Is an Old Debt Haunting You?

Financial stability is a function of awareness: If you don’t know what’s going on with your bank accounts or credit standing, you may not know about issues with them. And ignoring your finances is not only unproductive, it can be damaging.

Failing to check your accounts and credit reports could lead you to miss signs of fraud, or legitimate unpaid debts that need your attention. Either scenario, when not taken care of, can really do a number on your credit. Of course, if you discover fraudulent items, and work with the creditor to resolve the issue, you typically won’t be liable for those debts. But if you have any debts you incurred on your own but failed to pay, you’ll need to be ready to address those, too.

So if you want to improve your finances and credit standing and you have some old debts lingering out there, here are a few action items to add to your to-do list.

1. Check Your Credit Score

There are several ways you can get your free credit score, and many of these tools also identify the aspects of your credit history that have the greatest impact on your standing. If you have a collection account or high levels of debt, you’ll see those noted as “accounts in poor standing,” “negative trade lines” or something to that effect. With that insight, you will quickly learn what problems you need to work on.’s free tools provide such information: You can review your credit data every 30 days, see two of your credit scores and see which areas of your credit history need the most work. As you work on those problems, you can see how changes you make impact your credit standing by getting regular score updates.

2. Check Your Credit Report

Like many credit scoring tools, credit reports are accessible for free — just not as often. Consumers are entitled to an annual credit report from each of the major credit bureaus (Equifax, Experian and TransUnion), which give all the details about your credit and loan accounts, outstanding debts, public records items like bankruptcy and judgments and related personal information. Because you can’t get free credit reports as often as you can get something like credit updates through, it helps to check both as regularly as possible so you notice changes and address issues as they come up.

Credit reports come with a guide to the codes used to indicate accounts in good standing, delinquencies and all other aspects of credit standing — check out this credit report cheat sheet that will walk your through a typical credit report and what it means. Depending on how many trade lines you have and the age of your credit history, you may have a lot of paper to sift through, but you need to pay close attention to the data you’re reviewing. Errors will unnecessarily hurt your credit, consequently limiting your access to credit products and the best interest rates.

3. Contact Your Creditor

Once you’ve reviewed your scores and reports, you’ll have a list of your outstanding debts. If you’re not sure where to go from there, you need to reach out to your lender. The debt holder will be listed with the account on your credit report, so you can follow up on the debt, and if you’re having trouble tracking down the right collector, go back to the beginning: Contact your original creditor, and see if they can help you move forward.

Having a collection account on your credit report doesn’t necessarily mean you owe it: There are statutes of limitations on old debts, and sometimes a negative trade line may appear on your credit report by mistake. Here are the steps you need to take to verify your debt, and if you think your information has been confused with someone else’s, make sure you contact the credit bureau as soon as possible — mixed files are particularly problematic among consumers with common names. If you have a mistake on one credit report, it may appear on others, which is why it’s crucial to review all three major reports.

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