Data Facts Blog


A HReal HRisk HR can help HReduce | BCP Business Center

By Lesley Fair

Data Privacy DayToday is Data Privacy Day. You’ve educated your staff about limiting access to sensitive information, locking up confidential paperwork, and securing the network. But Latanya Sweeney, the FTC’s new Chief Technologist, just clued us in about a potential security vulnerability you, your HR team, and your web master can do something right now to correct.

It can happen on any site, but it’s common for universities, research institutions, non-profit organizations, and even tech companies to include links to the CVs of professors, scientists, executives, and other staff. For the most part, those resumes list scholarly publications and academic interests. But scroll through all that high-minded content and you may get to the down-and-dirty stuff identity thieves live for: dates of birth, home addresses, and even Social Security numbers.

On this topic – and a whole lot of others – when Latanya Sweeney talks, we listen. And here’s why. Yes, Latanya is an Ivy League Big Brain Academic. (And we mean that in the nice way, of course.) But she also has the tech credentials to speak geek with the very best of ‘em. And if that weren’t enough, for years she’s been a leading thinker about how privacy and technology policy affects consumers.

Here are some steps you can take immediately to help plug the potential gap Latanya is warning about:

HR professionals: Survey the faculty or management pages of your site and have your web master take down any CVs or resumes that include the kind of personal information ID thieves could exploit. Explain to your colleagues why it’s a risk they shouldn’t be taking. As new staff members are hired, implement a policy not to upload documents that include sensitive data. Executives and staff will appreciate that you’re looking out for them – and for the reputation of your institution or business.

Academics and professionals: If the CV or resume posted on your employer’s site or your personal homepage includes your Social Security number, date of birth, or other personal information, take the page down. If it’s a link to a .pdf, revise the document to get rid of the data crooks could exploit. Pass the word to your colleagues, mention it in your next staff meeting, or print this page and post it where they’ll see it.

Job applicants, graduate students, and others with an interest in promoting their credentials online: Be savvy about what you include on your CV, resume, or webpage. There’s just no reason for posting your Social Security number or date of birth where it’s accessible to some random web surfer. And your home address? These days, isn’t it more likely legitimate employers would contact you via email?

Those steps can reduce your risk from here on in, but what can you do if your personal information is already out there? Go to annualcreditreport.com and exercise your right to one free copy of your credit report from each of the three major national credit reporting companies. Stagger your requests and monitor your report once every four months.

A HReal HRisk HR can help HReduce | BCP Business Center.

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Back On Track: The Housing Market Is Changing For The Better

Home ownership in the palm of your handsThe housing market is improving much faster than anyone would have expected a year ago. Nationally, the prices of homes increased by 10% since February of 2012. However, many in the industry think that this may be cause for concern. They are nervous that the fast pace of recovery will cause another bubble.

Housing prices have remained positive throughout the seasonally slow winter months. “Home prices ended the first quarter of 2013 in a similar fashion to how they started the year, stable and in positive territory,” said Dr. Alex Villacorta, director of research and analytics at Clear Capital. “It has been seven years since home price growth continued throughout winter. This is very strong evidence of the start to a new leg of the recovery, one that should give further confidence to consumers and lenders alike that the recovery is real. As buyers become more confident the recovery is sustainable, this sentiment should grow to create a positive feedback loop.” It even appears that prices will still go higher. Here are a few reasons this may be the case:

