The Pros and Cons of Settling Your Debts

This is a guest post from John Ulzheimer, a credit expert and senior columnist for Credit Card Insider on the pros and cons of settling debts that appear on consumers’ credit reports. Over the past four years we’ve unfortunately had to become familiar with the term, “short sale,” which is actually a settlement accepted by your mortgage lender. And while mortgage settlements have become a common practice over the past few years, the process of settling other debts, such as credit card debt and debts being worked by collection agencies is a much more established process. Debt settlement works like...

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VantageScore Ignores Paid Collection Accounts

The NY Times reports that a major credit score generator, VantageScore Solutions, has decided to ignore collection actions on credit reports — many of which are medical debts — as long as the collections are paid. Vantage found that paid collections are less accurate at predicting future defaults than looking at unpaid collections and other factors. VantageScore’s findings lend support to proposed legislation that was reintroduced in Congress this year to require consumer reporting agencies to remove fully paid or settled medical debt information from consumers’ credit reports. That would help some of the estimated seven million people who reported...

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Credit Scores Should be Free!

Karen Blumenthal of the Wall Street Journal asks why consumers have to pay get credit scores. As important as credit scores are to consumers, they currently have to pay fees to Experian, Equifax, Trans Union or others to get their own scores. The report states this could change. In March, bills were introduced in both the House and Senate that would give consumers access to free credit scores once a year. The report points out that credit bureaus sell dozens of different credit scores, some intended only as “educational” for consumers, some generic ones for lenders and some tailored for...

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Factors That Do Not Impact Your Credit Score

The inner workings of the FICO credit scoring system are secret, but FICO does disclose the general components of its system. FICO says 35% of the score is based on payment history, 30% on your amount of debt (using more than 30% of your available credit will impact your score), 15% is based on the length of your credit history, and 10% of the score is based on such things as the number of new credit accounts opened. According to information collected by creditcards.com, what does not count in scoring are factors that one might believe would be important in...

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A Low Credit Score Can Ruin a Date

The NY Times reports that credit scores are now part of the dating scene. Young folks are being asked for their credit scores and a low score can be a deal breaker. One young lady thought things were going well when her date asked a decidedly unromantic question: “What’s your credit score?” “It was as if the music stopped,” said Ms. LaShawn, 31, said, recalling how the date this year went so wrong so quickly after she tried to answer his question honestly. “It was really awkward because he kept telling me that I was the perfect girl for him,...

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