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Credit score will determine what you pay: Insurance and Loans

June 4th, 2008

Need Credit or Insurance? Your Credit Score Helps Determine What You’ll Pay

Ever wonder how a lender decides whether to grant you credit? For years, creditors have been using credit scoring systems to determine if you’d be a good risk for credit cards, auto loans, and mortgages. These days, many more types of businesses — including insurance companies and phone companies — are using credit scores to decide whether to approve you for a loan or service and on what terms. Auto and homeowners insurance companies are among the businesses that are using credit scores to help decide if you’d be a good risk for insurance. A higher credit score means you are likely less of a risk, and in turn, means you will be more likely to get credit or insurance — or pay less for it.

The Federal Trade Commission (FTC), the nation’s consumer protection agency, wants you to know how credit scoring works.

What is credit scoring?
Credit scoring is a system creditors use to help determine whether to give you credit. It also may be used to help decide the terms you are offered or the rate you will pay for the loan.

Information about you and your credit experiences, like your bill-paying history, the number and type of accounts you have, whether you pay your bills by the date they’re due, collection actions, outstanding debt, and the age of your accounts, is collected from your credit report. Using a statistical program, creditors compare this information to the loan repayment history of consumers with similar profiles. For example, a credit scoring system awards points for each factor that helps predict who is most likely to repay a debt. A total number of points — a credit score — helps predict how creditworthy you are — how likely it is that you will repay a loan and make the payments when they’re due.

Some insurance companies also use credit report information, along with other factors, to help predict your likelihood of filing an insurance claim and the amount of the claim. They may consider these factors when they decide whether to grant you insurance and the amount of the premium they charge. The credit scores insurance companies use sometimes are called “insurance scores” or “credit-based insurance scores.”

Credit scores and credit reports
Your credit report is a key part of many credit scoring systems. That’s why it is critical to make sure your credit report is accurate. Federal law gives you the right to get a free copy of your credit reports from each of the three national consumer reporting companies once every 12 months.

The Fair Credit Reporting Act (FCRA) also gives you the right to get your credit score from the national consumer reporting companies. They are allowed to charge a reasonable fee, generally around $8, for the score. When you buy your score, often you get information on how you can improve it.

To order your free annual report from one or all the national consumer reporting companies, and to purchase your credit score, visit www.annualcreditreport.com, call toll-free 877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P. O. Box 105281, Atlanta, GA 30348-5281. For more information, see Your Access to Free Credit Reports.

How is a credit scoring system developed?
To develop a credit scoring system or model, a creditor or insurance company selects a random sample of its customers, or a sample of similar customers, and analyzes it statistically to identify characteristics that relate to risk. Each of the characteristics then is assigned a weight based on how strong a predictor it is of who would be a good risk. Each company may use its own scoring model, different scoring models for different types of credit or insurance, or a generic model developed by a scoring company.

Under the Equal Credit Opportunity Act (ECOA), a creditor’s scoring system may not use certain characteristics — for example, race, sex, marital status, national origin, or religion — as factors. The law allows creditors to use age in properly designed scoring systems. But any credit scoring system that includes age must give equal treatment to elderly applicants.

What can I do to improve my score?
Credit scoring systems are complex and vary among creditors or insurance companies and for different types of credit or insurance. If one factor changes, your score may change — but improvement generally depends on how that factor relates to others the system considers. Only the business using the scoring knows what might improve your score under the particular model they use to evaluate your application.

Nevertheless, scoring models usually consider the following types of information in your credit report to help compute your credit score:

Have you paid your bills on time? You can count on payment history to be a significant factor. If your credit report indicates that you have paid bills late, had an account referred to collections, or declared bankruptcy, it is likely to affect your score negatively.
Are you maxed out? Many scoring systems evaluate the amount of debt you have compared to your credit limits. If the amount you owe is close to your credit limit, it’s likely to have a negative effect on your score.

How long have you had credit? Generally, scoring systems consider the length of your credit track record. An insufficient credit history may affect your score negatively, but factors like timely payments and low balances can offset that.

Have you applied for new credit lately? Many scoring systems consider whether you have applied for credit recently by looking at “inquiries” on your credit report. If you have applied for too many new accounts recently, it could have a negative effect on your score. Every inquiry isn’t counted: for example, inquiries by creditors who are monitoring your account or looking at credit reports to make “prescreened” credit offers are not considered liabilities.

