details on conversations.

Also, stay calm. Dealing with the red tape and impersonal service often offered by large financial entities is frustrating. But you will solve this problem, and you will solve it faster if you are as pragmatic as possible.

Errors in your personal information

Errors in personal information on a credit report are quite common. But that doesn’t mean you should ignore them. Here’s how to do it:

  1. Pull up on all three credit reports to see if they have the same error. If so, contact them all. (They don’t communicate with each other, so correcting an address error with Equifax does not mean the same error will be corrected with TransUnion.)
  2. Check with your creditors first to make sure they have your correct name, address, and other personal information. Sometimes the error lies in the information that creditors send to rating agencies. In addition, it is always a good idea to make sure that current creditors have this correct information.
  3. Send a letter or complete the online dispute form for the agency with the incorrect information. If you are sending a letter, add supporting evidence: copies of invoices or other official letters should do the trick.

Whenever you correct personal information, give them a month or two to withhold it. Although credit bureaus are required to review inaccuracy claims in a timely manner, it may take some time for the claim to be processed and the information to be changed.

Correction of other errors

There are several types of common credit report errors, including:

  • Information from another person with a name or address similar to yours
  • Information left behind by a battle against identity theft
  • Information from a former spouse
  • Incorrect payment status on an account
  • Multiple late dates for an account, which can happen if an account is transferred to a debt collector
  • Bad ratings for closed accounts (it may seem like the creditor cut you off, when you really chose to close the account)
  • Corrected unreported offenses

Some of these problems are minor and easy to resolve. Under the right circumstances, however, any of these common problems could be enough to ruin your credit score. So here’s what to do if you find incorrect information from your creditors on your report:

  1. Gather documents that support your position. For example, if you’ve paid an overdue account, look for a payment receipt that includes the date. Circle the relevant information on your documents so that they are easy to find. Always send copies, not originals.
  2. Attach supporting documents to a dated professional letter at the credit bureau. The letter might look like this one from the FTC.
  3. Keep copies the letter and supporting documents, and write down the date you mailed them.
  4. Inform your creditor, either online, by phone or by mail. Which option you choose will depend on the type of creditor. You can search online or call your creditor to find a number or address specific to credit disputes.
  5. Wait. The FTC typically requires credit reporting companies to investigate the issue within 30 days, unless they find your dispute frivolous. Once the investigation is complete, they will give you the results of the investigation and a free copy of your credit report if the dispute changes it.
  6. Send copies of your updated report, if necessary. If the error on your credit report has prevented you from getting a lease, loan, or job recently, ask the credit reporting company to send a free copy of your report to anyone who has it. obtained in the last six months. You can request that copies of your report be sent to anyone who has retrieved it for employment in the past two years.

Alternatively, you can use the credit bureau’s online dispute system. Find online dispute forms for Equifax, Experian, and TransUnion at the links.

Sometimes you will need to take extra steps to correct an error in your report, especially if a creditor insists the information is correct. While the need for additional action is unusual, it does happen. If you go through this process multiple times without success, it may be time to consider hiring a lawyer to help you with the more complex process of suing a creditor or a credit bureau for reporting information. inaccurate.

Your credit report rights

During this process, it is ideal to understand and exercise your rights as a consumer when dealing with the credit bureau. Under the Fair Credit Reporting Act:

  • You have the right to be informed if the information in your file has been used against you. If you are denied a job, insurance, loan, or anything else because of your credit report, you need to be notified. You can also get a free copy of your report in these situations.
  • You have the right to know what is in your file. You can get a free report once a year, or when someone has taken adverse action against you because of your report, when you are a victim of identity theft, when you are on public assistance, or when you are unemployed but hoping to apply for a job within two months.
  • You have the right to claim your digital credit score even though you will have to pay for it.
  • You have the right to challenge incomplete or inaccurate information in the ways listed above.
  • If you prove that any information is inaccurate, incomplete, or unverifiable, credit bureaus should correct or remove it from your file.
  • Consumer news agencies cannot report negative information that is out of date. Most negative information is out of date after seven years, and bankruptcies are out of date after 10 years.
  • Your credit report can only be given to people who need to see it, and you must give employers or potential employers written consent to withdraw your report.
  • You can unsubscribe from pre-selected credit and insurance offers by calling a toll-free number provided with those offers.
  • You can claim damages from people or companies who violate these rights.
  • If you are an active military or a victim of identity theft, you may have more rights than these.

That’s a lot of information, but it can help you correct errors on your credit report. If it’s been a while since you last checked your report, don’t delay. The sooner you find and correct mistakes, the better your credit will be.

Related: If you are looking for an easy way to increase your score, sign up on Experian Boost ™. This service is free and can see when you make your monthly payments like your utility bill and your cell phone bill on time. When you do, your FICO® score may be increased.

Experian Boost Disclaimer – Results may vary. Some may not see improvement in scores or chances of approval. Not all lenders use Experian credit files, and not all lenders use Experian Boost impacted scores.

Learn more: Read our Experian Boost review


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