Don't Be Bullied By Debt Collectors

By Bob Massi - Fox News

While watching my Redskins try to beat the 4-0 Falcons, I flipped over to Fox News and caught a re-run of Bob Massi, the Property Man. I love this show. He is based in Las Vegas, the foreclosure capital of the world. This show featured a debt collection segment that is worth recommending. Here is a link to the original article about the show: http://www.foxnews.com/leisure/2015/07/23/dont-be-bullied-by-debt-collection-agencies/.

If you have become overwhelmed and fallen behind in paying your credit obligations, you are not alone. Roughly one in three Americans have unpaid bills that have been sent to collection agencies. Being contacted by debt collectors can create psychological stress and makes getting back on sound financial footing even more challenging. Knowing how to handle requests for repayment can put you in charge of getting your credit back on track.

First, and most importantly: If you believe the debt is not yours, send a letter to the collection company demanding verification.

If you have an unpaid debt and are being contacted by debt collectors, your first step is to contact the original creditor. Call the credit card agency, doctor’s office or cellphone company directly and offer a plan to settle your payments. Even when an account is turned over to a collection agency, the majority of creditors continue to own the debt. The collectors are hired hands who get paid when they recover it. The more money you pay the original creditor, the more they earn. This explains why debt collectors are frequently aggressive in their approach. They want you to pay as much as you can, as fast as you can, because their own paycheck depends on it.

Sometimes a debt collection agency will “buy” the debt at a reduced face value from creditors who believe they will be unable to collect. The agency then tries to maximize how much it can collect. In this case, the bad news is that you are going to have to deal with the collection agency and not the original creditor. The good news is that federal law compels these collection agencies to follow specific rules of contact when trying to recover a debt.

No matter how outside agencies obtain your contact information to pursue collection, they generally follow a set pattern of contact once they have it. First, they send a letter. Next, they begin making calls. Sometimes – but rarely – they will file a lawsuit. These collection activities can be reported to the three major credit bureaus, which is particularly damaging because the information stays on your report for up to seven years – even if you settle the account.

A debt collector must inform you that he is a debt collector trying to collect a debt and that any information obtained will be used for that purpose. In some cases, this contact can feel intimidating. But the Fair Debt Collection Practices Act limits the procedures a third-party agency can use to collect.

Don’t be bullied. By law, agencies are not allowed to:

• threaten you in any way, including threats of jail time or wage
• garnish wages (unless they have obtained a court ordered judgment against you)
• try to collect more money than is owed
• use abusive language
• communicate with third parties, like friends or relatives, regarding your debt
• harass with phone calls late at night (after 9 p.m.) or in the early morning (before 8 a.m.)
• call at work if you have requested not to be contacted at your place of business
• continue to contact a debtor who has requested in writing not to be contacted

If you are being harassed by overly aggressive debt collectors, you can report suspected violations to the Federal Trade Commission at 1-877-FTC-HELP.

If the debt is valid, and the collector has not violated a law in trying to collect it, negotiating a settlement is often the best resolution. If your debt is complex or you are being contacted by multiple collection agencies, you may want a lawyer to negotiate on your behalf. But for the most part, you should be able to deal with the agencies yourself.

When you settle a debt, ask to have any credit reporting that lists the collection amount removed. Follow up by reviewing your credit reports carefully and correcting any misinformation.

Robert Massi joined Fox News Channel (FNC) in 1996 and currently serves as a legal analyst as well as host of Bob Massi is the Property Man, part of FNC’s weekend lineup (Saturday, 12 p.m. ET / encore Sunday, 3 p.m. ET). The program highlights the various facets of the housing industry and features experts who break down current property trends and pricing deals. Massi appears weekly on Fox & Friends for his segments “Rebuilding Dreams” and “Legal Ease” along with appearing at other times on Fox News Channel and Fox Business Network (FBN) for real estate and legal segments.

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7 Secrets on How To Get The PERFECT Credit Score

By: Dave Sullivan.

People always ask “How can I get a perfect credit score?” 

The truth is, credit scores above 760 will get you the very best loan rates. If consumers credit scores make it above 800 the only possible benefit  is a slightly better home and auto insurance rates. 

What is the formula for a perfect credit score?  I’ve seen a few perfect credit scores and I have seen a few that we’re almost perfect. The ones that are close to perfect credit tell a very interesting story.  

Here are the 7 steps to the perfect 850 credit score;

1. The number one most important thing is no late dates ever. Never late on any account and no collections.  Also you can not have any current accounts that are marked “was 30 – 60 – 90 day late now current” All accounts need to have 100% perfect payment history.

2. Consumers need at least one bank credit card that is thirty years old or older. A thirty year old history with no late dates ever on that account.  That is a key anchor for a perfect FICO(r) credit score.

3. One important ingredient that will keep consumers from a perfect credit score is, a  store credit card. Store cards will not give you as many points as a bank credit card.  One of the “Reason Codes” on a almost perfect credit report I recently reviewed listed; “too many store credit cards” as the reason why the credit score was not higher. (they only had one).

4. Another important ingredient is  five to seven bank credit cards with balances around five percent of the high credit limit, not zero, although some of the perfect credit scores had accounts that were zero. I tell people to keep their balances at five to nine percent if you want to get the best score. In addition, you need to have the every other credit card with at least five to ten years of history.

5. Another common ingredient is an old mortgage. The mortgage needs to be in the last few years of a thirty-year or fifteen year mortgage. Meaning the mortgage is nearly paid in full.

6. An optional ingredient is a home equity line of credit. I’ve seen perfect credit scores with and without a home equity line of credit.  I like the home equity line of credit from a credit perspective because it gives you a real boost in your credit score.

7. The last two ingredients are; no new account less than five years old.  No credit card, auto loan or mortgage of any type less than five years old.  Also you cannot have any hard inquiries in the last two years. A hard inquiry is when you apply for credit. A soft inquiry is when a consumer checks their credit for their own information.

That is a formula for a perfect credit score. If you want to see more videos about credit and credit scoring check these out at www.thecreditguy.tv.

Link to original article: http://thecreditguy.tv/7-steps-for-the-perfect-credit-score/.

