Credit Repair Tips – Closing Your Accounts Will Absolutely Impact Your Credit Score

Don’t be afraid to settle and close your accounts so that you can be in a better financial situation in the future.
Credit is repairable. It’s important for consumers to understand that concept. Too many times we will hear that prospective clients refuse to enter into a settlement arrangement with a creditor for fear of negative implications to their credit score. Yes, that three digit credit score is often equally as cherished as your beloved vehicle, pooch, or other prized possession. So, hurting your score by entering into a settlement arrangement with a creditor is understandably a hard decision. Well, lets look at the bright side.

Settling with a creditor happens when arguably you are in not the best financial position. Meaning; you might be struggling at this time of your life… which is already forcing you to have a difficult time meeting your payment obligations. Perhaps you may have already been delinquent on your payments in the past… perhaps you are indeed meeting your minimum payments on time, but are near the limit on cards; which have now been rendered virtually unusable.

Often, your credit score will already reflect the negative nature of how and when the bills are being paid. So, why settle? Settling for less than the entire balance with a creditor may provide you with that fresh start in life that you so desperately need. Settling will afford you to pay back significantly less than what you might’ve originally borrowed, purchased, and spent. Settling will allow you the possibility of forever eliminating your credit card debt in a much shorter time period than had you continued to voraciously spend, spend, spend.

Finally, though your sacred three digit friend may suffer some unfortunate negative consequences… once you get back on your feet and get your finances in order your credit will begin the slow and arduous task of coming back to life. Time especially heals most credit wounds, so fear not. Taking a step backwards to take three steps forward with regard to fixing your financial future and ultimately your credit score should be the top priority.

Closing your accounts and settling with your creditors will help you to have mextra income that could not have foreseen prior to settling. Closing and settling your accounts forever eliminates all of that interest that you would have otherwise been paying for possibly many years to come. As the saying goes, “the only thing to fear is fear itself.” Get out of debt once and for all.

Credit Score Facts – 7 Things You Probably Didn’t Know Affected Your Credit Score

1. All Credit Reports are NOT Created Equal

This means that your interest rate is somewhat dependent on whichever credit report your lender uses. This may not sound significant but a few points could mean the difference between being classified from the no credit risk category to the some credit risk category or even the default credit risk category. This could mean having several percentage points added to your loan. Make sure you check which reporting agency your lender is using and if you have a better score with another agency, ask the lender to consider that report instead. Depending on the situation, it could be a good idea to switch to a lender who primarily uses a different reporting agency.

2. Where You Got Your Credit Card Can Affect Your Credit Score

In the past, your credit score was often calculated by rating credit cards issued through national banks higher than ones listed through local banks or credit unions. Although this calculation is rarely used anymore, some lenders still calculate your score this way. Owning a credit card issued through a local bank or credit union could be hurting your credit score if you end up with a lender using this old fashioned credit score calculation.

3. The Credit Report You Buy May Not Be The One Your Lender Sees

When you buy a credit report, the score you see is based on a specific calculation by that reporting agency. When a lender looks at your score, they could be using a different calculation and likely a variety of different scores based on calculations associated with specific risks (auto loan score, mortgage score, bankcard score, etc.). So don’t be surprised if the lender replies to your loan request differently than you expected.

4. There Might Be Errors on Your Report

It is estimated that up to a quarter of consumers are affected by errors on their credit reports each year. Just imagine paying a higher interest rate or not getting approved at all due to an error! To avoid this, make sure to check your credit report at least once a year for errors. You have the right to one free credit report each year from each credit agency. Only you will be willing and able to find the errors so prudence may be your best bet here.

5. Divorce Doesn’t Apply To Your Credit

Divorce will not automatically separate your joint accounts. Although you might manage your credit responsibly, your credit might be still getting damaged by your ex. When you divorce, you must send letters to each credit agency formally acknowledging your divorce. Even once you have done this, errors are likely still going to be made. Checking your credit reports after a divorce can be vital to avoid costly errors that will drop your credit score.

6. Credit Repair Companies Don’t Repair Much

Although credit repair companies can talk a big talk, most of the time they don’t walk a big walk. Most credit repair companies offer grandiose promises to fix your credit. The reality is they can really only send dispute letters to have items temporarily removed from your report to give you time to address them. However, if you cannot prove the error, the negative items will simply be put back on. Some of the better credit repair companies will negotiate with the creditor for you to make sure you are rewarded on your report for not defaulting on your loan. Although, overall these companies will make bigger promises than they can follow through on.

7. Your Credit Score Can Fluctuate A Lot

Your credit score is constantly being updated and your score is partially calculated by factoring in your credit card utilization rate (total card balances/card limit). One day you might have a 30% credit card utilization rate and another day a 70% or 80% credit card utilization rate. This factor can cause your credit score to fluctuate quite a bit. So don’t be alarmed, just make sure you keep your credit card utilization rate to a minimum when seeking larger forms of credit.