How many credit accounts do you have and what kinds of accounts are they? Although it is generally considered a plus to have established credit accounts, too many credit card accounts may have a negative effect on your score. In addition, many scoring systems consider the type of credit accounts you have. For example, under some scoring models, loans from finance companies may have a negative effect on your credit score.

Scoring models may be based on more than the information in your credit report. When you are applying for a mortgage loan, for example, the system may consider the amount of your down payment, your total debt, and your income, among other things.

Improving your score significantly is likely to take some time, but it can be done. To improve your credit score under most systems, focus on paying your bills in a timely way, paying down any outstanding balances, and staying away from new debt.

Are credit scoring systems reliable?
Credit scoring systems enable creditors or insurance companies to evaluate millions of applicants consistently on many different characteristics. To be statistically valid, these systems must be based on a big enough sample. They generally vary among businesses that use them.

Properly designed, credit scoring systems generally enable faster, more accurate, and more impartial decisions than individual people can make. And some creditors design their systems so that some applicants — those with scores not high enough to pass easily or low enough to fail absolutely — are referred to a credit manager who decides whether the company or lender will extend credit. Referrals can result in discussion and negotiation between the credit manager and the would-be borrower.

What if I am denied credit or insurance, or don’t get the terms I want?
If you are denied credit, the ECOA requires that the creditor give you a notice with the specific reasons your application was rejected or the news that you have the right to learn the reasons if you ask within 60 days. Ask the creditor to be specific: Indefinite and vague reasons for denial are illegal. Acceptable reasons might be “your income was low” or “you haven’t been employed long enough.” Unacceptable reasons include “you didn’t meet our minimum standards” or “you didn’t receive enough points on our credit scoring system.”

Sometimes you can be denied credit or insurance — or initially be charged a higher premium — because of information in your credit report. In that case, the FCRA requires the creditor or insurance company to give you the name, address, and phone number of the consumer reporting company that supplied the information. Contact the company to find out what your report said. This information is free if you ask for it within 60 days of being turned down for credit or insurance. The consumer reporting company can tell you what’s in your report; only the creditor or insurance company can tell you why your application was denied.

If a creditor or insurance company says you were denied credit or insurance because you are too near your credit limits on your credit cards, you may want to reapply after paying down your balances. Because credit scores are based on credit report information, a score often changes when the information in the credit report changes.

If you’ve been denied credit or insurance or didn’t get the rate or terms you want, ask questions:

Ask the creditor or insurance company if a credit scoring system was used. If it was, ask what characteristics or factors were used in the system, and how you can improve your application. If you get the credit or insurance, ask the creditor or insurance company whether you are getting the best rate and terms available. If you’re not, ask why.

If you are denied credit or not offered the best rate available because of inaccuracies in your credit report, be sure to dispute the inaccurate information with the consumer reporting company. To learn more about this right, see How to Dispute Credit Report Errors.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

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Un-fair Isaac? | Credit scores not accurate

March 27th, 2008

pie.pngThis pie chart from Fair Isaac’s consumer site, MyFico is really pretty. It has great colors and and it’s really motivating to have great credit.

Trouble is, I do all of those things in the pie-chart, yet my score still doesn’t stand up to where it should be.

Lets see. I have a great payment history, I owe very little, I have a long credit history, I have hardly no new credit (not too much anyway) and I have a great mix of credit types, so why is my score lower than I believe it should be?

Because credit scoring is flawed!

Credit scores have become big business since they are so readily available to consumers now. But how many consumers out there are paying higher interest rates because their credit score is wrong?  Millions of consumers have errors in their credit reports that directly affect their credit score but most of them don’t even know.

Fair Isaac, the company who generates the credit score has monopolized scoring for years, but now its in a tug of war with the credit bureaus who have released their own version of the credit score. Fair Isaac says this is causing more confusion because now the consumer doesn’t know whose score is accurate.