  • The inventory of homes available for sale has fallen to the lowest amount in 20 years.
  • Since 2008, Homebuilders are not adding as many newly constructed homes to the market. Rising costs of building materials and labor are causing builder confidence to be low. “Many builders are expressing frustration over being unable to respond to the rising demand for new homes due to difficulties in obtaining construction credit, overly restrictive mortgage lending rules and construction costs that are increasing at a faster pace than appraised values,” said Rick Judson, NAHB chairman and a home builder from Charlotte, N.C. “While sales conditions are generally improving, these challenges are holding back new building and job creation.”
  • Banks are selling fewer foreclosures. “Although the overall national foreclosure trend continues to head lower, late-blooming foreclosures are bolting higher in some local markets where aggressive foreclosure prevention efforts in previous years are wearing off,” said Daren Blomquist, vice president at RealtyTrac. “Meanwhile, more recent foreclosure prevention efforts in other states have drastically increased the average time to foreclose, which could result in a similar outbreak of delayed foreclosures down the road in those states.”
  • Investors have purchased many available homes, converting them to rental properties.
  • Borrowers aren’t willing or able to sell at such low prices.
  • Tighter Lending standards mean that sellers are afraid they will not qualify for a new loan.
  • Demand has increased dramatically due to first-time homebuyers. Rising rents and falling interest rates make monthly payments less than what it costs to rent. Also, the demand is currently higher than the available supply.
    Low interest rates allowing qualified buyers to borrow more money. Today’s historically low interest rates have given American homeowners a significant boost to their purchasing power. In the pre-bubble period from 1985 through 1999, when rates for a 30-year fixed mortgage ranged between six percent and 13 percent, Americans spent 19.9 percent of their median monthly incomes, on average, on mortgage payments for a typical, median-priced home, according to Zillow. At the end of the fourth quarter of 2012, with mortgage rates in the 3 to 4 percent range, U.S. homeowners paid 12.6 percent of their monthly income on mortgage payments, down 36.9 percent from historic, pre-bubble norms, according to Zillow.

Prices may be rising quickly but tight credit standards are keeping everything in check. The housing market is healing but could potentially be in for more instability until more people purchase homes in which they want to live.

~~Stacie Shelton is a member of the Marketing Team at Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

Debt Relief Act Extended Through 2013

calendar_iconFor the past few years, homeowners were able to utilize a tax break (part of the Mortgage Forgiveness Debt Relief Act) when dealing with a short sale.  Fortunately for many, this debt relief has been extended until the end of 2013.

Under the United States Federal Tax Code, any debt that is forgiven is treated as debt discharge income . As such, short sales with a deficiency balance could be counted as income on the difference between the mortgage balance and the sale price.

EX: If a person has a $200,000 mortgage balance, and short sold their home for $150,000, the deficiency balance is $50,000. Under the original Tax Code, the  $50,000 would be reported as income and taxed.  This can cost the homeowner 2 ways:

1: In this example, tax on $50,000 of income can rack up to thousands of dollars.

2: An extra $50,000 of income could raise the homeowner to an entirely new tax bracket.

The Mortgage Forgiveness Debt Relief Act, however, forgives the difference between the debt owed and the sale price, up to 2 million dollars on a primary residence.

The Act-which passed in 2007- was scheduled to expire at the end of last year, but Congress did some last minute maneuvering to extend it out another year, due to the still struggling housing market.

{591A83C3-EE82-46D3-A0B9-F0B07F20A31C}09232011_Underwater_Mortgages_articleHomeowners may choose to short sale for a variety of reasons:

  • They are late on the mortgage payments
  • They are not eligible for HARP, or any other refinancing
  • They owe more on the home than it’s worth
  • They can no longer afford the home , due to job loss or other circumstance
  • They have tried unsuccessfully to sell the home at a price that would cover the mortgage balance

Homeowners choosing to short sale can sometimes face large drops in their credit score.

According to CNN/MONEY, shorts sales have tripled over the last 3 years.  In some areas of the country, short sales make up almost half of the area home sales.

With this extension, homeowners who are underwater can breathe a little easier for a few more months, knowing this option is still in play.

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services

 

News Release: Senators Introduce Bill to Help Americans Struggling with Medical Debt

Medical Debt Responsibility Act helps consumers whose credit scores have been damaged by medical emergencies

WASHINGTON, DC – January 28: Oregon’s Senator Jeff Merkley introduced legislation to prohibit companies from using paid off or settled medical debt in assessing consumer credit scores. The Medical Debt Responsibility Act, which is cosponsored by Senators Dick Durbin (D-IL), Chuck Schumer (D-NY), Tom Harkin (D-IA), Sherrod Brown (D-OH), Robert Menendez (D-NJ) and Richard Blumenthal (D-CT), could help as many as 75 million Americans.

 

“Oregonians shouldn’t have to pay more on their mortgage or their credit card simply because they had the bad luck to need medical care,” said Merkley. “Unforeseen accident or illness can happen to any one of us. We can’t change that fact, but we can change the law so that responsible working families aren’t hit with unfair credit reports for years after medical debt has been paid off.”

