Dear Liz: I thought I read in your column that credit card companies must now allow 45 days' notice for people to make their payments. I received my credit card bill on April 3 and the due date was April 13. In order to pay on time, I would have had to mail it by April 6 or 7, which gave me only 3 or 4 days' notice. What's up with that?
Answer: You're confusing two different parts of the Credit Card Accountability, Responsibility and Disclosure Act.
One part of the CARD Act requires issuers to give their customers 45 days' advance notice of significant changes to their accounts, such as interest rate charges or new fees.
Another part of the act mandates that issuers mail or deliver your bill at least 21 days before your payment is due. If your bill was mailed by mid-March, the issuer has followed the law, even if the statement was subsequently delayed in the mail.
If you have evidence that the bill was mailed too late, such as a stamp cancellation with a later date, you can complain first to the issuer's customer service department and then to the issuer's regulator. Nationally chartered banks are regulated by the Office of the Comptroller of the Currency. State-chartered banks are regulated by the bank's home state, and American Express is regulated by the Federal Deposit Insurance Corp.
In general, though, you shouldn't rely on paper statements to trigger you to make payments on time, since mail delays aren't uncommon and you're supposed to pay your bills on time, whether or not you get the statement. Instead, add your bill due dates to your calendar — the CARD Act now requires your credit card due date be the same day each month — and make sure to mail your payment at least a week in advance. You can check your credit card website to see how much is due, or set up e-mail alerts to tell you your balance. Better yet, set up automatic payments so that at least your minimum payment is debited from your checking account on the due date.
(Subhed: Ways to improve poor credit scores)
Dear Liz: I pulled my credit report from all three bureaus and I'm embarrassed to say my scores are horrible, ranging from 500 to 558. I contacted each account on the reports and made settlement arrangements for most. I'd say 98% of my debt is now settled and I'm just waiting for the accounts to be updated at the bureaus. What else can I do to improve my credit? I have four cards, including a secured card I just opened and three others with small credit limits and no balances. I want to buy a home or condo, and my loan officer advised me to start using the cards for small purchases and paying them off in full each month. He said doing that for six months to a year should help my scores.
Answer: If the accounts you paid off were already in collections, don't expect big improvements in your credit scores. But you were still right to pay them off; not only did you owe the money, but getting a loan with open collection accounts would be tough.
Your loan officer is correct that the best way to rebuild your credit is to use the cards you have to make small purchases, preferably using no more than 30% of your credit limits, and paying off the balances in full each month. If you don't use the credit you have, the accounts may stop being updated and contributing to your scores.
But you also need to look at the rest of your finances. Your poor scores suggest you got in over your head with credit in the recent past. You'll have to be on guard that you don't do it again. That means never carrying a credit card balance and always living within your means. You'd be smart to start contributing to a fund for a down payment and to an emergency fund so any future setbacks have less of a chance of causing you to miss payments.
Liz Pulliam Weston is the author of the book "Your Credit Score: Your Money and What's at Stake." Questions for possible inclusion in her column may be sent to 12400 Ventura Blvd., No. 238, Studio City, CA 91604, or via the "Contact Liz" form at http://www.asklizweston.com. Distributed by No More Red Inc.