Disguised credit card statements: How "junk" mail can destroy your credit

junkmailThe next time you're sorting out your mail, you'd better give everything a thorough scan before tossing out what appears to be junk mail. Some credit card issuers, like Bank of America, are sending cardholders their statements in plain white envelopes that appear to be nothing more than a solicitation -- or junk. And since the average American throws out their fair share of junk mail, many don't realize they could be tossing their credit score right into the trash.
BofA's redesigned envelopes are absent of their company's notorious logo. Something card holders say they look for when sorting their mail. "I threw away the statements month after month because I thought it was just junk. It looked like all the other junk solicitations I get and who has time to open up and scrutinize all that junk mail," says Meryl Brown of Tulsa.

Sure, statements that don't look like statements can cut down the chances your credit card bill will be swiped out of your mailbox by an identity thief.

But experts say consumers should worry about another problem related to the statements that are hiding in plain sight. And that the envelope makeover can lead to big credit troubles. Brown agrees. "I incurred late charges because by the time I realized I hadn't paid my bill one month, the payment was late."

So what prompted card issuers to make the envelope switch?

Scott Stevenson of EliminateIDTheft.com says delinquencies at credit card companies are mounting. Because of this, many issuers are outsourcing more of the servicing on these accounts to call centers and agencies. "These agencies are third-parties and are subject to the Federal Debt Collections Practice Act (FDCPA). As such, they are prevented from many techniques that are available to the original creditor. To avoid potential litigation and violations of this act which courts continue to expand the reach, agencies are sending statements out using plain white envelopes."

So BofA's quest to save a buck or two could actually cost consumers several FICO score points.

"The obvious drawback for receiving these statements is that they are easily mistaken for junk mail or other unsolicited mail that consumers receive on a daily basis. Tearing these up and throwing them away without opening them can cause consumers to miss a payment, thus affecting payment history and, in turn, the credit score," Stevenson says.

And since payment history is responsible for about 35% of your credit score, a missed payment resulting from misunderstood "junk" can be costly.

Betty Reiss, spokesperson for Bank of America, says "Our statements include a notice on the envelope that says "statement enclosed" to alert customers and help ensure that it's not overlooked."

But critics caution that the somewhat-obscure blurb isn't enough.

Here's what you can do to keep unmarked bills from destroying your credit score.
  • Choose a route that's safer than the Post Office, go paperless. Since most credit issuers provide historical statements online, this also lets you track purchases and expenditures.
  • Open all your mail, even if you think it may be junk. Yes, it'll take an extra few minutes, but it could save you more than a few credit points.
  • Make a list of all of your accounts and monthly expenses. Include the bill's due dates to remind yourself of when you should be dropping a payment in the mail, or hitting "pay now" to process an online payment.
Gina Roberts-Grey is a regular contributor to WalletPop.
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