Really? As far as I know, you primarily get dings on your credit because you take out a loan, and don’t pay it back. How are you not aware that this occurred? And how were you not aware of the collections phone calls and letters?
Okay, so I know there are some things that can affect your credit negatively that many people don’t know about. Also, I realize that places other than your mortgagee or credit card company can report negative information about you. Libraries will report you if you don’t pay your late fees, unpaid traffic fines can get you, and an unresolved billing dispute can end up with the company reporting you as delinquent. This actually happened to me once. I had a billing dispute, we couldn’t come to a resolution, I thought we just walked away from it all, and then they started sending me threatening letters about reporting me as delinquent to credit bureaus. Those monkeys! I angrily called them, we eventually came to an agreement, things were seen my way, and we all moved on.
I suppose it’s possible for something you’re not aware of (parking ticket blowing off your windshield or something) slipping through the cracks if you move and your mail doesn’t get forwarded, or whatever circumstances that result in you missing the notifications, but for the most part, people should be aware of this kind of thing I would figure.
My question is: can negative information about you be sent to credit bureaus without you being notified first?
Ah, only in the commercial when he’s singing at the lobster place. At the one where he’s rapping in his Geo Metro, he doesn’t explain what happens. He simply states he didn’t realize that his credit was “wack.”
I’m working on a case right now in which the client’s estranged wife forged a power of attorney in his name, got a mortgage based on his credit, bought a house, and never paid the mortgage, which is now in foreclosure - he only found out when he checked his credit report. It’s a mess, believe me.
I want to say of course it can but I can’t say for sure. I know I’ve never gotten any kind of notification form one of the credit companies they they were going to change my information.
Once I had a dispute with a doctor’s office over some payments (they wanted money for work not performed - I say.) They went ahead and notified the credit companies before we resolved the issue. Once I found out I already had the blackmarks (I was taking out a loan at the time) the doctor never saw another cent from me. It’s not like she was going to call the various credit companies to straighten things out even if I paid everything she wanted.
I’ve often wondered if it’s possible purposely damage someone’s credit in this way. Could I start a company and report, to the credit bureaus, my enemy as having failed to pay a bill? What’s the difference if a company does this by mistake?
No, you’re dinged for a whole lot more things than that. Including (off the top of my head): A history of late or missed payments; a high ratio of credit used in relation to credit available; too much available credit whether you use it or not (unless you are scrupulous in paying everything on time every month); and specific credit inquiries that do not result in credit being extended. To take those four issues in order:
Let’s say you pay on your Visa card, but not always promptly. Sometimes your payment is late, sometimes you skip a month and pay more the next month. (This is extremely common with young credit holders, BTW.) Every time your payment is more than 30 days past due, you risk – and probably incur – a ding to your credit. 60 days past due: bigger ding. 90 days past due: Even bigger ding. It’s not “not paying it back,” that’s just not paying it back timely. That’s still a problem, and a lot of new credit card holders do not know this, or don’t fully grasp the damage it can do.
If you have, say, a $1000 limit on your credit card and you have an $800 balance, it dings your credit. Again, this is something new credit holders don’t always understand.
You have 10 credit cards. For the vast majority of people, this will affect your credit negatively, regardless of whether you carry high balances (bad) or don’t use the cards (also bad, because you have access to the means to run yourself into debt, but no proven history of paying the cards off). The only way to have lots of credit cards and not have it negatively impact your credit, is to use them all judiciously and pay them all promptly. Most people don’t need that many credit cards anyway, so for most people they are a bad idea.
Having people check your credit score and then not extend you credit. The offers almost all of us receive every day to get more credit cards – unsolicited mailings – do appear on your credit report but do not affect your credit score because you didn’t ask that the offered credit be extended to you. BUT if you authorize a person to check your credit – like a car dealer, or a mortgage company, or a credit card company – and then they decline to give you the credit you have applied for: That too can ding your credit. The fact that someone else has found you unworthy of credit is often a red flag to others who might be considering the same thing.
Not all of these factors will result in negative credit dings in every case, and there are many other factors that also can negatively impact your credit report. But it is absolutely true that your credit can be negatively impacted by things that you do not even realize could possibly have that effect.
And in the vast majority of cases, no, they do NOT have to notify you first.
Holy crap, so there was never any warning? Just a disagreement then, BAM! Off to the credit bureaus. What can you do when people do this? I know that you can dispute what is on your report, and submit statements requesting that items be removed. What if they don’t respond? Will the information stay there anyway? That kind of bones you, if that’s the case.
Right, I know that. I believe I even wrote that one sentence later.
Several months ago my Experian score suddenly went from 805 to 730 (I check it monthly out of paranoia). Nothing ever came to my address prior.
Turned out some unpaid $50 electric utility bill in another state went to collection and was posted against my credit SSN. A complaint from me caused its removal and the return of my score to normal, also without any communication to me of any kind–no explanation; nothing. (I made the complaint on the Experian site, as I recall).
