My husband’s credit card history and mine couldn’t be more different. I’ll never forget my first credit card. It was a leopard print design from Capital One with a $300 credit limit. I got it when I turned 18 and kept it for about 5 years. I never carried a balance on it and made sure I didn’t charge things that I couldn’t pay off each month.

Unfortunately, my husband didn’t have such good financial habits, and one day I discovered his surprise debt shoebox that contained all sorts of collections notices. Needless to say, he didn’t have any active credit cards because his credit score was around 590. When the time came that we paid off all his debt, we checked his credit and found out his score had gone up to around 630. We decided to apply for a Capital One credit card, and he used that for a few years until they started giving us problems and we decided to cancel both cards that he had with them. We had worried about the effect it would have on his credit score, but we decided that the benefits outweighed the risks. We’d take our chances. Luckily, around the same time we canceled his card, we were able to find out that his credit score had made it into the high 600s because his debt collections had been paid off for a few years and he had made all his credit card payments on time.

Awhile back we contemplated getting another credit card in just his name to help his credit score, but ultimately decided that because we have one credit card with him listed as an authorized user that it would be more trouble than it was worth to go ahead and get him another one. About six months ago, we decided to refinance our mortgage, and when we did that we were able to check our credit scores. Mine was about 800 and his was around 760. We got an excellent rate on our mortgage, and it was great to know that even without a revolving line of credit his score was really good. I’m thankful that everything worked out in the end, even with our radically different credit card pasts.

Mr Credit Card’s thoughts – I asked Mrs Money to write about this experience because I think we can learn something from this. She started with a secured credit card, a small limit, always paid in full and got her credit score up to 800. Her husband’s credit score took a hit, but with some good habits (like paying on time), he has managed to build up a decent history. It takes time, but it ain’t as difficult as many make out to be.

The Equifax ScoreWatchâ„¢ is a credit monitoring service provided by equifax, one of the three major credit bureaus. Each bureau, the other two being TransUnion and Experian, have their own monitoring service. And they all come with different bells and whistles. Let’s look at this one provided by Equifax.

Basic Credit Monitoring of Your Experian Credit Report and Score – With this service Equifax will monitor your Equifax Credit Report and Equifax FICO® score. You will get notification of any major changes in your Equifax report or score via email or wireless alerts. In addition, you will get the following service.

Monthly Fees – The cost for this service is $9.95 a month.

How Does this compare with other credit monitoring service? – Well, there essentially two types of credit monitoring services. The first type simply monitors just one report (from that particular credit bureaus. The second type monitors all three credit bureaus.

Comparison with TransUnion credit monitoring service – Experian does not have a single bureau credit monitoring service, but TransUnion does. The difference between TransUnion’s monitoring service and Equifax is that TranUnion gives you unlimited access to your credit report. You also have $25,000 insurance for ID theft. But you cannot see your TransUnion score and you do not get alerts when you score changes. The cost is also higher at $11.95.

Comparison with 3-in-1 monitoring services – For those interested in monitoring your credit report constantly, chances are that you would prefer a service that monitors all three credit bureau reports. Equifax has their own Equifax Credit Watchâ„¢ Gold with 3-in-1 Monitoring, which monitors and alerts you to changes in all three credit reports but not your score. In addition, you will get unlimited access to your Equifax credit report and $1,000,000 in ID theft insurance. The cost is $12.95 a month for this service.

TransUnion also has their equivalent of 3-in-1 credit monitoring service that comes at a price of $14.95 a month. Experian has a similar deal.

Verdict – One of the things that I really like about the Equifax ScoreWatchâ„¢ is that you can access your Equifax score twice a year (rather for 60 days). This feature is absent for example in TransUnion’s own credit monitoring service. However, I suspect that that those who are really interested in monitoring their credit would want to do so with all three credit bureaus rather than just one. If that is the case, then I would suggest you try the Equifax Credit Watchâ„¢ Gold with 3-in-1 Monitoring. It cost a bit more ($12.95 a month rather $9.95) and you cannot see your scores. But for credit monitoring purposes, it is cheaper than the alternatives offered by TransUnion and Experian.

