Credit score dropped nearly 100 points! :(

[Coleroo]

I am so annoyed...

How unfair is the finance world?

I have always been on top of my credit score and very concious of reprocussions of being late, going over the limits, etc. I've been working to increase my credit score for years now. I got my first credit card in March of 2001 when I was 18. I have NEVER been late, NEVER over the limit, NEVER had anything in collections, or anything negative on my reports. I check my credit report 4-5 times a year to make sure everything is accurate, and my fico 1-2 times a year. In 2003 my credit score was 648. As of this past January it was 740.

Ok...fastfoward to last month. April 2007. My husband and I are now into purchasing rentals. Having just checked Jan 30th, it didn't occure to us to consider any problems.

WELL last week, the loan guy calls me and we start chatting. Then he says, "Im sorry maam, but you did not qualify for this particular loan since you need a score over 680".

(EXCUSE ME?????? )

I politely reply "Oh no, I have a credit score of 740".

"No Maam, the 3 credit bureas reported a median score of 654"

WHAT?? I was in total shock. I couldn't even speak. Not to mention completely embarrassed! (If I would have known something was wrong I wouldn't have applied and caused a hard inquiry ding to appear)

So he says that one account is in collection (???!!!! ???!!!) for $91. Then he sends me the report.

Sure enough, theres a new collection account from NCO financials claiming an original start date of 2004 and original creditor of Nationwide insurance. Oh man was I hot. In May 2004 i purchased my first new car - in order to drive it off the lot, I HAD to have insurance on it. So I just went with nationwide (who my parents were with) so I could have SOMETHING. I told them up front I would probably not be staying because I didnt like the rate but I had to have something. I paid my first month in full and began searching for other companies. 3 weeks later I switched over to State Farm. Since i didnt have a full month with nationwide one would expect (as I did) to get a partial refund or something..right??!

But no. 2 weeks later I received a BILL for $91!!!! I was so ticked - I went into their office for an explaination. The agent lady in there was so rude to me and didnt offer any explaination, just kept talking in circles. I hadn't even been told when I cancelled that I would (or even MAY) be billed MORE. I left an hour later still refuting that I owed anything and still not knowing why they claimed I owed it. I received just one more bill from them and never heard anything else. I naively thought back then that they had "realized the error of their ways" and recognized i didnt owe it.

I didnt even THINK about the insurance incident until last week when it suddenly appeared on my reports!!! 3 years later!!! I have received NO notification about this, no collection letter, no one has called me or anything. No word from anyone for 3 years!!

I was so angry that night I cried. ONE collection ding for $91 that i DONT EVEN RIGHTFULLY OWE has cost me years of work and nearly 100 points - and the chance to get a good rental loan. Whats worse, "paying it off" wont even help or make it go away.

So now I am the process of disputing it with NCO...and thats going to take a while. So who's skunked? Me, my credit score, and my good name with creditors who think one score is the end all be all.

[poundwise]

Unfortunately, you almost certainly did owe that amount.

When you obtain car insurance the policy is typically written either for six months or one year. Though you may cancel the policy prior to the anniversary/renewal date, you typically must give advanced notice (most often 30 days) and are still responsible for a pro-rated amount and are sometimes subject to a cancellation fee on top of that.

It sucks. But that's the way it is.

I expect that this, or something similar, is what happened to you.

Your first mistake was not understanding the policy, cancellation, and terms. But, the even larger mistake was in "letting it go" or assuming that this was dropped.

[JanH]

Is that number for both you and your husband? If it is just on your report, your hubby might be able to get the loan on his own if you want to go ahead with the purchase.

[Coleroo]

Originally Posted by poundwise

Unfortunately, you almost certainly did owe that amount.

When you obtain car insurance the policy is typically written either for six months or one year. Though you may cancel the policy prior to the anniversary/renewal date, you typically must give advanced notice (most often 30 days) and are still responsible for a pro-rated amount and are sometimes subject to a cancellation fee on top of that.

