Part 4: Answers to your credit questions

Here’s the next installment of answers to your credit questions. Personal finance experts from Consumer Credit Counseling Service of Greater Atlanta supplied the responses.

Please return tomorrow for the final installment. Thanks. (By the way, you can see answers to other questions or the column with CCCS President Suzanne Boas by scrolling down this blog.)

Q: How much of an effect will paying off debt raise your credit score? I had three debts — house, car and one credit card. I have paid off the car (5K) and the credit card (1k) and need to raise my credit score another 40 points. I have one bad debt — an ambulance charge I thought my insurance paid for. I paid it off as well.

A: What is most likely holding your score down is the ambulance charge. If that is still reflected on your credit report, you need to contact all three credit reporting companies — Equifax, TransUnion and Experian — to dispute the charge through the process they provide. You need to provide them evidence that you paid, and send in a letter saying that you’ve paid it. Then contact the ambulance company, preferably in person, and ask them to remove the inaccurate information from your credit report. You also will want to get a copy of your credit report to make sure everything is accurate. Removing an invalid item should significantly raise your score.

Q: What is the best way to deal with defaulted student loans? I am trying to rehab my credit and that is my only issue. I don’t know where to start.

A: The first thing you need to do is call your student loan company to relate your situation. Only the company has the power to get you back on track paying the loan. Unfortunately, a delinquent student loan must be resolved before your credit score will improve. Even bankruptcy is not an option, because a bankruptcy can’t remove your student loan obligation.

Q: I had some credit card debts from 2000 that I could not pay off. Those debts were repeatedly sold to the collection agencies that are mailing me and telling me to pay off. How long can they do that? Thank you for help.

A: Collection agencies can continue to call you about old debt indefinitely. But you may be protected from being sued in this case by a statute of limitations. In the state of Georgia there is a four-year statute of limitations, during which time either the original creditor or the collection agent that buys the account may sue you in an attempt to garnish your wages.

The four years is counted from the date when you first became delinquent on the account, which should be reflected in your credit report. This doesn’t mean that you can’t be contacted about the debt, or even sued, after the four years are up. But it does provide a defense for you if you have to go to court.

You also have rights under the Fair Debt Collection Practices Act, which protects people from some collection tactics, such as unwelcome calls at work or calls late at night. Also, consider sending the collection agency a letter, citing the statute of limitations and asking it to stop contacting you.

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2 comments Add your comment

Michelle

July 30th, 2009
2:56 pm

Please answer this questions. Besides paying on time every month. How can I raise my score up 30 points?

J

July 30th, 2009
5:31 pm

stop carrying a balance. pay off all your debt