Hi,
I have a credit card which I’ve had for years. When my daughter, at age 17, went to college, I got her a card for emergencies. She didn’t sign for it and we didn’t ask for joint account. She used it a few times but since had paid it off. I went through a financial struggle and used the card myself to the limit and now am in BK13. They shifted the debt to her, changed the name on the account and sent it to collections. It now shows on her credit report and we have never given them her SSN. I don’t understand? Can this be?

Mr Donald Harless Jr

Answer – Donald, though you think it is a joint account, it may well be that your daughter is just an authorized user. But I’ll try to explain the consequences of your situation.

If she is just an authorized user

How to find out if she is just an authorized user or a joint account holder with you?

I suggest you ask your daughter to get a copy of her three credit reports (from Experian, Equifax and TransUnion) and thoroughly comb through them. If she is just an authorized user, it will show up as an “A”. If it is a joint account, then it will show up as “J”.

If she is an authorized user, then this are your action steps

Using Validation against collection agencies – If your daughter ever answer a call from the collection agencies, simply ask for a name and an address and then HANG UP. Write to them requesting a validation of the debt. Many times, they are unable to validate it and they will magically disappear! Send all correspondence using “certified mail” and keep all records.

(having said that, if you are in the middle of filing for chapter 13, you will be on “automatic stay” which means your creditors are not allowed to contact you)

But what if she is indeed a joint account holder

Since you are filing under chapter 13, by definition, you and your attorney will have to present a payment plan to your creditors. You will have to present a plan to the judge and you will also have what is called a 341 meeting with your creditors. This is when your attorneys should all these sorted out.

I do not know how long you are in the process of your chapter 13 filing, but depending on your state laws, it may or may not be too late to remove your daughter as a joint account holder. And since the account has been sold to a collection agency, it may probably be too late.

But if your daughter is indeed a joint account holder, then your bankruptcy attorney should know about this and have all this sorted because the debt will not be wiped out and you will have to negotiate your payment plan. In this case, you best bet is to consult your BK attorney.

To sum up – There is a higher chance of removing the credit item from your daughter’s credit report if she is an authorized user. But if she is a joint account holder, that is a different story. Her credit report will take a big hit. Best to consult your BK attorney.

]]> http://www.askmrcreditcard.com/creditcardblog/what-happens-to-joint-accounts-or-authorized-users-when-main-card-holder-files-for-bankruptcy/feed/ 1 http://www.askmrcreditcard.com/creditcardblog/whats-the-best-way-to-raise-your-credit-score/ http://www.askmrcreditcard.com/creditcardblog/whats-the-best-way-to-raise-your-credit-score/#comments Tue, 17 Mar 2009 07:45:54 +0000 Mr Credit Card http://www.askmrcreditcard.com/creditcardblog/?p=4823 What’s the best way to raise your credit score when you have had a few delinquent accounts?

A reader, April, had this question:

I used to have good credit but when I purchased my home my score went down some, even though I was on time.

Recently I was having a hard time paying my home loan because my husband’s business was not doing well enough to be able to pay the mortgage. (He pays, though I am the only person on the loan).

So we fell behind. However, we recently qualified for a loan modification. The only way we could get them to help us was to be delinquent on the mortgage.

Now my credit score is in the mid 500’s…all of my other credit cards are on time, though they all raised the interest rate on me.

So my only option to go back to my original low rate is to opt out (forced to close cards).

In about a year we will be debt free with all closed credit cards… I want to start working on my credit score.

Will my lender reverse the delinquent on my credit now that it is added to the new loan?

Also will getting a secured loan/credit card now, even though I have good credit card history, help bring up my score?

April

Hi April. Thanks for your question. I think I can give you a plan of action that will help you raise your credit score and manage your debt a little easier.

Here it is, in 5 steps:

Step 1:

Call the bank you have your mortgage through. Ask them if there is any way that they can reverse the late payment records on your credit report.

Request it as a one-time thing, for a customer that has always worked to make arrangements with them. If you can get that from them in writing, even better. See if they can fax anything to you that is on official letterhead.

