Frequently Asked Questions
Financial Terms:
Bankruptcy, Foreclosure,
Inquiry, Judgment,
Lien,
Repossession,
Debt Settlement
How long do items remain on my credit report? Negative items will remain on your credit report for 7 years
from the last date of activity. Positive items can benefit you
for 10 years or longer if they are still active. Bankruptcies generally remain on
file for 10 years. [back
to top]
What can I do to reduce the interest rates on my credit
cards? Credit card issuers will generally grant small
reductions in your interest rate if you show financial strength
and ask for a reduction (See
Strategies to Reduce Interest).
[back to top]
How can I stop receiving credit card solicitations?
You can request a halt to solicitations by dialing (888)
5-OPT-OUT. This number registers your request with all three
main credit bureaus. This may reduce the number of solicitations
you receive. [back to top]
Do I need a credit report monitoring service? Probably
not. These services typically cost $12 to $13 per month and do
not in themselves prevent identity theft or other fraudulent
activity. They do notify you of any changes to your credit
profile. If you suspect that you may become a victim, you may
place a fraud alert with the credit bureaus for free. Some
states also offer a credit freeze at a cost of $10 per credit
bureau. [back to top]
Does credit counseling hurt my credit? Credit
counseling will never hurt your credit. Furthermore, if you are
financially distressed and need a debt management plan, your
credit score almost always improves as you complete repayment.
See this article (Does Credit
Counseling Hurt my Credit?) for a closer look. [back
to top]
Financial Terms
Bankruptcy: Legal process
where a debtor is deemed insolvent and unable to pay their
financial obligations. Chapter 7, or liquidation allows for the
debtor to be absolved of all eligible debts while assets are
sold to partially repay creditors. Chapter 13 allows for the
debtor to retain assets while paying a portion of their debt
over a period of time. See
bankruptcy basics for a more detailed look at the common
types of bankruptcy and the impact on your credit.
[back to top]
Foreclosure: Lender
reclaiming real estate property due to default of a mortgage
loan. The debtor loses any equity in the property. The lender
typically auctions the property to satisfy the outstanding debt.
See the
steps to foreclosure for a closer look at this process.
[back to top]
Inquiry: Record of entities that
have requested a copy of your credit report. These appear on
your credit report for up to 2 years. Different types of
inquiries may or may not affect your credit scores. See
inquiries
for a detailed look at the impact on your credit scores.
[back to top]
Judgment: Decision by a court,
in this case on an outstanding debt. A judgment is a public
record that will appear on a credit report. This indicates that
a judge ruled in favor of the creditor. See
judgments
for a detailed look at this legal process.
[back to top]
Lien: Legal claim to property due
to outstanding debt. A lien may be placed on an asset to prevent
the sale of that asset without the approval of the lien holder.
A tax lien is a claim by the government on property owned
by a debtor with an outstanding tax bill. More information on
liens is
available.
[back to top]
Repossession: Seizure of
secured asset due to default on a loan. Any equity in the
collateral property that is seized is forfeited by the debtor.
The asset is typically sold to satisfy the debt. Most
repossessions do not fully cover the outstanding debt, and the
debtor continues to be responsible for the remainder.
See
repossession for additional help.
[back to top]
Debt Settlement: A reduced
payment made on an outstanding debt to cancel that debt in full.
The payment is a compromise between a debtor and creditor made
to resolve a defaulted debt. Debt settlement can have a negative
credit impact. It can be used to occasionally avert legal
processes. See debt settlement
for an in depth look at how the process works. [back to top]
*If you still have additional questions that are not answered
here, feel free to submit your
question for a response. If you question is featured, your
actual identity and privacy will be preserved.
© 2004-2010 Vision Credit Education, Inc. All rights reserved.
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