Stacy Wall
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It’s really up to the creditor
There’s no requirement for any lender to report anything to the credit bureaus. It’s entirely up to the lender.
I can’t think of any national lender that doesn’t report a repo to the credit bureaus. Not only they report it, it’s very likely that they will go after you for the balance of the loan, including late fees and legal expenses…
That could end up for almost the current loan balance, because the vehicle would be sold for a very small price in an auction.
As to why the loan has not been reported to your credit reports – hard to tell. Will for that reason the repo won’t appear on your reports? Maybe so.
In any case, it’s entirely up to a creditor whether or not to report anything (good or bad) to a credit bureaus. The law only requires for the report to be correct!
Is the debt showing on your credit report?
Your first action should be to pull your credit reports and check them. It the debt shows on your report than it’s either a clerical error or fraud. Clerical errors are easy to correct with a simple dispute procedure. If its credit fraud, you need to take actions before more damage is done. Use this identity theft checklist as a guide.
If the debt is NOT showing on your credit report than its more likely that the collection agency is just “fishing” for everyone with a similar name. It happens all the time and it’s not ID theft.
Simply send the collection agency a certified, return receipt letter telling them to cease all contact as the debt is not yours. They have to stop, and will likely sell the debt to another collection agency, and you will need to repeat the process.You can’t fix a charge off
Especially with credit card defaults – there’s no legit way to remove the charge-off record from your credit report. You will have to wait 2.5 yrs until it ages off your report.
A Charge-Off is one of worst things that can happen to your credit. Once you have a charge-off on your credit report the damage is done and cannot be fixed. It remains on your credit report for 7.5 years from the date of first delinquency. Even if you pay back the debt in full – the charge off record will continue to show up.
Paying off the collection account won’t change a bit. At best, your credit report would be updated to Paid/Settled R9 Charge Off status with a $0 balance. A little better but still pretty bad.
Even if the collection company agrees to delete the account entirely from your report in return for a full payment – they can’t remove the original charge-off that was reported by the credit card company. Pay For Delete Agreements (PFD) are only good for “single” items that are reported only by the collection agency such as unpaid medical bills/utility bills/cellular bills, bounced checks, gym memberships etc.
As time passes the affect of the charge-off on your credit score is reduced, but any potential creditor reviewing your credit report will be able to see that charge-off.
Your ONLY option is to wait the 2.5 years until it falls off.
Good luck
You can’t remove them
You can’t simply remove items from your credit report. Old accounts are part of your credit history, and count in your FICO score.
With time, information does fall off your credit report. Most negative items remain on your credit report for 7 years, while closed accounts in good standing remain on your credit report for at least 10 years. They just don’t count as much in your FICO score as open, active accounts.
Closed accounts in good standing are positive history and improve your credit score. Removing them would adversely impact your credit.
More about closed accounts here. See this for a complete list of the credit report time frame limits.
You are comparing Apples to Oranges…
To start with – they are NOT the same score and they use different scales. While the 3 major credit bureaus only sell Vantage Scores to consumers, third party monitoring services like freescore.com use their own model to simulate your Fico score. Vantage & Fico run on a different scale and use different formulas, so comparing between the two is like comparing apples to oranges.
Because Fico runs between 300-850 while Vantage uses a 500-990 scale it’s not surprising that the score you see on EX site (Vantage) is significantly higher than what you get on freescore.com.
In my opinion you waste your money with these credit monitoring. More than 90% of all creditors use Fico for their lending decision, so the Vantage score you get on Experian is worthless. The scores you get on third party monitoring services (freescore.com included) are called FAKKO Scores. These can be off more than 100 points from your real Fico, which makes them worthless as well.
If you want a real free credit monitoring service go to CreditKarma.com. They offer free credit score and monitoring services that are based on your Trans-union’s credit report. The score they give for free is pretty accurate – within 50 points of your real Fico.
No, but it cost you more
Utility companies don’t report to the credit bureaus, so your late bill payment won’t appear on your credit report.
If you default on your utility bill and it is sent collection, the collection agency would report the defaulted debt to the credit bureaus and then it will show up on your file.