You can also ask them to put a note in your account if they will not reverse the late notices. The note should look something like this:

Made a verbal agreement with customer. She plans to challenge the late notices on her credit reports. Do not validate the late payments. Agreement with customer is to remove these items from her credit report.

Obviously, that’s not a sure-fire method because your late accounts may be reviewed by computers and not by people, but it never hurts to ask the customer service rep to put it in there.

Step 2:

Repeat step one with all of your credit card companies. Have them remove anything that they are willing to from your credit report.

This will be aggravating. But even one removal will raise your credit score, so it is worth doing.

While you have them on the phone, please make sure you ask them to lower your interest rate, and remove any late or over the limits fees on your card. You can request that they remove up to a year’s worth of fees.

Some companies will only remove one such fee, while other companies really will remove a year’s worth of fees as long as you still have a balance on your credit card.

You can find out more about how to negotiate those deals here:

• Tough Negotiations With Credit Card Companies
• Negotiating With Your Credit Card Company

Step 3:

Pull copies of all three of your credit reports. Since you are actively trying to repair your credit score, then it makes sense for you to pick up a cheap credit monitoring service. Let me stress that using a credit monitoring service is more convenient, but not absolutely essential. If you want to save the money, you can, and I’ll explain why.

Start by going to Annual Credit Report.com Make sure that you obtain a current copy of each credit report from TransUnion, Equifax and Experian.

This is free. Make sure that you print a copy of each report. Look over each of the reports carefully.

Highlight any negative information that you would like to have removed.

You will then need to log on and begin the process of disputing the negative items on your credit report.

This is time consuming, but in many cases it can dramatically raise your credit score. There are some standard “do’s” and “dont’s” though, so please check out our free guide before you begin disputing.

According to the FCRA (Fair Credit Reporting Act) your lenders have 30 days to verify whether or not your claim is true. If they do not report back to the credit bureaus, then by law the delinquency must be removed from your credit report entirely.

That is why I suggested that any customer service reps that you speak to should note your accounts that way.

If you can get letters from your creditors saying that they do not dispute your claims, then you can send those to the credit bureaus as proof.

It’s really just how much time and effort you want to put into it. The more you work to clean up your credit report, the higher your score will be.

Step 4: Keep Checking Your Credit Report

You are entitled to a free copy of your credit report when you dispute things on it. After 30 days, you should receive something in the mail from the credit bureaus telling you whether the late notes will be removed or not. If they were not removed you can keep challenging.

If they were removed, then you will want to wait a month, and pull all three of your credit reports again. Make sure that everything that was supposed to be removed actually did get removed.

Credit monitoring services that let you see all three of your credit reports are around $15 a month. This is convenient because you can log into one place and view everything, but as I said, in your case not strictly necessary since you can pull your reports for free after each challenge.

Step 5: Check your FICO Score and Get New Credit

If you choose to go the secured credit card route, yes it should help you, and you can get started right away, no need to wait until after you clean up your credit report.

Just make sure that you never charge more than about $35-40 a month on that secured card, and set up an auto-pay so that you are never late. If you do those two things, then getting a secured credit card will help to raise your credit score.

There is no need to check your FICO score when you apply for a secured credit card.

However, before you apply for an unsecured credit card, make sure that you know your FICO score.

If you aren’t yet in the 600’s at least, then just stick with the secured credit card, and keep paying off your loans as quickly as possible.

Once you’re in the mid 600’s, you can consider balance transferring some of your high-interest debt. (That’s if you haven’t already paid if off first!).

Thanks again for your question, and good luck as you work to raise your credit score!

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• How to Raise Your Credit Score In 7 Easy Steps
• Can Your Spouse Hurt Your Credit Score? The Good, The Bad, And The Ugly
• The FICO® Score Breakdown

]]> http://www.askmrcreditcard.com/creditcardblog/whats-the-best-way-to-raise-your-credit-score/feed/ 3 http://www.askmrcreditcard.com/creditcardblog/credit-report-disputes/ http://www.askmrcreditcard.com/creditcardblog/credit-report-disputes/#comments Tue, 24 Feb 2009 15:51:20 +0000 Mr Credit Card http://www.askmrcreditcard.com/creditcardblog/?p=4000 Once you begin the dispute process with your credit reports, where do you go from there? A reader had this question:

I have successfully disputed a few charges on my Experian report. Do I need to dispute the same charges on my other credit reports?