 

“Ohioans shouldn’t be penalized on their credit scores because of medical debt that they have repaid,” Brown said. “No one chooses when they fall ill or get hurt and no one’s credit score should be permanently tarnished due to temporary health issues.”

 

“After a sudden illness or medical emergency and the skyrocketing cost of critical treatment, the last thing families should have to deal with is a plummeting credit score,” said Durbin.  “But all too often unresolved medical debt bills, including those stuck in insurance red tape through no fault of the consumer, are provided to credit reporting agencies with serious negative consequences for consumers.  This practice unfairly damages a consumer’s credit score for years after the debts have been paid in full.  Our legislation would restore fairness in the system by ensuring that medical billing problems don’t become part of a patient’s permanent credit record.”

 

“A good credit score is critical for Iowans that want to obtain a loan, a new credit card, or a mortgage—but medical debt, even when paid off, can leave an unfair mark on a credit report,” said Harkin. “Oftentimes consumers are billed incorrectly, and are unaware that they have been left with medical debt. The Medical Debt Responsibility Act would ensure that consumers are treated fairly and are not punished for unexpected medical emergencies.”

 

“The unpredictable expense of medical debt should not confine consumers to a lifetime of bad credit,” Senator Blumenthal said. “Penalizing consumers for repaid or settled medical debt is an unfair and unnecessary practice that must be stopped.”

 

Currently, medical debt collections can significantly damage a consumer’s credit score for years, even after the debt has been settled or paid off.  As a result, consumers can be denied credit or pay higher interest rates when buying a home, obtaining a credit card, or applying for a small business loan.

Medical bills differ in a number of ways from other bills. The bills are often submitted first to insurance, and it can take considerable time to determine the accurate amount actually owed by the consumer. Consumers must navigate a complex and confusing billing system and wait for decisions from one or more insurance companies to find out how much they owe. For this reason, consumers often do not learn that they are delinquent on a medical bill until they hear from a collection agency, by which time their credit score has already suffered.

In addition, medical debt is atypical because consumers have little choice over whether to incur medical expenses or how much debt they accrue. Due to this unique nature of medical debt, its predictive value on credit reports is low.

The Medical Debt Responsibility Act fixes this problem by prohibiting consumer credit agencies from using paid off or settled medical debt collections in assessing a consumer’s credit worthiness.  In addition, the bill will require the creditor or credit rating agency to expunge the medical debt from the consumer’s record within 45 days from the day it is paid off or settled.

The Medical Debt Responsibility Act was endorsed last Congress by the American Medical Association, Consumers Union, Mortgage Bankers of America, NAACP, and the National Home Builders Association.

Spending Mistakes Smart People Make Over the Holidays

empty-pocketDecember is a time for families and friends to come together over the holidays. However, the last month of the year can also be a big budget buster that can leave you broke and in debt if you aren’t careful.

We have created a breakdown of mistakes smart people make over the holidays that result in January being hard to bear.  Avoiding these actions can help you make certain you roll into January with some money left in your pocket and your credit score intact.

The “I’ll pay it off next month” blunder.  Perhaps the best thing you can do for yourself is to set a budget for the holidays, and pay for those plans with cash. Using a credit card for holiday purchases sets you up to overspend. Paying for gifts you bought in December all the way through April is nobody’s idea of fun. Not to mention the negative affect those credit card charges could have on your credit score.

The “I’ll know it when I see it” shopping plan. Scour sales papers BEFORE your shopping trip to get an idea of the items you will be buying, and the cost. Shopping without a plan is like going into the grocery store hungry; it sets you up to overspend on impulse items.

The “it’s a bargain” trap. Don’t fall for the deep discount prices and one-day only ads. These ploys can break your budget and rack up lots of credit card charges. If the item wasn’t on your list and included in your budget, don’t buy it.

The “open a credit card today” ambush. Sure, an extra 10 or 15% off for simply opening a store credit card sounds great. However, don’t be taken in by this offer. A new credit card will show up as an inquiry on your credit report, and will give you the urge to use it lavishly. Just say no.

Now, those are goofs that deal with shopping. However, other activities can be budget breakers during the holiday season.

