Q:Will my Bad Credit history follow me forever?


Your FICO credit score will improve as you practice good debt management habits. Remember that you credit score is a snapshot of your financial well-being at a particular point in time.  This means that it changes.  Your score may be 500 today and change to 700 in a few years – it all depends on how motivated and disciplined you are.  To improve your score, Fair Issacs Corporation advices consumers to do the following:

  • Pay ALL your bills on time no matter how small or big. Avoid delinquencies on your credit file. Do not let your bills go unpaid for 30, 60, 90, 120 days. Payment history accounts for 35% of your credit score so focusing on this aspect alone, can greatly improve your score.
  • Limit the amount you owe on your accounts. Do not max out all your credit accounts. This implies that you are a risk factor.
  • Avoid opening too many accounts. Opening a new account will not significantly impact your score in a negative way but keep the number of accounts you own low. If you own a credit card that you have had for a while, keep it since “length of credit” is a positive factor in your credit score.

Q: Collection Agencies are constantly harassing me, is there something I can do?

A:Yes. The Federal Debt Collection Practices Act (FDCPA) has very specific rules on what a third party collection agency can do and cannot do with respects to contacting you. Here are a few of the things that they cannot do.

  • Call you before 8 a.m. or after 9 p.m.
  • Threaten you with statements such as “we will sue you”, “you will be arrested” or “your wages will be garnished” unless it is legal in your circumstance.
  • Use foul or obscene language.
  • Falsely imply that they are an attorney or government official.
  • Spread your business by contacting family, friends, employers and revealing your financial circumstance.
  • Contact you directly, if you are being represented by an attorney.
  • Publish a list of people who owe money.

Take your power back by writing a letter to the Collection Agency demanding that they cease communications with you unless otherwise specified by FDCPA. If the harrassment persists you may want to seek the assistance of a professional company, who can negotiate with them or stop the harrassment. Refer to the list of credit counseling service professionals.

Q: I think I am a victim of Identity Theft, what can I do?

A: Contact one of the three National Consumer Reporting Agencies (Equifax, TransUnion or Experian) to initiate a “fraud alert”. Once the fraud alert has been initiated, the Reporting Agency that you contacted will relay the information to the other two agencies. A fraud alert makes creditors and others aware of the fact that you believe you are the victim of identify theft. The alert is a powerful tool because it deters scam artists from further initiating instances of fraud against your credit.

Equifax: 1-800-525-6285
Experian: 1-888-EXPERIAN (397-3742)
TransUnion: 1-800-680-7289
There are two types of fraud alerts that can be placed against your credit file, namely: Initial Fraud Alert and Extended Fraud Alert. An Initial Fraud Alert stays on your file for 90 days while an Extended alert stays on your file for seven years. To file an Extended Alert, you must complete an identify theft report. The identity theft report must include reports that you have filed with federal, state or local law enforcement agencies.

You are entitled to one free credit file, if you filed for an Initial Fraud Alert and two free files if you requested an Extended Alert.

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