Posted by John Concrane on March 25, 2019 in Finance
Making your credit payments on time is one of the biggest contributing factors to your credit scores. Some banks offer payment reminders through their online banking portals that can send you an email or text message reminding you when a payment is due. You could also consider enrolling in automatic payments through your credit card and loan providers to have payments automatically debited from your bank account, but this only makes the minimum payment on your credit cards and does not help instill a sense of money management.
When a creditor reviews your application for a loan or credit card, they’ll check both your credit report and credit score to determine your creditworthiness. Based on that and other financial information, they’ll decide if you qualify for a loan or card. If you do, you’ll receive a higher interest rate if you have poor credit because they think you pose more of a risk of defaulting on your payments if you have a rocky financial past.
New credit tips: Note that it’s OK to request and check your own credit report: this won’t affect a score, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers.
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A charge-off occurs when a creditor decides a debt is not collectible. Rather than carry it on their books as an overdue or past due debt, they can instead eliminate it from their reportable past due accounts. By charging off the debt, the company’s accounts receivable report improves; however, that doesn’t mean the debt has disappeared. In most cases, the debt is sold to a “debt buyer” who pays pennies on the dollar for the face value of the debt. By purchasing the debt, the debt buyer can now attempt to collect the amount owed (plus court fees, interest, late charges, and more) by contacting the debtor and taking them to court for the full value plus any applicable fees. If you have a charge off on your credit report, it can stay there for up to seven years plus 180 days from the original date of delinquency.
Contact Your Creditors – Do this immediately to set up a payment plan if you miss payment deadlines and can’t afford your monthly bills. Quickly addressing your problem can ease the negative effects of late payments and high outstanding balances. Apply for New Credit Sparingly – Although it increases your total credit limit, it hurts your score if you apply for or open several new accounts in a short time period.