Stacy Wall
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Take the offer. It’s a great deal!
The offer sounds reasonable for the time & current status of your account. The settlement won’t do anything to your credit, which by now should be pretty bad.
Not making payments for seven months is bad by itself, not to mention that the account is closed and charged-off, which adds another blow to your credit.
Paying your debt off will do nothing to raise your score, but at least will update the balance to $0 and the status to “Settled”. That will look much better than unresolved debt to future creditors.
If you decline the offer, either they will sell it to collection or sue you themselves. Chances are that they will get a judgment against you, and then you’ll end up paying more, further ruining your credit with a new judgment on your report.
The late payment & charge off will remain on your credit report for 7.5 years fro when you first stopped making payment. For the first two years it will devastate your credit, but after that it will have a lesser effect.
Make a photocopy of the agreement. Keep it forever. Pay only with money order or cashier’s check.
Start working on re-establishing credit today. It takes at least two years. Use a secured credit card if you have to.
Good luck
Depends if it’s Fico or Vantage…
Where did you get this score? Is it Fico? Vantage?
There’s a big difference between the two. A 761 Fico is considered an excellent score, and it’s unlikely for people at your age to have such a high score. The average Fico for people your age is around 640 (See average-fico-score.html).
More likely that the score you have is a Vantage score. That would suggest that your score is average at best, which better correlate with young people that have a “short” credit history.
In general, vantage scores are worthless. The 3 major credit bureaus sell them to customers like you, but over 90% of lender still use Fico.
You can see a comparison between Fico and Vantage scores here.
Sure they can. They can even garnish your wages!
Government subsidized student loans are forever. They cannot be discharged, not even through bankruptcy! So in general – your student loan will follow you to your grave.
They can go after any asset that you have to enforce payments of these loans. They can certainly put a lien on your home, garnish your wages, offset tax refunds and more.
If you have problems keeping payments, it’s better to call them up and see if they have any programs that can help you, like deferment
There are limited cases where outstanding loans can be forgiven. These include serving in the military, agreeing to work in certain economically depressed areas etc. However any loan balance forgiven under one of these programs generally becomes taxable income for you in the year that the amount is forgiven.
No, co-signer can’t access your credit history
Lenders are not allowed to disclose YOUR information with anyone, not even a co-signer.
Regardless – you really should disclose it to him yourself, even at the cost of him backing off. Co-signers take a huge risk on themselves when they co-sign. You can mess HIS credit very easily, and so you are expected not to hide the truth from him.
In fact, I advice people to NEVER co-sign, or at least sign only after they’ve seen the credit reports of person they’re co-signing to, and are fully aware or the risk.
Any late payment will spill directly to the co-signer’s credit report as well as to yours.
Co-signers are usually NOT informed on late payments until the account goes 90 days past due, by which time major damage is done to the co-signer’s credit.If you face a problem meeting payments, make sure to alert your co-signer immediately, BEFORE any damage is done.
It depends on your specific circumstances
Whether married couples should maintain separate or joint accounts is beyond the scope of this site. It depends on whether both spouses are employed, on how they want to manage their financials and more.
The following section describes the advantages and dis-advantages of every account type, with emphasis on the credit reports and scores aspect:
Individual Accounts
Whether you are married or single, you alone is responsible for the account and for paying off any debts related to it, unless you live in one of the Community Property States.The account will appear only on your credit report (or both yours and your spouse’s if you live in a community property state), and may appear on any “Authorized User” credit report as well.
Advantages
No one can hurt your credit. If you are responsible – your credit will benefit.Disadvantages
If you’re only part time employed, have a low-income job or doesn’t work at all, it may be very difficult or even impossible to obtain credit without your spouse’s income.If you’re applying for a mortgage with your spouse, you probably have no choice other than joint account.
Joint Accounts
Whether you are married separated or even got divorced, both you and your (former) spouse are responsible for the account and for paying off any debts related to it.The account will appear only on both yours and your spouse’s credit reports, and will affect both of your individual credit scores. The account may also appear on any “Authorized User” credit report as well.
By law, either spouse has the right to close a joint account (after the debts have been paid off).
Advantages
Because both your income & financial assets combined with your spouses’ are considered for a joint account – it may be easier to apply for credit.Disadvantages
Because both your existing debts & credit standing combined with that of your spouse’s are considered for a joint account, it may be more difficult to apply for credit, especially if one spouse has high debt or bad credit.
