Carreon and Associates Blog

Posts Tagged ‘credit repair tips’

Will paying off a debt remove it from my credit reports

November 2nd, 2009

Well that depends on you. Yes you. If you have a debt in collections and you’ve decided to pay it off because someone advised you to do so- perhaps a mortgage lender, then you’d be surprised to know that that may be a very bad idea.

If an account has been placed on your credit reports that is negative such as a charge off, collection account or repossession, simply paying the balance will NOT improve your credit. Here’s why.

A bad account status like a charge off, collection account, repo, foreclosure etc is considered negative and as bad as it gets. The rating is commonly referred to as an R-9. To put this in perspective, an R-1 is a perfect credit rating. An R-9 is negative and unfortunately if you pay an R-9, its still an R-9. Its simply paid now, which has released you from financial liability but your credit reports are still left in ruin.

The best route to take is to NEGOTIATE THE RATING IN EXCHANGE FOR THE PAYOFF. It’s done everyday- believe it or not. Sure an original creditor may not agree to these terms but a third party debt collector will. Most negative accounts past 180 days delinquent are sent to third party debt collectors. Once that process happens, you are in a better position as far as negotiations of the credit rating go.

A third party debt collector will often settle the account and delete the credit rating because all they are concerned with is getting paid. An original creditor will not approach a debt this way, but a bill collector will.

By getting the debt collector to agree to settle the debt for this exchange, you will gain something from the payoff as well. Keep in mind there are a few instances where you will want to pay the debt off even if the collector refuses to improve your credit rating.

For example, a collector has absolutely refused to remove the rating, you’ve received validation that the debt is accurate and you need this account to show paid because either you are being forced to by a lender before they issue you a loan, or you want the collection agencies to leave you alone and are worried about being sued. This is when you need to pay the debt if negotiations have fallen through.

When dealing with a collection item you must always attempt to negotiate the rating before you pay a dime. Not doing so is a very bad financial move because chances are, you will get your way. Can you imagine having an item completely wiped away from your credit reports from just a little effort? It’s definitely worth your time.

Article written by credit expert, Kristi Feathers. Kristi can be contacted via her website at www. KristiFeathers.com

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Are you a credit abuser?

August 10th, 2009

Lots of people have bad credit. According to national stats, most of us have a blemish or two, but if your credit report is full of issues then you may need to look at the culprit; you.

credit cards People who have true credit issues are victims, no doubt about it, and you should use every tool and tactic available to you to fix the issues, but if your credit is full of negative items, and I do mean full, then maybe a little reality check is in order.

Lots of people try to use the excuse of errors to remove legitimate items and often times it works, but what I tend to see is the clean up is short lived because the person repeats the same actions again.

If you’re going to be late on credit card payments, mortgage payments and even rent or utilities, you can expect that information to land on your credit reports each time. Some people pour hours of work into fixing their credit issues, only to mess it up again and again.

This isn’t what credit repair should be used for, and frankly it makes it harder for the rest of us who are trying to use the system to fix real mistakes. With so many credit reporting issues, the system is taxed and filled with people trying to right a wrong, but we’re up against repeat credit offenders who fill the system with disputes and complaints.

If you truly understand the value of your credit, you will do everything in your power to keep it looking perfect. I understand there are people who cannot avoid credit issues because of an illness or a job loss, but those who pay their bills late just because they’re lazy or don’t care really need to stop taxing the system just because they can.

I equate that kind of abuse to insurance fraud or workers comp fraud. Just because you can, doesn’t mean you should. If we’re all going to complain about the credit system and how flawed it is, then we as consumers need to be accountable as well.

I can say this firsthand because I have managed to keep my credit perfect for the last 20 years. I’ve been through job layoffs, illnesses, slow work times just like many of you, but outside of those circumstances, I pay my bills on time and I use my credit responsibly. I don’t buy new cars when I don’t need to, I don’t max out my credit cards, and if I get a medical bill, I pay it. You should too.

Taking responsibility of our credit will make a cleaner leaner credit system for the rest of us. Thats the heart of credit education– to educate and learn- to benefit you financially.

Financial responsibility starts with you.

J.K. Feathers, Credit expert, Contributor