Message from Robert:

This is the first article that I have re-published from anyone who holds an anti-credit repair viewpoint. Dave works for a large national mortgage tri-merge credit report provider which is where he get's his experience and knowledge. I really hope that you have learned a lot from this article!

Like many mortgage industry insiders, Dave is only against credit repair companies that simply write dispute letters and sell a dream without backing it up. All of you know that is NOT what Credit Restoration Associates is about. REAL credit repair is a true art, and there are not enough artists.

Call us at (804) 823-9601 for a professional credit report review and professional credit consultation at absolutely no charge.        

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What To Do When You Get a 1099-C For An Old Debt

By Gerri Detweiller.

Earlier this year, questions poured in from readers grappling with how to deal with 1099-Cs they received from lenders reporting “canceled” or “forgiven” debt. I wrote a number of stories addressing the issues they raised, and vowed not to touch the topic again until next tax season.

But the questions kept coming in.

One kept nagging at me: What should you do if you get a 1099-C for a very old debt? Though I had written one story already on that subject, the fact that I couldn't provide readers with a clearer solution bothered me.

Take Dave, for example. He told us that in 1997 he was in an auto accident. He was out of work for eight months and could not pay his auto loan. The vehicle was repossessed and the $15,000 balance was charged off. The loan was with Chevy Chase Bank. In 2006 – almost 9 years later – he heard from a debt collector but he ignored it. The debt was off his credit reports by that time. Capital One had acquired Chevy Chase bank in 2008, but didn’t try to collect from him. In 2011, he received a 1099-C from Capital One reporting $9,000 in canceled debt for tax year 2010 – about 13 years after he stopped paying on the loan. Now he may have to pay an additional $2,000 in taxes for 2010 as a result.

Read the rest of this fantastic article from it's source, Credit.com: http://blog.credit.com/2012/06/what-to-do-if-you-get-a-1099-c-for-an-old-debt-2-58670/

Next Post:  35 "Other" Credit Bureaus

Great Article: How Student Loan Debt Factors Into your Credit Score:   

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The Worst Loan That You Can Default On Is.....

 I think we’d all agree that the past few years have been tough on tens of millions active credit consumers. Foreclosures continue to be a huge problem, we’re now in $800 million of credit card debt, and our student loan debt just crossed the $1 trillion mark. This means it’s likely that loan defaults will increase over the next year.

I’m writing this for the consumers who find themselves in one of those difficult places where you have to decide which bills you’re going to pay each month. You can’t afford to pay all of them, but you can afford to pay some of them.

Now, who’s getting your money? Before you answer the question there are a variety of things to consider.

Which default is the worst for your credit reports and credit scores? Which default is most likely to end getting you sued? Which default can cause an interruption of your housing and transportation? And which default is going to cost you the most money?

In order to keep this information digestible, I’ve decided to split it into two parts. Today, in Part 1, we’ll explore the impact of loan defaults on your credit reports and credit scores and how defaulting can potentially expose you to litigation. What you’re going to realize is that there are pros and cons to defaulting on different types of loans.

Credit Reports and Credit Scores

You’re probably thinking, “Dude, I can’t afford to pay all of my bills. I don’t care about what’s going to happen to my credit.” Fair enough. But, while I’ve got your attention…

When you start missing payments and delinquencies start to show up on your credit report there is no hierarchy of “which one is worse?” A late payment is a late payment is a late payment, regardless of what loan or account it’s on. So a 30, 60, or 90-day delinquency on a credit card is just as bad as doing the same on a mortgage loan.

Having said that, missing payments on your mortgage will eventually hurt your scores more than missing payments on your credit card. Why?

The answer is simple: you’ll accrue a much larger delinquent balance on a mortgage than you will on a credit card. When you miss a credit card payment, the only thing that’s past due is the minimum payment. When you miss a mortgage loan payment, the repercussions could cost you thousands of dollars. And when it comes to calculating your FICO scores, there’s a component that measures past due balances.

Bottom Line: For your credit score health it’s best to miss credit card payments over mortgage or auto loan payments only because the past due balance is likely to be lower.

Litigation

You should be very concerned with the prospect of being sued if you default on any of your credit obligations. You can’t ignore the guy who knocks at your door and serves you with the complaint. Well, you can, but you’ll lose by default and then you’ll be subject to a default judgment. If you do choose to fight the lender, whom you actually do owe a ton of money, you’ll be paying a lawyer to do it. That’s not a cheap date.

While any loan default can lead to you being sued, it seems to be much more common if you default on credit card debt. Normally, it takes 6 months for a credit card issuer to “charge off” delinquent credit card accounts and then they’ll likely sell them to a debt buyer. Debt buyers are notorious for suing debtors for defaulted credit cards.

If you find yourself in this situation it’s not a bad idea to make a settlement offer to the credit card issuer before your debt gets shipped off to the collection agency. They’ll make more from a settlement than they’ll make selling the debt for pennies on the dollar.

If your debt does make it to a collection agency, offering a settlement is still a viable offer and you can do this on your own. You don’t have to hire a 3^rd party debt settlement company to make settlement offers on your behalf (and charge large fees at the same time).

Bottom Line: To reduce the possibility of being on the wrong side of a collection lawsuit, make sure you pay your credit cards on time and preferably off, as soon as possible.

Article source: Mint.com

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A Credit Score That Tracks You More Closely Than You Think ...

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A Credit Score That Tracks You More Closely

By: Tara Siegel Bernard
Anyone who has recently applied for a mortgage knows that lenders are already looking much more closely at your financial affairs. But soon, they’ll be able to easily delve into the deepest recesses of your financial life, accessing information that never before appeared on your credit report.


This week, a company called CoreLogic introduced a new type of credit file, which is based on the giant repository of consumer data it maintains on just about everything that most of the traditional credit bureaus do not: missed rental payments that have gone into collection, any evictions or child support judgments, as well as any applications for payday loans, along with your repayment history.
The new report also includes any property tax liens and whether you’ve fallen behind on your homeowner’s association dues. It may reflect that you now owe more than your house is worth or if you own any other real estate properties outright. It also is supposed to catch mortgages made by smaller lenders that the big credit bureaus may have missed.
 