Also, if I cleared a derogatory item at Experian, would that make it easier to clear it at the others? IE – I call Equifax and say “hey, account ###### was cleared at Experian for reason blah blah” – would that be sufficient, do you think?

Thanks for your question!

Disputing an item, and having it removed at one credit bureau does not automatically remove the items at the other two main credit bureaus.

For each account that you want to dispute, you will need to go through the process at all three credit bureaus. You can do that easily (and for free!) by signing up for an account with each of the three main credit bureaus:

• TransUnion
• Equifax
• Experian

You can also begin the process by visiting Annual Credit Report.com. However, Annual Credit Report will just make you create logins for the three credit bureaus individually, so it ends up being just an extra step.

If all you need is to see your current credit report, then Annual Credit Report is your best bet. If you know you want to dispute charges, then go ahead and set up the individual accounts. Make sure you write the login information down somewhere too.

Disputing items on your credit report is going to be an ongoing process for a while. You will need to sign in and dispute, then log back in and make sure that the items have been removed, then dispute a few more items if you need to, etc.

Be careful of disputing too many accounts at once. If you dispute a large number of accounts on your credit report, your credit score will be temporarily frozen until the disputes are resolved. This is also why I say that it’s an ongoing process.

Pick one or two accounts at each credit bureaus, dispute, resolve, repeat.

Once you finish with one credit report, like our reader, you will want to move on to the next two credit bureaus and do the same thing.

Now, to answer the second part of the question,”If you have an item removed at one credit bureau, will it be easier to get it removed at the other two?”

Unfortunately, the three credit bureaus really do not work together. Having an item removed at one bureau means nothing to the other two bureaus. Not only do they not automatically update, it won’t matter to the folks at TransUnion that you had something removed at Experian. This is because they are two completely separate entities.

A note about the dispute process:

When you dispute an item on your credit report, by law the credit bureaus have to get in touch with the business that is reporting the disputed account. That business then has 30 days to validate the debt. If they do not validate the debt, then it will be automatically removed off of your credit report.

This is the reason many people are able to have old, (but correct) items removed off of their credit report.

Most companies will not take the time to validate a very old debt – especially if they have already sold the account to collections, of if it was a one-time late payment, etc.

That means that you and I really do have a lot of say over what goes in to our credit reports, and our credit scores.

Our credit reports are not at all like report cards – they aren’t written in stone, and kept in a permanent file forever. Instead they are mobile records, things fall off of them after 7-10 years, and you can pretty much edit them as you see fit.

If you’ve had credit problems in the past, (or even the odd late payment here or there) the very best thing you can do for yourself is to clean up your credit report.

It takes time, it takes effort, but disputing the negative items on your credit report can save you thousands of dollars throughout your lifetime – better interest rates on loans, for some, just being able to get a loan.

The very best thing you can do for yourself is to make maintaining your credit reports a lifelong monthly habit. It takes very little time to do, and you will never have to pay more for a loan than absolutely necessary.

For more information on how to dispute the negative accounts on your credit reports, you can read our step-by-step walk-through.

Thanks for your question!

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I had a bankruptcy discharge in June of 2002. My credit scores are ranging between 637 and 675.

I am working, have a good job have reestablished new credit but keep getting refused for credit.

The main comment I receive is too many derogatory marks. Is there a way to remove these remarks?

Also one credit card company was purchased by another and they are showing a CO charge off for the account report in 11/2003, this was included in the bankruptcy,,,how can i fix my credit, i want to buy a house or a car. Any help would be appreciated.

Lisa, thanks for your question!

If you are being denied credit because of too many derogatory marks on your credit report, then the best place to start is by cleaning up your credit reports.

