Monday, February 20, 2012

Credit Scores and Debt

There can be a lot of confusion when it comes to credit scores.  First of all, there is more than one credit score.  The most popular is the FICO score.  However, each of the three credit reporting agencies has a different formula to calculate the FICO score, resulting in higher and lower scores for consumers.

Second, a credit card company may use a different score to approve a loan than a home mortgage lender or auto loan financial institution would use, so the lenders are not consistent with the scores used to accept applications.

Another problem resulting from the recession is that many consumers have had their inactive credit cards closed by financial institutions.  This increases the outstanding debt to the available credit ratio, resulting in a lower credit score.

Outstanding uncollected debt that is older than seven years will be removed from the credit report.  Therefore, if you are being harassed by debt collectors and you make a payment because you think it will stop them from calling, then the clock on the time limitation will restart.

If you are being harassed by debt collectors, please contact us at 866.553.3272.

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