After my brief time in the NFL as a wide receiver for the Bills and Patriots for two seasons, and all the other leagues I played in trying to get back in the NFL, I found myself as a mere statistic: the broke, bad-credit, former pro athlete.
You’d think after five years of college, undergrad at the University of South Carolina and then Rutgers University, I’d have something of a clue on credit—how it works, and how it affects people financially. Well, like many Americans, that was, unfortunately, not the case. I didn’t even know the names of the three major credit bureaus (Equifax, Experian, Transunion) and their tremendous sway over Americans’ finances.
Hark back to the Fall of 1989. I had just turned 18, and Discover had a huge tent with pretty woman (gets you every time), beer and hot dogs. Just like that, I got my first credit card. I had no idea of compound interest, and purchasing a $100 item in high-interest credit card installments could easily run into 4-5 times the cost. Shortly after the minimum payment jumped from about $11 to $30, $50, etc., etc. I could not handle the payments, and the card was shut down.
Admittedly, like many young people, I was very irresponsible and ignorant about finances to begin with. By the time my NFL career was over, after a four seasons of earning very good money, I had achieved a career many talented football players can only dream about. But, more importantly, I had very bad credit and no clue about the financial challenges ahead. The dealership where I bought my first vehicle after making the Patriots roster, simply used my NFL contract and didn’t even run my credit. So, until my career was over, when I went to trade my vehicle in, I was informed—and embarrassed to learn—that my credit score was terrible.
I then turned all my energy into studying the laws in place to protect consumer rights—not just for myself but for other professional athletes and people in need of financial education out there. There’s a lot of misinformation out there. So, here’s some insight from 20 years of research, from a former pro athlete who, today, has an outstanding FICO score of well over 800.
Myth 1
If I pay a collection account, it will be removed from my credit rating.
Fact
If you have a “collection due” on your credit report, that means that you owed an original creditor money, and you didn’t pay them. The standard procedure is they write the debt charge off their books for tax credit.
If you try to go to them to pay the amount due, technically they can’t take your money. Even if you pay the third party, it will just be listed on your credit report as a “Paid Collection” and appear to be an admission of guilt. Some people believe repairing your credit is as easy as paying off all of the amounts due.
Myth 2
I received a collection notice. If I ignore it or have a great excuse when they call me, they will go away and leave me alone.
Fact
First, admit nothing. Remember, the collection agency has to prove the debt is yours.
However, you must respond to them. Even if you don’t recall making the purchase, if you receive a notice, then you must respond.
If you decide the purchase and the amount is correct and you want to pay it, getting that first collection notice is the best time to pay it since it won’t appear on your credit report as a paid collection—if you make the payment within the initial 30 days. Again, try to pay the original creditor, not the collection agencies.
On the other hand, if you know the debt is not yours, your identity could have been compromised, which could be very serious. Do not hesitate to go to police station with the credit report and file an identity theft report.
Most of the time, the police will not initiate an investigation, but you will need the report to force the collection agency or creditor to comply with giving you the proper proof of the purchase, or remove the item.
Never try to handle your problem with regular customer service; they do not have the authority or the wherewithal to make any changes to the credit report. Only a supervisor can accomplish that goal.
Myth 3
If I close credit cards I am not using, then I will put myself on a faster track of getting out of debt.
Fact
That is a horrible idea. It’s one thing to cut up your credit cards, or to shove them in the back of a drawer and never use them. But—the second you close an established credit card, you will potentially lose a lot of points on your credit score because credit card revolving debts account for about 20% of your score.
What you need to do is get a copy of your credit report to learn the average age of your credit, and the debt ratios on your credit cards; you have to make sure you are below 15% by the reporting date.
Always know when a payment is due (also known as your reporting date), because that is when credit card companies send their data to the credit bureaus. I have seen people lose 50 points easily just because they closed a credit card with an extensive credit history on their credit report.
These are only three myths. While they are pretty major ones, there are so many more. Check out my tips at: creditaudit911.com and get a free analysis to see what exactly you need to do to increase your credit score and unleash your buying power.
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Mario Henry (www.housevisors.com), a former National Football League player, is a financial services professional with 18 years of experience in the industry and author of How to Hire Your House, an innovative guide on how to create a tax-free pension and sustain sufficient income through retirement. Mario also is a licensed insurance broker and a national motivational speaker. He was a wide receiver with the NFL’s New England Patriots and a scholarship football player at Rutgers University.