It’s easy to begin the process. Since you were denied credit, you are entitled to a free credit report with whichever credit bureau was used to make the decision. You are also entitled to one free credit report from all three credit bureaus each year.

To begin, just visit each of the three credit bureaus and create an account.

• Equifax
• Experian
• TransUnion

We have a complete step by step guide on how to clean up your credit report. You can find it, and download the walk through here:

Do remember not to challenge too many items at once so that your credit scores don’t get frozen. Just look at it as a process that may take several months to complete.

As far as the account that is showing charged off when it was included in your bankruptcy, that is the first item you will want to challenge. If the company can’t substantiate it, then the entire tradeline has to be removed from your credit report – that’s the best that can happen. The worst that can happen is the account will be corrected to say “Included in bankruptcy.”

Verifying some of these accounts may involve sending a copy of your bankruptcy discharge to the credit bureaus via certified mail. At the very least you will want to have your bankruptcy paperwork with you when you begin your disputes online. You will need your case number, the date of filing, and the date of discharge.

It’s a very simple process to clean up your credit reports, but it can be a little time consuming. Just schedule it out one day a month and challenge a few things each time.

This really is the best way to clear up your credit (after a bankruptcy, or any other time). If you have any questions about the process, or our guide, please feel free to leave a comment, and we’ll help you out.

Thanks for your question!

Another reader, Lenny, had this question about disputing correct items on your credit report:

I am all with you on taking the time and persistence to clear info off the credit report but what if none of it is actually false? I have bad info but that is because I missed payments etc. Should I still challenge it and under what grounds?

Should I try to clear any of the good but closed accounts or just leave them?

Thanks for your question Lenny!

Yes, you can challenge correct items on your credit report. You can challenge anything on your credit reports, for any reason if you choose to.

Some suggested reasons include:

• I did not authorize this account / I have no knowledge of this account. The credit bureaus make mistakes too, as do the credit card companies. With electronic signatures becoming very common, sometimes it’s hard for the credit card companies to prove that you really were the one that opened the account.
• The amount owed is wrong / I did not pay late - Usually you need documentation to back this up, but it’s not always necessary. It really just depends on whether or not the credit card company chooses to validate the debt with the credit bureaus.
• My name / address / information is incorrect - If anything is incorrect with the accounts at all then it is grounds to have the entire account removed from your credit report.
• Identity Theft - It helps if you have a police report to corroborate this, but it isn’t really necessary. Just citing Identity theft as a reason can be good enough to get the account removed from your credit report.
• This account was paid as agreed / was not charged off / included in a judgment or bankruptcy – This one may not apply in your situation, but it is the one that Lisa, the reader above, is going to want to use.

Best I remember, the last time I challenged an item on my credit report, it was as simple as choosing a reason from a drop – down list on the credit bureau’s website.

Also keep in mind that you can keep challenging the same items over an over if you want to. You can also include a statement on any item listed on your credit report. The statement won’t affect your credit score, but any lenders that actually view your credit report instead of making an automated decision will see what you have written there.

As far as removing the good accounts that were closed – I would leave those on there. Anything that says “paid as agreed”, etc. is going to benefit you rather than hurt you.

Thanks again for your question!

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What Does The Fool Say?

Over at Fool.com, they have their 60-Second Guide to Managing Your Credit. It is rather optimistic to think that all you need to know about credit cards can be learned in 60 seconds, but I think they are trying to emphasize the fact that this is not rocket science.

0:60: How much is enough?

Here they talk about your debt to income ratio, concluding that while “the ideal number is zero,…you want to keep your debt — including car loans — to 15% or less of your after-tax income.”

First of all, I personally don’t find it ideal or practical to have a true debt ratio of zero. If I were to check my credit report, I would find all of my spending since my last statement closed listed as credit card debt. If my payment due date is tomorrow, I might have up to 45 days worth of spending listed as debt. Note that I am paying all of this on time and in full, however it is listed as debt until the moment it is paid electronically on it’s due date. I never pay interest, but the credit report still sees this balance as “debt”.