Truth is, none of them are accurate. Let’s take my credit for example. I have a mortgage, a car loan and about 7 credit cards. I’ve had credit for over 20 years and I’m never late on anything. My credit card balances are about 400.00 (total) and my accounts have been opened for 15+ years or so. Yet my Fair Isaac credit score, just last week was 769. I don’t think that’s fair considering 850 is best, and based on my years of open accounts, low balances in relation to limits, limited inquiries, and good secure loans like my mortgage and car, why am I only in the 700′s?

To top it off, just 60 days ago it was 786. How does it change so rapidly? And say I had one or two inquires because I am refinancing my mortgage, is it fair to drop my score 20 points because I used my credit? Credit scores are ruining peoples lives because they are paying higher interest rates and being penalized for simply using their credit- responsibly.

If I have a bunch of inquiries and or I’ve been late on any of my accounts, then drop my score 20 points, but simply because I had one inquiry, my score has suffered pretty harshly. Lenders don’t care if I tell them why. They simply look at the number. So what needs to happen? We need to go back to human beings processing our loans and giving us credit based on our credit reports not a score that is always wrong!

I know credit. I really know credit. I’ve been a credit expert for over 20 years and I know what it takes to make a credit report shine. If I have very few inquiries, a couple of secured loans like a car and a mortgage, pay my bills on time and keep next to no credit card debt, then I should be rewarded. If the highest score is 850 then why do we rarely, if ever, see it?

Years ago lenders regularly relied on the content of your credit to give you fair rates. With scoring becoming such a big deal in the last 10 years, lenders rarely look at your credit reports anymore. They simply glance at the number that Fair Isaac spits out and your rates are based on that. The credit industry is a mess and it’s going to take more than a few changes to fix it.

Another beef I have is credit repair. All the credit bureaus and Fair Isaac attack credit repair and spin it to scare consumers into not doing it. We wouldn’t need credit repair if our credit reports were accurate.

A few years ago I pulled my credit because I was refinancing my car. What I found was shocking to say the least. I had 7 address variations, three different social security numbers and incorrect employment information. When I contacted the credit bureaus I was told that the information was added because applications submitted by me through lenders had the varied information and it was transplanted to my credit reports.

I think I know my own social security number and address, so shouldn’t these errors have been quickly removed with just a phone call? I had to spend weeks sending dispute letters  to remove all the inaccurate data. It wasn’t quick or easy and my errors were pretty harmless. I’ve seen clients with multiple collection accounts all from the same creditor. How is it fair to report one charged off debt four times?

Lobbyist’ spend millions warning consumers against credit repair, when in fact, it’s necessary because of the flawed credit industry. Sure there’s people who try and remove accurate negative information but that’s the bureaus job to investigate the claims and act accordingly.

If the credit bureaus are doing their job then why is the Federal Trade Commission flooded with complaints? Now, more than ever we need to fix the credit system and stop relying on credit scoring. With the housing crash and economy in the toilet, consumers are going to see lower credit scores more than ever before. Credit repair is going to skyrocket because people are desperate. The credit bureaus and the credit scoring system has created a mess and we’re left to clean it up — yet were told not to.

I’m not alone in my beliefs. Do a Google search on credit scores and you will come across hundreds of credit forums where consumers rant about their credit and rattle their brains trying to figure out how to improve it. Credit issues are among the most popular Internet searches besides porn! People are confused and overwhelmed and a lot of them are angry. They are frustrated at the system and simply don’t know what to do to leverage their credit, so they too can get good rates on loans.

I for one, am an advocate of credit repair, whether you pay someone or do it yourself. It’s necessary and it’s not going to go away. As long as there is a demand, there will be a supply. If the credit bureaus really wanted to reduce the number of investigation requests they receive, they’d clean up their act. Simply report more accurate information and use the credit score as a tool, not a deciding factor. Human beings are underrated. I think we can all look at a credit report and surmise if its good or bad. Give us some credit – literally!

If you’re up for some reading, MSNBC also has some great information on this topic.

About the author: Kristi Feathers is a credit expert and author of Credit and Collection Success Strategies. Article copyright N2Credit.com 2008.

Image credit. Fair Isaac is a registered trademark of Fair Isaac Co. All opinions expressed in this article are those of the author.

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How to deal with bill collectors

February 2nd, 2008

So you’ve screwed up. You’re drowning in debt. Maybe the credit card was burning a hole in your pocket and you just had to get the HDTV. Or maybe you or a family member had a medical emergency while you we laid off. It doesn’t matter to your creditors; they lent you the money and now they want it back.