The idea, CoreLogic says, is to provide lenders with more details about prospective borrowers, supplementing what they already know through the more traditional credit reports furnished by the big three credit bureaus, Equifax, Experian and TransUnion. Moreover, CoreLogic has formed a partnership with FICO — the provider of one of the most popular credit scores used by lenders — which will formulate a new consumer score based on the new data.

Perhaps it’s not surprising that a company decided to pull together this information, since much of it is already publicly available. But because it comes on top of all the other information that’s being collected about you — your exact location at every minute, where you’ve been on the Web — you can’t help but feel that some of these companies know more about your activities than your spouse.
While the CoreScore credit report became available to all types of lenders on Wednesday, the actual score, which will be ready in March, is being created specifically for mortgage and home equity lenders, though it could eventually be developed for other types of credit.

For many consumers, the files are likely to reveal black marks that previously went undetected, which may damage an otherwise clean record. But the companies contend that it works both ways: The added information could help consumers with thin credit files by illustrating positive behaviors elsewhere, say making timely rent payments.

So why now? Clearly, the two companies saw a business opportunity. Lenders, who just a few years back looked the other way, remain particularly skittish about mortgage lending and are looking for more information about prospective borrowers’ ability to pay their debts.

“Lending is very constrained and origination volumes need to grow to make for a profitable mortgage business,” said Joanne Gaskin, director of product management global scoring at FICO. “So lenders are looking for ways to expand, but to expand safely.”

An estimated 100 million American consumers will have a CoreScore credit report, while more than 200 million people have traditional reports from the big three bureaus. Though the new information can influence a lender’s decision, the new score isn’t replacing the classic scores used in the automated mortgage underwriting systems kept by Fannie Mae, Freddie Mac or the Federal Housing Administration, which buy or back the vast majority of mortgages (though CoreLogic said it has let the agencies know what it is doing). But the added information may sway a lender to charge you more (or less) in interest on a mortgage. Lenders of all stripes, including auto lenders, have access to the reports, and they will be marketed to employers and insurers, too.

Ms. Gaskin said that FICO was still tweaking the credit score’s formula. But the next step is to build something that will try to get even deeper inside your financial mind: The company plans to create a more sophisticated tool that will predict how you might behave under different loan terms.

Read the rest of the article HERE


Six Ways To Beat Late Fees - That EVERYBODY Needs To Know


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Girl Scouts Add New "Good Credit" And "Finance" Badges

By Ben Popken on October 20, 2011 2:00 PM (Girl Scouts USA)

The Girl Scouts just finished their first redesign of their badges in 25 years, adding several new ones that will appeal to Consumerist readers.

There's now a "Good Credit," "Money Manager," "Budgeting," and a "Financing My Future" badge. But It's not just the consumer credit side that's getting represented, but also the other side of business. There's a new "Customer Loyalty" badge in the cookie sequence, as well as Meet My Customers and Business Plan badge.

For an Ambassador level scout in the 11th or 12th grade to earn the "Good Credit" badge, for instance, one of the tasks to accomplish is meeting a loan officer at a bank to discuss how one becomes a good candidate for a loan and what are the duties of a responsible borrower. After they've learned about credit reports and credit scores, the girls must make a pledge as to how they will use credit in their life.

A Girl Scouts USA spokesperson said that the badges add up to a program of financial literacy education that schools aren't providing.


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Six Ways to Beat Late Fees

By Naomi Mannino

Did you know late fees are assessed on just about all your monthly bills? These include bills related to your mortgage, cellphone, cable, utilities, insurances, credit cards, library books, traffic tickets and even kids' activities. And, of course, Uncle Sam assesses severe late fees and penalties if you're past due with your tax payment.

"Issuers claim they are a way to account for risk, but our research in the credit card industry shows that is not the case. They are trying to maximize revenue with late fees," says Josh Frank, senior researcher for the Center for Responsible Lending.


Financial experts agree that credit card late fees have been reined in somewhat by the Credit Card Act of 2009, which limited late fees to $25 for the first violation and $35 for subsequent violations. But these rules have substantial loopholes and do not apply to small-business credit cards or any other type of late fees, which can ring up at $39 each and more for past due payments -- on your mortgage, for example.


Late Fees Have Big Consequences

"While late fees (for many debts) are not reported to the credit bureaus, the late payments certainly are. That loads your credit report with delinquencies and can trigger a rate increase on your other cards for all future purchases," says John Ulzheimer, president of Consumer Education at SmartCredit.com. - Say you have one of those zero percent interest credit cards. Many of those have a clause that says one late payment will have the account default to an interest rate as high as 35%.

Another caveat:

"Credit card issuers can revoke your air miles, rebates and rewards for late payments. You may be able to reinstate them, but you'll be charged a reinstatement fee," says Frank.

Dave Ramsey, personal finance expert and radio talk show host, says, "When you pay your bills late and incur that extra charge, you're simply paying more and more every month. You're putting yourself deeper into debt and making it harder to pay in full on time next month."


Late Fees Are Not in Your Budget

The 2011 Financial Literacy Survey from the National Foundation for Credit Counseling found that more than half of adults don't keep a budget or track their expenses. In order to break the cycle of debt and late fees, Ramsey suggests you first figure out exactly where your money is going. "Make a written budget that gives each dollar a name -- including late fees," he says. You will be able to see just how much money you've been paying in late fees every month and what you can cut if you can pay each bill on time.

Says Ulzheimer: "You have to pay on time and be smart about taking on liability. If not, you are going to have a serious compounding problem unless you bring in more income or spend less."


Don't Make the Same Mistake Twice

Chronic procrastinators pay a higher price in the long run.

"The Fed approved a cap for late fees on credit cards, but the rule lets issuers charge a higher late fee of up to $35 if customers make more than one late payment," says Frank. "Credit card issuers can also change your annual percentage rate, or APR, to whatever they want on new charges and balances in the future. If you go 60 days late, they can change your APR on your total balance and you'll simply have to accept the consequences."

In addition, multiple late payments may prompt electric companies and cooperatives to demand additional substantial deposits and fees, without which they can disconnect your service.