The “this dress makes me look skinny” argument. While we all like a new outfit, do you really need that new dress, new purse, or new cufflinks for your holiday party? Do you really not already own an outfit you can wear? Make sure you don’t overspend on clothing for the holidays that will end up only being worn once.

The “eat, drink, and be merry” boo-boo. Holidays inspire quality time with friends and family. However, expensive meals and overindulging in alcohol can tank your budget. Plan ahead for nights out, and suggest less expensive venues if your budget is tight.

Being aware of these holiday budget saboteurs is the first step to success. By avoiding these mistakes, you can keep your bank account and credit score high! Don’t let money mistakes over the holidays turn HO HO HO into NO NO NO!

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

From Data Facts: 5 Things Not to do After You Apply for a Mortgage

Buying a home can be one of the most stressful adventures a person can embark upon. From choosing the home, negotiating the price, obtaining a mortgage loan, to securing ownership, there are many pitfalls that can derail the plan.

Consumers often mistakenly believe that it is clean sailing after the mortgage loan process has been started. If the credit score it good, they are good to go, right. Wrong.

There are negative actions that can be taken even after the mortgage loan has been applied for that can decrease or annihilate the chances of getting that loan closed.

Today we are going to discuss the 5 No-No’s. These are the actions that a consumer needs to AVOID after applying for a mortgage loan.

#1: Don’t charge new credit card debt. In many cases, the mortgage loan was narrowly secured based on the consumer’s debt ratio or credit score. In these instances, even a few hundred dollars in new debt can cause the ratios to swing out of favor or credit scores to drop.  Postpone any new purchases on credit. Opt instead to pay cash.

#2:  Don’t quit your job.  The mortgage loan will be figured on your (and maybe your spouse’s) income. Your employment status will be checked again before the loan closes, and if the bank finds out you are unemployed, the mortgage loan will most likely fall through. Quitting your job is one of the most surefire ways to spoil the mortgage loan process.

#3:  Don’t buy a car.  If you get car fever during your mortgage process, REFRAIN from acting on it. A car loan will show up as a new inquiry on your credit report, AND the debt could possibly skew your debt ratios enough to mess up your chances of closing on your mortgage. Trust me, a car is not worth losing your dream home.

#4: Don’t miss payments. Forgetting to pay a bill or paying it late has a tremendously negative impact on a credit score. Just one late payment could tank your credit score to the point that the new mortgage would be unattainable. Practice diligence in paying your bills on time, especially when trying to obtain a mortgage.

#5: Don’t pay off old collections. It is a common misconception that “cleaning up” your credit by paying off old collection will help you look better to creditors. This is often not the case. By paying off an old collection, the date of last activity (which is how the credit scoring model looks at collections) will be brought to the present. The old collection will look like it just happened, which could result in a credit score drop of 100 points or more!  Leave old collections alone, and only pay them at closing, if required.

Securing a mortgage is a big endeavor. It takes lots of time and energy. Be sure to avoid these 5 common pitfalls to ensure you get the mortgage you want!

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

4 Tips for Reviewing Your Credit Report

You have probably read the advice everywhere:  CHECK YOUR CREDIT REPORT!  However, what does that really mean? What are you supposed to be checking?

While pulling your credit report at least once a year is very good advice, a person needs to know what to look for when reviewing their information. Start with these tips to make certain you are making the most out of the credit report:

1: Check out identifying information. Look over the names, addresses, and social security numbers appearing on the credit report. While slight misspellings are common, alarms should sound if an entirely different name or address is associated with your social security number, or if there are multiple social security numbers showing up on the report.

2: Examine the creditors. All tradelines of credit should be reviewed closely. Note any creditors that you are not familiar with. Also review the balances on each account, looking for discrepancies.

Another important piece of information that is in the creditor tradelines area is joint or individual account information. This tells you if you are the only one on the account, or if you share it with another person.

3: Note any late payments. Accounts showing late have the single biggest impact on your credit score. The date of the late payment should be reviewed to see if the account really was paid late, or if the late was reported in error.

4: Review all public records: Serious financial missteps such as bankruptcies, foreclosures, collections, and tax liens will show up in this section. Go over these closely to see if any of the items are reported in error.  If you have relevant public records in this section, make certain the dates are reported correctly.

