Your Debt and Your Credit
There are a number of junctures at which debt management and credit repair intersect. Your debt will have a serious impact on your scores via the FICO scoring model which considers your balance to debt ratio. The higher your balances the lower your score will be and vice versa. Your debt load can cross over into your credit life in other important ways as well
Your Balances and Your Scores
The application of credit repair principles to debt management for the purpose of optimizing credit scores must take the FICO treatment of debt into consideration. FICO acknowledges credit card utilization levels in 20 percent increments; the lower you go the better, but it is handy to know the details. Think of 60 percent card usage as neutral, 40 percent and below as positive and 80 percent and above as deadly. Manage your balances with care.
Charge Off and Collection Accounts
Many people involved in credit repair have another form of debt worth considering. When a default occurs the creditor will typically write off, or charge off, the debt after 180 days. At this point the debt will be sold or assigned to a collector, who will attempt to collect. Prior to reporting the account to the credit bureaus the collector must send collection notice. This creates an important opportunity.
FDCPA and Debt Validation
Under the Fair Debt Collection Practices Act (FDCAP) you have the right to validate a debt within 30 days of getting dunned. Read more…