Paying your utility bills a month late is not impacting your credit report or score, but it may negatively affect your record with the utility company. If you keep doing that for a long time, they may disconnect you and require a deposit before reconnecting you back. Not to mention that you are paying more because of late fees.
My advice – find a way to get current and stay current.
I strongly advise against a 72 months loan!
It looks like you have lots of negative equity. I strongly advise against a 72 month loan. It just gets you into a higher rate and a term longer than you’re likely to own the car. Rolling in negative equity and taking out another 72 month loan will just get deeper and deeper into negative equity.
B.T.W – 6.9% is still high.
I would suggest instead paying off your negative equity, saving up a down payment and finding something affordable that you can get with a 36 month term.
Use both, but keep utilization low
A key factor in building credit is payment history. The longer your payment history is – the higher your score will go. If you don’t use at least one card – your score will go down slowly.
As to using just one credit card or both – it doesn’t really matter. However, Fico formula doesn’t treat all credit card the same. Although store credit cards function similarly to revolving credit accounts, retail credit cards won’t contribute to your Fico score as significantly. Consider it something like a 3:1 ratio – for every three ways that a traditional credit card impacts your score, a retail cards makes one impact. For this reason, if you end up using just one CC, use the Capital One CC rather than JC penny.
Most importantly – keep your utilization low. The general consensus is to keep utilization anywhere between 10% – 35%.
Use your credit cards for some of your normal budget expenses (I.E. things you know that you have the money to pay off at the end of the month). Wait for the statement and pay them in full. This will save you money on interest while building your credit. It may also increase the likely hood of being approved for increased credit limits. Increased CL’s over time will lower your utilization which will further boost your score.
To keep utilization below 35% you may need to make one or more pre-statement payments. Only the end-of-month balance reported on your statement is counted towards your utilization.
It will look very bad paid, settled or unpaid
Any collection account look very bad, whether paid, settled or unpaid. Collection account is a serious negative that will damage your credit significantly. You can forget credit building with a collection account.
When you fail to pay as agreed, the original creditor will report the late payments to the credit bureaus. That alone will hurt your credit. After a period of 3 to 6 month the creditor will charge-off the account and turn it to collection. A charge off is a serious negative that remains on your report for 7.5 years. Once in collections, the account will not report any payments made until the debt is completely settled, after which it will be updated to show paid or settled.
Collection agencies also report debts to the credit bureaus. Paying off defaulted debts in collection will NOT improve your credit. The damage is done and will remain for 7.5 years on your credit report, whether unpaid, settled, or paid. That doesn’t suggest that you shouldn’t pay off your debts. In fact, there are many reason why you should!
Potential creditors look at your credit reports to see how you’ve handled past credit. Late payments, chargoffs and collections pose major problem when you’re looking for new credit.
Also, remember that credit is just one of your problems. Collection companies can (and most likely will) sue you in court. In many case they win and can garnish wages or go after your assets. Do yourself a favor and pay off that debt or negotiate a settlement.
Re: grace period for interest on a credit card
Credit cards have an interest free grace period between the purchase date and the statement due date, but ONLY if you pay the balance in full every month!
Most cards have 3 or 4 weeks between the closing date and the statement due date. So the grace period can be a lot longer than 24 days. For example, if you use the card on the 1st day of the month, you have a full month until the closing day PLUS that 3 – 4 weeks until the due date, meaning 50 – 60 days interest free grace period.
You’ll probably have to start with a secured card, because you won’t qualify for any major credit card. Use the card for regular purchases, wait for the statement and pay the balance in full every month. This will build your credit while avoiding interest.
Pay the statement if full AFTER you get it
Credit cannot be build overnight. Good credit is build month by months. It takes at least two years to build reasonable credits, and years to build excellent credit.
What actually builds credit is a steady stream on timely payments. For best results – use the credit card for normal expenses, wait for the statement and pay it in full. Each month the statement is reported as a balance to the credit bureaus, and assuming it is paid on time (either the minimum payment or in full) your credit score will inch up a bit.