Know the Rules, Grace Periods and Due Dates

Due dates for all your monthly expenses are clearly printed on your bills and statements, but they can change. Under the Credit Card Act, a credit card company must send you a notice 45 days before they can change fees, rates or other terms, but other bill issuers and monthly expenses are not bound by those rules. While the Credit Card Act extended the grace period to 21 full days (from 14 days), the grace periods for other companies and service providers vary. Knowing this information for each of your creditors can save you late fees.

"The consumer who is going to win against late fees is one who notes due dates on a calendar and works toward setting a shadow date to pay recurring bills a month early in advance," says Ulzheimer.

If you're desperate, making a phone payment, paying in person or paying online (note any lead times for posting) by the end of the grace period can help because the consequences of convenience fees (typically up to $15) are much less than the consequences of the late payment and late fees (typically $25-$39 and up).


Don't Be Afraid to Ask

If something unusual happens to you one month, it's a good idea to approach your creditor.

"If you happen to get in a bind and make one late payment for a good reason, ask your lender to give you a goodwill adjustment of your late fee. Obviously that doesn't work if you are habitually late," says Ulzheimer.

You can also avoid late fees by calling up before the due date to request an extension for many regular expenses such as the phone, electric and insurance payments.

If you find payment timing to be the problem, call to request a different monthly due date that better matches the timing of your paycheck to avoid late fees, says Frank.


Take Proactive Rather Than Reactive Steps

According to the 2011 Financial Literacy Survey from the NFCC, one in four adults admit to not paying all of their bills on time. "If you're paying late fees regularly but not defaulting, you are able to pay but are choosing not to pay on time and incur the late fee. The larger problem is fiscal irresponsibility," says Ulzheimer.

"If you're living paycheck to paycheck and paying late fees, you're a ticking time bomb. If an emergency happens or you get laid off, you will be tempted by pawn shops, car title and payday loans that are an extremely expensive start on your way to total default on all of your obligations."

If you find yourself juggling too many payments or too much debt, consider credit counseling or getting into a nonprofit debt management program.

"Go through the government-regulated National Foundation for Credit Counseling and stick to the program of paying back your debts and your monthly expenses on time with lower interest rates and no late fees," says Ulzheimer. "It takes hard work, commitment and typically three to five years to complete, but you'll get out with excellent credit and no debt."


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Credit Scores Will Be Easier for Consumers to get with New Rules from Federal Reserve, FTC www.Chicagotribune.com

Credit Scores Will Be Easier for Consumers to get with New Rules from Federal Reserve, FTC
www.chicagotribune.com

Consumers who are denied credit or whose existing loan terms become less favorable will soon be able to get free credit scores under new rules from the Federal Reserve Board and Federal Trade Commission.

Read the rest of the article here: http://www.chicagotribune.com/business/ct-biz-0708-credit-score-20110708,0,5422211.story


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Medical Debt Responsibility Act May Aid Consumers: MyFoxATLANTA.com

Medical Collections Could Be Removed From Credit Reports!

The Medical Debt Responsibility Act May Aid Consumers.

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Rewriting the Rules of Credit

In his new book, A Call for Judgment: Sensible Finance for a Dynamic Economy, economist and Tufts University professor Amar Bhidé laments a banking system that bases decisions on complex algorithms rather than good old-fashioned loan reviews, a practice that has greatly choked off financing to small business.

Auto Finance Insider interview excerpts:

Lending used to be a subjective matter. Why did we wind up with a system of stringent rules?

First, there was an ethos that developed in academia that said that all risks can be quantified. What economists did was say the stuff that we cannot quantify is really on the margin. And what's essential to risk, we can pretend to reduce to one or two numbers. Once you do that, then you can create a machine. If you're required to think of risk in a broad, holistic kind of way, it's much more time-consuming.

Implicitly and explicitly, the government embraced this view of risk. Almost unwittingly, [Fannie Mae and Freddie Mac] created the largest mechanistic model of lending in the world simply by saying we will underwrite the risk of mortgages if they meet XYZ criteria. If you followed the model for a loan, the government would take it.

The interesting part is that not all lending can be equally mechanized and scaled up. And therein lies the rub. It means that if I'm a bank, and I want to expand, I'm going to favor the activity where I can put pedal to metal fastest.

And small-business lending does not fit into that mold.

Correct. It was and remains an activity that requires a banker to go and talk to the borrower. Analysts can pretend that all housing loans are the same, but with small business, the pretending completely defies belief. So small business gets the short end of the stick.

What about the bank bailout? Why did so little money reach small businesses?

The way to get more credit into the hands of the small-business owners has been long impaired, and for the money to reach the people who need it, you need more channels. Small-business lending requires a mechanism that frankly will take a long time to rebuild.

How can the U.S. revive small-business lending?

The government should demand that any depository institution whose liabilities are ultimately guaranteed by the taxpayer make its loans prudently—where a banker and an examiner understand the risks and where each loan is made with a case-by-case examination of the risk in the bank. Small-business lending will remain risky. But there's a difference between a risk taken after a bank has obtained a deep understanding of the situation and a risk taken based on algorithms or rules that do not in fact make a lending decision safer.

What role should regulation play?

I think one of the great strengths of America is people's willingness to borrow and consume in the expectation of a better tomorrow. That is one of the things that distinguishes America from Europe. I think it's fantastic that three million iPads have been sold even in a recession. But that primal urge needs to have a brake applied to it sometimes and the brakes used to be provided by the banking system. Something healthy and useful was taken to extremes. It becomes insane. It's like, protein is good for you so you go on an all protein diet.

For regulators, instead of continuously experimenting with things like quantitative easing, why not pay attention to the things we know are bad?

But there's no hard and fast rule that says more regulation is good or more regulation is bad. You have to look at the facts of the case. And the facts said with banks that self-policing did not work. We ought to examine the brakes.

I agree wholeheartedly!


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What is a Credit Repair Company?

A good informative article by John Ulzheimer - President of Consumer Education of Credit.com

Switzerland; the land of great skiing, hush hush banking, Roger Federer, and international neutrality. It’s that neutrality I’m going to imitate while writing this article. Why?

The subject of credit repair is a powder keg, lightening rod, PR loser…chose your own metaphor.

Opinions on the subject seem to be polarized, meaning you either like credit repair companies or you hate credit repair companies.

First off, what is a credit repair company?

