The Top Questions and Answers Concerning Debt

1) Will my credit score go up once I have paid a debt in collections off? What if I don’t pay it in full and just settle it?

It might go up a little. It all depends on everything else that is on your report. Keep in mind that the majority of the damage is done to your credit score at the point it goes into collections.

2) Why are the credit scores different at the 3 credit reporting agencies?

First, they all have their own tweak to the FICO score. Second, it is rare that all three reports have the same information. That can make a difference.

3) Is it smart to just not use credit at all?

This is a financed based society. You need to have a credit score. Using credit each month and paying it off each month is good for your credit score.

4) Can credit card companies legally change your interest rate?

Yes, they can change any detail to the credit contract that you signed. By signing on the dotted line, you are agreeing to the fine print which gives them the right to make changes.

5) Why does your credit balance increase so much when it gets to a collection agency?

Basically, it comes down to bogus fees. Collection agencies add a ton of fees and penalties.

6) Do these companies that advertise that they can repair my credit score really work?

There is no magic to improving your credit score. Thus, there is nothing that they can do for you that you cannot do for yourself. Then there are companies that guarantee they will get everything removed, but that is not possible. If a consumer lies to the credit reporting agency and tells them that an item shouldn’t be on the report and the consumer reporting agency cannot find anything to refute that claim, then the item gets removed. These companies basically advocate that you lie about everything in hopes that they get removed.

7) What is the quickest way to improve my credit score?

There is no quick way. It takes time and positive credit activity

8) If I want something correct on my credit report, do I need to contact all three credit reporting companies?

You only have to contact one. If they make changes, they are to contact the other two and have it corrected.

9) I have no debt and feel like I am on track for my financial goals. Do I really need a credit score?

Dave Ramsey says that the credit score is not important. In a financed based society, it is imperative to keep your credit score strong. Plus, you cannot ever say that in your lifetime you will not need to take out a loan. You need a credit score for insurance scoring and you might even need it for a job interview.

10) Can anyone just check my credit file?

Creditors don’t need your permission to check your credit file. They just need a permissible purpose and there are a lot of permissible purposes. A credit inquiry is just a statement of fact that someone inquired about your credit.

Copyright © 2008 Prudent Money and Bob Brooks. All rights reserved.