Stacy Wall
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They can’t legally post it
There’s no connection between The Statute of Limitations (SOL), which is the time frame to bring a lawsuit and the credit reporting period which is the time frame a debt can be posted on your credit report.
The SOL is governed by state laws, and for most debts it is less than 11 years. See this Complete list of SOL by State for your state.
The credit reporting period is governed by the Fair Credit Reporting Act (FCRA) which is a federal law. Most debts can be posted to your credit report for 7.5 years from the date of first delinquency, and this clock cannot be restarted. See this
complete credit reporting period list for more accurate information.An 8 year old defaulted debt cannot be legally posted to your credit report. They CAN try to post it anyway. If they do – simply dispute it as being beyond the reporting period.
If the debt is beyond the SOL, send the collection agency a certified, return receipt letter telling them to cease all contact as the debt is beyond the SOL and the reporting period.
They will probably stop calling you, but will likely sell the debt to another zombie collector, and you will need to repeat the process.
For more important information about how to behave with debt collectors please see how-to-pay-off-debt.html.
Simply close them
It is true that closing credit card can hurt your credit. It makes your credit history younger which is bad for your score (Length of credit history counts for 15% of your fico).
Closing cards also lowers you available credit and raises your balance-to-limit ration which is also bad for your score (Utilization counts for 30% of your fico). However, if you carry no balances then it doesn’t matter anyway.
By the way, some of these cards may have already been closed due to lack of activity. You may want to check your credit report to verify their status. Closed accounts in good standing remain on your report for at least 10 years. They just don’t count as much in your score as open, active accounts. So, since you are not using these cards, they really don’t do much to help your credit anyway.
Having 13 unused cards in you drawer is also asking for trouble with fraud and ID theft. What I would do is close some of these cards. I would keep the oldest open (that way you don’t loose credit history length) if it has no annual fee.
Keep your oldest card only if it’s older by more than 4 years from the other cards. If the card is less than 4 years older than your other cards it makes no difference.
Closing these 13 accounts may drop your score 50 points, but even if it does, you score will rebound within a year.
Close the accounts via written letter and request written confirmation that the account is closed with zero balance. Keep that confirmation forever.
Please see How to Close Credit Card Accounts and sample letter for closing a credit card account for more information.
You need to pull your actual reports
Don’t waste your time. They won’t accept it anyway, and with a good reason. For starters – they need to pull it thru their systems, so they know the numbers have not been tampered with. Nowadays, anyone with Photoshop can print pretty much whatever they want.
The second thing you need to understand that Equifax sell consumers vantage score, while the score they used is almost certainly Fico. These two different scores run on a totally different scale. While Fico runs from 300 – 850, vantage starts at 500 and runs all the way up to 990. In fact, a 500 Fico is comparable to below 700 vantage… (See this table).
Third – Home renters are not interested in the number of inquiries on your report, not in the actual score. All they want to see is whether or not you pay your debts on time, i.e. if you have late payments, defaults, charge offs or collections on your report. Actually, I’m surprised that they even mentioned your score as the problem. Is there other negative information on your report?
As to the 20 recent credit inquiries – what you really need to do is pull your credit report from the 3 different credit bureaus (Equifax, Experian & TransUnion), and check them thoroughly. You may find out that one report show them while the other two are clean. You may even find out that someone else is applying for credit in your name!
It doesn’t cost money to pull your credit report. You are entitled to a Free Annual Credit Report from each of the 3 major credit bureaus every 12 months (Here’s how to pull them).
Don’t withdraw. Take a loan
Defiantly do not withdraw money out of your 401k. You’ll be heavily taxed for it. Money withdrawn from your 401k will be taxed by 40% by the IRS, and if you spend the amount taxed you will potentially owe the IRS a lot of money when you file next year.
Instead – take a loan from your 401k. To start with, you’ll get more money that way. You’ll also not lose future capital gains, which you would if you withdraw.
You can take a loan for up to 50% of your 401k. Take a residential loan and NOT a general loan. General loans must be repaid within 5 years, while residential loans can be paid over 20 years. You MUST take the loan BEFORE the closing date on your contract, but you can use it for other costs as well like moving, new furniture etc. There should be no penalty for paying back early, but you’ll need to make sure of it.
You can request a residential loan over the phone or directly thru your online account. They’ll send you a promissory note in the mail, which you’ll need to sign and post back with a copy of your signed purchase and sales agreement. Approvals typically take a week.