Selecting the Right Credit Repair Company

When you’re trying to fix your credit history and improve your credit score, and you want to use a credit repair service to help you, it can be tricky to pick out the good from the bad. Here’s a handy guide on what to look for when choosing credit repair services.

So you’ve got a copy of your credit report, and it makes no sense at all to you. The history is filled with acronyms and codes that make no sense at all, and they didn’t even have the decency to pack in a decoder ring to help you decipher it at all. So where do you turn for help with credit repair.

Stay away from dispute factories

When you’re first getting in touch with credit repair companies, ask how much emphasis they put on dispute letters sent to credit bureaus over negative accounts. A lot of credit repair companies use this as a quick-fix for people’s bad credit, sort of like throwing darts at a board; eventually, one of them’s bound to stick, right?

However, as I’m sure you’ve guessed, disputing every negative item in your credit history isn’t the best way to improve your credit and will more than likely get you in trouble if the items are really yours. Avoid companies that rely on disputes.

Getting to know your SOL

You’ll also want to learn your state’s statute of limitations, that is, how long the original creditor has to collect on a particular account. The Federal SOL is 7 years from the date of last activity on the account. Your state’s SOL varies wildly depending on the type of account in question (between oral/written agreements, promissory notes, and open-ended accounts), with some states lasting for only 2 years, while others follow you for closer to 15 years, making the road to credit repair seem that much longer depending on where you live.

So instead of allowing any of these companies to randomly dispute every negative account on your report, familiarize yourself with your state’s SOL and be prepared to work out payment plans with the creditors themselves.

Pardon my debt

One other thing to consider when looking for the right credit repair company is whether or not they incorporate debt settlement and negotiation services as part of their program. If they do, make sure you are able to work out payment plans with both the creditor and the debt settlement specialists so you can work towards reducing negative accounts within your means.

Keep an eye on your accounts, and anyone eyeing them for you, and within a few months time, your report will look cleaner than ever before.

Can You File a Criminal Complaint Against a Debt Collector or Credit Bureau?

In a simple answer, yes you can. If you invoke any of your rights afforded to you under the Texas Finance Code and the debt collector or credit bureaus fail to act on your rights as a consumer, then they are guilty of a criminal act as well as civil penalties. Section 392.402. of the Texas Finance Codes states as follows:

CRIMINAL PENALTY. (a) A person commits an offense if the person violates this chapter. (b) An offense under this section is a misdemeanor punishable by a fine of not less than $100 or more than $500 for each violation.(c) A misdemeanor charge under this section must be filed not later than the first anniversary of the date of the alleged violation.

As mentioned here and in previous articles, the Texas Finance Code is the Texas law by which you can invoke your rights under and request an investigation of any information you know is incorrect, does not belong to you or is simply being reported erroneously. With this law, many people can rid their reports of inaccuracies and/or errors and collection accounts. Now, you must remember that the Texas Finance Code does apply to both credit bureaus and debt collectors doing business in the State of Texas.

If you request an investigation to a debt collector or a credit bureau and they fail to act in a timely manner, then they have committed a criminal offense under the aforementioned section of the Texas Finance Code. If you request from the debt collector or credit bureau specific information as to how they went about investigating your dispute and they fail to respond or do not respond within the time restrictions as set out by this law, they have committed a criminal act under the Texas finance code. If a debt collector sends you a letter purporting to be from a lawyer and it is not, then that debt collector has committed a criminal offense. If a debt collector sends you a letter with differing or several return addresses on the envelope and on the letter itself, as to confuse the consumer, then they have also violated the law.

There are many protections afforded to consumers by the Texas Finance Code but you must act. Just as each section has time restraints for the third party debt collector or credit bureau, any of your rights that were violated must be acted upon within a certain time period. According to the Texas Finance Code, there is a time window in which you must file a criminal complaint against the credit bureau or debt collector that violated your rights under the Texas Finance Code. The language specifically states that you must file a complaint no later than the first anniversary from the date of said violation. So basically you have one year to file a criminal complaint and if you do, you can pretty much be sure that these people will be deleting the account you are disputing. Please note that this is the only time restraint mentioned specifically for the consumer in the TFC. Unfortunately, many people are not even aware that these laws exist and therefore they continue living their daily lives thinking there is nothing they can do.

Other future articles will involve the civil penalties that the Texas Finance Code calls for if anyone should violate that law. Yes people! Not only are there criminal penalties but there are civil penalties as well. Without giving away too much information on future articles, I will simply mention that any violation of the Texas Finance Code is not only a criminal act (as we have established), but ALSO, is actionable under other Texas Laws and is considered a deceptive trade practice under the Texas Business and Commerce Code which allows for stiffer civil penalties including possible punitive damages!

It is the intent of this article to help by informing the public that there are specific laws that are out there so that you too can wield these laws like a sword and not be taken advantage of. I have said it many times before and I will never tire of saying it because it is true; Knowledge is power!