It sucks. But that's the way it is.

I expect that this, or something similar, is what happened to you.

Your first mistake was not understanding the policy, cancellation, and terms. But, the even larger mistake was in "letting it go" or assuming that this was dropped.

How can I understand something that was never told to me? I was never told about any fees for cancellation (I asked while I was cancelling) nor was I told I would be billed more when I cancelled. I signed up for their policy, which if kept would last 6 months. I told them up front I would be cancelling, this was temporary, I just needed insurance to get the car. My dad had been with them over 20 years so I trusted them to get me started. They said upfront they understood my situation, and while they didnt offer "temporary" policies I could get a regular 6 month one and cancel it if need be. I paid my first month ahead, $252, in full, and I switched to state farm exactly 3 weeks later. After receiving the bill, i went to their office asking why, please explain. The agent was very rude from the start and tried to dismiss me several times even when i kept asking to please point out in the policy anywhere where it said I would owe more, and "why was I not informed of this ahead of time". If I would have known I wouldn't have made the mistake of signing with them in the first place. And I could find nothing in my policy documents saying I would owe more if cancelled, nothing about pro rating, etc. AND since it was my first insurance, I didn't even know to ask when signing up if such things existed.

I have never had this happen since - last year when I switched from state farm to allstate I gave no notice and even got a prorated refund back since I had already paid earlier that month. I told my allstate agent about the nationwide incident and she acted surprised it had happened.

You're right in that I shouldn't have made the mistake of assuming it was dropped. But what other choice did I have back then? I wasn't going to pay it until they explained why I owed it and how they calculated it, and where in my policy they said that. I only received one more bill after that and never heard anything else from them - so silly, stupid 21 year old me assumed everything was ok. What should I have done back then... just pay something I didn't believe i owed? *sigh* Yet now 3 years later, this has hit suddenly. And nationwide is going to win afterall, and my credit score is ruined.

Anyway. Regardless of if I truly "technically" owe it or not, I guess the moral of the story is, no matter how hard you work on your "score" one little thing can mess it up completely. I was always one of those perfectionist A+ type students in school so I guess I put too much emotional stock in a credit score... its kinda like my report card. I know I shouldnt think like that, but its just how my feelings react.

That, and its very very embarrassing to apply for a loan and be told something negative about your credit report you didnt know.

Thanks for your post...

[poundwise]

Originally Posted by Coleroo

Anyway. Regardless of if I truly "technically" owe it or not, I guess the moral of the story is, no matter how hard you work on your "score" one little thing can mess it up completely.

This is more true than most people want to admit. Credit scoring is largely convoluted in the first place.

[disneysaver]

You should go to creditboards.com and research how to approach this. You may be past the statute of limitations for this debt, in which case you are no longer responsible for it. They have a lot of advice on how to dispute negative items and have them removed from your credit reports.

[Coleroo]

Originally Posted by JanH

Is that number for both you and your husband? If it is just on your report, your hubby might be able to get the loan on his own if you want to go ahead with the purchase.

Before meeting me, my hubby had never had credit. The only reason he has a score of anything is because I put him on as an authorized user on 2 of my accounts in early 2006 so he could inherit some of my score. Right now his highest credit score from a bureau is a 700 - he would have to get a no doc loan for it to be under just him and that requires a higher than 700 score.. and the interest rate would be higher than if we could get a nice joint convential loan (our first goal). Im not too keen on having a much higher interest rate on a rental property. so our happy house / complex hunting days have come to a sudden halt until we figure out another plan of action.

I guess this is a very emotional thing for me too... its like having a slap in the face to have my score lowered so much - over 91$ measly dollars from 3 years ago - after working so many years to acheive it. I feel like all of my work and "credit ethics" have been for naught. We have our own house purchased, owe less than 2 year on both our brand new cars, have always paid waaaaay above minimum on all credit cards, never been late and we sacrifice many of the things people "our age" (20somethings) seem to have coming out the bazooka like vacations and other various luxuries just so we can pay all of our bills on time.

