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Collection Archives | Ovation Credit Repair Services

3 Credit Myths Debunked

By | Credit Repair, Credit Reports, Credit Scores, Your Credit

There have been a lot of great movies in recent years based on mythological characters: Percy Jackson & the Olympians: The Lightning Thief (2010), Clash of the Titans (2010), Immortals (2011), and Thor (2011). Myth-based movies are great entertainment, but myths about your credit score can be expensive. The following three myths about your credit score can end up being very costly.

Myth One: If I Pay Off the Debt, They’ll Report It

One of the biggest myths about your credit score is believing that the company to whom you’ve paid a debt will properly report it to the credit agencies. People often believe that as soon as they’ve paid off a debt, the company will immediately report that to the credit agencies and their score will improve. Unfortunately, depending on the company’s reporting practices, they may wait three months to report the payoff, or they may never report it at all.

What you actually owe a lender and what’s reporting on your credit report are often two different things. It’s crucial to review your credit report regularly and take charge of making sure it stays up to date if you really want to improve your credit rating.

Myth Two: If It’s Not on the Report, I Don’t Owe the Debt

Another myth that hurts consumers is the assumption that if something does get removed from your credit report that you no longer owe the money. For example, let’s say you really do owe $4,000 on a charge off, but we’re able to get it removed from your credit report because it isn’t being accurately reported. That doesn’t mean you don’t still owe the money.

Myth Three: Paying Off Debt Fixes Everything

Many consumers believe that the minute they pay off their debts that their credit rating will increase significantly. But if you’ve had a history of late payments and delinquencies, companies can still report all the late and missed payments for seven years. It can take that long for your credit to fully recover.

Paying off your debts and bringing payments current will help your overall credit score. Making the debt go away, especially if it is in collection, helps in two ways: one, it shows paid instead of still owed. Two, it stops the date of last activity, which means seven years from that date it goes away. Otherwise, it just keeps being a current reporting, and the seven years keeps being seven years in the future.

How Long Can Information Be Reported On Your Credit Reports?

By | Bankruptcy, Collections, Consumer Rights, Credit Cards, Credit Laws, Credit Repair, Credit Reports, Fair Credit Reporting Act, Your Credit

One of the first credit repair steps involves removing information that is outdated.  The problem is that many consumers cannot tell when information is outdated.   On the surface, it seems like a simple exercise – just compare some dates.  While that is correct, the more difficult part involves determining which dates to compare.  The answers are provided in The Fair Credit Reporting Act, section 605.  According to section 605, the following items may not be reported on your credit reports:

  1. Bankruptcy: Cases under title 11 [United States Code] or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years.
  2. Civil suits, civil judgments, and records of arrest:  Civil suits, civil judgments, and records of arrest that from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period.
  3. Paid tax liens: Paid tax liens which, from date of payment, antedate the report by more than seven years.
  4. Collections and Chare Offs: Accounts placed for collection or charged to profit and loss which antedate the report by more than seven years.
  5. Other Adverse Items: Any other adverse item of information, other than records of convictions of crimes which antedates the report by more than seven years.

So What Are The Exceptions?

There are exceptions to these general rules.  Most of the exceptions are based upon the use of the report.  The general rules are not applicable in the case of any consumer credit report to be used in connection with the following:

  1. Credit transactions involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more;
  2. Underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $150,000 or more; or
  3. Employment of any individual at an annual salary which equals, or which may reasonably be expected to equal $75,000, or more.

If you have ever wondered why there are so many different credit scoring models, this is one of the primary reasons.  The information that is permitted to be included on the credit report can vary depending on what the credit report is being used for.

So When Does The Time Period Start?

In regards to bankruptcy, the 10 year period starts at the date of entry of the order for relief or the date of adjudication.   In regards to the other items, the 7 year period begins, with respect to any delinquent account that is placed for collection (internally or by referral to a third party, whichever is earlier), charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, or similar action.   Clear as mud, right?

So What Does This Mean?

In order to understand if items on your credit report are outdated, you need to understand how the dates are calculated.  Remember, you should review your credit reports frequently for errors and signs of identity theft.  It is not uncommon that dates are incorrect.  In fact, in the case of debt collection, errors in the proper dates are very common.  These errors may result in negative items being reported longer than necessary.  Check the dates on your reports and verify that the information is correct.  If you need help, give us a call – we would be happy to assist you.

 

Can Debt Collectors Contact Friends and Family Members?

By | Ask a Credit Expert, Collections, Consumer Rights, Credit Repair, Debt, End Debt Collector Abuse Act of 2010, Fair Debt Collection Practices Act

It is not uncommon for debt collectors to go to extreme measures in order to get information about a debtor.  In fact, many debt collectors call friends and family members of debtors they are trying to reach.  While this practice is permitted and regulated by the Fair Debt Collection Practices Act, it is frequently abused.

Are Debt Collectors Harassing You About Someone Else’s Debt?

