Stacy Wall
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It doesn’t work that way
Credit scores account for only a small part of the lending process when it comes to personal loans. Income, actual credit reports and debt to income ratio have higher impact on the lending decisions.
For example, a person with a Fico credit score of 710 but a thin credit report may be turned down, while a person with a 640 Fico score but with an extensive history would get approved.
It’s very hard to get a personal loan these days. Even people with excellent credit score may find it hard to get one.
There is no minimum score or any other magical number.
Try the goodwill tactic
First, you should know that credit card companies don’t usually delete charge-offs. Did the charge off went to collection, or do the credit card company still owe it?
I’m also surprised that it causes “Huge Problem”, since the new Fico score doesn’t consider nuisance small debts (less than $100).
I would start by calling the credit card company, explain what happened, offer to pay and ask them to remove the negative item in return. You may need to go up a few levels in customer service as most reps don’t have authority to remove negative information. If you manage to get a deal, have them send it to you in writing before you pay.
Although goodwill letters’ level of sccess with removing charge-offs are very slim, in your case it’s still worth a try (See goodwill-letters.html for more information).
If you fail to get a deal, you may try to dispute it with the credit bureaus. I don’t normally advise people to dispute legitimate items, but in your case it may be your only option. Even if your dispute fails, you still have a right to add a 100 word statement to your credit report, explaining the situation. Every creditor that pulls your credit report will be able to read your explanation (See how-to-dispute-credit-report.html for more information).
If all else fails, you may be able to sue the credit card company. If it’s really just a matter of fee and the nonpayment of it that resulted in the charge-off, you should be able to sue and get it removed. Most credit card companies will prefer to simply remove it rather than go to court over it.
Good luck
You MUST pay off immediately, but that won’t raise your score
You need to get current. Any additional 30 days that pass without you getting current will result in another late payment reported to the credit bureaus, and a further decline in your credit score.
If you approach the 150 days late mark, you risk getting your account charged-off, which can be a death sentence to your credit score, not to mention that you will loose your credit card.
Getting current won’t erase the negative effect of your late payments. Unfortunately, the damage has been done and cannot be erased. You can only avoid further damage.
Accurate information remains on your credit report for 7-1/2 years before aging off. It will bear on your credit score for the next two years, and after that its affect will diminish with time. By the time it falls off your report it will hardly affect your score.
The only thing you can do to raise your score is re-establish good credit, which basically means paying off your debts on time, for a long period of time. It will take you 2 – 4 years to get your score back to where it was before.
See how-to-build-your-credit.html for a list of credit building do’s & Don’ts.
Good luck
It’s legal, and even common
This is what happens when people don’t resolve their problem on time. Instead of just one, you now have three negative items on your report.
The first account is the original default from AT&T. They have charged-off the account and sold it to a collection agency. The original charge-off should have a $0 balance.
The first collection agency have probably done nothing to collect (or did they?) and sold it to a second collection company. This collection account should also have a $0 balance.
There should be just one account with the original balance, and that would be the collection agency who currently owns your debt. They are the agency you should deal with.
You should be able to get a settlement for 25% lump sum or less. The second agency probably bought your debt for few cents on the dollar, so they will be making a nice profit even at 25% (See how-to-pay-off-debt.html for more information).
All of the three negative accounts weigh heavily on your credit score. They will fall off 7-1/2 from date of first deficiency, whether paid, settled or unpaid. After two years their impact on your credit score will diminish.
Spare your time and skip the dispute. It won’t remove any of the items since they are legitimate. Don’t believe all that advice you may find in the internet about disputing every negative item on your report. It’s not true. The items may be removed for a short period of time if the collection agencies respond late, but eventually they will return onto your report.
Next time deal with your debts in time and you will suffer less damage.
Maybe. Most likely not.
If this is something that you’ve just recently paid, that it’s more likely that it will remain on your report. I would actually advise against it – sending false disputes to the credit bureaus will get you tagged and you might have problems getting legitimate errors fixed.
First, the credit bureaus can see for themselves that you have recently paid-off the account because it will show the recent status change.