I supposed im just in a pitying state (I know, shame on me) Sometimes living a more frugal life gets frustrating. Our 2 cars are the only things we have thats "new" (mine, since I got it in 2004 and refused to give that one thing up, and my husbands who needed a car to drive and we got him a cheap 2006 no frills aveo for 10.5k). We have hand me down furniture that doesn't match, all clothes for 1$ at the thrift store in town, no cable, my parents pay internet (otherwise we wouldnt have internet), we have a cheap house comparitively, we rarely run the AC or Heater, we dont go out to eat, no vacations.... and then I watch friends (single and married) enjoying all of lifes little luxuries and seeming to have it so easy - and yeh, yeh, i know the mantra is "they'll pay in the future" ...but every now and then it starts to get to me. And now, even though I had a solid credit history, my score doesn't reflect my efforts. it sucks.

i'll get over it though. all in all my husband and I have it great. I know this in my head, but im just not feeling it at this particular moment. But i find so much support just reading all of yall's threads. all of you are so wise and i learn sooo much from you guys. im just glad we have this board to bring our frustrations and questions too! thsi board is one of the best out there, in my opinion.

[tinapbeana]

coleroo:

fellow SC resident here, and if you want check out the SC Code of Limitations for Civil Action, which addresses (among other things) the statute of limitations when both parties are governed by SC law (i.e. you and the company you dealt with were both in SC). here, the limit is 3 years, and if they don't take action on a debt within that timeframe they have no claim to it.

with that said, if the insurance company is based out of another state with more than a 3 year time period (some are up to 20), then you're back at square one with the 7 years + 180 days after the first delinquent action as outlined in the Fair Credit Reporting Act so far as getting it off your credit report.

good luck!

[Joan.of.the.Arch]

Coleroo, I know my words won't help you, but I want to let you know that your words may help me. My husband and I get quotes on insurance alternatives probably a couple times a year. So far no one has offered a better deal than we already have, but I would switch if I got a better deal. Your post teaches me that I had better have a look at my obligations to the present company whenever I think I'm ready to go to another company.

And now that I'm in my late forties I can look back and see myself in my twenties/early thirties wondering how the heck people I knew were making close to the same as us could have so darned much. Well, it really did turn out to be true that some of them were living horrendously beyond their means, financing and using credit cards as if there were no tomorrow. I've seen people lose their houses, marriages break up, kids have to leave the schools they were in, even embezzelment and theft...much of which I think was a result of trying to have a lot of stuff and the best of stuff. So what you have been told--that it will come back to bite them later, really can be true. You are wise to not go crazy with credit, to be as careful as you have been.

To me, it sounds like you are doing well for a couple in their twenties. We sure did not have two cars or a house, much less rental properties when I was twenty something. My credit score was 814 last December, but I do not think I am likely any more honorable or responsible with credit than you are. I just did not run into the problem that you did. I sure see how that might have happened to me, though. I sympathise.

[Quynne]

I am sorry for your trouble. I was sent to collections for an account I did not owe. It was a medical bill that insurance paid in full but for whatever reason...it got sent to collections. Anyway...after complaining it was removed from my credit report. Of course, that was when I had good credit and it mattered. lol. I guess it always matters. It is possible to write something....oh...a statement...that attaches to your credit report. I don't know how much that helps as companies sometimes go your score only. Shouldn't you be able to bring it back up soon? I know my credit score jumped from a 590 (?) to 675 in a fairly short amount of time. Don't ask how far we have fallen. It is far easier to drop your score than bring it up. Just like loosing weight...easier to gain than loose.

[Quynne]

OH...by the way...after a few experiences with medical bills and insurance. I have learned to get everything in writing. When something gets paid off or cancelled have them send a letter to you to confirm the balance is zero! I kept a paper that seemed unimportant for years...almost threw it away. Good thing I didnt...I ended up needing it.

