debt you have in comparison to the credit limit you’re allowed on a particular account. Ideally, you should keep this ratio below 15%, so concentrate on paying down each of your credit card balances accordingly. Your credit utilization ratio affects 30% of the FICO score used by mortgage lenders, so paying down your credit balances can make a significant difference to your credit score.
AVOID LETTING YOUR ACCOUNTS GO TO COLLECTI LLECTION AGENCIES
It’s important to realize that paying off an account with a collection agency does not eliminate it from your credit report. It will remain on your report for seven years. The best strategy is to make payments regularly so that accounts do not go to collections. If you’ve already been contacted by collection agencies, there is one method you can try to remove those accounts from your record. Contact the collection agencies regarding any of your accounts that have small outstanding balances. Inform the collection agencies that you want to “pay for delete.” This means that in exchange for you paying off what you owe on that account, they’ll eliminate the account from your credit report. Tell the collection agency to send you a pay for delete letter — a written acknowledgment that the collection agency has agreed to delete the account from your credit history in exchange for you paying it off. Be sure to write down a note of the person who spoke to you and their phone extension number. If the collection agency declines to accept your pay for delete request, you will have no compelling reason to pay that particular debt at this time. Move on to another small debt and make it your payoff priority. Be aware that the collection agency might try to evade your request with a clever use of words. It will not benefit you to have them place a note in your account that says “paid as
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