Now that we have focused on paying off our debt to improve ourcredit score (see Part II), I have a few well experienced suggestions:
Procedures I should use to negotiate and pay off my debt:
- Call your creditor first to confirm the balance, the method of payment (check, cashier’s check, money order, etc.) and the address to send it to. IF you feel that a negotiated settlement is appropriate then ask (you may need to talk to upper management).
- Ask for the name of the person you are talking to. Send a short letter confirming your conversation with your payment. Ask for a written letter from your credit company accepting your “payment in full”. If they are accepting a settlement of less than the full amount then that should be stated as well. Remind your creditor that you are expecting them to notify all three of the credit data banks in the U.S. of your full payment.
- Keep a file on your conversations, keeping good notes on each call with name, phone number, copy of your check, and details of your conversation. When your letter of confirmation is received then add it to your file and to your notes.
- Even though you have been told that each creditor will send your payoff information to the three data banks, do NOT rely 100% on that expectation. It often does not happen. Therefore, you now must prepare another letter to Experian, Transunion, and Equifax explaining what you have done and sending a copy of your letter of confirmation of payment from your creditor. Each of the three companies’ addresses are on the last page of our credit report.
- Then, two or three months later ask your lender, like CornerstoneCapital to re-run your credit history to prove that your credit historyshows that the balances are paid off as you expected. Your credit scoremay not have gone up or changed very much because time has not had itsfull effect.
- Finally, your last task comes about six months later as you once again ask your lender to run your credit score to determine what your new score has become. Again, your new score will be clearly affected by how much old debt has been paid off.
One More Suggestion – Very Important
Since you now have paid off the negative accounts, your scorewill be largely determined by your good accounts. If you do not haveany or very few (under five) good accounts you will need to build atleast five new accounts at the same time you are accomplishingeverything above.
The building of accounts is our next subject; I will address itin my next article. Once again, I’ll see you then. Thanks for the lastfew moments of your time.
Peter M. Galde is the founder and principal at Cornerstone Capital Funding, 14520 Mono Way, Suite 110, Sonora Ca. 95370. Peter has 28 years experience in the finance industry. E mail Peter or call him on 209 532 7711 for further information.