Here are the top 7 questions we hear from consumers about credit reports and credit scores…
1. Will closing paid off credit card accounts improve my credit score?
This will surprise many of you, but closing paid off credit card accounts can actually hurt your score in two ways. In Your Credit Score, Liz Pulliam Weston explains:
A. Closing accounts can make your credit history look younger than it is. Your credit score factors in the age of your oldest account and the average age of all your accounts. So closing accounts, particularly older accounts can ding your score.
B. Closing accounts reduces the total credit available to you, making your debt utilization ratio soar. Remember that the FICO formula measures the gap between the credit you use and your total credit limits. The wider the gap, the better. If you suddenly lower that limit by shutting down accounts, the gap narrows and thats a bad thing.
2. Whats the best way to deal with a collection agency when you dont have the money to pay them?
The Federal Fair Debt Collection Practices Act clearly states that you do not have to deal with credit or debt...
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