Let me cut to the chase.
I transferred out the entire balance on my credit card to another credit card and ever since haven’t used the credit card. Having been consistent with all my credit card payments , i was confident of good credit history. This was proved when i bought a house, i got a very good rate.
A year later , when i went to the bank for financing my car , the credit was rejected. I had to go to the dealer and get my car financed at a very high rate. To my surprise , the credit card , that i had not used for a year , had some outstanding balance. Since i never paid any minimum amount , it was referred to the collection agency. This was enough to destroy my credit history.
I had a pretty tough time talking to the credit card company, the credit bureau , but i won’t write about that. What i do want to write is the lessons learnt .
Free Credit Report
The three credit bureaus offer one free credit report each every year. Take advantage of this and use one report every 4 months and avoid any surprises.
NO PHONE CALLS
- When you see a derogatory account on the report , that means it had already been referred to the credit bureau. The credit card companies do not have access to the details of the account any more. So DON’T call them.
- Calling the credit bureau is also not useful either.
Instead the easiest and fastest way to deal with such accounts is to use the online feature to dispute any transactions in question. The normal processing time is 2 weeks, but for me it took only couple of days.
Security or Fraud Alert
When you dispute any credit card transaction, a security or fraud alert is set on your account and this stays for 90 days. What this means is when a creditor approaches the credit bureau , they will not have access to your account until they identify your identity. In order to do that , you need to provide a contact number information on the alert. You have to call the credit bureau to update this information.
When a creditor approaches the credit bureau to access your information , it is recorded as an enquiry. The is one of the factors that would affect the credit score. The important thing to remember is , if you know that a creditor has approached the credit bureau more than once in 30 days for the same reason, then this can be treated as a single enquiry. Again you need to call the credit bureau.