Good luck.
They are like all credit cards, only with very high APR
Store credit cards are a great way to start your credit. They work just like standard credit cards, only that store credit cards tends to have very high interest rate.
All credit cards work pretty much the same:
- You have a minimum monthly payment, that is typically 3% to 5% of the balance or $10, whichever is higher.
- If you pay the balance in full every month, you don’t pay any interest.
- If you pay less than the full balance, you pay interest on the remaining balance.
- Interest is based on t he average daily balance times daily interest rate(1).
The problem with store credit cards is the outrageously high interest rate (20% up to 30%). If you pay the minimum payment every month, most of it will cover the interest and only a small amount actually goes toward reducing the balance. This means that it will take you a very long time to pay off the balance, while paying tons of interest during that time. This makes your purchases extremely expensive – more than double the original purchase price!
Store cards are convenient, but you can end up paying tons of interest if you run up balances on them. Only use them if you can avoid carrying balance. Use them for regular purchases, wait for the statement and pay it in full before the due date. That will build up your credit while avoiding high interest rates.
(1) Total Interest = Average Monthly Balance (total of each day’s balance, divided by the number of days) times the Monthly Interest Rate (APR divided by 12).
You owe the new collection agency
There’s no limit to the number of times your debt can be sold. There are collection agencies that specialize in buying up judgments and then taking action to collect.
You can expect to see wage garnishment and/or bank attachments in the near future.
In any case, when a company sells your debt or judgment, you no longer owe them. You owe the company that purchased the debt.
All of your negotiations should be done with the collection that bought your debt.
Hope this helps…
It’s an urban myth
It’s a common misconception that lender must accept any payments you offer to make. They have no obligation to take those payments. In fact, they can take them and still sue you or turn you to collection.
It all depends on what payment plan you ask them to agree. If you’re willing to pay $25 a month – forget it. On a $2,500 debt they may agree for a $250 – $500 a month. But once again, they don’t have to agree to any king of payment. If they do – it’s only because it’s worth more to them than selling it for a few cents on the dollar to the collection company.
Yes, you certainly should continue paying!
Just because something no longer shows on your credit report doesn’t mean that you do not still owe. It is common for people to confuse between the 7-1/2 reporting period to the actual liability to pay their debts.
You should also keep in mind that judgments are good for a long time and can be renewed. You certainly don’t want the judgment reappearing on your credit report.
The judgment holder can also use the judgment to garnish wages, attach bank accounts, and lien personal property. It would be a good idea to pay off that judgment before you incur additional fees & interest.
Here’s How
Perhaps the best way to answer your question is with this image:
While the median remains the same in both images, the average does change and the difference between the two increases.
Now imagine that the balls are simply credit scores…
As some balls (people with low credit score) move left (i.e. their credit score drops), it drags down the average credit score but doesn’t affect the median credit score.
Prefer a numeric example? Consider these two lists of 1,200 Fico scores:
Number Of People Fico Score Number Of People Fico Score 30 800 30 800 60 780 60 780 110 760 110 760 150 740 150 740 250 730 250 730 120 720 120 720 80 700 80 680 80 680 80 660 70 650 70 630 60 600 60 580 50 550 50 530 40 500 40 480 40 450 40 430 30 400 30 380 30 350 30 350 Average – 678
Median – 725Average – 671
Median – 725On the right hand side table, the people with bad credit lost on average 20 points compared to the people on the left hand side table, while the people with relatively good credit score retained their score.
The result: while the average credit score on the right hand side table is lower by 7 points than that of the left hand side (671 compared to 678), the median credit score for both tables is the same – 725.
Why is that so?
Because of the current credit crunch, more people than before find themselves in a situation where they can’t handle their financial obligations. When these people increase their credit utilization, start missing payments, don’t pay their utility bills or even default on their credit card – their credit score takes a biting and drops immediately.On the other side of the scale, people who keep their financial obligations don’t see significant change in their credit score.
The result – the average credit score drops, while the median credit score remain unchanged!
What does this mean?
This example demonstrates why the average credit score is a bad reference. If your credit score remain the same while the average credit score dropped – that doesn’t make your credit standing better!Hope this answers your question.
