Credit card companies more than make up for losses by charging exorbitant interest rates to their paying customers.

Next time they call and make a legal threat, state the following:

Per the Fair Debt Collection Practices Act, I would like the full name of the attorney who will be taking action against me and his/her license # in the state bar association. I will be calling the Illinois state bar association to verify your attorney’s information.

If they do not give you this info, the threat is bogus. If they do give it to you, the threat is real and you should proceed with caution.
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FYI: Debt collectors buy defaulted debts from credit card companies at huge discounts….often for pennies on the dollar….They may have paid as little as $290 for the original debt of $2,900. Try making a settlement offer….start at $400 and go from there. Settling the debt will not undo the damage to your credit…it’s still a black mark on your credit file…Still, you need to understand that once a credit card has been charged-off, the damage has already been done and it would be pointless to pay back the entire original defaulted amount as charge-offs can stay on your credit file for 7 years….paid or unpaid….Because of this, get the lowest settlement you can get for this debt.

Lastly, forget about “doing the right thing” when dealing with credit card companies and debt collectors….

Tips for dealing with debt collectors
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* Get all terms of any settlement deal with debt collectors IN WRITING PRIOR to giving them your money. Never accept settlement deals over the phone…they’ll deny that any settlement was ever made once they get your “settlement” money and will continue harassing you for the remaining balance.
* NEVER, EVER give debt collectors your checking account numbers for making payments. This is an open invitation to catastrophe. Once they have this info they can attempt to withdraw money from your checking account at any time
* Never pay debt collectors with your personal checks…Your bank transit + checking account number are clearly visible on the check. With this info they can attempt electronic debits from your checking accounts.
* Pay only via USPS money order…photocopy for your records
* DO NOT sign your signature on any document that you mail to a debt collector. It could end up on a forged contract that can be used against you. Simply type your full name.
* Debt collectors love to create a false sense of urgency…If they’ve waited months/years for your payment, they can wait for any payment or settlement agreement from you. Any “deadline” like 5PM to get any payment to them is bogus.
* Debt collectors have absolutely NO legal power over you. By themselves, they cannot garnish your wages or freeze checking accounts…only a court can authorize this and they’d have to go through the court system to do this.
* Debt collectors have NO power whatsover to have you arrested/sent to jail for not paying them.

Good that you ask.
The place I found to be usefull when reasearching about: bankruptcy.

Hope that helped
Greetings

The best way to improve your score is not by asking for multiple cards or repeated requests for higher limit. Each referral to your credit file lowers your score by 5 points and that will hurt you. Stop asking for more cards or higher limit.

Instead, obtain a secured card or a ’secured loan’. In a secured card you put $1K into a term deposit for one year and use a credit card against it (you can apply for a secured credit card). By law they can’t reject that deal. After a year they won’t generally reduce your limit.

In a ’secured loan’, you ‘borrow $1K’ from a bank and the bank puts that $1K in a term-deposit of one year. You then keep paying $100 or so each month and in one year you “pay off that loan”, which results in you having a $1K in a term deposit with interest and also a higher credit limit. This is the revolving credit. If you default in payment it will hurt you score and also force a higher interest rate on the loan. (Interest on loan minus interest on deposit) would be about $50 and you will lose that money to the bank in the process of improving your credit score.

Of course, getting a loan against collateral (like an auto) and repaying it promptly also helps.

Prompt payment is the key here. Not necessarily full payment each month. It is considered healthy to have up to 1/3rd of your credit line used each month or rolled over. But remember, the scoring method with different credit bureaus are different. They are trying to create a common score now but that will take a while. A lender or a credit card agency won’t just look at your score, they will look at your credit file comprehensively before deciding if you a credit risk or not.

A score of 642 is above the national average of about 630, although not much. Pay your balances in full and dump the debt. It’s really not a good way to manage your money. Only spend what you have and save for the things you want. You’ll be amazed at what you score looks like in a year.

BTW – AMEX is a terrible card to have. The annual fee is AT LEAST $75. If you go gold it jumps to about $90, platinum, over $100. If you NEED the MC/Visa logo, get a check card attached to your checking account.