If you pay off the balance BEFORE the statement is issued, your statement will show a zero balance, and that same zero balance will be reported to the credit bureaus. This may sound good, but it’s actually bad because a $0 balance has the same effect as not using the card (with respect to building credit). This strategy is good only for a month or two before applying for a car loan or a mortgage. See paying-credit-card-before-statement.html for more information.
As long as you pay at least the minimum payment on time, it will be reported to the credit bureaus as an on time payment and will build your credit. However, if you don’t pay the balance in full every month, you will be charged interest for what you carry.
There is absolutely no benefit to paying interest with respect to credit building. In fact, if you carry balances of more than 30%, it will hurt your credit.
Summery – The best way to handle a credit card is to use it for regular purchases, wait for the statement and pay it in full every month. That builds credit and avoids unnecessary interest.
Forget about settlement
Most credit card companies will NOT accept a settlement. Anything short of full balance payment is considered only in rare cases such as permanent change of finance, like total disability or.
Even if they settle, it will have a significantly negative effect on your credit because the forgiven portion of the debt will be reported to the credit bureaus as settled or charge-off. Both are serious negative items and will affect your score significantly.
In addition, you’ll receive a 1099 for the forgiven portion of the debt and it will have to be included in your income tax.
You can only settle after the debt is already defaulted by the credit card company and sold to collection. You’ll have a better chance of negotiating a settlement with them, but your credit will take a bigger hit.
Bankruptcy will damage your credit the most, and you may end up paying more than the original $20,000 in elevated interest rates, insurance terms etc. Consider it only as last resort.
If You Divorce
Divorce (or separation) in itself has nothing to do with credit, and does not appear on your credit report.
It may however effect you credit indirectly.The most important thing to understand when getting divorced is that while you and your former spouse are bound to the divorce decree – creditors are not, and so are the credit bureaus. Your obligations to lenders remain unchanged regardless of what the divorce decree states.
Therefore, it is important that all joint accounts should be either closed, of refinanced in the name of only one spouse. This may involve closing credit card accounts, selling your cars and even selling your home.
Unfortunately – that’s the best (and only) way to ensure that your credit is not harmed by your former spouse.
Closing accounts and applying for new credit may ding your credit, but it’s nothing compared to what a vandective spouse can do to it. It’s not unheard of people ruining their ex credit (along with their own) just for vengeance.
For more information see divorce-and-credit.html.
Gray Area
Pay for delete agreements fall in the gray area. The Fair Credit Reporting Act (FCRA) requires that information reported to your credit file not be knowingly inaccurate. It says nothing about information NOT REPORTED…
Their restriction against account deletion is an administrative matter on their part, and not a statutory prohibition. It is only, at best, pegged to their agreement with the credit bureaus.
What I’d suggest is to wait a few weeks and try again. Keep sending those PFD letters, but try to find a different address, preferably someone in management’s name (address the letter to that person directly). Don’t give up. Eventually someone may accept your terms.
Good luck!
Real credit scores cost money. However…
To begin with, if you’ve just started using credit then for the first 6 months your Fico score is 0 due to lack of sufficient credit information.
The Only place consumers can get their REAL Fico scores is myFICO.com, but that cost money. There’s absolutely no reason for you to pay for this.
Although all three credit bureaus sell consumers credit scores, these are non-Fico (Vantage) Scores which are practically worthless – more than 90% of creditors use Fico scores for making lending decisions. Don’t waste your money there either.
Other third party credit score monitoring services use Fakko scores. These can be 100 or more points off your real Fico score and therefore worthless as well.
A good place to get a free credit score is CreditKarma.com which offers a free score estimator based on your TransUnion credit report. It’s not real FICO but within 50 points or so. Good enough for most purposes.
You should need to understand that despite all the commercials, credit scores are really only a very small part of any lending decision. What really counts is what shows on your credit report and other factors such as debt-to-income ratio, job stability etc.
Pay all your bills on time, check you credits reports annually for errors and your score will take care of itself.
For more information see free-annual-credit-score.html.