Second, when the credit bureaus verify the account with the collection agency, most likely that the collection agency will verify an account that has been recently paid-off. You can have more luck with 3-4 years old debt though.
It goes without saying that it’s only worth a try for single item debts like unpaid utility bills or medical bills. It’s would defiantly won’t work with defaulted credit card or installment loan because the original default item (place on your credit report by the ORIGINAL creditor) will remain on your report, and you won’t be able to dispute it.
You are fully liable when you co-sign
When you co-sign, you are equally liable for the loan. The loan will appear on both credit reports and affects your credit score (either good or bad, depending on whether it is paid back on time or not).
The loan is also included in your total debt to income ratio. It does not matter that the other person is making all payments. This may keep you from qualifying a loan when you’ll need one.
In case that the person you co-signed for defaulted on the loan, the creditors will come after you for payments.
As a general rule I advise people not to co-sign for someone else, unless it’s for a wife or children. If your kids need you to co-sign because their credit report is too thin – fine. But if they need a co-signer because of bad credit – do not co-sign. They won’t hesitate to screw your credit if they’ve already screw theirs.
Never co-sign for ANYONE other than your wife or kids.
It might. And it’s not about your credit
Your problem is not your credit, nor is it your income from the worker’s comp. The big issue here is the uncertainty of whether or not you’ll be able to return to work.
Even if it’s very likely that you’ll recover completely and return to work, the mortgage company isn’t willing to take the risk, and probably wants to wait until you actually return to work.
Mortgage companies are extremely carful these days, and I’m afraid there’s nothing you can do about it.
Hope this helps.
It’s a bad idea
What builds credit is a stream of timely payments, whether credit card statements or installment loans payments over time.
You need at least 6 month of timely payments for just having a credit score, and at least 24 months for a decent credit score.
Credit scores are 90% based on your credit activity from the previous 24 months.
Installment loans build credit by making payments over time. Paying off installment loans early does NOTHING extra for your score.
Taking a personal loan just for building credit is an expensive way to jump-start your credit. Having a credit card is much cheaper, and builds credit just the same.
You may need to start with a secured credit card, but it’s still smarter option than installment loan. Use the card on a regular basis for small purchases such as gas or groceries. Wait for the statements and pay the in full every month. That will build you credit and avoid interest.
See establishing-credit-history.html for more information.
Very likely they will sue
Chances of getting sued for a $3K credit card debt are 100%. Credit card companies are no longer just writing off and selling bad debt. Citibank is one of the cards that have become much more aggressive in collecting defaulted accounts. If it still owns the debt and has merely hired a collection agency, it is very likely that they will sue.
In general, making payments to a collection agency is bad idea. They tend to accept the payments for a year and then re-sell your debt to another collection agency.
You are always better off making a lump sum settlement. Always get any payment plan or settlement agreement in writing before you pay.
Never give a collection agency access to your bank account. Use USPS money order or cashier’s checks instead.
Absolutely DO NOT just send small payments. That will not keep them from filing lawsuit against you, and only resets the Statute of Limitations, so in fact you’re making things worse for yourself.
See how-to-pay-off-debt.html for more tips on dealing with collection agencies.
It will damage your credit very badly for a long time
Your credit will be shuttered. First, you will have late payments on your credit report. While the first 30 days late will only drop your score by around 30 points, when you hit the 90 days mark you can expect a much bigger drop.
After 180 days (6 months) of delinquency the creditor will charge-off your accounts. That will really ruin your credit for at least 2-3 years.
Your debt will be sold to collection. They will probably file lawsuits, certainly for a large debt as yours. If they win and get a judgment against you (a reasonable scenario), that judgment will continue to ruin your credit for a few more years. Not to mention they can garnish your wages, attack your bank accounts and property and much more.
What’s worse is that the better your score is in the first place, the dipper the drop will be (See why-pay-off-debts.html and how-to-pay-off-debt.html for more information).
In the end you will pay your debts, plus interest and legal fees, while ruining your credit in the process.
My advice? Forget about it. Feel and obligation are not the same. If you have an issue with the lender, take legal actions against him. But don’t just default on these loans. You only stand to loose.
