Late child support payments may not hurt your score

This post originally appeared August 11, 2016 on CreditCards.com as “How delinquent child support affects credit scores

By Barry Paperno

Dear Speaking of Credit,
How do delinquent child support payments affect credit scores? – Russ

Dear Russ,
There are three common ways for child support debt to appear on a credit report. Two can affect your credit score and one cannot.

1. Collection
As with any other form of past-due debt, a collection item on a credit report for delinquent child support debt can seriously hurt your credit score. Collections for unpaid child support most often originate with either a state child support enforcement agency or an individual custodial parent turning to a collection agency for help.

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Can credit denial hurt your score?

This post originally appeared August 4, 2016 on CreditCards.com as “How being denied credit affects your score

By Barry Paperno

Dear Speaking of Credit,
What are the credit consequences of being denied credit? – Bo

Dear Bo,
In the days before modern credit scoring, more than 25 years ago, it could hurt. A lender who saw a hard inquiry on a credit report, and no corresponding credit card account being issued, would assume the application was denied. The assumption could then negatively influence the credit decision at hand.

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How much score damage to expect from added inquiry?

This post originally appeared July 28, 2016 on CreditCards.com as “Hard inquiry warning not required

By Barry Paperno

Dear Speaking of Credit,
Are lenders supposed to warn you before you apply that a hard inquiry will hurt your credit score if denied? Do inquiries hurt your score differently when denied credit than approved? – Tommy

Dear Tommy,
Some lenders may warn applicants of the potential for credit score damage from a hard inquiry caused by a credit pull. But no law requires them to do so. The harm from a hard inquiry happens at application. It does not matter whether your application is approved or denied.

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Credit scoring quirks that make you wonder

This post originally appeared July 21, 2016 on CreditCards.com as “5 Credit scoring head-scratchers

By Barry Paperno

Dear Speaking of Credit,
What makes your credit score drop when a loan has been paid off early? – Delores 

Dear Delores,
In the vast majority of credit-granting situations, the rules of credit scoring makes a lot of sense. If you have a history of living within your means and paying on time, you’ll have a good credit score and be able to obtain new credit when you need it.

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Credit utilization ratio: timing is everything

Dear Speaking of Credit,
Is it true that paying off my credit cards every billing cycle may not benefit my score as much as I hope, because creditors can pull my credit scores at a time during the month when my balances are @ 50%? I have utilization ratios @ 50-70 % between cycles, because of business expenses. –Richard

Dear Richard,
You don’t need to worry about when your creditors pull your scores each month, as long as your balances as of each card’s closing/statement date are as low as you can make them. No matter when your scores are pulled during the month, the last reported closing/statement date balances are the only ones the scores will ever see.

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Discarding authorized user card could hurt more than help

This post originally appeared July 14, 2016 on CreditCards.com as “Authorized user doesn’t like the piggyback ride

By Barry Paperno

Dear Speaking of Credit,
I was recently added to my fiance’s accounts as an authorized user to try to help him clear up some fraud. He had a few late payments in the past and now those are showing on my credit report. Is that legal? Can I dispute this since the late payments happened long before I became an authorized user? – Amy

Dear Amy,
Not only is it legal to report account history that predates you becoming an authorized user, it’s based on a legal requirement.

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Know which debts do & don’t appear on a credit report

This post originally appeared July 7, 2016 on CreditCards.com as “Score damage increases if unpaid debt goes to collections

By Barry Paperno

Dear Speaking of Credit,
I owe around $1,000 to the state Bureau of Motor Vehicles and have had my driver’s license suspended. I also owe around $800 for emergency ambulance visits to the emergency room. All of these are 2 to 3 years old. I received a collection agency notice for the ambulance charges, but only a collection notice from BMV for BMV fines (not from collection agency). My question is which of these affected, or are still affecting, my credit? − JIT

Dear JIT,
How − or whether − a debt is reported to the credit bureaus can make a difference between a little credit score damage and a lot. To minimize the damage to your credit score from unpaid debts, it’s important to understand what kinds of debts you have, their stages of delinquency, and whether you’re about to take another hit from another negative item being reported to the credit bureaus.

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Debt settlement carries a hefty price tag

This post originally appeared June 23, 2016 on CreditCards.com as “If you settle debt, expect a score drop.”

By Barry Paperno

Dear Speaking of Credit,
I am currently in $60,000 of credit card and loan debt. I am considering a debt negotiation that would close and settle seven accounts. I have never been late and my credit score is only 650. How will settling debt on multiple accounts affect my credit score? And for how long? Thank you. – Jane Doe

Dear Jane Doe,
When you settle debt on multiple accounts, expect to see the description of “settled” or “settled for less than the full amount due” appear on your credit report for each account. Having never been late has helped prop up your credit score, and you are to be commended for your diligence. Yet, regardless of how an account was paid before settlement, the credit scoring formulas treat settled accounts much like charge-offs and other balances not paid according to the original agreement – badly.

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High Canadian score won’t carry any weight in the U.S.

This post originally appeared June 16, 2016 on CreditCards.com as “How a Canadian can restart credit in the U.S.

By Barry Paperno

Dear Speaking of Credit,
My husband is a Canadian citizen and has excellent credit (771), but he will be a U.S. permanent resident this year and we were wondering how that would affect his credit? He was hoping to buy a new semi truck this year and doesn’t know if his credit will carry over to the U.S. or if he would be starting with a clean slate and the need to start his credit history all over again. Thank you for any advice you can give me. – Felicia

Dear Felicia,
Despite your husband’s excellent 771 Canadian credit score, to finance that truck he will now have to restart his credit. He must create an entirely new credit file and score in the U.S. by obtaining credit from U.S. companies that report to U.S. credit bureaus. And he is going to have to act quickly if he wants to buy that truck this year, as a credit file and score won’t appear instantly.

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Do 100-word statements matter?

This post originally appeared June 9, 2016 on CreditCards.com as “Who sees credit report 100-word statements.”

By Barry Paperno

Dear Speaking of Credit,
Barry, if I write a 100-word statement on my credit report, does every lender see it? Or just the ones I want to have see it? In other words, if despite my medical issues I managed to keep my mortgage current but had some credit card late pays, I want card issuers to see why I had a problem, but I don’t want future mortgage lenders to see that I ever had a problem at all. And do the 100-word statements expire, or do I need to manually remove them? Thanks. – TJ

Dear TJ,
The “100-word statement” first came about as a way for credit bureaus – Equifax, Experian and TransUnion – to comply with a Fair Credit Reporting Act (FCRA) requirement that some recourse be available to consumers following an unsuccessful dispute over the accuracy of credit report information. It says:

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