Debt collectors are permitted to contact third parties for the purpose of acquiring location information about the debtor.  Section 804 provides the following:

Any debt collector communicating with any person other than the consumer for the purpose of acquiring location infor­mation about the consumer shall identify himself, state that he is confirming or correct­ing location information concerning the consumer, and, only if expressly requested, identify his employer.

Debt collectors are prohibited from stating that such consumer owes any debt.  They may not communicate with any such person more than once unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information.  Debt collectors may not communicate by post card and they may not use any language or symbol on any envelope or in the contents of any communication effected by the mails or telegram that indicates that the debt collector is in the debt collection business or that the communi­cation relates to the collection of a debt.

By the way, if the debt collector knows the consumer is repre­sented by an attorney with regard to the subject debt and has knowledge of, or can readily ascertain, such attorney’s name and address, they may not communicate with any person other than that attorney, unless the attorney fails to respond within a reasonable period of time to the communication from the debt collector.  In this case, family and friends may not be contacted at all.

How Can You Stop Debt Collectors from Harassing You About Someone Else’s Debt?

The purpose here is to allow debt collectors to try to obtain location information.  That makes sense.    However, many debt collectors abuse this provision to harass family members and friends in an effort to get the debtors to respond.  This practice is unethical, and it is illegal.  If you are being contacted by a debt collector regarding someone else’s debts, and the debt collector is violating the provisions above, let us know.  We’ll help you locate an attorney in your area that can help protect you from this type of abuse.

By the way, if the debt collector knows the consumer is repre­sented by an attorney with regard to the subject debt and has knowledge of, or can readily ascertain, such attorney’s name and address, they may not communicate with any person other than that attorney, unless the attorney fails to respond within a reasonable period of time to the communication from the debt collector.

 

How Does Debt Collection Impact Credit Repair?

By | Consumer Rights, Credit Laws, Credit Repair, Debt, End Debt Collector Abuse Act of 2010

If you have ever been contacted by a debt collector, you probably already know that they can be aggressive.   Debt collectors are governed by the Fair Debt Collection Practices Act.  While any contact from a debt collector may appear harassing, the Act actually defines those actions that are legally permissible.  This post addresses some of the restraints regarding communication from debt collectors in regard to legitimate debts. 

When can a debt collector contact you?  Generally, a debt collector may not communicate with a consumer in connection with the collection of any debt at any unusual time or place or a time or place known or which should be known to be inconvenient to the consumer.  In the absence of knowledge of circumstances to the contrary, a debt collector shall assume that the convenient time for communicating with a consumer is after 8 o’clock in the morning and before 9 o’clock at night.

What if you are represented by an attorney? Debt collectors may not communicate with a consumer in connection with the collection of any debt if the debt collector knows the consumer is represented by an attorney with respect to the debt and has or can ascertain the attorney’s name and address.  There is an exception if the attorney fails to respond within a reasonable period of time to a communication from the debt collector or if the attorney consents to direct communication.

Has a debt collector contacted you at work? Debt collectors may not contact the consumer’s place of employment if the debt collector knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communication.

Has a debt collector called your neighbors, friends and/or family?  In most cases, a debt collector may not communicate, in connection with the collection of any debt, with any person other than a consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.

What can you do if a debt collector is contacting you about a valid debt? If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt, except to advise the consumer that the debt collector’s further efforts are being terminated or to notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor.

When I pay off a collection or charge off account, will it start reporting as paid in full and as a positive account?

By | Ask a Credit Expert, Collections, Consumer Rights, Credit Cards, Credit Laws, Credit Repair, Debt, Payment, Personal Finance, Your Credit

When you pay off a collection or charge off account on your credit report that is great. It is always in a consumer’s best interest to pay off their debt. However, a lot of consumers think that once the account is paid that it is no longer negative and has actually become positive. That would be great, unfortunately that is not the case, and it is still a negative account. The creditor should update your account on your credit report to show that it is paid in full or paid collection/charge off.  By updating that information it will have a positive impact on your credit report and more importantly on your credit score. The amounts owed on your accounts is 30% of your credit score, so as you pay accounts off it will help to raise your credit score. By paying accounts off they no longer have such a bad impact on the credit score.

Your credit scores will improve when you pay off accounts because your reports will show you owe less money to creditors, it will stop the account from updating every month that it is not paid and it’s late, and it will keep the date of last activity as when it was paid.  When the account is paid off it stops the activity on the account so that it will fall off of your credit reports 7 years (for most items) from the date of last activity.  All collection, charge off, and late payments should come off your reports 7 years from the date of last activity. If you have accounts that have not updated as paid or have not come off your reports when they were supposed to, then give us a call.

If you have any other questions about items on your credit reports, how items are reporting, and when items will come off your credit reports, please call one of our Experts at Ovation Credit Services.  Call 1-866-639-3426 and schedule a FREE credit consultation! Check out http://www.ovationcredit.com/howItWorks/howWeHelp.php to see other ways we can help! We are here to guide you to a BETTER Financial Future!

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