According to the Credit Repair Organizations Act (CROA), the Federal law that defines how credit repair companies must do business, a credit repair company is actually referred to as a credit repair organization (or CRO) - and a CRO is anyone who “sells, provides, or performs any service, in return for the payment of money or other valuable consideration, for the express or implied purpose of improving any consumer’s credit record, credit history, or credit rating.”

There are some exceptions to that rule.

If you’re non-profit and perform those duties then you’re not a CRO.

If you’re a bank or a credit union then you’re also not a CRO.

But if you are for profit, aren’t a bank, and sell services promising to help a consumer’s credit then you’re a CRO, whether you want to be one or not.

There are people who believe all credit repair is illegal.

That’s not true. “Credit repair is anything but illegal if you do it the right way,” says Edward Jamison, a lawyer and the founder of CreditCRM, a developer of credit repair business software.

And, the “right way” means you fully comply with the requirements of CROA and any state equivalent. How exactly do you comply with CROA? According to credit repair experts, CROA states that a CRO must do the following things, and others, in order to be in compliance:

1. Provide mandatory disclosures letting consumers know, among other things, that they can dispute credit information directly with the credit bureaus.

2. Avoid making any misleading or untrue statements about any consumer’s credit worthiness. You can’t say, “We guarantee we can remove your negative credit items.”

READ THE REST OF THE ARTICLE HERE:

http://www.mint.com/blog/trends/credit-repair-10042010/



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What the Credit CARD Act (Credit Card Accountability, Responsibility and Disclosure Act of 2009) Means For You

Restrictions on rates and fees:

This new legislation will put restrictions on credit card companies from increasing rates and fees on existing balances.

If your credit card company raises your interest rates, the newly raised rate will not apply to your preexisting balance, just on new charges.

Avoid getting charged fees by always paying your credit card bills on time, even if you’re only paying the minimum monthly payment or balance.

Keeping the balance below your total credit limit will also help lenders view you more favorably (try to stay under 33% of your total limit).


No immediate changes:

The new law won’t go into effect for nine months.

Meanwhile, banks may still raise interest rates on your existing balances. A smart move now would be to start or continue monitoring your credit so you’re aware of balances and debt as well as fees, rates and interest charges.


Curbing of caps and fees:

The new legislation doesn’t completely cap credit card fees and interest rates.

For example, the regulation doesn’t set limits on the charges that may come with your monthly statement. It does, however, ban late fees if the issuers had delayed crediting the payment.

It also requires banks to give consumers at least 21 days notice when sending bills.

You’ll have more time between a bill’s receipt and its due date, but make sure you stay on top of your bills to avoid late charges.


No more rate raise surprises:

Credit card companies must now alert customers 45 days before interest rate increases.

They’re also required to give notice of significant changes to a card’s terms, so that companies can’t completely alter rewards programs without warning on customers who have been participating for years in a certain rewards program.

Be sure you understand a credit card’s terms before you agree to anything — read all the fine print.


Harder to get credit for some:

Credit card companies will be required, under the legislation, to consider a consumer's ability to pay when issuing credit cards, which could make it harder for some to get credit (but could also protect them from getting in over their heads). It also limits how issuers can offer credit to those under 21 without verification of their ability to pay or parents' permission.

It makes great financial sense to keep aware of how lenders view you as a borrower, so start or continue staying on top of your credit report!

Good stuff!


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Four Myths About Your Credit History

From Equifax's own: Robin Holland


If you don’t learn how to understand your credit, it will be a lifelong problem.

You most likeley know that you should be checking your credit report at least once a year.

Do you understand what’s included in your credit report and how to read it?

Do you know what your credit score means?

When I work with consumers or lead workshops on financial literacy and credit, I’m always amazed at the misconceptions about credit histories, credit scores, and credit-reporting agencies.

Here are four myths about your credit history that I hear people proclaim frequently as truth:


Myth #1: The credit-reporting agency is responsible for my debt (or credit) rejection.

The credit report is an important part of the decision to grant you credit or not, but it’s not the only one.

Each lender or creditor has a set of criteria it uses to determine whether or not you qualify for that credit.

Think about it: It’s much easier to get a gas card than a credit card or a mortgage.

That’s because the requirements to qualify for a gas card are not as stringent as those for a mortgage.

It’s up to you to establish an on-time payment history and a good mix of credit.

Then when the creditor pulls your credit report, the creditor can look at your history, along with the other information you have provided, to make a decision about whether or not to give you credit.

A lot of the details you may provide, such as your gender, income, and employment history, aren’t on your credit report. But you can take responsibility for your financial identity and make sure the information reported about your credit history will present a positive picture of you to creditors.


Myth #2: The credit-reporting agency put the negative information on my credit file.

A lot of people don’t understand how credit reporting works.

Credit reporting agencies put information in your file when creditors send us details about your payment history.

Credit reporting agencies are not out to get you, and no one pays us to report negative information so they can avoid granting you credit.

We compile the data sent to us about your financial history and present it as a snapshot of your finances.

*** There may be inaccurate information on your credit report (and you should frequently check your file at all three nationwide credit reporting agencies for inaccuracies), and if you find any inaccuracies contact the credit reporting agencies to dispute them.


Myth #3: My credit score is a part of my credit report.

Your credit score is not included with your credit report.

You can access your credit report and credit score from Equifax or one of the other nationwide credit reporting agencies.

Your credit report is a history of how you pay your bills.

It includes your credit accounts—mortgages, student loans, credit cards, and auto loans—and shows if you’ve been late or on time with your payments, the balances on these accounts, and who else has been looking at your credit report.

Your credit score is calculated from a formula based on the components of your credit report.

While the score is a good reflection of you and your financial capabilities, there’s still room for interpretation.

A lender or creditor will look at your score as another element in determining the risk in lending to you or giving you credit.

So you can get your credit score from a credit-reporting agency, but it is not automatically included with your credit report unless you purchase a credit report and score product or subscribe to a credit monitoring service that includes it. (Because like all companies, we need to show a profit).


Myth #4: Credit-reporting agencies make the rules on how your credit history is reported and how long information stays on your credit report.

Nope.

The credit reporting agencies compile and report information about your credit history, but we’re not the decision makers.

