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21 Dec

WHAT HAPPENS WHEN YOUR CREDIT CARD ACCOUNT IS CLOSED

General

Posted by: Derek Vandall

I have had all sorts of clients over the years since I started as a Mortgage Broker. Every once in a while I get someone who has a car loan and a couple of credit cards but there’s also a collection from a credit card, a dentist or some other creditor. When I ask why this has not been paid, I am told that they had a dispute with this firm and they are not going to be pushed around. The client doesn’t care if the account is sent to collection, they won’t pay it just on principle.

While I admire people who stick to their guns, they are on a slippery slope when it comes to collections. Sometimes they think that because the account is closed they’re off the hook for having to pay it. This is totally wrong.

CREDIT SCORES WILL DROP
As the creditor has reported your late or missing payment, your score goes down with the credit reporting agencies every month until you get to 120 days late or the creditor closes the account. However, they may send your account to a collection agency who will add their fees to the account and threaten or harass you. While you may not owe the money to your original creditor anymore, they have sold the debt to someone else and now you owe your original amount and probably more with interest accruing every month.

Something that most people do not realize is that this refusal to pay an account means that you won’t qualify for a mortgage or any new credit lines until the problem is resolved. The longer you hold out, the more likely that you will need to use a B lender for your next mortgage and car loan. I have seen car loans with 26% interest and mortgage with 16% interest over the years.
My advice: don’t ignore the problem. Get it resolved as soon as possible. I know that you want to stick to your guns but it’s going to end up costing you a lot of money. If you have any questions, contact a Dominion Lending Centres mortgage broker near you.

DAVID COOKE

Dominion Lending Centres – Accredited Mortgage Professional