The hope when assessing your credit report is that you will find no surprises.  That is not, however, always the case. Various reports have found that up to 25% of credit reports contain errors.

What should you do if you find errors on your credit report?

Contact the bureaus. Write all 3  bureaus (either on their website or by mail) and tell them about the error.  Send copies of any documentation that backs up your claim.

Notify the creditor. Send the creditor a letter saying that you dispute the item, along with copies of documents that give evidence to your claim.

Follow up. The credit bureaus have 30 days to investigate your dispute. They will then contact you to give you the outcome.

Implementing these tips can help you understand your report, catch any errors or mistakes, and assist you in staying on top of your reported credit history.  Pulling and reviewing your credit report once a year is an important aspect of maintaining a successful financial life.

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

Social Security Numbers and Mortgage Fraud

The social security card looks like an innocent little thing. However, its 9 digit number packs a powerful wallop during the mortgage process.  People who commit mortgage fraud often attempt to utilize other people’s socials to acquire mortgage loans.

According to Fannie Mae’s Fraud Finding Statistics , for the 2011 and 2012 mortgages where misrepresentations were discovered,   8% of the misrepresentations involved social security numbers. This, unfortunately, is an increase from 2010.

Mortgage fraud is a rampant practice in today’s real estate climate, with fake or stolen social security numbers often at the heart of the scams. Fraudsters have several ways of gaining access to a person’s social:

1: Purse or wallet snatching: a thief may utilize this very common practice to gain access to a consumer’s private information.

2: Phone scams: fraudsters call a person with a phony story. Examples of this are scammers telling the person he/she has won a great amount of money, or posing as the person’s bank or credit card companies. In these cases, thieves ask for identity verification in the form of a social security number.

3: Computer hacking: websites where private information is stored may be hacked in order to retrieve social security numbers.

Once fraudsters have secured a valid social security number, they can utilize it to open credit cards, get hired for jobs, AND obtain a mortgage.

Criminals who set their sites on mortgage fraud often set up complex networks and intricate scams to commit mortgage fraud. One person will steal the social security number, while another fraudulent person applies for the mortgage. A group working this way can rack up tens of thousands of dollars in cash without the consumer’s knowledge.

How can consumers protect themselves?

–          Leave it at home. Never carry your social security card in a purse or wallet. This practice will eliminate the possibility of a thief stealing it in a purse or wallet snatching incident.

–          Guard the number closely. Only give out the number on a call that you initiated.  Beware of anyone calling or emailing you asking for your social security number.

–          Report a theft immediately.  If you feel your social security number has been compromised, report it to the FTC, the 3 credit bureaus, and the Social Security Administration immediately. Doing damage control up front will save you big headaches down the road.

How can mortgage lenders protect themselves?

–          Closely check the credit report. Scour it thoroughly for any discrepancies in the applicant’s social security number.

–          Run a social security verification on every borrower. For added protection, this process makes certain the social matches the person trying to obtain the mortgage.

It’s a sad fact of life there are criminals out there who prey on honest people by fraudulently acquiring their social security number. However, by being vigilant (whether you are a consumer or a mortgage lender), these criminals can be thwarted and the incidences of mortgage fraud can be decreased.

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

7 Steps to Protect Your Finances During a Divorce

We all hope it never happens to us. The “D” word.  Divorce.

It’s a sad fact that lots of marriages end in divorce, and sometimes the relationship is contentious and hostile. If you are facing divorce, protect yourself and your finances with these simple tips:

1.  Keep detailed records.  The first step is to commit to making certain that all financial arrangements and obligations are well-documented.  If you end up having problems with a creditor for a debt that is not your responsibility, documentation can help clear the issue up faster and with less effort.

2. Dissolve every joint account.   This is one of the biggest mistakes that divorcing couples make. One person will keep a joint account, and the other person finds out months or years later that the account has been paid late or sent to collection. Be aware that divorce decrees do not supersede contracts. In other words, if you and your ex split certain debts in the divorce, but your name is still on the debt, YOU ARE STILL RESPONSIBLE FOR THE PAYMENT OF THAT DEBT.  This is a biggie, and can completely tank your credit score and ruin your finances.

