Things My Credit Counselor Has Beaten Into My Thick Skull

Wow, that's a long title isn't it? It might have been easier if I didn't have trouble hearing on the phone and a short attention span. In any event, he's taught me three things that are very important and I will share them with you now.

1. Never pay a collection agency. I know it goes completely against everything in your being, unless you're just a deadbeat. When people say we owe them money, our first instinct is to pay them so that we don't look like a deadbeat. Here's the problem and I never thought of this, you don't owe money to the collection agency. You may or may not owe money to the "original creditor" but you don't have an agreement with the collection agency, your agreement was with the "original creditor". The problem in paying a collection agency is two-fold: one, you may not really owe the money to anyone. Collection agencies frequently look in the papers for people who have died and then try to collect from the next of kin. Two, how do you know the money is actually going to the company that you supposedly owe unless you check with the original creditor. Remember it's always best to call the original creditor and pay them directly. It's in their best interest to have you pay them because then they get all the money and they don't have to pay the agency for collecting from you.

2. Don't use your debit card to pay for things. This is your money and you are giving away a lot of information about how to get your money. Use cash, a check or a credit card. It's much easier to have a charge reversed with a credit card than with your debit card. The reason is you have to sign with the credit card. You don't with the debit card.

3. Always look over your bank and credit card statements. If something doesn't look right, investigate it. Report possible identity theft immediately. Look at your credit report periodically too. You have the right to challenge anything on your report that you think is inaccurate. Remember that time you paid your credit card one day late? Check your report does it say you were 30 days late that time? That will hurt your credit score and the three credit reporting agencies have to report it correctly and accurately. That means it must say you were one day late, not 30.