Top 5 Credit Mistakes Clients Have Made

credit cards

There are a lot of questions that revolve around credit and how to repair it. While helping our clients, we came across a number of common credit mistakes they were making. This inspired us to put together this list of 5 credit mistakes our clients have made in the past to help you avoid making them in the future.

Paying Collection Accounts

Paying on older collection accounts can renew the statute of limitations on the debt while lowering your credit scores due to the recent collection activity on your credit. Paying on a collection account does not remove the item from your credit report. Before paying on a  collection, be sure to validate the debt with the creditor to avoid paying on scams.

Disputing Online

While it may seem convenient, disputing your accounts online can end up hurting you. The FACTA (Fair and Accurate Credit Transaction Act) amended the FCRA (Fair Credit Reporting Act) in 2003 allowing the dispute process to be performed online, but doing so, you may waive many rights afforded to you under the FCRA and limit options for removing inaccurate items from your report in the future.

Cosigning For Friends and Family

While your heart may be in the right place, cosigning for people you know can be very dangerous to your credit. Often times, the people we care about get embarrassed when they cannot pay their bills and do not tell you. When cosigning, you are just as responsible for the debt as the person you cosigned with. You “guaranteed” the loan would be paid. If it is not, then you are either stuck paying the bill or damaging you credit.

Not Responding To a Summons To Court

Being sued is a terrifying event and all too often it seems that the easiest way to deal with it is to pretend it never happened. Not responding to a summons to court can be a costly mistake which can end up with you paying a higher amount, wage garnishment, asset seizure, and garnishment of your bank account. If you are ever summoned, be sure to contact your attorney and get the summons answered to avoid default judgments. Your creditors are banking on you to not show up, and often times, showing up is all it takes to win the battle!

Settling a Past Due Account

Settling your account may seem like a good idea due to the fact that you’re not having to pay the full amount owed, but this will negatively affect your credit score worse than a severe late payment remark. Lenders will report the “deficiency amount” to the credit bureaus as a negative item since the full amount was never paid. It lets other lenders know that there was a remaining balance on your account that was not paid in full. Be sure to negotiate with your lender first about completely removing that negative remark on your credit report. If they are unwilling to work with you about reporting the deficiency balance, then your next option would be to just pay it off to avoid this issue from damaging your credit further.

Have you made any of these mistakes?

Don’t worry, we’re here to help! Contact us today and schedule a free credit repair evaluation with us to see how we can help get your credit back on track. Sure, you can repair your own credit, change your own oil, represent yourself in court, and even give yourself a haircut… But why not save time and headaches by going with a trusted, reputable company that has helped many people in worse situations than yours? We have the tools and knowledge it takes to improve your credit score and get your life back on track. Don’t settle for anything less!