A credit report is a detailed account of your individual credit history, compiled by one of the three major credit reporting companies (Experian, TransUnion, Equifax). Creditors use these reports to evaluate an individual’s ability and willingness to repay debt. Banks, department stores, the IRS, the court system, doctors, hospitals, utilities, and other companies all submit payment information directly to the credit reporting companies.
Out-of-control debt has a way of taking over your life. High interest rates can cause your balances to climb higher each month, and the higher balances hurt your credit score, making it more difficult to obtain financing for important household expenses or personal needs. As the debt grows, so does your stress.
Many consumers use debit, credit and prepaid cards, often interchangeably; however, these three types of cards are quite different.
Every time someone checks your credit report, the inquiry is logged.
That’s important because too many inquiries over an extended period of time can spell trouble for your credit score.
There are different ways and different reasons your credit report might be checked. Some, like hard credit checks—also known as hard inquiries or hard pulls—might have an adverse impact on your credit score. Others, so-called soft checks, are harmless. Too many hard credit checks in a short period of time could knock a few points or more off your credit score. But no matter how many soft credit checks are run against your credit history, they will have no effect.
It’s tough to get by without a credit card.
You need one to make a hotel or plane reservation, or to rent a car, even if you plan to pay cash. Responsible use of a credit card builds a good credit rating, too, marking the owner as mortgage-worthy.
But people who have never had credit or need to repair a poor credit history may not qualify for a regular credit card. For them, a secured credit card may be the only way to establish, or re-establish, credit.
Your credit rating is one of the most important tools in your personal arsenal, which may be used more often than you realize.
I recently read an online forum which said that a creditor charges off a debt once it’s turned over to collections. What’s more, I gathered that a person does not have to repay this debt and can write “cancelled” on any invoices received from a collection agency instead of paying the bill. Is this information correct?
Unfortunately, the Internet is often a source of misinformation. If you opt to write “cancelled” on a invoice for a debt you legitimately owe, you may find yourself being sued. If you’re already dealing with the fallout from past debts, getting sued will only further complicate your situation.
Your credit scores are prepared by FICO and other companies and are mainly based on your history of managing debts, such as whether you tend to make payments on time. Your scores play a significant role in your everyday life because the next time you apply for a loan or a credit card — or perhaps a new apartment or insurance —your scores could affect the final decision, including your costs.
Parents and family members may think they are simply lending a helping hand by co-signing a car loan or credit card application for a child. But they are, in effect, agreeing to pay back the debt themselves — and they often end up doing so.
The statute of limitations is a law that protects consumers when they are contacted by a collection agency about an old debt.
The statute varies from state to state. But once a debt passes beyond the number of years in your state’s statute of limitations, a debt collector no longer has the right to sue you for payment.