To express it more accurately, I have no revolving debt. For me, this includes car payments as well. As you might have read, I am not a big fan of car payments. What is a bit more important, at least to your credit score, is your credit utilization ratio. This should be under 30%. The most likely reason it would not be is that you do not have enough available credit.

0:53: Don’t pay by their rules

Here they beg of you not to pay the minimum balance. As you should well know, paying the minimum balance is a “fool” proof way to keep you trapped in debt for the rest of your life. Medieval serfs had a greater chance of ever becoming debt free than the poor soles who attempt to pay off their credit cards by writing checks every month for the “minimum payment”.

0:46: Watch out for fees

Yes, fees are bad. Never pay them. Never pay late, do a balance transfer, or take a cash advance. They claim there are card companies that will charge you an “inactivity fee” and will even charge you to speak to a representative. I have heard of credit cards with such egregious fees, but perhaps they exist out in the sub-prime world.

0:35: Play the system

Here is some good advice. Always call up your credit card company and tell them what you want. If you are a good customer, they should waive fees, increase your rewards, or grant you other wishes.

0:26: In trouble? Stop charging

This is also great advice. Whenever I find my monthly finances too close for comfort, I go on what I think of as a “spending diet”. Every time I want to buy something, I ask myself to reconsider if I actually need it. If I really must have it, I put it off until it appears on my next statement. If you are having trouble paying your bill on time and in full, now is the time to go on a big diet.

0:23: Boost your credit GPA

This is their way of telling you to monitor your credit score and keep it high.

0:18: Carry just what you need

I am going to have to disagree with this. I wish it were the case that having fewer credit cards resulted in a better credit score, but sadly it is not true. A major component of your credit score happens to be your utilization of credit, see “0:60: How much is enough? “. Unfortunately, having too few cards actually hurts you as it raises your credit utilization ratio.

0:13: Get some free stuff

These are the words that I live by as a reward card aficionado. If you use credit cards as charge cards, only charging what you will pay off at the end of the month, there is no reason you should not be choosing your credit cards in order to maximize your rewards.

0:05: Teach your children well.

Pass down what you have learned to your children, as without your guidance it is all too easy to develop habits that will cause them become trapped in debt.

In Conclusion

These are some very good rules. I would have included some valuable advice on managing your bills with electronic payments. I also think that the Fool needs to brush up on credit utilization ratios and the current reality of credit scoring.

A quick check of your credit report should tell you everything you need to know. It will also help you to catch any instances of identity theft.

If you do not monitor your credit reports regularly, you can still check them once a year for free by going to Annual Credit Report.com.

Any other sites or advertisements that you see do not actually let you check your reports for free. Only Annual Credit Report.com is the real deal.

So, you’ve checked your credit report and found bad information, what then? Let’s take a quick look at the dispute process:

Option One:

You can create an account with all three of the credit bureaus (websites below). All three have entire sections of their sites dedicated to helping you challenge this bad information on your credit report.

Here are the sites you will need to visit:

• Transunion
• Equifax
• Experian

Once you log in with them, you can begin the automated process of challenging the information on your credit report.

I have actually been through the dispute process with all three of the credit bureaus via their online forms. I can tell you for certain that TransUnion has the best system – because I actually heard back from them after I made the challenges, and they did make the necessary changes. The other two credit bureaus (Equifax and Experian) I heard nothing back. Nada. Zero. Zip. No changes were made.

So, the next option for me was to send in a certified letter to Equifax and Experian. That got results.

Option Two:

Sending in a certified letter:

You will have to spend a little time getting everything together before you send your certified letter in to the credit bureaus.

You will need:

1. A copy of your most recent credit report from each credit bureau.
2. Make a copy of your credit report, and highlight any missing or incorrect information.
3. You will also need to include various forms of identification like a utility bill in your name at your current address, your social security number, and a copy of your driver’s license.
4. Gather up any supporting documents you will need. Things like canceled checks showing the credit account was paid in full, credit card statements, police reports (in case of identity theft), court documents or discharge papers (in case of a judgment or bankruptcy).
5. Attach a cover letter to the information stating that you are disputing the highlighted items on your credit report.
6. Send it certified mail so that you have a delivery receipt.