A government agency, the Federal Trade Commission (FTC), governs the credit reporting agencies.

The Fair Credit Reporting Act (FCRA) outlines the rules on what credit reporting agencies can and cannot report and how long negative factors stay on your file.

It is helpful for people to understand what a credit reporting agency does and how information gets into their credit report. The more knowledge you have about this and your credit history the more control you will have over your finances.


Robert's comments: This is some good information. As much as I criticize the 3 big credit reporting agencies, we would not have the access to credit that our economy is based on without them.


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Secrets ot the Perfect Credit Score

Good Credit Scores Are the Key To Financial Health

Credit scores were developed as tools to help banks and businesses make objective decisions. To generate them, a mathematical formula pulls credit report data and transforms it into a numerical rating. Fico Scores range from a low of 300 to a high of 850, and, according to Fair Isaac, the creator of the scoring system, mortgage lenders consider anything above 760 as ideal.

Despite differences in each ranking system, they have one thing in common: A higher score indicates less risk. And having high credit scores makes you more appealing to lenders, employers and landlords.

Consequently, focusing on your credit scores is only natural. "People are drawn to this subject because it allows them to measure something that they equate to financial health," says Jose Rivas, the national education manager for Consumer Credit Counseling Service of San Francisco.

That focus, however, can turn into anxiety, and conflicting information is often to blame.

"One article states that consumers should close their unused accounts," says Rivas, and "another states that consumers should never close their accounts." For this reason, getting the facts from reliable sources is essential.


Keeping the Right Mix of Credit

"Every time someone runs my credit, they say, 'Wow, I almost never see someone with credit that high,'" says Carrie Rocha of Minneapolis, the founder of the “Pocket Your Dollars” blog. She keeps her credit first-rate to preserve her autonomy.

"As someone who got out of $50,000 in debt in less than three years, I take a lot of personal pride in my financial freedom" she says.

Though Rocha has no plans to borrow money again, "I have no barriers when it comes to employment, insurance or other areas of life where my credit score is used to assess the kind of risk I am."

Besides "the obvious things like pay my bills," Rocha says she increased her scores by talking to her credit union loan officer, who said an overabundance of idle retail accounts was driving it down.

She had opened the cards randomly during in-store promotions but never really charged on them, so there was no history to protect. After formally closing the accounts, her scores that were previously in the 720 to 740 mark rose to the 800s.


Does the Perfect Credit Score Exist?

Pursuit of excellence is often wise, but does "perfect" exist? Yes, says Craig Watts, the public affairs director for Fair Isaac. "Several thousand consumers do, in fact, have the highest possible FICO score."

Though most people won't reach the credit score apex, you can get close by consistently following three simple guidelines:

• Pay all bills on time.

• Keep credit card balances low.

• Take on new credit only when you really need it.

Don't obsess over small credit score variations. "Lenders decide what score they will accept for their best-interest-rate product," assures Watts.

"They genuinely don't care if your score is 50 or 100 points higher than that."

Clearly, A-plus credit has its advantages, but there is no reason to go overboard. Find a balance between attentiveness and fixation by understanding what those numbers can do for you and knowing how you can improve them.

And remember: Credit scores gauge your borrowing history, not your value as a person.


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Why Debt Settlement Is The Wrong Move

Debt settlement a 'nuclear option' that most people shouldn't even consider.

An excellent article by: Alysse Dalessandro


Complaints about debt settlement companies are on the rise - prompting warnings that dealing with those types of businesses might not the simple solution they might seem for consumers overwhelmed by debt.

Only an estimated one in 10 consumers who use these companies successfully emerge from the process, according to a recent government report.

The Better Business Bureau said it received more than 3,500 complaints from consumers on debt settlement companies since late 2007.

"The whole industry is getting a lot of attention right now because so many people are in so much financial trouble and unfortunately if they get tangled up in the wrong debt settlement company, they end up worse than they began," said Alison Southwick, BBB spokeswoman in an interview with Consumer Ally.

The Government Accountability Office recently released an investigation into debt settlement company practices and found that 17 out of 20 companies sampled impose fees on consumers before settling any of their debts - a practice that the Federal Trade Commission has proposed banning.


According to Southwick, how the process works:


1. consumers are told to stop paying their debt and instead pay into an account set up by the company.

2. The consumer pays into the account for years and then after saving a substantial amount, the debt settlement company will try to negotiate with the credit card company to accept the saved amount instead of the full debt owed.


The issue is that the credit card companies or other original creditors DO NOT have to comply with the negotiation and that is only one of the many potential problems Southwick warns.

"The problem is you haven't been paying your credit card for years, your debt is mounting, and your credit report is taking a hit and in the meantime, your credit card company can file a lawsuit with you and start garnishing your wages," Southwick said.

The BBB, a membership-based business ethics group, takes specific issue with companies making claims of debt settlement as a "simple" solution "guaranteed to work," according to Southwick.

GAO found the debt settlement companies provided information to consumers that was "fraudulent, deceptive, or questionable" including advertising success rates of the program as high as 100%, according to the investigation report.

"Debt settlement is not an easy fix and if you are going to do it, you really should only consider it before declaring bankruptcy," she said. "Its really one of those nuclear options that you do not want to enter into lightly."

Once entered into the lengthy debt settlement process, it may not be so easy to leave. Southwick cites a consumer who had paid $15,000 into a debt settlement account. When she dropped out of the process, the company refused to return the money.

According to the GAO, FTC and state investigations have shown that fewer than 10% of those entering into the process complete it.

U.S. Sen. Charles E. Schumer (D- NY) introduced the Debt Settlement Consumer Protection Act, which would require increased disclosure, limit fees charged by debt settlement firms and grant greater enforcement power to state and federal officials to go after companies that are taking advantage of consumers.


The FTC warns consumers should avoid companies that:

* promotes this as a "new government program".

* guarantee their success of making your debt vanish.

* advise you to stop all communication with your creditors.

* say that they can stop debt related collection calls or lawsuits against you.

* require you to pay a full upfront fee.


"You should always contact your credit card company and try to work something out first with them," Southwick suggested.

"For some people, who have a little bit of credit card debt, debt settlement is really not for them."


