At Veracity we’re always trying to further educated consumers on all different aspects of credit. We found this question posted online and thought we’d give our insight:

I know with credit cards and such, closing them can have a negative effect on credit scores. But does this apply to standard brokerage accounts like a Charles Schwab or Fidelity?

Generally speaking, closing a brokerage account does not apply to your credit score the way closing a credit card would, and should not affect your credit score negatively.

However, when opening a brokerage account, many firms will do a “hard” credit pull. Technically, you must give permission for a hard credit pull and they are common when seeking most kinds of credit or insurance. The hard credit pull can have a temporary, negative effect on your credit score, though it will usually rebound from hard pulls over time.

Because brokerage accounts have no terms of payment, there is no reporting to the credit bureaus, and thus no affect to your credit. The exception to this rule would be if you were to close your account with insufficient funds and you were to be reported for collections.

Otherwise, standard brokerage accounts, opened or closed, have no inherent effect on credit scores.

Here’s an article coming out of Veracity Credit Consultants’ home state of Colorado about how to get out from under credit card debt:

http://www.koaa.com/aaaa_top_stories/x528752199/How-to-get-out-from-under-credit-card-debt

While some credit advice columns can be short on information and a little sparse when it comes to practical advice, this piece by John W. Schoen is both thorough and extremely accurate.

First of all, as a credit repair agency, we at Veracity cannot stress the importance of good financial habits enough. Chances are, if you need credit repair, you may be beyond that point. But if you do choose credit repair to help you out of your credit funk, remember that good fiscal habits are the cornerstone to maintaining good credit, once you’ve again established it.

In a nutshell, Mr. Schoen’s article is a practice in practicality: pay your bills on time, adhere to a budget, keep a spending journal, make the biggest payments you can to avoid extreme interest charges, seek help and consultation and, of course, watch out for frauds.

We cannot find a single bit of fault in Mr. Schoen’s thorough evaluation of how to get out of debt. But we would like to expand on one thing.

When Mr. Schoen warns against frauds, it would be good to mention, too, that the scenario Mr. Schoen lays out in his article is not a good one for credit repair. A credible credit repair agency would never advise a person falling behind in paying their bills to enroll in credit repair services. Credit repair is something a consumer should look into after they’ve achieved a comfortable spot financially. After all, credit repair has fees, too, and it would do no good to add more fees onto an already stretched budget.

Before looking into credit repair, we at Veracity suggest you find a comfortable place first. That way you can focus on what’s important: optimizing your credit score.

Veracity Credit Consultants is always trying to find a way to remind potential clients how they can use credit repair to their benefit. This article on government cash stimulus is a perfect example of the peripheral role credit repair plays in the overall scheme of your finances:

http://www.riograndesun.com/articles/2009/06/25/news/doc4a42730734eaa495744577.txt

While none of these stimulus topics seem to have much to do with credit repair, it would do well for consumers to note that by using credit repair they can help to raise their credit score and lower their rates on home mortgages, auto loans, insurance and credit cards. By combining stimulus packages and tax credits (such as the one being offered to first-time homebuyers) with a good credit score (and thus good rates), consumers can benefit tenfold.

If it seems like Veracity Credit Consultants is beating a dead horse when it comes to talking about credit repair scams, it’s only because it’s such a hot topic. A poor economy and high unemployment rates are causing credit problems for folks everywhere. And wherever people are desperate for solutions, scams are sure to turn up.

Fortunately for everyone receiving credit repair services or involved in the credit repair industry, precautionary measures are being taken to counter the efforts of scam artists.

For one, the Credit Repair Organization Act http://www.ftc.gov/os/statutes/croa/croa.shtm clearly outlines a consumer’s rights when dealing with credit repair agencies, and exactly what they can and cannot legally do.

But as a further precautionary measure, consumers are getting together in order to ensure fair credit repair tactics. Take, for example, the Ethical Credit Repair Alliance and chairman Ben Hanania: http://pressmediawire.com/article/Consumer/Consumer/Credit_Repair_Scams_A_Warning_For_Consumers/21139

In the article, Mr. Hanania recognizes the need for good credit, citing how poor credit can result in higher mortgage, car loan, credit card and insurance rates. But the real gem of Mr. Hanania’s sound advice comes next:

…the truth is, it’s impossible to remove negative information from a credit report if the ‘black marks’ are accurate and timely.”

He’s absolutely right. That’s one way to know right away if you are dealing with a sketchy credit repair service. No service, no matter how good, can eliminate negative marks if they happen to be the result of legitimate debt. A good credit repair service may help remove erroneous information from your credit report, consult you on your credit options, help you create a game plan for reducing your debt and educate you on how to optimize your credit and maintain it, but even the best credit repair services cannot erase documented debt.

The article, written by Kathleen Hanover, goes on to outline three red flags when it comes to choosing a credit repair service:

• The company wants you to pay for credit repair services before they provide any services.
• The company suggests that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
• The company tells you they can get rid of most or all the negative credit information in your credit report, even if that information is accurate and current.

All of those “red flags” are spelled out in the CROA, too, but considering how important your credit is to you, it bears repeating!

At Veracity, we’re looking out for your best interest. That’s why we are so transparent about what we do. We always recommend the consumer do their homework when choosing credit repair, or any kind of repair for that matter. And at Veracity, if we do not feel that you are in a position for credit repair (perhaps you are having a hard time paying current bills), we will tell you as much and advise you to seek further counseling.

Our dedication to ethical credit repair and optimizing clients’ credit is the backbone of our success so far. We hope our reputation precedes us.