It’s a lot of trouble to go through, yes, but you could actually raise your credit score considerably just by taking the time to do this.

Your legal rights under the Fair Credit Reporting Act:

• If you dispute an item on your credit report, the credit bureau must investigate, and they are not allowed to charge you for the investigation.
• The credit bureaus have thirty days to investigate your dispute. If, at the end of thirty days the disputed item cannot be confirmed, then the items is removed from your credit report.
• After the thirty day period, the credit bureau is required by law to send you the written results of your investigation.
• Once the investigation is finished, you are entitled to another free copy of your credit report.

Generally when a disputed item is “investigated” it means that the credit bureaus will contact the company or bank that listed the item on your credit report in the first place, and ask them to verify the debt, or status of the debt in question. If the company does not respond to the credit bureau within the thirty day time frame, then the information is removed from your credit report.

It is possible to challenge the same information more than once.

A word of caution: Challenging too many items on your credit report at the same time will cause the credit bureau to freeze your credit report temporarily (until your disputes are settled). If that happens, you will most likely not be able to get a loan during that period of time, because your prospective lenders will not be able to pull your credit report, or your credit score to make a decision on a loan.

People often run into trouble with this because they challenge a bunch of items, and then go apply for a car loan, or a credit card. So, just keep in mind that these disputes are going to tie up your credit report and score for about a month, and don’t apply for anything. If you do, you will not get the loan, and your credit score will drop slightly from the inquiry. Best to wait until everything is resolved, and then move forward with any new loans.

That’s pretty much it. The entire process is really very simple. There is no need, ever, to pay a company to do this for you unless you just really, really do not want to mess with it. Most companies that I have seen charge upwards of $50 a month to challenge items on your credit report for you!

If you want to take care of challenging the bad information on your credit reports yourself, you can click here to download a short, free guide which includes a sample letter of dispute, and the mailing addresses for all three credit bureaus.

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Can you recommend a generic type of statement for people who want to close a credit card account just b/c they want it closed, or they think they have too many lines of credit open?

I’m curious if wording exists that could potentially give lenders a psychological moment of pause, or a vote of confidence in favor of the borrower, after reading the 250 word statement.

Thanks for your question Matt!

Matt is referring to the short 250 word statement you can place on any account listed in your credit report. As we noted previously in our article “Closed By Lender Vs. Closed By Consumer – Does It Matter?“, the only time the 250 word statement will matter is if a lender actually views your entire credit report, and not just your credit score.

Times that a lender will typically view your entire credit report include:

• When you apply for a home loan
• An Auto Loan
• Or a personal loan

In these cases, the 250 word statement might come into play, but the deciding factor will still most likely be your overall credit score.

Now, to answer the question, yes there are right and wrong ways to use your 250 statement. Right ways would include an explanation of why it benefited you to close the account, identity theft, or an explanation of a late payment or complicated account.

The wrong way to use your 250 word statement would be to air grievances with your credit card company or other lender! Prospective lenders really do not want to hear about the time your credit card company processed your payment late, and refused to issue you a credit. They also don’t want to see that you frequently argued with your creditors if they are about to become one of them!

If you have a problem with your bank or credit card company, be sure to take it up with them, or with the Better Business Bureau. Do not attach it to your own credit report – your credit card company will never see it, and it will only make you look bad in the long run.

So, with that said, let’s get down to some specific examples.

For instance, most of us love to take advantage of those “in-store” credit cards, especially around Christmas. So, let’s say you opened up a credit card to take advantage of the 30% to 50% off deal they were having. After Christmas, you paid the card off and closed it. You would want to go back into your credit report, and make a note that says something to this effect:

I opened up this credit account to take advantage of a special discount. When the special offer ended, I paid off the card, and closed it because it no longer benefited me. I have other credit cards with excellent interest rates, and the default interest rate on this one was 24%.