Remove your spouse’s name on any accounts that you plan to keep (such as your car, etc). Move the utilities and any other bills into one name. If you share joint credit cards, divvy up the balance and open a credit card in just your name, and transfer the balance over to the new account. BE SURE all joint credit cards are closed.

3.  Sell the house if possible. The best idea is to sell the house and split any profits. It is imperative to not walk away from your house with your name still on the mortgage.  If selling the house is not an option, the person who ends up with the house needs to refinance it in his/her name alone as quickly as possible.

4.  Divide all assets. Split all cash, property, and any other assets during the divorce. Do not share assets with an ex.

5.  Be on guard online.  An ex can do some real damage when armed with passwords to bank and credit card accounts. The first action should be password protecting your computer and your cell phone (this will ensure your ex does not add a sneaky spyware).  Change ALL of your passwords on all of your accounts to something your soon to be ex would not know. Do not use birthdays, anniversaries, mother’s name, dog’s name, or anything else that your former beloved would be able to figure out.  Phrases like “bobpleasedie” or “lovereallystinks” probably aren’t good ideas, either.  A long password (10 characters or more) with letters in upper and lower case and numbers is the best option.

6.  Check your credit report. This is a good all-round rule for everyone. However, it’s especially important after going through a divorce.  Pull a credit report every 3-4 months, and scour it to make certain all joint accounts are closed and that there are no accounts you do not recognize. Follow up on any errors and get them cleared up immediately.

7.  Change your will and life insurance beneficiaries.  When moving on after a divorce, make certain to review all important documents, and implement changes where necessary. Remove the ex’s name from your will and any insurance policies in which he/she is named.

Divorce is never a fun endeavor. However, by being educated about the financial facts and following these simple tips, you can make it much easier to move forward and avoid the financial pitfalls that many people fall into when ending a marriage.

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

The Sticky Truth about Collection Accounts

Collection accounts can be a huge headache for consumers, and can wreak havoc on a credit score.

Debt collection in the United States is estimated to be a 12 billion dollar industry.  The way it works, in a nutshell, is when an account becomes overdue to the point the creditor does not think they will get their money, they sell the debt to collection agencies for pennies on the dollar.  The collection agency then attempts to recover what is owed.

Dealing with collections:

If a consumer has a debt sent to collections, he should receive a letter from the collection agency notifying him of the situation. If the collection is an error (reported incorrectly, or is not the consumer in question), he should contact the collection agency immediately to resolve the matter.

However, if it is a true collection, the consumer does have rights afforded to him under the Fair Debt Collection Act.

1: The collector cannot threaten you.

2: You can request the collector to not contact you, or only contact you by mail

3: A collector may not contact you before 8 in the morning or after 9 at night

3: The collector cannot tell you that you owe more than you really do

4: They may not publish the names of people who will not pay them

5: They are also not allowed to misrepresent themselves as credit reporting companies, attorneys, or government officials.

Once a person determines that the collection is valid, there are a couple of avenues to explore:

–          Pay the collection. A consumer may choose to negotiate with the collection agency and pay the balance of the collection. In this scenario, the consumer needs to MAKE CERTAIN that the collector sends all offers in writing.

–          Not pay the collection.  Deciding to not pay a collection may result in the collection agency suing the consumer. If the agency wins, the consumer’s wages may be garnished to repay the debt.

Unfortunately, either way negatively affects your credit score. Once a collection has been reported to the credit bureaus, it remains on the report for 7 years, whether or not the debt is paid off.

And, beware of paying old collections! Sometimes, consumers will mistakenly believe that paying off a collection account that is several years old will help to increase their credit score, and this is not the case. Paying off an old collection brings the date of last activity to the present, and the effect of the collection is felt all over again (which usually means the credit score drops).

A good rule of thumb is to try your very best to stay current on your payments. If you fall behind, strive to not let the account go into collections. If you do end up with collection accounts, be prepared to deal with collection agencies, and brace yourself for a credit score drop.  Once a collection hits your credit report, managing your other credit accounts wisely is the best way to rebuild your credit score.

(For more information on collection accounts and consumer’s rights, read the FTC’s Debt Collection FAQ’s).  

 ~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

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