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Why the Credit Bureaus Can't Get It Right - Part 2

How Problems Go Global

So suppose there’s a whopper of an error on your credit report - Suppose it says you’re dead.

That’s what Ken Clark, a financial planner in Little Rock, Ark., was told when he tried to buy his wife a minivan. The auto dealer called Clark a con man because his report was marked “deceased.”

When Clark called the credit bureaus to report that he was still breathing, he learned that the real authority on the matter was a Utah bank that issued him a credit card and later reported him dead. To fix the error, Clark had to send a notarized letter and a copy of his utility bill to the bank, which in turn assured the bureaus that he was alive.


Clark’s story sheds light on how the dispute process works.

Credit bureaus say they usually need to check with the lender because 30 percent of disputes are filed by shady credit-repair companies that challenge all the negative information on a consumer’s report, regardless of its validity. Bureaus also have to deal with consumers who pull stunts like concocting official-looking statements on phony letterhead; one bureau says it recently got a letter from “Banke [ed.-this “typo” is intentional, replicating the original] of America.”

To sort the good from the bad, the industry sends almost everything through the automated system e-OSCAR (Electronic Online Solution for Complete and Accurate Reporting), which forwards consumer disputes to lenders for verification.


Here’s where the trouble begins.

Rather than call the lender or send it the consumer’s letter and supporting evidence, the bureaus zap the documents to a data processing center run by a third-party contractor. This system yields considerable savings.

Equifax reduced its per-dispute cost from $4.50 to 50 cents by outsourcing the work to Costa Rica and the Philippines, for example. But consumer advocates say these workers are under enormous pressure to process disputes and forward them to lenders as quickly as possible. While the bureaus say quality is the overriding factor, employees deposed in civil suits describe a harried pace.

One TransUnion manager testified that workers were expected to complete up to 22 cases an hour. An Equifax worker estimated she was allotted four minutes per dispute. To process the letters so rapidly, the workers summarize every complaint with a two-digit code selected from a menu of 26 options.

The code “A3,” for example, stands for “belongs to another individual with a similar name.” The worker can also add a single line of commentary. The two-digit code and short comment is the only information the lender receives about the dispute.

Consumer advocates say these summaries omit the background banks need to understand a complaint, and banks agree. “We’ve met with [the credit bureaus] and said, ‘Look, we need more information,’” says Nessa Feddis, vice president and senior counsel for the American Bankers Association.

But the bureaus say their codes provide accountability and accuracy. “People talking to people? That’s the last thing consumers want,” says Experian’s Maxine Sweet.

She suggests that consumers with complex cases resolve their disputes directly with their lenders. But that can put consumers in a catch-22. Currently, banks have no obligation to investigate a dispute unless it’s forwarded by a credit bureau.

What’s more, consumer attorneys say some lenders do little more than check the disputed information against their own records—even if those records were the source of the error. “It’s a closed loop,” says Michigan lawyer Ian Lyngklip. And some lenders rely on software rather than people to do some of the checking.

Not every dispute sent to a credit bureau gets the e-OSCAR treatment.

Some complaints get extra attention. Experian says it sends disputes to its “special assistance service” department when consumers have “unusual problems” or an elected official requests consideration for a constituent;

Equifax says it handles disputes relating to public figures and court cases with “additional processing procedures.” TransUnion declined to provide details on its VIP service, but its employee manual instructs workers to use “priority processing” if a letter comes from a “judge, senator, congressman, government official, attorney, paralegal, professional athlete, actor, director, member of the media or a celebrity.”

If your case is assigned this status, it may be given to a dedicated rep who will make phone calls on your behalf. But there’s no guarantee of a successful resolution. “I have a lot of cases that go to special services, and they still mess it up,” says Robert Sola, a Portland, Ore., attorney.


Better Times Ahead?

The Consumer Data Industry Association, the trade group, reports that 72 percent of disputes result in an update or correction, suggesting that the e-OSCAR system fixes plenty of errors. However, when the system fails, the consumer has few options.

If he files a second dispute without providing new information, the bureau can dismiss it as “frivolous.” The FTC is supposed to enforce laws requiring the credit bureaus to conduct a “reasonable investigation” into consumer disputes, but it hasn’t taken any action on that front since the start of the decade. (The agency says its recent reviews of consumer complaints yielded no reliable conclusions about report accuracy or the dispute process.)

That leaves the courts. But consumers can’t sue a bureau over an error until they can prove the error is already creating problems. “It’s a system designed to make sure the horse is out of the barn,” says Santa Fe, N.M., attorney Richard Rubin.

And even a successful lawsuit won’t necessarily fix a mistake. Just ask Chino, Calif., marriage counselor Jeff Christensen. In 2003 the cable company Charter apologized to him for reporting a collections account in error and directed the credit bureaus to delete the information.

Experian refused, so Christensen took the bureau to court. In 2005 a judge ruled that Experian was violating the law and fined the company $2,500. Experian paid the fine, but it didn’t correct the error until December 2008—when SmartMoney called—saying it never got the right paperwork.

Turns out, the courts can issue fines, but they can’t demand corrections.

“You have no right to an accurate credit report,” says Lyngklip, the attorney. Consumer advocates estimate that bureaus pay just $25 million a year in court fines—a minor expense for the $7 billion industry.

The credit bureaus say they have no immediate plans to change the dispute process.

They note that turnaround time is at an all-time low, and consumers have embraced a new online dispute-filing feature. “The possibility of errors is at its lowest point ever and continues to decline,” says Equifax’s Klein.

Consumer advocates have their own ideas. They want Congress to amend the Fair Credit Reporting Act so that judges can demand corrections. They’d like the bureaus to establish an appeals process and require proof from lenders who rereport disputed information.

And everyone seems to have their hopes pinned on regulations expected this year that will require lenders to address complaints received directly from consumers. Says Pratt, the trade group president, “That may allow consumers a better route to resolve a stickier dispute.”


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Why the Credit Bureaus Can't Get It Right - Part 1

A fantastic article submitted by SmartMoney.com


A mistake on your credit report can cost you literally thousands of dollars, especially in this economy. So what can you expect from a big credit bureau if you ask them to investigate and correct the error?