It won’t affect your credit, unless she runs huge bills
Adding your mother to your Amax account as an authorized user won’t affect your credit, unless she runs up huge bills that you can’t pay. Since you are the primary card holder, it’s you that would be completely responsible for paying the bills.
If you’re doing this to help your mother build credit – forget about it. Piggybacking with authorized user accounts only count in the Fico score for spouses and kids, but not parent (See credit-piggybacking.html for more information),
If you want to help her re-establish good credit, help her get a secured card in her name and make sure she pays on time.
Just one of life’s “rewards” of loaning your credit to someone else
Unfortunately, people tend to co-sign too freely, without understanding the full consequences of their actions.
When you co-sign for someone else, you’re taking full responsibility for the loan. You probably haven’t checked your credit report lately. I suggest that you take a deep breath before you do. The late payments, repo of even charge-off may already appear on YOUR credit report, and your score has probably dropped by at least 150 points.
Not only your credit is ruined, since the other person filed bankruptcy on the car loan that you co-signed, you are now entirely responsible for that loan. If the lender would repossess the car, you will also be held responsible for the loan balance plus legal fees!
Since that other person filed bankruptcy, you have no recourse against him. Just one of life’s many “rewards” of loaning your credit to someone else.
Credit report lock offers more security than fraud alert
When you lock credit report you block access to your credit file from potential NEW creditors. Since lenders pull your file as part of the new credit approval process, freezing (locking) your credit report effectively stops the process of granting new credit in your name.
Credit freeze is viewed as the most effective way to prevent identity theft. Even if a criminal has your information (SSM, Date of Birth, Full Name) he is stopped from opening new accounts in your name by the credit freeze.
Fraud alert is much more limited. It doesn’t block access to your credit file, and it has to be renewed every 90 days. The only thing it does is to attach a warning to your file stating that your identity should be verified before opening new account in your name.
There are a few more differences between Credit Report Lock and Fraud Alerts:
- Credit lock should be placed desperately on each of your files with the 3 major credit bureaus. When you put fraud alert with just one credit bureau, it automatically notifies the other two bureaus that they must follow.
- it cost money to lock credit report. Fraud alerts are free of charge.
- Credit freeze lasts until you positively remove it. Fraud alert last 90 days, and has to be extended manually.
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For more information and links to the 3 major credit bureaus’ credit freeze request forms please see credit-freeze.html.
Are you sure these are Fico scores?
It’s very unusual for someone with just one credit card and a short credit history of just one year to have such high scores. Where did you get them?
I’m not sure about TransUnion, but Equifax is no longer selling Fico scores to consumers. They only sell Vantage scores now. A 711 Vantage score is pretty mediocre, which is where I would expect your score to be with a very short credit history (See credit-score-range.html for a comparison between Fico & Vantage).
The ONLY place that sells actual Fico scores to consumers is myFICO.com.
Having 4 hard inquiries is not brilliant, but it’s also not as bad as you might think. Each hard inquiry will only lower your score by a few points. They stop counting in your Fico after 12 months, and completely fall off your credit report after 2 years. Of all the things to worry about on your credit report, inquiries should be at the bottom of the list.
If you’re not in a hurry to get a reward card, I’d wait another year before applying. 90% of your credit score is generated by the last two years credit activity, which you lack. You will have a much better credit score a year from now.
After a year, check with your bank and see what kind of reward program cards they offer.
Remember that score is not everything, so you may not qualify even with a higher score. They may look at your debt-to-income ratio or other parameters.Try Discover card. I hear it is easy to get approved on.
Good luck
No
Debit cards are not extension of credit, and are not reported to the credit bureaus. Therefore, using your Debit Master Card will not build credit for you.
Do not confuse the debit card attached to your bank account with a credit card. That debit card has no line of credit. Selecting “credit” when using a debit card is just a method of processing the transaction.
If you choose “credit” then you can sign instead of using your PIN, and the transaction is processed thru the merchant’s credit card processing service.
Since the funds still come directly from your bank account and do not go to the credit card company, they are not reported to the credit bureaus and won’t build credit for you.
