The Power of Piggybacking
Let me first say this, I do not encourage anyone to ever purchase tradelines to add to their credit report, however I am a firm believer in “piggybacking” credit off of a family member or close friend. It is a great way to build credit or help your spouse or family member build their credit. “Piggybacking” is simply adding an “Authorized User” to one’s card, allowing the user access to the primary account holder’s positive credit history. I usually recommend this to clients in which we’ve removed all negative items however they still lack positive credit accounts. Benefits of adding an AU is that you are lending the positive accounts that will boost their credit score without necessarily giving them access to the actual card (If you do give that person a card just remember YOU are responsible for all charges they make) and you are making it possible for them to qualify for their own accounts in the near future. A couple of things to keep in mind is that when you do decide to add someone as an authorized user to your credit card, any bad/negative reporting on your card will also reflect on their credit, including extremely high balances. Also, not every credit card company will report authorized user accounts to the credit bureaus, so be sure to ask before adding the user.
How Responding to Debt Validation Letters can Help Keep Collection Accounts off your Credit Report
When you receive collection notices from a debt collector, DO NOT IGNORE the debt validation letters. This will usually be the first written communication between you and the collection agency. They have to send you this letter within five business days of initial communication with you regarding a debt they are trying to collect on. The letter must include:
– The amount of the debt
– The name of the creditor
– The assumption that the debt will be valid unless you dispute it within 30 days
– Notification that you can request verification of the debt within 30 days
– Notification that you can request the name and address of the original creditor within 30 days
Respond to the letter in writing via certified mail that the debt is not yours. Make sure you keep a copy of the letter as well as the certified mail receipt. They have to either respond to your debt validation request or stop collection activity, which includes reporting on your credit report. This will help you in the future if they do add the debt to your credit report. Although you can still dispute the items with the credit bureau in the future even if you do not respond to this debt validation letter, responding makes removing these collection accounts easier. Also, if the collection agency does not respond then it means they have violated your rights under the FDCPA (Fair Debt Collection Practices Act) and not only would you be able to get it removed from your credit report, you would also be entitled to sue them in federal and/or state court for damages. I know we all hate opening up those annoying collection letters, however this year make it a point to read through these letters before trashing them; it could save you time and money in the future!