In the case that one spouse is not responsible – he/she can damage his/her spouse credit. Furthermore: should you separate and don’t close the joint accounts – former spouses who run up high bills and don’t pay them can very easily hurt their ex partner’s credit.Account “users”
If you own an individual or a joint account, you can authorize another person to use it. The account may appear on the credit report of each authorized user, as well as on yours.Often, people name their spouse, kids or parents as authorized users, so they can benefit from a good credit history they otherwise couldn’t. It’s called Credit Piggybacking, and it’s fairly common, especially with parents who want to give their teenagers a credit jump start.
Advantages
An excellent way to jump start someone’s credit, especially if he/she has no steady income.Disadvantages
While authorized users can use the account, only the account owner(s) are liable for paying the debt. An irresponsible authorized user can get you into debt and trouble.Very much like an authorized user can benefit from a good credit history, if the account owner is not responsible or runs into financial troubles – an authorized user’s credit will get hurt.
My advice is to enjoy the credit piggybacking as long as you need it, and then ask the account owner or the creditor to remove you as authorized user.
It depends on how the question is phrased
Chapter 13 bankruptcy ages off your credit report in 7 years. Chapter 7 bankruptcy ages off in 10 years.
While the bankruptcy appears on your credit report there’s no point not to disclose it. After it falls of, the answer is that it depends how the question is actually phrased.
Usually the question is phrased like: “Have you filed for bankruptcy in the past XXX years?” where XXX is between 7-10. However, if the question is phrased like: “Have you EVER filed for bankruptcy?” then you must disclose it even if it’s no longer on your report.
Don’t risk lying. They usually find out, and then you’re in a problem. It’s a federal offence to lye in a credit application.
You will not qualify for “the best” credit card
If you have no credit, you won’t qualify for “the best” credit card. You need to have actual history and a decent score to get a regular credit card, not to mention a reward credit card. It’s more likely that you will have to start with a secured credit card.
To get a secured credit card you will first need to make a deposit, which is held as collateral against the line of credit. Use you card for small purchases like gas or groceries, wait for the statement and pay the balance in full every month. This will build credit for you and avoid interest.
It can take at least 24 months to build a decent credit score. After a year or so you can start inquiring about transferring from secured to a non-secured credit card, but you may need to wait more before they’ll agree.
See establishing-credit-history.html for more information.
You can’t go current
If you stopped making payments 8 months ago, the account is already closed and charged-off. It sounds like its one step away from being sent to collection.
You do not have the option of bringing it current and making payments. At this point, they’re no longer interested in payments. They want to settle with a lump sum and write the account off.
Declining the offer can potentially damage your credit further. You’ll probably get sued, and you can find yourself with a judgment against you. Not good for you and for your credit. Accepting the offer can also spare you the “pleasure” of dealing with collection agencies.
Take the settlement. It’s a good deal. Keep that letter offering this settlement and pay with a USPS money order or cashier’s check.
You need to pay the collection company
In some cases collection agencies buy the debt from the original creditor for pennies. In this case they own the debt. In other cases, the original creditor hires the agency to collect the debt for a percentage from the debt. Rules are the same either way, so you usually can only deal with collection agency.
It’s not likely that the collection agency has the title to your car, and it may be unable to get it.
Start by asking who has your signed paperwork (Not a photocopy, the original paperwork). After you know who has it – negotiate a settlement. Make the title a part of the settlement, and have this in writing. Don’t pay a cent without a signed copy of the settlement from the collection agency.
Probably a clerical error
Clerical errors are made by credit bureaus and creditors alike.
Since the card is not showing an all 3 reports, this rules out credit bureau error.Probably the credit card company is reporting the card with some kind of error. It may be misspelling of your name, nickname, SSN, address, previous address or even your pre-marriage name.
These type off errors happen all the time. Factor in the merger issue – it must be it.
What I would do is call the credit card company and go over your details again.
If you manage to sort it out, do come back and share it with us..
Regards
Are you missing something? Seriously…
Do not (I repeat – DO NOT) do this under any circumstances. Even if this guy is your best friend.
Have you given any thought as to why does this person need to put the phone on someone else’s name? Why can’t he get it in his own name?
This person has obviously trashed his credit, so he can’t get a cellular contract on his name.
It’s a very bad idea to lend your credit to someone else. Especially someone you know has trashed his own credit. If he doesn’t care about his own credit, why would he care about yours?