So I think the answer to your question is “yes.” However it’s possible that the bill was sent to another address or was posted in error. I have never lived in that state.
Having said all that, the “freecreditreport.com” commercials seem to me to be inaccurate and overblown. Plus if the guy living with his rotten-credit spouse in his mom’s basement married her, surely her bad credit would have come up…
The problem is that the credit reporting companies don’t send any form of notification when something negative is added to your history.
In my case I had an account for a phone that I canceled in 2004. I paid the last bill and never heard from them again.
In late 2006 (over 2.5 years later) they posted a charge-off on my credit history claiming I owed $40 and sold the debt to a collection agency. Only reason I knew they did this was because I checked my history.
It took almost a year of multiple disputes before it finally disappeared from my credit report.
I was denied a line of credit once on this basis, even though I am scrupulous in paying everything off. Although I was annoyed at the time, in hindsight, I actually sort of respect the bank for being a responsible lender.
In my case, at the time I had two credit cards. Both fully paid off. One of them however, had the pesky habit of rewarding my good behavior by upping my credit limit. I never, ever used that much credit (it was inconceivable to me), but I never really thought of that available credit as a liability. When I wanted to get a line of credit, for some home renovations. The one bank said: “Your credit history is excellent! But sorry, we can’t give you a line of credit because your available credit is too high.”
It was true. Even though I’m a very conservative spender, my available credit had exceeded half of my income. :eek: If I ever completely lost my mind and went on a crazed spending spree, I could potentially wrack up an enormous debt that I did not have reasonable means to pay.
I have since insisted that the CC companies lower their respective limits to something reasonable and inline with my spending patterns, and they are not allowed to up my limit without my express permission.
I think many people don’t realize that bouncing a check can affect your score too, because they don’t think of checks as “credit”. Maybe not so much in years past, when the business would usually give you a courtesy call to say, “Hey, your check didn’t clear. Can you come down and take care of this?”. Nowadays if you bounce a check the business will usually just pass it straight off to a collection agency, and you may not even know you wrote a bad check (assuming it was an honest mistake and you didn’t do it deliberately) until you get a notice from your bank a couple weeks later . By that time its already in the hands of a collection agency.
Also, for some odd reason, canceling unused credit cards will ding your credit score. I had a couple of credit cards that I hadn’t used in years (an old gas card and an old store-specific card that had both turned into Visa cards somehow) that I canceled and it dropped my credit score. I asked about it and never got an explanation other than “It’s because you canceled these cards.”
Last year, it took me over two months to get approved to buy a home because my credit score was messed up. Since I always paid my bills on time, I thought that it would be no problem, but once I got the report, it showed that my score was lower than 600. It turns out that someone with my exact name and middle initial had not been paying her student loans and also had credit cards at several department stores that she was not sending in payments for. The odd thing is that I have a fairly uncommon name. I can’t imagine what the credit reports of guys named John Smith must look like. :eek:
I was able to contest these items and eventually get them taken off, but all of that greatly delayed the process of buying my house. No one wanted to approve me for a loan until my score was cleaned up. So yes, it is possible to have no idea that your credit is “whack.”
I will give my own anecdotal report and say “Absolutely”. I checked my credit report and had a negative showing an outstanding balance of $540 to a local medical specialist. While I had used this company before, it was over two years prior, and I had paid the bill in full.
I called the company, faxed my bill, they called back “So, sorry”, and removed the negative reference. Had I not checked my report, that would have stayed there and potentially cost me money in a loan.
I had a store credit card, that particular chain of stores got really douchey (had to do with unethical telemarketing practices), so we refuse to ever do business with them again. Ergo, I canceled the card. You’re saying that fully paid up, hadn’t even used the card in months, I may have dinged my credit report because I voluntarily terminated the account?
Here are four examples of credit problems from people I know where they legitimately didn’t know the problem was on their credit.
Identity theft. Someone opened up a credit card in their name, made minimum payments for a couple of years and then stopped. They found out about when they applied for an apartment that I managed. (We didn’t exactly deny their application, but we did give the apartment to a different applicant).
Bank error via bankruptcy. A debt was properly discharged through bankruptcy. Near the time of the bankruptcy, one bank bought out another. During the transfer of records, the discharge was accounted for, and the new bank thought that the debt was still owed. For some reason, they didn’t contact this person, but it did show up on a credit report. (That person was denied a job because of it).
Bank error via divorce. Some debts were assigned to one spouse during the divorce for what had formerly been a joint account. When the one ex-spouse failed to pay, the bank reported it as a default on both people’s credit.
Cosigner. Person A was denied a checking account due to bad credit. Person B, with good credit, cosigned on the account. All of the contact information for the account was with Person A. By the time the bank notified Person B of all the overdraft activity, it had already affected both people’s credit.
If you had 2 cards one with a 10 000 limit and 0 balance and another with 1000 limit and 900 balance your credit used vs total credit available looks good. Cancel the high limit card and it no longer looks so good lowering your credit rating.