The lender will try to work with you for a while and its best to try to negotiate with them at this stage. If you can’t work something out or just don’t pay, they will send your file to either an in-house bill collector or, more commonly to an outside agency.

Bill collectors are a tough bunch. They have heard all the sob stories and aren’t interested in yours. They mostly get paid on commission, so they just want to get money out of you and move on.

There aren’t many laws to get you off the hook as far as the debt goes (bankruptcy is your only choice). But there are laws that prevent harassment and abuse by bill collectors. Debt collectors tend to try to ignore these laws, but if you know your rights and insist on them, at the very least you might be able to collect damages if the bill collector persists in ignoring them.

The major law protecting you is the Federal Fair Debt Collection Practices Act. Some states have their own versions of this law.

The law does not prevent a bill collector from contacting you, but it must be at convenient times. Contact can’t be before 8 a.m. or after 9 p.m., unless you agree. A debt collector also may not contact you at work if you tell him that your employer disapproves of such contacts.

If you don’t want to be harassed, get the name, address and telephone number of the bill collector. Then send a certified letter, return receipt requested telling the collector to leave you alone. Once the collector receives your letter, he can not contact you again, except to say there will be no further contact or to notify you that the bill collector or the creditor intends to take some specific action against you, such as sue you or report your delinquency to a credit bureau.

The bill collector can contact friends, relatives or neighbors, but just to find out where you are. They are not supposed to be spreading the word that you’re past due on your debts.

Within five days of first contact, the collector must send you a written notice telling you the amount of money you owe; the name of the creditor to whom you owe the money; and what action to take if you believe you do not owe the money. You have 30 days to dispute the debt, in writing (certified mail RRR again). The bill collector is then not allowed any other contact with you until he is able to send you proof of your debt.

According to the Federal Trade Commission (FTC) the agency charged with enforcing the Fair Debt Collection Practices Act: Debt collectors may not:

use threats of violence or harm; 
publish a list of consumers who refuse to pay their debts (except to a credit bureau); 
use obscene or profane language; or 
repeatedly use the telephone to annoy someone.

Debt collectors may not use any false or misleading statements when collecting a debt. For example, debt collectors may not:

falsely imply that they are attorneys or government representatives; 
falsely imply that you have committed a crime; 
falsely represent that they operate or work for a credit bureau;
misrepresent the amount of your debt; 
indicate that papers being sent to you are legal forms when they are not; or 
indicate that papers being sent to you are not legal forms when they are.

Debt collectors also may not state that:

you will be arrested if you do not pay your debt; 
they will seize, garnish, attach, or sell your property or wages, unless the collection agency or creditor intends to do so, and it is legal to do so; or 
actions, such as a lawsuit, will be taken against you, when such action legally may not be taken, or when they do not intend to take such action.

Debt collectors may not:

give false credit information about you to anyone, including a credit bureau; 
send you anything that looks like an official document from a court or government agency when it is not; or
use a false name.

Debt collectors may not engage in unfair practices when they try to collect a debt. For example, collectors may not:

? collect any amount greater than your debt, unless your state law permits such a charge;
? deposit a post-dated check prematurely;
? use deception to make you accept collect calls or pay for telegrams;
? take or threaten to take your property unless this can be done legally; or
? contact you by postcard.

However, as I said before, a lot of debt collectors will ignore this law whenever they can. So it is very important that you build a case against harassing debt collectors. Send repeated certified letters outlining what they said or did.

Tape the phone conversations. Tell the collector you’re doing so. If he continues to talk, he’s considered to have consented to the taping.

If you contest the debt, ask that you be sent proof of it in writing. In many cases, neither the creditor nor the collector can produce this.

Check your credit report and, if you see false entries, contest them right away.

If you do owe the debt, negotiate calmly and in good faith. Because it gives you more time to think, I would try to carry out all negotiations in writing or hire an attorney to do them for you. This will also give you a paper trail if you have to proceed in court.

Do not be bullied into rushing into an agreement and do not make any payments unless the agreement is in writing. For example, if the bill collector agrees to take half of the amount you owe as full payment and report the debt paid to the credit bureaus, get it in writing. If the collector won’t send you a letter, send him a certified letter accurately stating all the terms of your agreement.

