I can’t tell you how often a client tells me that they can’t “understand” why their scores are so low. At first I thought it was an excuse. It took me a while to figure it out (I think I was blond at the time) but the fact is is that most people DON’T understand.
So what are some of the things that people do with good intentions that net bad results?
1. You do what everyone is doing these days and you order a copy of your credit report…YIKES!!! There’s a $36 bill from ABC Collection Co from 6 years ago that you don’t even remember.
So being the responsible person that you are, you pay it because who wants a collection account on their credit report??? Hmmm? Now it would seem logical that that would be the end of the story, you breathe a sigh of relief, you just know your scores have gone up and you couldn’t feel better.
2. You have a couple of credit cards… one is a MonkeyMan Clothing with a limit of $200. You have only gone over the limit a couple of times, but you always pay before the due date (well except that one time but the amount was only $13) and usually for more than the minimum amount because that is what you have been told to do. The other is a $500 secured credit card from XYZ bank with an outrageous interest rate but in 2 years it will go to an unsecured status if you show a good usage history. You have never gone over the limit on this one and are always careful to make at least a payment and a half.
3. You spent some time out of work because it is seasonal, and decided to see if you could make some settlements on some of your old debts. You have been paying them, but you have been told that if you threaten to stop or do stop they will take a settlement (after all this is what most “debt settlement” or “debt consolidation” companies do so it must work). It does (or does it?). You settle 3 installment accounts for pennies on the dollar, Yippee!
So you spend countless hours on the phone combing through your credit report trying to get your finances under control. You have done everything that the “so-called” financial experts have said to do and now it is time to pull your credit report again.
Oh, my… I can hardly stand the excitement! Drum roll please ….WHAT THE HECK!!!! Your score has dropped by nearly 100 points. That can’t be right!!!
I would love to know what you, the reader, might think went right or wrong. I will be back with the answers in a follow up.
However, if this story describes you, don’t wait! We are here to help!