What you don’t know about collections can hurt your credit score.

Here are two facts most people don’t know:

1) The balance does not affect your credit score.

Whether you owe $100 or $10,000, it makes no difference in your credit score. A collection is a collection is a collection. Why?

Because a large balance might indicate a person has a high income; whereas, a small balance might indicate a person had a low credit card limit and therefore has a low income. Since it is illegal to consider income for credit scoring, the credit reporting agencies are barred from making a difference in score due to the balance.

This is important to know, because if you’re thinking your score will go up as you pay down the balance, you are in for a disappointment. The only way you will get your score to go up is by the collection…

The important thing about looking ahead is to prepare so that we aren’t caught unaware.

With that in mind, here are my comments on the predictions for the New Year.

Forecast: Interest rates will go up.

Comment: For the past five years, economists predicted rates to rise. Only in 2018 were they right. The year ended with rates about .5% higher than 12/2017. My opinion is that rates will increase moderately in the first quarter and then go flat.

Forecast: House sales will increase but at a  slower pace  than the past two years.

Comment: I don’t see how that could be wrong. Young people are coming into home buying age faster than old people are going into assisted living. Immigrants also need housing. The frantic, insane bidding wars are over — and that’s good.

Forecast: About three quarters of economists believe a recession is coming somewhere between late 2019…