Another good instance would be balance transfer accounts. You open them to take advantage of the low, or 0% interest for a specific period of time. Your notation could look something like this:

I opened this credit account so that I could take advantage of the 0% interest on balance transfers. Once I paid the balance down, (or the rate expired) I closed the account because of the high annual fee and increased interest rate.

Or, if you are in the process of streamlining your credit accounts – you have too many and don’t want to deal with them all – you could say something like this:

It is my belief that using credit responsibly means having only the number of credit accounts that I can safely and happily manage. I rarely charged anything on this card, and since I have other lines of credit that I prefer to use instead, I closed this account. The cards I kept had better interest rates, and lower fees.

In an identity theft situation, you would want to challenge the item on your credit report as well as make a statement. Hopefully you can have any derogatory information removed permanently. In case of identity theft you can use this notation:

This account is/was in dispute. I had my identity stolen on (date). All or part of the charges made on this card were made by someone other than myself. The late payments that show up are because I had no knowledge of the account (or because I am not obligated to pay for charges I did not make).

If you got ticked off with your credit card company and closed the account, and you absolutely positively must note it on your own credit report, you could put it like this:

The incredibly rude and unhelpful customer service representatives that this company employs made it more worth my while to close this account than to keep it open.

Basically the goal with the 250 word statement is to show a valid reason for closing or disputing an account. In cases like that, the truth is always best.

If you closed the account because you didn’t use the card, say so. If you closed it because the credit card company sold your information to every telemarketer in India (I’m talking to you HSBC Bank – watch out!) then say so.

Always keep in mind though, that what goes on this report is a permanent record. Your permanent record. So choose your words carefully!

Thanks again for your question Matt!

Have a question for us? Leave a comment below!

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My question is: if my husband open a credit card and got me a credit card and that account how would that affect my credit score if I want to take my name off the account. I don’t want the credit card.

Thanks for your question Marcia!

The first thing you need to know is whether or not your husband opened this account up with you as a joint account holder, or an authorized user.

Here’s the difference:

If you are a joint account holder:

If your husband set up the credit account with you as a joint account holder, then that means that you and he (jointly) are responsible for any money that either of you charges to the account.

Also, holding a “joint” account means that this credit account will be treated like any other credit account you might have open.



If you are an authorized user on his credit account:

If you husband set up the account with you as an authorized user, then it means that he, and only he, is liable for any charges that are made to the account.

As far as your credit report goes, this account will still show up, but it will be given slightly less weight than a normal account.




What does that mean to your credit score?

Well, if you are a joint account holder, it means that your credit score will have dropped slightly because the credit card company pulled your score as well as his when he opened the account.

If you are an authorized user, then your credit score should not have dropped at all when he opened the account. Since he is the one fully responsible for the debt, the bank that issued the credit card would not normally pull your credit report too.

What happens if you close the account?

Closing the account will hurt your credit score, period. If you have good credit to begin with, then you can go ahead and close it out. Your credit will take a hit, but not a big one. If you regularly have poor credit though, you should probably leave the account open. Open credit accounts do a couple of positive things for you.

1. If you (and your husband) keep a low limit, and make payments on time, then your score will go up, and continue to go up.
2. This new account will increase the total amount you are able to borrow. If you were carrying high balances on other credit cards, then having this new, open line with nothing charged on it would help you because it would reduce your overall debt to credit ratio. (The amount you can borrow, vs the amount you have already borrowed.

Now, let’s get into a few of the other specifics that you will need if you close this account.

If you are a joint account holder, you are probably going to have to close the account completely to get your name off of it. Your husband will then have to apply for a different account on his own.

If you are an authorized user, then all you have to do is call the credit card comapny and request to be removed from the account.

*Editor’s Opinion: If your husband does not have an excellent history of credit management (pays his bills on time, always, and keeps his revolving debt low) then I would close out the account regardless.

If he is making late payments, and going close to the limit, or over the limit on his cards, then you do not want that negative information going onto your credit report each month. Do whatever it takes to get the account closed and protect your credit. You might take a small hit by closing the account out, but it would be better than a long series of negative reports if he mismanages his credit.

Thanks again for your question!

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