I recently got my credit reports (March 4) and found a wrong address listed (in a state I have never even been to), and two collections that I do not recognize, and assume go with the incorrect address. I immediately used Suze's credit agency letter writing tool and pointed out these problems to each of the agencies. Also on these reports were late payments on my three credit cards, each of which were nearly at the limit.
I paid these three in full with a miraculous bonus I got from my job this week. Should I close these cards, or just leave them sealed in an envelope until I get a mortgage for a house we found that we want to buy? Also, how much of a change in score can I expect from having these collections (there are 2) removed and having the cards paid up? Does anyone have any idea? My scores are in the high 500s and very low 600s.
hi hopefulhomebuyer, It looks like you're putting your Su...
It looks like you're putting your Suze Orman FICO Kit to good use and congratulations on paying off those 3 nearly max'd out credit card accounts. In response to some of your questions:
1. Don't close the accounts you just paid off. Place the cards sealed in an envelope if you must, but leave them open so that you still have this credit available to you. This will reflect positively on your FICO score since the more revolving credit available to you, the better your score.
2. There's no way to estimate the change to your score upon removing 2 collections, but the more recent the assign dates on these collections, the more of a negative impact they're having on your score now and thus the more positive impact to your score upon removal.
3. You mentioned the 3 credit cards paid in full had recently been late. These recent late payments, in addition to the collections, are probably also having a negative effect on your score and could even be hurting your score more than the collections. Don't worry, though, since now that your balances are much lower and your payments are up to date, your score will continue to increase as you continue to pay on time and keep your credit card balances low.
Formerly consumer affairs manager, media spokesman and myFICO Forums community manager at FICO, I'm now freelance writing for CreditCards.com and my own site, SpeakingOfCredit.com.
Hi Barry - Thanks for your response! I have to tell you t...
Hi Barry - Thanks for your response! I have to tell you that buying this kit was one of the best things I've done in my life. I've lived in fear since my divorce of looking at my credit score, certain it was trashed. And when I would break down and apply for this or that, I'd be denied and just accepted it. I had no idea that there were collections on there that do not belong to me. It took a lot of courage for me to really look at it, but having the tools right there made me feel not quite so impotent. I will absolutley leave the cards as is. The two remaining open charge accounts are now down significantly and we'll continue to pay those off regularly. It totals $700, so that is not bad! The most recent collection on the account is only one year old. I'm sure it's impacting in some pretty serious way. I have tracked out the "late payments" on my credit cards and am backtracking to see when payments were actually posted. I have one that is 60 days, and I find that hard to believe. I guess I can dispute it if I find that it was not in fact that late. On a very hopeful note, we did get a pre approval on a mortgage and have put an offer on a house we love. I'm hoping the offer is accepted and that I can get a new loan offer at a much lower rate once these things have been straightened out. It's not so scary afterall! Thanks again Barry!