It is not unknown for bill collectors to settle the case with a debtor and then sell the rest of the debt to another collection agency, which will try to collect the unpaid balance. This is why it is very important to have a paper trail.

If you have old debts that have apparently gone away, beware of the zombie bill collectors. They are buying unpaid debts for pennies per hundred of dollars of debt and then trying to harass debtors to pay. Even if they only get a few dollars, they make money.

The problem is that in many cases the statute of limitations on collecting the debt is run. If you make a payment, you can reopen the statute, the debt can be reported to credit bureaus as freshly delinquent and you can open yourself up to all sorts of problems. Sometimes even saying the wrong thing to one of these guys can be considered an acknowledgement of the debt, allowing them to reopen the statute of limitations.

If you have any old unpaid debt become familiar with the statute of limitations, generally 4 to 6 years, in the state where you live now and, if applicable, in the states you lived in when you ran up the debt.

The best way to handle a zombie bill collector is to refuse to speak to him. Just hang up the phone.

The Fair Debt Collection Practices Act is rather vigorously enforced by the FTC and state attorney generals. Make complaints to both is you feel you being unfairly treated.

Also you have a private right of action against the debt collectors. You can sue a bill collector in a state or federal court within one year from the date the law was violated. If you win, you may recover money for the damages you suffered, plus an additional amount up to $1,000. Court costs and attorney’s fees also can be recovered. If you need a lawyer referral, go to National Association of Consumer Advocates website. http://www.naca.net.

Also I would suggest you buy or borrow from the library Money Troubles: Legal Strategies to Cope With Your Debts (Solve Your Money Troubles) by Robin Leonard, if you have a lot of debt. It best to know what you’re facing and how to handle yourself going in.

Remember, even if you can tame the bill collectors, your debts do not go away. The next step will probably be lawsuits and garnished wages. That is why the best course of action is to negotiate with your creditors from the very beginning.

Chris Cooper is a retired attorney. At http://www.credit-yourself.com/ he tries to pass on some of the knowledge he picked up in his journey to become debt free. [source]

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Consumer debt growing

January 30th, 2008

U.S. consumers fell further in debt than ever last year and some will probably feel a little “debt hangover” when credit card bills from the holidays start arriving.

In 1968, consumer credit debt was $8 billion. Now the total exceeds $880 billion, the Federal Reserve Bank reported.

We’re certainly much better at spending than saving.

Consumer spending accounts for a high level of the nation’s gross domestic product, roughly 70 percent, UNLV economist Keith Schwer said.

“We thought consumers were tapped out, but automobile sales picked up. The latest income numbers are up. It’s kind of a mixed bag,” he said.

While plastic may be the quick and easy way to make a purchase, some people still operate with cash, checks and debit cards, Schwer said. The credit issue comes and goes as a concern and is often focused on the bottom half of the income bracket, he said.

According to a recent survey conducted by the National Association for Business Economics, the combined threat of subprime loan defaults and excessive debt has overtaken terrorism and the Middle East as the biggest short-term threat to the U.S. economy.

Thirty-two percent of survey participants cited loan defaults and excessive debt as the biggest threat. By contrast, 20 percent cited terrorism.

Credit counselor Mark Brinker of Detroit-based Hoffman Brinker and Roberts said he sometimes feels like an emergency room doctor trying to stitch up people’s financial wounds.

“I’m not happy they’re in this situation, but I’ve got to do my best to try to get them out,” he said. “It’s not a simple, quick and easy fix. You have to sit down with them and lay it out on the table.”

People need to figure out what they want to accomplish and then “reverse engineer” their ability to meet that goal, Brinker said. If they have the ability to pay, they should fulfill their obligation.

If they’ve lost their job or gone through a divorce, they may want to negotiate a settlement with the credit card company for less than the full balance. Lenders aren’t going to post that option on their Web sites, Brinker said, but every major credit card company will consider a settlement.

“I can tell you credit card companies are not going to make it easy for you,” he said. “Believe it or not, there are some credit card companies where you’re much better off letting your account be outsourced to a collection agency if your goal is to obtain a settlement.”

