Help Please!

[kusuma]

This site is really wonderful and gave me confidence. Thanks for everyone who shared their stories. I am new and need help repairing my credit score. I have a very low credit score and need advice (EQ-664 TU-588 EX-610) on improving my score.

My summary looks like this :
Public Records - 0
Negative Accounts - 2
Collections - 1

Credit Card issues - I did not know that closing credit cards would impact credit history. I closed 4 credit cards after paying them in full in 2009 - 2010. Out of them JCP and Khols has 5 late payments and are now reflected as Negative Accounts. I currently have 1 open credit card with CAPITAL ONE with 40% utilization rate.
Actions I took - I have been after JCP and Kohls to remove my account as Negative Accounts. Am I on the correct track? Is it possible for companies to do that or should I just accept that Negative accounts cannot be deleted?


Collection Account - I did not open the account that is in collections. It is SMART READER REWARDS BOOK CLUB which says that I owe $99 in the credit file. How should I proceed with this? I can pay it off ONLY if it can improve my credit score.

Address Issues - CRA's have different addresses for me(all are correct but they are not my current address). Only EQ has my current address. I enrolled in BOA Privacy Assist and that is how I know this information. How do I delete my old addresses ? Would that impact my score?

All this is kind of fuzzy for me but I want to set things right. Where do I start? I am going for a auto loan and really need help.

Thanks,
Kusuma

[Hal Jordan]

Paying off the collection will not help your credit score unless you can get them to remove it. Get it in writing to agree to remove the negative tradeline when paid before you pay them. A paid collection effects your score the same as an unpaid collection so you have no reason to pay them if they won't delete it.

Personally, I wouldn't pay them anything right now unless you're needing to get this removed yesterday.. I would DV them. Those book club collections are a crock! DV them. I'd write them a straight forward DV letter letting them know this was not you and that you demand proof it was you and that you will pursue legal remedy unless they immediately remove that tradeline from your reports.

If that book thing was not yours like you said I'd seriously consider making a police report and getting a copy and a case number to send to the CRA's in a dispute. I'd also consider doing a 623 to the OC/stupid book club too.

[kusuma]

I am surprised. I just called disputed the account and the lady was cool and told to give them 30-45 days to remove the account. Let me see if this works, if not my next step is to write to them.

Can any one please help me with my credit card issues section posted in this tread -
Credit Card issues - I did not know that closing credit cards would impact credit history. I closed 4 credit cards after paying them in full in 2009 - 2010. Out of them JCP and Khols has 5 late payments and are now reflected as Negative Accounts. I currently have 1 open credit card with CAPITAL ONE with 40% utilization rate.
Actions I took - I have been after JCP and Kohls to remove my account as Negative Accounts. Am I on the correct track? Is it possible for companies to do that or should I just accept that Negative accounts cannot be deleted?

[Lian]

Closing an account often has little or no impact on credit score. It is often not a big deal.

The main concern with closing an account is that it will eventually result in the loss of its credit limit in your percent utilization calculation. Closed accounts continue to score in your percent utilization until the balance reaches $0. At that time, both the balance and credit limit disappear from your scoring. If it is high credit limit card, that could have a significant impact on your overall percent utilization.

You don't immediately lose the age of the account in your average age of accounts or oldest account scoring. FICO scores the age of all accounts remaining in your credit file without regard to their status.

The main concern with closed accounts is down the road. The creditor may choose to just delete the account, which results in your loss of its age. You have no control over that.

Additionally, the CRAs have a practice, which I think is improper, but is nonetheless done, of deleting old accounts from your credit file once they have been closed for approximately ten years. Then you can take a good hit on your average age of accounts, and also lose your oldest account. But that is ten years down the road.

It is usually best, when dealing with accounts showing derogatory information, to ask only for deletion of the derogs, and not of the account. If the derogs are deleted, the account becomes positive for its remaining life in your credit file, and that is usually a positive if its age is longer than your current average age of accounts

[kusuma]

Thank you Hal and Lian. Thats great help.

I heard that deletion of derogatory items actually reduces the credit score. Is that true?

(The age of my derog accounts are - 2008-2009. I closed the card in 2009.)

Thanks!

[Hal Jordan]

That's extremely unlikely. Ideally we want only the negative portion of the tradeline removed (IE 30 day late pay) instead of the entire closed account as this will effect the overall age of your credit and can hurt your score a little that way.. But a charge off or a collection or a 90-120 day late pay will tank your score much much more than having the item completely removed and it lowering the age of your account.

Age of credit effects 15% of your fico score. Payment history effect 35%. If it were me and I had a choice of leaving a 90 day late pay or an old charge off on my account vs just having the entire tradeline deleted.. I would take total deletion every single time.

Now if it's like a simple one or two time 30 day late pay from more than 3 years ago I would rather keep it than get it deleted totally but for anything else I'd prefer total deletion.