WELCOME 2: TWENTITY.COM ~ The Home for Twentysomethings

Have You Ever...- 3-28-07

Thought About What to Do About My Credit? (part III)

By ChaChanna Simpson

So what if my credit sucks?

Having bad credit will most definitely hinder your options. I know that if you have bad credit and try to get a cellular phone, most companies will require you to putdown a $500 deposit before they will give it to you. If you apply for a loan or a credit card, you could be turned down or if they take you, you’ll have a high interest rate because they know you are not financially trustworthy. According to the Federal Trade Commission’s website, “Bad credit…usually results from making payments late or borrowing too much money, and it means that you might have trouble getting a car loan, a credit card, a place to live and, sometimes, a job.” Also note that your current creditors are monitoring your credit report and if they see you are paying late or not at all on some of your other bills and debts, they may raise your current interest rate. So much is riding on your credit. You have no idea.

Don’t worry if you are suffering from any of the previously mentioned credit problems, you can bring your score up. It won’t happen overnight but overtime it can happen. Start by paying your bills on time, stop applying for credit and payoff your credit card balances (using your credit card ‘til its limits will also hurt your score). For more information on credit, please click here.

Making the minimum balance payment

If you can’t pay anything else, pay the minimum balance, and whenever you can, give a little extra. Just this year, credit card companies have started doubling their minimum fee payments. Finally, the government came to our defense by telling the credit card companies to raise the rate because with us paying the bare minimum payment they were assigning before, no one was going to get out of debt or pay off bills before they died. But now with the minimum payments almost doubled, you can pay off that computer in five years instead of thirty.

What illegal tricks debt collectors use to get money out of you?

I know there some of us out there that are in over our heads in debt. It sucks, I know. You have the debt collector calling you and, if you pick up the phone, they are threatening to take some action against you. I have had a couple of calls. I remember one collector called to collect $120 from me, that was my monthly minimum balance. I wasn’t working at the time and I just didn’t have it. His bright idea was for me to do three easy payments of $600 for a few months to pay off the debt. I asked him, if I can’t pay $120 a month, what makes you think I’m going to come up with $600 a month? He said he was just giving me my options. And he even offered up the idea for me to borrow the money from friends and family members. My favorite one was when the same company called and demanded that I pay the balance of what I owed. I told him I didn’t have it and he said, “Well I have numbers and I have options.” I told him to do what he had to do. It was just an empty threat.

Have you tried to negotiate to get a lower monthly payment but learned you have to pass a broke test? They ask you how much you make gross, all the bills you have and then when you are done you have maybe $200 a month and they say. “Well, it looks like you can pay this bill.” And the bill is $180. Hello? I have to live a bit. I recently found out that some of the tactics that bill collectors use are not legal. Under the Fair Debt Collection Agency, creditors may not:

Imply that they are an attorney government agency
Lie about the amount of money you owe
Imply the documents sent to you are legal forms when they are not or vice versa
Harass, oppress, or abuse you
Threaten to harm you
Threaten to seize your property or garnish your wages, unless the collection really intends to do so
Use a false name
Call you repeatedly when you have requested them to stop

When a debt collector contacts you, they must let you know that you have the right to dispute the claim, usually 30 days. If you don’t dispute it within that time then they can assume that the debt is valid.

A recent trick debt collectors are using is calling and harassing people and trying to get money out of them for a debt that they don’t owe. But because some people’s finances are all screwed up they may not realize that they are being made to pay a debt they never created. The other trick is to collect an outdated debt. A debt is outdated (beyond the statue of limitations) after seven years. If a bill has gone uncollected for that long then the creditor has to chalk it up to a loss and charge it off.

And one thing you do not want to do is pay a debt that was charged off of your report. You’re thinking, why? I want to pay some debts I know I owe. And that’s nice in theory but if you pay off a payment that has been ruled expired beyond the statue of limitations, you will be doing your score more harm than good. Even if you decide to arrange a payment schedule, that can restart the statue of limitations and allow credit companies to sue you.

Even having a conversation on the phone with the creditor can restart the statue of limitations, so just hang up the phone. If not answering the phone isn’t working, send them a letter demanding that they stop contacting you and that you aren’t responsible for the said debt, if you really aren’t. Or send notice by certified mail and they are required by law to stop contacting you.

Okay, this concludes your lesson on credit for now. Go forth and be credit savvy.

Subscribe to Twentity.com and get new articles and notices on cheap and free events in the CT Tri-State area. Your e-mail address is safe with us! We will never give out or sell your e-mail address.