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February 24,2009

  • Dust Your FICO, Pt.3
      Let's make a deal...


    • You can run, but not hide: Don't believe that ignoring credit card problems will simply make them go away. Collection agencies excel in making life miserable for people on their list. It's not that they're bad people...they have to spend most of their day ever day chasing after low-lifes and responsibility dodgers and they don't know you. It takes ‘tough skin' to perform their job. If you catch a credit card collections charge against you quickly enough, many of the agencies will agree to expunge your ‘derogatory' credit history ‘black mark' if you immediately pay the balance along with a $10 processing fee. Otherwise, these agent's will do their worst by splitting your charge into multiples so they can slap you with multiple ‘derogatories' on your report. Simply closing your delinquent credit card account won't help, either. This will only serve to add, yet another, ‘derogatory' to your report called ‘Closed while in delinquent status' or some other phrasing. Every ‘derogatory' against you is another strike. It doesn't matter if they're all for the same thing.

    • Can't make the minimum payments?: The bad news is that the minimums were already too low. The credit card industry has just learned a hard lesson from this but, alas, they can't just ‘redo history'. By keeping minimums too low (about 2%) they sere stacking the deck to encourage people to owe greater amounts over time (their bread an butter is supposed to be finance charges). Unfortunately they, like our recent White House leaders, failed to understand (or respect) balance. With little or no government regulation and no self-regulation, they succeeded in overdoing this principle. Now, millions of honest citizen's are so far in debt that they can't even pay the 2% and the credit card lenders are in panic and raising the minimum to 4% (where it always should have been). If you've been duped into allowing debt to build with minimums that would never pay down balance and now, can't even pay the 2%, then how will you ever pay twice that from this point? Most of the lenders realize their sin now and are forced to bend to unprecedented concessions. They are willing to negotiate to just get what they can. Many are even willing to forgive between 20 – 70% of your debt. Of course, this will decimate your credit rating but, if you can't avoid that anyway, might as well go for what you can get.

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