What you should do if you get a collection account on your credit.

Here’s the first thing you should know about debt collection: The people calling you are not the people you borrowed from. In actuality you are talking to someone who purchased that debt for pennies on the dollar and is trying to make a profit on it.

If you have a collections account on your credit report it is important to know how this will affect your credit score and what you can do about it. 

Let’s start with the basics… What does it mean for your credit?

If you have a collection account, your credit score may drop by a substantial amount. It typically is correlated with how high your credit score is.  Therefore, the higher your score the more points you can lose.

As you know, having your credit score drop from having an account in collections can impact your financial future.  You could be denied for credit cards and loans.

Realities of overdue debts…

The truth is a creditor could sue you and win a judgment, allowing them to garnish your wages or hire a sheriff to come get your property. However, the chances of this are slim.

Many consumers feel overwhelmed by their debts and file for bankruptcy because they think it is their only option. DON’T DO THIS!  This should only be considered once all other options are exhausted.

What should you do?

Call or email me, asap! Through a careful analysis of your situation, I can determine the necessary steps to settle your debt and move toward rebuilding your credit.

-Erik Kaplan

Coming Soon!

How a business credit card could impact your personal credit score

If used the right way, a business credit card can help improve both your business and your personal financial health – which ultimately can lead to more attractive opportunities to grow your business. 

Does a business credit card impact my personal credit score?  

As with personal credit cards, if you’re paying your bills on time you can expect to see nothing on your credit reports. However, if you or your employer are not paying credit cards (in your name) on time or missing payments expect to see negative marks posted on your credit report and watch as your personal credit score drops.  This is also true for your employees. Make sure you trust your employer/employees before signing for that credit card. 

How does personal credit affect business credit? 

Let me start off by saying there are significant differences between a business line of credit and getting a business loan. When talking about business loans, personal credit scores work the same way as with any other type of lending. Typically, anything less than a 660 and you will have a hard time finding an “A” bank lender with favorable terms.  A score of 720 or higher gives you a much better chance at approval with more favorable rates and terms. Using personal credit for a business loan or credit line is common if you run a small business or a start up. You can boost your personal credit score and your business credit score by making payments on time and keeping a low balance in relation to your available credit. Experian recommends keeping your balance at 20% to 30% of your credit limit. 

Do you need help with building up your business credit? 

One of the first things new businesses should do is start a business credit in the company’s name.  Like your personal credit, your business has its own business credit scores and reports.

We can help get your Dun and Bradstreet (D&B) business profile and a paydex score of 80! We also can help get you business credit cards and get negative items removed from your business credit. 
Give us a call or email me today!

THD Credit Consulting  ・ (800) 822-7120 ・kaperik@gmail.com

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Am I Liable for My Spouse’s Debt?

It’s no doubt that each partner comes into a marriage with some debt, i.e. student loads, credit card or a mortgage from a home he or she already owns. How you work together to tackle this debt and your finances throughout the marriage will make the road ahead a smooth or bumpy one.

A question I often hear from clients going through a divorce or after the death of a spouse is, “Am I Liable for My Spouse’s Debt?”

Whether you and your spouse are liable for each other’s credit card debts depends on a handful of factors. In most states, you are only responsible for the debt that you sign for. If you are not listed on the account, then the debt is not in your name.

In a divorce situation, you can be liable for credit card debt in two ways — by direct liability (joint credit card) to the credit card company or by the divorce agreement.

However, if you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin), you are considered a co-owner of the debt, regardless of whether or not your name is on the account. Therefore, your partner’s debt will affect your credit and you are legally responsible for it as if your name was on the account.

If you are not living in a community property state, you most likely live in a common law state. In a common law state, you are not liable for your spouse’s debt before marriage, and you can typically avoid responsibility for your spouse’s debt after marriage. Common law holds that only the person whose name is on the debt is liable for its repayment. An exception is if the debt was incurred for joint household expenses, such as food, clothing, shelter, medical care, education or childcare.

For example, if your partner has medical problems and has to go to the hospital or emergency room and can’t pay the medical bills for this visit – if you have the money to pay these bills, the creditor can come after you for payment.

Have questions about spousal debt liability? Give me a call, and let’s talk about your situation and what your options are.

Until next month,

Erik Kaplan

THD Credit Consulting ・(800) 822-7120 ・kaperik@gmail.com