The answer, for many consumers: About 50 cents worth of effort, conducted by offshore workers at third-party firms. That’s just one of the findings from SmartMoney’s investigation into why credit-report errors continue to pop up so frequently—and why consumers often have so much trouble getting them fixed.

To follow what one consumer advocate calls an “electronic hot potato,” SmartMoney pieced together a depiction of the dispute process through information from trial depositions, internal company memos and the bureaus’ own employee manuals—much of which the bureaus and their trade group subsequently confirmed. The process may be efficient, but it remains a mystery to most consumers, and a source of bitterness for some.


The Wrong Kind of Thrills

For Brandon and Amanda Mendelson, it had all the elements of a paperback thriller:

The innocent newlyweds, the mysterious account held by an obscure bank in Boca Raton, the faceless corporation controlling everything behind the scenes.

But when the Mendelsons discovered the strange overdue loan mistakenly listed on Amanda’s credit report, they weren’t exactly thrilled.

The Glens Falls, N.Y., couple had never done business with that bank, and the error spoiled Amanda’s credit history. Making matters worse, their call to a national credit bureau yielded nothing more than a form letter stating that the accuracy of the entry had been “investigated” and “verified.”

Now they can’t help but wonder: investigated how? Verified by whom? Brandon studied organizational leadership in school, but even he can’t imagine how the bureau failed to fix such an obvious mistake. “Maybe it fell through the cracks,” he says.


Or maybe the process worked pretty much as it was designed to.

Although they generally decline to discuss specific cases, the three major credit bureaus—Experian, Equifax and TransUnion—each attest to their commitment to accuracy and accountability in their record keeping.

But while consumers might assume that each bureau employs an army of dedicated sleuths who carefully investigate and correct errors, all the bureaus actually process most disputes using a system that’s almost entirely automated—and where human beings are involved, they’re often working at a harried pace.

The bureaus say the system, dubbed with the Muppety acronym e-OSCAR, is the most efficient way to handle the more than 20,000 disputes a day they receive.

In practice, most complaints are electronically zapped straight to the lender, and according to consumer advocates, many lenders respond by simply rereporting the erroneous data.

Credit-report accuracy is profoundly important now, because an error can wreak more havoc than ever on your financial life.

Before the nation heard the words credit crisis, just about anyone with a pulse could get a loan. Now many banks are refusing credit to anyone who looks remotely risky. And as legions of anxious job hunters know, a growing number of employers routinely check credit reports before they make a hire. It’s no wonder, then, that the National Foundation for Credit Counseling says call volume is up 31 percent in the past 12 months.


“Credit is on consumers’ minds more than ever before,” says Curtis Arnold, CEO of CardRatings.com.

But according to a 2007 survey by pollster Zogby, 37 percent of consumers who obtain their credit reports find errors, and half of those said they could not easily correct the mistakes.

An earlier study by the U.S. Public Interest Research Group, a nonprofit consumer advocacy organization, found that one in four reports contained “serious errors.” For its part, the Consumer Data Industry Association, the industry’s trade group, says only 11 percent of consumers who get their credit report file a dispute and just 5 percent of those challenge the results.

“That’s an excellent satisfaction rate,” says the group’s president, Stuart Pratt. Still, even some industry insiders say there’s a problem. Testifying before Congress, one CEO of an independent Arizona credit bureau likened the dispute process to “having an IRS audit, brain surgery, getting a tooth pulled or going to your own funeral.”

And when the dispute process fails, consumers say they are left feeling powerless. Martha Soto, a 63-year-old Antioch, Calif., shipping manager, says she couldn’t get the mortgage she needed last fall because Experian listed her as the defendant in an unpaid court judgment.

She says she’s faxed records proving that she’s actually the plaintiff; Experian says they’re the wrong records, and the dispute is still unresolved, leaving Soto increasingly frustrated. “They’re defaming you, and you can’t do anything about it,” says Soto. “It’s scary to think an agency like that can control your life.”


Big Business, Little Service

Until the late 1980s, consumer credit records were scattered among thousands of low-profile local bureaus.

The industry gradually underwent a consolidation frenzy that left three companies controlling the data of 210 million Americans. The smallest, Chicago-based TransUnion, is owned by the Pritzker family of the Hyatt hotel fortune and boasts credit-reporting operations in 25 countries, including Nicaragua and Botswana.

Publicly traded Equifax, founded in 1898 by a Tennessee grocer who sold his customers’ payment records to fellow shopkeepers, calls itself a “global leader in information solutions” with businesses as diverse as risk detection and database management. (According to its income statements, its consumer data unit remains its most profitable, boasting a 40 percent pretax profit margin.)

Experian, the largest of the three and based in Ireland, is a $4 billion company that uses consumer data to help businesses send more than 20 billion pieces of junk mail every year.


Together, the three credit bureaus have amassed a spotty record on consumer care.

In 2000 they jointly paid a $2.5 million Federal Trade Commission fine for blocking millions of phone calls from consumers. Three years later Equifax paid a second fine because it still hadn’t hired enough people to answer the phone. In 2005, after new federal laws forced the bureaus to give away credit reports, Experian was hit with a $950,000 FTC fine for marketing those reports through a Web site that automatically charged consumers for an $80 credit-monitoring service. Last year TransUnion agreed to pay $75 million to settle a class-action lawsuit over sales of consumer data for marketing purposes.

The bureaus, which never admitted wrongdoing in these cases, say they realize the importance of providing reliable information to lenders and consumers alike. “If we don’t, we cannot survive, either as a company or as an economy,” says Equifax spokesperson Tim Klein.

But they also admit that credit-report errors can stem from glitches in their own systems. Some mistakes occur thanks to the algorithms used to match loans to individual credit reports. If the name or Social Security number on another person’s account partially matches the data on your file, the computer might attach it to your record.

The credit bureaus also employ contractors who gather tax lien and bankruptcy data from courthouses and government offices.

If these workers transpose a digit or misread a document, their error winds up on your report. But even if they never made mistakes of their own, the bureaus say they can’t possibly patrol the accuracy of the 3.5 billion pieces of account information they receive every month from lenders. “We’re the library,” says Maxine Sweet, Experian’s director of public education. “We don’t write the book.”

Continue to Part 2:

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