If you put the cell phone on your name, you will be responsible for the bill, no matter how high this other person runs it up. It’s very likely that this person will run up a huge bill.
He may pay you at first or only make partial payments. In the end, he will stop making payments (this is probably how he got his credit trashed in the first place). You will be stuck with a big bill and the balance of the contract. Not to mention that your credit will be trashed in the process.
NEVER agree to lend your credit to anyone!
Charge cards ARE credit cards
Charge cards build credit exactly like regular credit cards. In fact, charge cards ARE a type of credit card.
Unlike regular credit cards, charge cards are not revolving accounts. You can’t carry a balance, and the statement must be paid in full every month. Charge cards have no limit and no interest rate (because you can’t carry a balance).
When it comes building credit, there are some similarities and differences between charge cards and credit cards:
- As far as payment history goes – there’s no difference between the two. Both will build good credit assuming timely payments.
- Since charge cards have no limit, both the new Fico (NextGen Fico) and the new Vantage do not count them in the credit-to-limit ratio (utilization). This gives charge cards advantage over credit cards, because utilization counts for 30% of your Fico score, and 23% of your vantage score.
In about 2 years of credit piggybacking you should have goo enough credit. Have your father remove you as authorized user. Down the road, those accounts can be a problem. They will count in your debt to income ratio even though your father pays them, and if your father ever misses a payment, it will also appear of your report and hurt your credit.
P.S. Some charge cards do come with the option to revolve a portion of the debt (e.g. American Express). It’s called Flexible Payment Service. I’m not sure how Fico or Vantage considers the revolving balance in the utilization. Most likely that they do.
It has a good effect
Automatic payments in itself has nothing to do with credit scores or credit history. As long as the statements are paid before the due date, you are building good credit history and increasing your score.
It doesn’t matter is you’re using automatic payments or not, as long as payments are made on time.
The only point is not to make the payment to early. You need to wait for the statement and only then make the payments. If you don’t – your balance will show zero, and that has the same effect on credit scores as having no card at all.
So just make sure that your automatic payments are set to any date between when the statement arrives and the due date.
You have few options
There are a few things you can try, but you should know that there’s nothing you can do to force them to remove the item from your credit report. It is legit, even if the circumstances are rather unfair.
This is a good example why closing accounts should NOT be done over the phone – because you have no paper trail. In the future, close accounts by letter and request written confirmation that the account is closed and the balance is zero.
There is no excuse, on their part, for them to not bill you for the accumulated interest, nor for failing to send you a statement in time.
I imagine that what you got charged for is called R.R.I.C. – Recurring Revolving Interest Charges. If you pay on the due date, it takes 3-4 days to process the payment. You get charged for the interest on this time period, which will appear in the next month’s statement.
What I would do is to sent a letter to the credit card company, protesting this reported late payment based on their representative failure telling you that the account is closed in good standing, and their failure to send you a statement. It might not do any good, but worth a try.
If this doesn’t help, try to dispute it with the credit bureaus. You have a slim chance of actually removing it, but if the dispute is rejected, you have a right to add a 100 word statement to your report, explaining your position. It won’t raise your score, but creditors will review it and it may help in future applications.
Please do come back and tell us if and how the problem was resolved.
Good luck
Re: Pay off my bills
There are various considerations when it comes to paying defaulted debts.
First – there is the moral issue. I won’t deal with it here.
Second – Your debts aren’t old at all. Collection agencies have plenty of time to sue these debts, and since they are yours – they are likely to get a judgment against you. You will end up in a much worst situation. Not only you will add a judgment to your credit report, you will pay much more than the original debt (interest, late fees & legal fees).
Not to mention that a judgment will re-start the 7-1/2 clock…Third – It is true that paying old debt doe’s nothing to your credit score. The damage is already done, and paying the debt does not erase your history of delinquency. However, since Fico score is 90% based on the previous 2 tears activity, the effect of the debts diminishes with time.
Forth – potential creditors look at much more than just your score. When they see unpaid debts, they are not likely to approve you new credit. When you pay the accounts, their status will be updated to “Paid in Full” or “Settled“, which looks much better.
Lastly – Try to negotiate a Pay for Delete Agreement, especially if these are single items (rather than defaulted credit cards). It’s not easy to do, but if you can pay in full, you might get them to erase the negative item from your credit reports.
See why-pay-off-debts.html for more information.
Good luck.