For those who are really behind the eight ball, the most aggressive solution may be filing personal bankruptcy. The main reason people want to avoid bankruptcy is usually because of their moral beliefs, not because it’s a black mark on their credit, Brinker said.

U.S. households received about 5.3 billion offers for new credit cards in 2007, he noted. The average consumer already has four credit cards and about 10 percent of consumers have more than 10 credit cards.

Many people face overwhelming money concerns from mismanagement or overspending, said Michele Johnson, chief executive officer of Consumer Credit Counseling Service of Nevada. Sometimes job loss, illness or accidents can place a family in financial jeopardy, she said.

Her office handles about 1,000 counseling sessions a month, not only for consumers deep in credit card debt, but for homeowners facing foreclosure.

“The creative loans and mortgage ARMs (adjustable rate mortgages) that were available, combine that with depreciation of housing prices so consumers can’t refinance and now you have folks with homes they can no longer afford,” Johnson said.

Schwer said the credit crunch in the mortgage lending industry could play out with consumer credit as lending standards increase and interest rates rise. Homeowners are going to find it more difficult to take out home equity to pay off debt, he said.

A telltale sign that consumers are in credit card danger is when an increasing amount of income goes to paying debts, said Howard Dvorkin, founder of Consolidated Credit Counseling Services. Only 10 percent to 15 percent of take-home pay should be spent on credit debt, he said.

Hubble Smith writes for the Business Press’ sister publication, the Las Vegas Review-Journal. He can be reached at hsmith@reviewjournal.com or 383-0491. Source

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What To Do About Old Chargeoffs And Collections

January 18th, 2008

If you have some outstanding debts that need to be cleaned up once and for all, here are the 2 best strategies to use:

  • VOD (Validation Of Debt)
     
  • DN (Debt Negotiation a/k/a Debt Settlement)

I’ll explain each strategy in detail, then give you some examples of when to use (and when not to use) each strategy.

Validation Of Debt

As outlined in the FDCPA (Fair Debt Collection Practices Act), if a bill collector is pursuing you for an unpaid debt, you have the right to see written proof that the alleged debt actually exists, hence the term “validation of debt”. And until that bill collector can produce the requested information to support their claim, they must halt their collection efforts against you. It’s that simple.

Here are some examples where you should invoke your right to see some documentation from the bill collector:

1. Dispute. If you receive a collection notice on an old outstanding debt that you believe you might owe, but the collection notice lists (A) an incorrect account number or (B) the claim total is way more than what truly might be owed, ask the bill collector to validate the debt. Mistakes and sloppy record keeping happen all the time. Therefore, I would want to see the supporting paperwork before I offer any money to the bill collector on a possible settlement.

2. The Debt Is Very Old. Even if you know that you owe the money, but the debt is pretty old (say, 2 years or more) you might want to ask the bill collector to produce the documentation because you just might get lucky. Remember, if they can’t produce the documentation to validate the debt, they must close their case against you and stop all collection efforts.

However, use the debt validation process wisely. If you know you owe the money and you believe that there is a very good chance that they will be able to produce the supporting documentation, you might want to just go straight to negotiating a settlement before any additional animosity is created. In other words, if a bill collector goes to the trouble of gathering all the paperwork to validate your claim, do you think they’ll be in much of a “mood” to offer you a decent settlement at that point.

Special Note: If a debt is still being handled by the original creditor such as Chase or Citibank, for example, don’t waste your time asking them to validate the debt because there is a 99.9% chance that they will be able to produce full supporting documentation. The older a debt is, the more likely there will be errors, and that’s the best time to request supporting documentation from a bill collector.

Debt Negotiation (a/k/a Debt Settlement)

Here are two situations where I believe attempting a negotiated settlement is the way to go.

1. The bill collector has successfully validated the debt. OK, they’ve got you. They’ve produced full supporting documentation to validate the debt. Now you need to quickly shift your focus to negotiating a settlement for less than full balance or working out a reasonable payment plan for the full balance. If you have the skill and confidence to go head to head with the bill collector, you can certainly do this yourself. On the other hand, if you’ve never done this before, you might be better off to have a professional debt negotiator do this for you.

2. Personal integrity. Rather than messing around with the whole “debt validation process” when you know you owe the money and there really is no dispute, how about just admitting that you owe the money and go straight for a settlement! You will almost always end up with better results this way. Personally, I have a lot of respect for people that are mature enough to say, “Hey, I owe the money, I’m sorry about what happened, let’s reach a settlement that works for everyone and let’s get on with life.”

