Statute of Limitations for Debt, What you Need to Know

Debt does have a statute of limitations. This limits how long a creditor or collector has to sue to recoup any unpaid balance. Statute of limitations, also knowns as SOL, does vary by state and debt type. Usually, it is between 3 to 6 years, though some do have longer windows. However, you should never treat the SOL as a solution to money trouble. The SOL does not have anything to do with how long debts appear on your credit report. Unpaid debt can appear on your credit for 7 years or longer.

Frequently Asked Questions about the Statute of Limitations

  • Statute of LimitationsHow long is the SOL for my debt? Usually the statute starts either when you fall behind, or from the date of your last payment. The length can of time depends on state law and what type of debt it is.
  • Can a debt collector try to collect after the SOL has expired? In most cases, yes. However, should you tell the collector to not contact you again, they must stop. It’s best if this request comes in writing. Once they receive the request, they can only contact to notify you of receiving the request, or to notify of legal action.
  • Can I still be sued if the SOL has expired? If you are sued after the SOL has expired you can use the expiration as a defense against the lawsuit. However, many consumers do not appear in court and this allows the creditor or collector to get a judgement against them. This is one reason to never ignore legal notices about a debt.
  • Do I pay the old debt? This is a judgement call. However, you should be aware that if you pay, even a small amount, you can restart the SOL.
  • Does debt still appear on my credit report after the SOL has expired? Generally, yes. The length of time that negative information gets reported is covered by the federal Fair Credit Reporting Act. Most negative information can be reported for seven years.

First-Time Homebuyer, Money Mistakes to Avoid

Moving from renter to homeowner is an important milestone. However, it is not always a smooth transition. Home buying involves research and planning. This is especially true if you’re a first-time homebuyer. If you don’t plan carefully, your dream home can become a financial nightmare.

Mistakes to Avoid as a First-Time Homebuyer

  • Always check your credit. Before you start checking listings in your area, you need to check your credit. It’s important to know if you’re able to buy. If your credit history is spotty, getting first-time homebuyerapproved for a mortgage may be difficult. While you can qualify for a loan with a lower credit score, you will pay a higher interest rate. Just by checking your credit, you can save time and money when starting the home buying process.
  • Don’t focus on price, and be realistic. After you’ve determined your credit is in shape enough to qualify for a loan, you need to determine how much you can afford. Most first-time homebuyers assume because the bank approved them for a certain amount, that they can afford that. Set a limit on what you can afford. However, you do not want to only focus on the list price. There are more costs that come with buying a home. The appraisal and inspection costs, real estate agent fee and the closing costs for the loan. Once the loan is complete you want to also consider homeowner’s insurance and property taxes.
  • Choose the right kind of mortgage. A traditional 30-year mortgage is the most popular type of home loan. However, this is not the only option. If you can put down a large down payment, you may be able to afford a 15-year mortgage instead. This means your home is paid off much faster.

Most homebuyers look at several homes before deciding on one. You should be just as selective with a lender. Instead of going with the first deal you’re offered, it’s a good idea to speak with several banks.

Pre-approved Mortgage, Credit Score Tips and Tricks

It’s that time of the year where there is an increase in real estate activity. Spring and Summer are ideal for buyers to hunt for their home. Before you buy, you need to be pre-approved. However, getting pre-approved can be easier for some, harder for others. Some buyers need to have credit repair to increase their credit score before they can be approved.

Improve Credit Scores for a Pre-approved Mortgage

pre-approvedThere are a few options you have to improve your credit score quickly. It’s important to remember these tricks will only work if you have something minor like a late payment. More severe issues like a defaulted payment will require much more time to repair. Don’t fret, there is hope to eliminate minor problems that can be preventing you from being pre-approved.

The first step is to contact the company that reported the late payment and explain the situation. If you thought you made the payment, or it it was an honest mistake. Regardless of the situation, explain what happened. The lender may review the case, analyze your credit, and determine if they want to reverse the decision. Lenders want to keep your business, work together with them and your chances are good.

Should you not get anywhere with the lender, you can write the credit reporting agencies. Explain the situation to them, they then will conduct a 30-day investigation to determine if the lenders decision should be reversed. This method does take longer than working with the lender. If the agency rules in your favor, it can help improve your FICO score. With the improvement, you may be able to get pre-approved.

Unfortunately, not all consumers will have great credit. You may not be able to fix your credit issues by contacting the lender or the credit reporting agencies. If this were the case, it is best to start establishing good financial behavior. This does include making on time payments and keeping a low balance on credit cards.

Identity Theft, Protect your Child

Identity theft has little mercy. Anyone can be a target and have their information stolen. This is the same for minors. It’s important to monitor not only your own credit report, but also your children’s. You must be vigilant and ensure your child does not become a victim.

How to Protect your Child from Identity Theft

  • Include your child. Identity theft should always be a concern. One of the best ways to protect identity theftyour child is to explain why security is important. Even children as young as five can understand the risks that come with giving out private data. You should encourage your child to talk to you when they see something unusual. You can keep your child safe by setting up parental controls online.
  • Watch for unusual activity. There are many signs of child identity theft. When opening a checking account for your child and they are denied due to poor credit, or there is one already open. If the IRS states your child owes taxes and if your child receives credit card or loan applications in the mail.
  • Keep information secure. It’s best to store personal documents in a safe place. You should shred paperwork with private information.
  • Check for a credit file. It is a major red flag if your child has a credit report with accounts. You can access your child’s report to check for fraud. Each credit bureau has their own process for parents to check. Experian and Equifax require parents to mail in copies of the child’s birth certificate, social security number, and proof of address to confirm if there is a credit file. TransUnion has an inquiry form you can fill out.
  • Consider a credit freeze. Freezing a child’s report may be possible to eliminate the threat of theft. This has been difficult in the past. However, Equifax now allows parents to credit reports for their child and then freeze them. A freeze will only prevent new lines of credit.