1. I can raise my credit score by paying off my credit cards and closing the accounts.
The credit score was designed to show lenders how much of a risk a consumer can be. The higher your credit scores are the lower the risk you are to creditors and obviously the lower your credit scores are the higher the risk you are. When it comes to your credit and credit score, paying off your credit cards and credit accounts is always a good idea and can help raise your credit score. Now, closing your credit accounts does not always help your credit score, even if they are paid off. Let me explain why. When you pay off an account it helps raise your credit score in a couple of areas. First, it helps the payment history to show that the account is paid and positive. Second, it shows you have less money you owe on that account and on your overall credit. Here is the downside. When you close your credit accounts you are stopping your payment history on that account, therefore ending the timeframe of your payment history on that account. Payment history counts as 35 % of your credit score, so paying the accounts off is great but don't close them unless you have to because closing them can actually lower your credit score.
2. When I pay off a collection or charge off account it will then report as paid in full and report as a positive account.
When you pay off a collection or charge off account on your credit report that is great. The creditor will update your account on your credit report to show that it is paid in full. By updating that information it will have a positive impact on your credit report and more importantly on your credit score. However, it does not change to positive account; it remains negative but does not have such a bad impact on the credit score. It will help your credit score by the account showing as paid but it is still a collection account.
3. Since my credit is bad I can just use my social security number as an EIN and start over with a new Credit File with the Credit Bureaus.
If you speak to anyone that told you to do this, first tell them that it is illegal what they are telling you to do and then file a complaint with the Federal Trade Commission at www.ftc.gov. Tell the FTC about this company and any other information that you have about them: like where they are located, a web address, what they told you, etc. Then tell the credit company that you don't work with companies that have illegal practices. When you are all done with that, give us a call at 866-639-3426 and speak with Sales (option 2).
4. If I file BK I will not have to pay back my debt and my credit report will be wiped clean.
This is one of the biggest myths out there. When you file Bankruptcy you are telling the court that you do not have enough money to pay your bills. Since you do not have enough money they will include EVERYTHING in the bankruptcy and in return you can wipe away your debt. If you file a Chapter 7, then you debt is wiped away. If you file a Chapter 13 then you set up a payment program to pay a percentage of the money back to your creditors. The debt may be gone or may be lower dramatically and put in a payment plan but the Bankruptcy as well as all of the creditors will report on your credit report. All of your creditors (even positive accounts) will now report as Included in Bankruptcy, which reports like a Charge off or Collection account. So, your debt may have been wiped away but you now have a low credit score in its place.
5. Being 30 days late on a Positive trade line is no big deal and will not even lower your credit score.
Most consumers would think being late one time on an account is ok, it's no big deal. Most consumers would think being late only one month (30 days) is ok, it's no big deal. When in actuality it is a big deal. Any late payments within the last twelve months affect your credit the most. Yes, even one 30 day late payment. Studies show that a 30 day late payment can actually drop your credit score 50-80 points, even if it is the first time. As that late payment gets older it will have less affect on your credit score but for the 6 months it can be dramatic to your score. This is why we tell our clients, don't be late. If something happened and you were late call the creditor and tell them what happened and see if they will help you out and take it off your account.
Ovation Credit is excellent at helping consumers with any of the issues listed above. Just give them a call at 866-639-3426 and let them do the work for you too!!
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