Hope this helps. If you have any additional questions or need more information, please feel free to visit our website at http://www.hoffmanbrinker.com/?aid=7

About the Author
Mark Brinker is the founder/CEO of Hoffman, Brinker & Roberts, Inc. (http://www.hoffmanbrinker.com/?aid=7) Since 1995, Mr. Brinker has assisted individuals and small business owners in obtaining millions of dollars of debt relief by negotiating mutually acceptable settlements for less than full balance with creditors, collection agencies and attorneys.

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Using Mint.com to Manage Your Personal Finances

January 18th, 2008

If dealing with personal financial software seems cumbersome to you, you’re not alone. Finding an easy to use budgeter is now easier because of Mint.com.

I like this budgeting platform because it helps you uncover where money is going and where it can be better used. I already set up an account and am using it now. This software helps me track my credit card transactions, savings accounts and more. And it’s free which is great. So now, instead of logging on to each site separately, I just go to Mint.com and review everything in one place. Thumbs up from me!

How Mint works

Mint is a modern, powerful, easy and secure web-based solution for managing your finances. And it’s free. You register anonymously using any valid email address, and then add the log-in information for the online bank, credit union and credit card accounts you want to consolidate in Mint.

Mint connects to over 3,500 US financial institutions. Your account information is updated each night. Mint automatically categorizes all your purchases, showing you how much you spend on gas, groceries, parking, rent, restaurants, DVD rentals and more, with amazing precision. An advanced alerting system highlights any unusual activity, low balances, unwanted fees and charges, and upcoming bills so you’re in constant contact with your money – effortlessly. 


Mint goes way beyond just reporting. Using a patent-pending search algorithm, Mint constantly searches through thousands of offers from hundreds of providers to find the best deals on everything from bank accounts to credit cards; cable, phone and Internet plans, and more. Mint’s suggestions are “unique to you” as they are based on your individual spending patterns. For example, if you have $20,000 in a bank account that’s earning no interest, Mint might recommend a high interest rate savings account from ING or HSBC. Acting on that suggestion would give you an extra $900 in interest income over a year.

Key Benefits

Mint is an entirely new approach to personal financial management. You don’t work for Mint, it works for you. We think you’ll love Mint because it’s:

  • Easy to use: You’re up and running in under five minutes. And Mint does virtually all the rest.
  • Comprehensive: Mint provides detailed visibility into virtually all your financial relationships with a single, secure login
  • Visual and Analytical: Mint gives you powerful insights into your finances – making it easier to make good financial decisions
  • Constantly working to find you savings: Mint typically finds users $1,000 in savings opportunities in their first session – minutes after registering. And Mint keeps looking for new ways for you to save every day — continuously comparing your needs to product, service and bank offerings most relevant to you.
  • Secure: Mint provides bank level data security and industry leading identity protection. Its security and privacy have been validated by VeriSign and TRUSTe.
  • Always On: You’re automatically notified of upcoming bills, low balances, and any unusual activity in any of your accounts, through one (m)interface.
  • Anywhere/anytime access: You can get to Mint anywhere, anytime over the web
  • And it’s Free!

Mint.com is secure and private

Mint does not store your usernames, passwords or account numbers. Mint does partner with Yodlee, a leading provider of online banking services to major banks for over 10 years, to ensure a secure connection to your financial information.

Mint protects your information using bank level data security and 128 bit-bit encryption, verified by Verisign and HackerSafe.

Mint is TRUSTe certified to provide industry leading privacy protection and partners with RSA to provide anti-phishing protection.

Using Mint does not require any personally identifying information, leaving you as anonymous as you would like to be.

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How to Clean Up Your Credit Report

January 13th, 2008

Clean up that credit report before you apply for a loan or mortgage

To clean up your credit report, you’ll need to order a copy of your credit report, determine what’s inaccurate or out of date, and then request that the credit bureaus fix the information. You may have to follow-up several times with each credit bureau before your credit report will be sparkly clean — or at least accurate. To do this right, you’ll need to know what the credit agencies are allowed to report and for how long. 

