Credit and Debt
CREDIT REPORTS AND CREDIT SCORES
Your credit report is kept by the three major credit bureaus (also known as credit reporting agencies): Experian, TransUnion and Equifax. It shows your credit accounts (e.g. mortgages, loans, credit cards), your outstanding debts, your available credit, and how promptly and reliably you pay your bills.
Your credit score is a numeric representation of the information on your credit report. It is intended to show how likely you are to pay your bills on time. A credit score of 700 and higher (on a scale of 300 to 850) is generally considered good.
Lenders, banks, mortgage companies, auto financing companies and insurance companies may pull your credit report to help them decide whether to extend credit to you and on what terms. If your credit is good, you should be able to get a loan, mortgage or credit card – and at a reasonable interest rate. A low credit score means lenders will consider you a “high-risk” borrower, which can translate into higher interest rates, lower credit limits or being turned down for credit altogether.
If your debt has gotten out of hand, a reputable credit counseling agency can be very helpful. Credit counselors can advise you on managing your money and debts, help you develop a budget,
and offer free educational materials and workshops. They can also renegotiate the terms of your credit agreements and arrange to pay off your debts. However, not all credit counselors and debt adjusters are legitimate. Some may charge excessive fees, misrepresent what they will be able to accomplish, or not pay your creditors in a timely manner, thereby actually worsening your debt problems and your credit score.
Watch out for companies that promise they can “repair” your credit for an up-front fee. With very few exceptions, credit repair is prohibited by Georgia law. No one can legally remove negative information from your credit report if the information is accurate. Furthermore, it is illegal for companies to charge you any up-front fees for credit repair services.
You should also be wary of companies that offer debt settlement services. Debt settlement is when a company negotiates with your creditors to reduce the amount of debt you owe. These companies often advise consumers to stop making payments to their creditors until a negotiated settlement has been reached, and to instead make payments to the debt settlement company. This scenario is not only illegal in the State of Georgia, it may end up worsening a consumer’s money problems. Credit card companies are under no obligation to reduce the total amount of debt you owe; so, if you have stopped sending them monthly payments, and no negotiation is reached, your balance will be even higher than it originally was – thanks to interest and late fees – and your credit rating could take a further hit.
FINDING REPUTABLE HELP
- To locate a reputable credit counseling/debt adjustment service in your area, contact the National Foundation for Credit Counseling. You can contact them at 800-388-2227 or nfcc.org.
- Be sure you know your legal rights concerning debt adjustment companies. Under Georgia’s Debt Adjustment Act:
- A debt adjuster may not charge you any up-front fees. The only amount that they can legally charge is 7.5% of the amount you pay monthly for distribution to your creditors.
- All funds received from a debtor, minus authorized fees, must be disbursed to creditors within 30 days.
- A separate trust account must be maintained for your funds, along with certain insurance coverage, and audited annually.
- Copies of these audits and insurance policies must be filed annually with the Georgia Department of Law’s Consumer Protection Division.
You can report violations of Georgia’s Debt Adjustment Act to the Consumer Protection Division by visiting consumer.ga.gov or calling 404-651-8600.