     Shylock (Shylock) | Tuesday, October 17, 2000 - 04:17 pm 
Thank you for contacting me with your problem and I am glad to help you out.
You mentioned in your letter that you had incurred a charge off with Discover Card back about 5-6 years ago. Your credit has been seriously damaged. You are about to get married, you are making excellent money and you are probably thinking about buying a house or something. You'd like to settle up your debts, get in good with the lending companies again and get a fresh start. Good!
Let's begin by understanding two important credit time limits: The statute of limitations and the reporting period. Since you live in the Silicon Valley, CA the statute of limitations on your debts is four years. That means that legally you don't owe Discover card (or anyone else from "back then") anything anymore. They cannot sue you to get the money -- it's too late.
However you may feel that you have a moral or ethical obligation to pay those debts. I'm not here to say that you do or that you don't. That is something for a person to work out personally and come to their own decision.
I will point out that the reporting time limit has not passed. A company can report negative information on you for seven years only. That means that in two years all the negative credit information will be truly gone and you can get on with your own life again.
But perhaps you feel that you have an obligation to pay your debts or perhaps you feel that two years is a long time. Or perhaps you worry that although they won't be able to report on you that Discover card will still hold a mean grudge against you in their private files and refuse you credit should you ever apply. Perhaps you'd like to know if you couldn't just pay on your debts and get the issue wiped off of your credit report. Perhaps banks will look more kindly upon you if you do pay your debts, right?
Well, not necessarily. Should you just show up on your creditor's door with a big chunk of cash and pay them what you owe they'll gladly cash the check and update your credit profile to show "paid collection" or "paid charge off" and honestly neither of those notations are that great. In that they're pretty crappy. You'd like to avoid them.
But first we need to FIND these people that say you owe them money. One good place to start is to get a copy of your credit report. If, by chance, you've applied for credit anytime in the past 60 days and got turned down you can get a copy of your credit report for free. Your other options are to go out and APPLY for credit somewhere in order to get turned down and get the credit report or you can just call (888) EXPERIAN and pay $8.00 to get your credit report (that's the amount people in California can be charged by law).
In a short while you'll get your credit report and you'll need to look it over. I should warn you that every person's credit report has errors in it. Mine has errors and I've been working solidly since June 1997 to get them corrected. Most errors are harmless but some are not.
So your goal is to look through the credit report for errors. The most common errors have something to do with the dates. I mean you know that you had that Discover Card back at 19 so that means it should show a date of 1993 or 1994. Accordingly the negative information should drop off in 2001 or 2002.
BUT you never know what might happen. Perhaps they put the wrong date and it actually says 1996 or perhaps they SOLD the account to a collection agency that has put a 1995 or 1996 date on it. Or perhaps they hired TWO collection agencies and it shows twice (or three times) or whatever.
So the first thing to do is to start writing letters to the Big 3 Credit Reporting Agencies telling them exactly what is wrong with your credit file. Assume that all three agencies have the same information and send dispute letters to all three of them, they are:
Experian in Allen, TX (www.experian.com)
Trans Union in Fullerton, CA (www.tuc.com)
Equifax in Atlanta, GA (www.equifax.com)
You can also get their addresses from Yahoo! Yellow Pages. Soon after you write them letters telling them how wrong your credit profile is they'll send you responses back including updated copies of your credit so that you can see what old errors remain (and what new ones arrived).
Don't wait for that though! You should have addresses and contact information on your credit profile and you can begin calling all those people that say you owe them money. If those addresses and contact information aren't there try calling the (800) number with the credit report you have and try asking them for a phone number for these people. They'll be happy to oblige.
When you call the creditors and they find your account information in their computer the first thing you should ask them is if you owe THEM money or if they are just collecting for SOMEONE ELSE. Often times these people are just collecting for someone else and that's no good! CUT OUT THE MIDDLE MAN that's what I say -- go direct. Find someone who has the authority to deal on behalf of the company and talk to him.
Basically you are offering to pay them money (perhaps all, or perhaps just a part of the debt) in order for them to delete all reference to you off of the credit reports and consider the debt finished. Sometimes they will tell you that they can't or that it would be illegal, unethical, dishonest, kills small puppies in South Africa or whatever line they think is true. They'll offer to show it as PAID. This is NO GOOD AT ALL. Act very surprised that they would be so unhelpful.
Of course some companies will literally JUMP at the chance to take your money and they'll promise you the world if you'll just sign the check and mail it to them. MAKE SURE YOU GET IT IN WRITING.
A combination of time, disputing wrong information with the credit bureaus and settling debts with your creditors should result in everything getting cleaned off of your credit report. But that's just not good enough! You need more than no bad credit you need actual GOOD credit. That means a credit card. Usually that means OrchardBank.com.
These people will give you a credit card if you haven't been late in the past 6 months and if you're willing to send them $100. Now $100 probably seems like a lot of money considering they're only giving you a $300 limit but believe me it's well worth it. You'll save that $100 in the half a percent lower interest rate you get on a house when you buy it with good credit instead of borderline credit over and over and over again.
I hope this has answered your questions and, if not, you can always ask me for more information and I'll be glad to help out. You can either ask here or privately. |