Probably a Vantage score, not FICO
Where did you get that score? My guess would be Equifax/Experian/TransUnion, not
myFico.com.The 3 major credit bureaus stopped selling Fico scores to consumers. Instead, they sell Vantage scores which run on a completely different scale, from 501 to 900.
There is no real comparing between Fico and Vantage, but as you can see from this credit score range comparison, while a Fico score of 695 is good, a 695 Vantage score is pretty bad.
The only place that sells ‘real’ Fico scores to consumers is myFico.com. If you got a Fico score elsewhere than it’s a FAKKO score, which is pretty much useless.
Credit scores are just one factor among many in the lending decision. Creditors look at your actual credit reports, as well as other factors such as employment history, annual income and more. You can have a 710 Fico score and be turned down due to not having enough credit, or get approved with a 680 Fico.
Overdraft is not reported to the credit bureaus
Overdraft in itself is not reported to the credit bureaus. In itself it has no effect on credit scores, and it doesn’t show up on your credit report.
Only if you fail to pay back, the bank may close the account and turn it over to collection. Then it will go on your report and will have a negative impact on your credit score.
If you continue to regularly overdraft your account, the bank may even close the account and report you to ChexSystem. You will then have problems opening a new bank account.
Keep in mind that over drafting is bad for you. It means that you’re spending more than you can afford to. You need to figure out why you are over drafting and adjust your spending.
Absolutely no connection
There is absolutely no connection between your score to that of your wife’s. Credit reports and scores are personal, and your credit score isn’t connected or correlated in any way to your wife’s credit score.
If you have joint accounts (like mortgage, credit cards, car loan etc) then these accounts will show up on both of your credit reports.
If these joint accounts are current then it will have a positive effect on your credit score and your wife’s. similarly, if the joint accounts are in bad shape then both your scores will drop.
Adding your wife (or you) as an authorized user to your/her’s account has the same effect as a joint account. The only difference is that authorized users have no accountability to the account, while joint account holders do.
You must pay-off the card first
Never close a credit card (even a secured credit card) without first paying it off. Unless you pay the card off first, it will be considered as a defaulted debt and it will affect your credit score negatively.
The logic behind that is that they had to use the collateral to satisfy the debt because you failed to pay it.
Pay the credit card off, send them a letter asking to close the credit card and ask for a refund of the deposit. Ask for a letter confirming that the account is closed with a $0 balance, and keep it forever. See close-credit-card.html for more information.
It can happen if you live in one of the community property states
If you’re living in one of the community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington & Wisconsin), your spouse’s debt may appear on your credit report.
In a community property states, most property acquired during the marriage (except for gifts or inheritances) – the community, or communio bonorum is owned jointly by both spouses and is divided upon divorce, annulment or death. Joint ownership is automatically presumed by law in the absence of specific evidence that would point to a contrary conclusion for a particular piece of property
In community property states, married persons are considered to own jointly their property, assets, and income and also debt. As a result, you and your spouse are considered equally responsible for debts incurred during your marriage, and therefore individual debts of one spouse may appear on the credit report of the other.
The Community Property StatesYet another identity theft case 🙁
You’re actually facing two separate and important tasks: Fixing your credit and making sure you’re not held accountable for these debts.
Paying off those debts is out of the question. Not only you shouldn’t – even if you pay them off it will do nothing towards fixing your credit. As far as defaults and collection account go – the damage is done and paying off debts doesn’t re-do the damage (See ../why-pay-off-debts for more information).
A total different issue is your liability to the debts. Unless you do something about it, you are held accountable for these debts. Collection agencies can file law suits against you, come after your car and bank account and even garnish wages.
You should start by filing an identity theft police report. There’s no getting around it. That police report is a must for both fixing your credit and avoiding collection agencies and law suits.
You’ll need to dispute every item (all defaults and all collection accounts) with each of the three major credit bureaus. Send your dispute letters via mail and include a copy of your birth certificate along with a photocopy of the police report, your driver’s license and social security card. Indicate that this was an identity theft while you were still a minor (See ../credit-report-disputes/ for more information).
Next, send letters to all the creditors and collection agencies, indicating the identity theft and include a copy of that police report.
For a complete check-list of identity theft recovery see ../how-to-report-identity-theft.
Keep in mind that even if it turns out that a family member stole your identity – still, you should be prepared to press charges. If you don’t – it will be considered as you giving permission to use your identity, and you’ll be held responsible for paying all those debts.
