John is interviewed by FOX and discusses what defaulting on our national debt would do to credit card rates
John is Interviewed on FOX and Discusses Credit Score Disclosure Legislation Effective July 21, 2011
John – I want to get my FICO scores. I’m confused about the options. What is the best and cheapest way to get all three of them?
Answer – That’s a very easy question with a very complicated answer. There is no retail website where you can go buy your three FICO credit scores. It simply doesn’t exist. There are a ton of websites that will gladly sell you 3 scores, but they won’t be FICO scores. The only way you can get all three of them is to apply for a mortgage loan (or get pre-qualified). The Fair Credit Reporting Act requires that mortgage lenders disclose your scores to you when you’ve applied for a mortgage loan. It’s a radical step to take just to get your three FICO scores, but it’s the only way. Sorry!
John – My question is; I want to pay off some old debts in full. I would like to do “pay for removal.” Should I call them and say I am willing to pay off the debt but they must send me on a letter on company letterhead that spells out they will remove the debt from all three major credit-reporting agencies, or can I send them a letter?
Answer – Be careful when talking “pay for delete” with lenders and collection agencies. It’s tempting for collectors to offer pay for delete structures but then not actually honor them. And, the credit bureaus may not honor the arrangement even if they send a letter asking for the removal of the negative credit reporting. Normally the credit bureaus frown on the pay for delete agreements. Normally the only reason an item would be removed from a credit report is if it’s incorrect or cannot be verified.
John – I want to close an old credit card but I’ve heard it will lower my FICO scores. Why?
Answer – When you close a credit card, assuming the balance is $0, that card will no longer count in the calculation of your revolving utilization percentage, which is an important component of your FICO scores. Add up all of your credit card limits and balances. Divide the total balance figure by the total limit figure. That’s your utilization percentage. Now, pretend you’ve just closed an account. Back out that lost credit limit and recalculate. It’s almost a guarantee that your utilization percentage just went up. And, it’s possible your scores went down as a result.