I recently checked my credit report and found a $104 collection account dating from July 2006 for an unpaid utility bill. Xcel Energy claims I owe $86 from 2001, when I was in college, but I was never notified. This has knocked 100 points off my credit score. What can I do?
You may have to bite the bullet and pay the bill. That will at least get the collectors off your case -- but unfortunately it won't help your credit score. "Having a collection account on your credit report is statistically significant for predicting future delinquency," says Craig Watts, of Fair Isaac, the company that compiles the FICO credit score. "What you do later on what that account doesn't change its significance to the scoring formula."
Your score should gradually improve if you pay your bills on time and keep your credit-card balances low. But if you feel Xcel did not make a good-faith effort to contact you, you can try to boost your score by having the collection account removed from your record. Ask the company for a copy of your payment history that specifically records where the past-due notices were sent. Or ask the consumer-affairs office at the Minnesota Public Utilities Commission to intercede on your behalf.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
One positive note: Under federal law, negative items must be removed form your credit record after seven years. For accounts in collection, the clock starts 180 days after the original account was first delinquent, says Watts. Because your original bill was from 2001, the black mark should be removed by about 2008.
For more information about improving your credit score, see Demystifying Your Credit Score. For more information about dealing with debt collectors, see Debt Police Who Go to Far.
-
Stock Market Today: Have We Seen the Bottom for Stocks?Solid first-quarter earnings suggest fundamentals remain solid, and recent price action is encouraging too.
-
Is the GOP Secretly Planning to Raise Taxes on the Rich?Tax Reform As high-stakes tax reform talks resume on Capitol Hill, questions are swirling about what Republicans and President Trump will do.
-
Credit Report Error? They All Mattercredit & debt Don't dismiss a minor error. It could be the sign of something more serious.
-
Insurance for a Learning Driverinsurance Adding a teen driver to your plan will raise premiums, but there are things you can do to help reduce them.
-
529 Plans Aren’t Just for Kids529 Plans You don’t have to be college-age to use the money tax-free, but there are stipulations.
-
When to Transfer Ownership of a Custodial Accountsavings Before your child turns 18, you should check with your broker about the account's age of majority and termination.
-
Borrowers Get More Time to Repay 401(k) Loans
retirement If you leave your job while you have an outstanding 401(k) loan, Uncle Sam now gives you extra time to repay it -- thanks to the new tax law.
-
When It Pays to Buy Travel Insurance
Travel Investing in travel insurance can help recover some costs when your vacation gets ruined by a natural disaster, medical emergency or other catastrophe.
-
What Travel Insurance Covers When Planes Are Grounded
Travel Your travel insurance might help with some costs if your trip was delayed because of the recent grounding of Boeing 737 Max planes.
-
Ways to Spend Your Flexible Spending Account Money by March 15 Deadline
spending Many workers will be hitting the drugstore in the next few days to use up leftover flexible spending account money from 2018 so they don’t lose it.