[JoyJoy]

Originally Posted by Coleroo

So who's skunked? Me, my credit score, and my good name with creditors who think one score is the end all be all.

FWIW, I use this Experian website as a reference when I have credit matters that need addressing. I don't know if Max is still there to answer questions, but you can still a lot of good information here.

Here is an answer which may help you cope with your problem over time.

Experian | Ask Max | The impact of paying a collection account on credit scores

[jodi]

I don't have anything to add, but just wanted to say good luck with everything. What that company did just stinks. I can't answer as to the original bill or reason why, but there is no excuse for lousy customer service, not giving you an explanation, or not following up on the matter in order to get it resolved before sending it to collections. When I switched insurance a few years back, I forgot to even notify my old insurer. I just got a notice one day that they cancelled me for non-payment (I had already put the new policy in place effective the date the old one had ended). They didn't try to bill me for more - maybe because my policy was technically up already? I don't know - but don't let the frustration get to you. I know sometimes it feels like you are giving up a lot, but you will be gaining so much more in the future.

[Coleroo]

thanks everyone so much for the responses... all the advice on what to look for, where to go.. and just the heartfelt "ive been there" or "i understand the feeling" words. i knew if i brought my frustrations here, you guys would help bring me back to solid ground again. i was feeling so down on myself earlier today. my husband just says im PMS'ing ... lol... maybe .. but i haven't gotten this down about things in a lonnnng time. i guess i put too much emotional stock into having the "perfect" score - and what happened just brought me back into the real world. sometimes its very easy to get way too wrapped up in what we're "supposed" to be (frugal, super savers, super wives, super kids, no debt, etc) or "supposed to do" (dont buy this, dont do that, do do this, do do that) that its easy to forget life does go on no matter what and things are always changing... like a rollercoaster. i sometimes just forget to sit back and enjoy the ride so to speak.

thanks again everyone!!!

[scfr]

I feel your pain ... My score sank temporarily after we paid off our mortgage. I called the credit reporting company and they said "When we see a mortgage cancelled and another one doesn't take it's place we just have to assume it went in to foreclosure." I resisted the urge to tell them where they could stick their assumptions.

[JoyJoy]

Wonderful thing about credit scores....they will RISE again! Welcome to the "I AM NOT PERFECT CLUB". Relax, breathe and kiss your hubby!

[Elgin526]

I'm just thinking "out loud" here, but it may be something you can look into.

Since the amount is so low, why not try a "pay for removal" letter? You contact whoever owns the debt (the insurance company may have sold it to a debt collection agency) by mail, stating you'll be happy to pay the debt if they'll remove the negative line from your credit report. Request they corrispond with you by mail only. Whatever you do, DO NOT TALK TO THEM OVER THE PHONE!!! Ever! Under any circumstance. Do it all by mail. The worst they can say is "no". If you go to creditboards.com you can find samle pay for removal letters to help get you started, and they can give you other credit advice too.

[BCHGRL]

I know you must be frustrated, but I can't stress how important it is for you to check your credit on a regular basis (once every six months). You can obtain a free credit report annually.

Take it from someone who's identity was stolen and I didn't find out until a year later when the person ruined my credit, you want to know what is being reported on your credit. None of my legitimate accounts were compromised so I would not have known any other way. My credit went from 520 to 770 once I cleared the id theft. Big difference, huh?

[Coleroo]

Elgin - Thanks!! I haven't heard of pay for removal letters... I didnt know we could do that! If the proof of validation gets..uh..validated.. that will be my next course of action.


BCHGirl - Unfortunately once every 6 months is not enough sometimes. I have always been on top of my credit, checking as often as I can - I just checked my reports and my FICO back at the end of January and nothing negative was on there.

[baking23]

I think what happened to you really sucks. But I wonder if maybe the rental loan folks looking into your score is what caused the company to remember to bill you?