How to Get a Copy of Your Credit Report

Everyone is allowed at least one free credit report each year. If you’ve already gotten yours this year, you may have to pay a small fee for one.

Free Reports

The federal Fair Credit Reporting Act (FCRA), amended by the Fair and Accurate Credit Transaction Act (FACTA), allows consumers to get a free copy of their credit report each year from each of the three major credit reporting companies. Free annual credit reports are now available in every state. 

To order your free report, go to http://www.annualcreditreport.com/, and either order your report directly or download a form to mail in your request. You can also call 877-322-8228.

Also, you are entitled to one free copy of your credit report each year under any of the following circumstances:

  • You’ve been denied credit because of information in your credit report and you request a copy within 60 days of being denied credit.

How to Clean Up Your Credit Report

After you get your credit report, you’ll have to read through it carefully, try to decipher some of the account numbers and names, and start correcting.

Out-of-Date Information

As you read through your report, make a list of everything that’s out of date. The following out-of-date information should not appear in your credit report:

  • adverse information older than seven years, including lawsuits, judgments, paid tax liens, accounts sent to collection, criminal records (except criminal convictions, which may be reported indefinitely), late payments, and any other adverse information
  • bankruptcies older than ten years from the date of the last activity (usually the date you received your discharge or the date the case was dismissed, although credit bureaus sometimes start counting from the earlier date of filing)
  • credit inquiries (requests by companies for a copy of your report) older than two years, and
  • overdue child support older than seven years.

Note that some adverse information regarding U.S. government insured or guaranteed student loans, or national direct student loans, may be reported for more than seven years.

Inaccurate Information

Next, look for incorrect information, such as:

  • incorrect or incomplete name, address, phone number, Social Security number, or employment information
  • bankruptcies not identified by their specific chapter number
  • accounts that are not yours or lawsuits in which you were not involved
  • incorrect account histories, such as a history of late payments when you paid on time
  • any closed accounts that are listed as open — it may look as if you have too much open credit, and
  • any account you closed that doesn’t say “closed by consumer.”
  • You’re unemployed and looking for work.
  • You receive public assistance.
  • You believe your file contains errors due to fraud or you are (or you think you are) a victim of identity theft.
  • You’ve been denied employment (or another adverse employment decision has been made) based in whole or in part on information contained in a credit report.
  • Your report has been revised based upon an investigation you requested.

Credit Reports for a Fee

If you do not qualify for a free report (for example, if you have already ordered your free report for the year), there will be a small charge for your credit report. The amount will vary from state to state because it is mandated by state law ($3-$10, with most states charging $10).

The three major credit reporting companies are Equifax, TransUnion, and Experian. It’s best to order your report from all three. To order directly from one of these credit bureaus, call, email, or visit the company’s website.

Equifax
P.O. Box 740241
Atlanta, GA 30374
800-685-1111
http://www.equifax.com/

TransUnion LLC
P.O. Box 2000
Chester, PA 19022
800-888-4213
http://www.transunion.com/

Experian
P.O. Box 2104
Allen, TX 75013
888-397-3742
http://www.experian.com/

Information Required

When you request your credit report, you’ll need to provide the following information:

  • your full name (including generations such as Jr., Sr., III)
  • your birth date
  • your Social Security number
  • your spouse’s name (if applicable)
  • your telephone number
  • your current address and addresses for the previous five years, and
  • sometimes, even a copy of a government-issued I.D. such as a passport or driver’s license and a copy of a recent utility bill — both documents showing your current address and the date of issue.

Request Removal of Bad Information

After reviewing your report, complete the “request for reinvestigation” form the credit bureau sent you, or send a letter listing each incorrect or out-of-date item and explain exactly what is wrong. Once the credit bureau receives your request, it must investigate the items you dispute and contact you within 30 days. If you let the bureau know that you’re trying to obtain a mortgage or car loan, it can often do a rush investigation.

more…

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Credit repair tips and pitfalls

November 25th, 2007

Are you new to credit repair or an old hat at it? Either way, I bet you have been through the old dispute process, at least in your mind if not on paper. I can remember when credit repair was a dirty word. Anyone involved in credit repair was thought to be a scam and a scum. That was only about 10 years ago. Now, you can find credit repair all over the Internet. Everyone’s doing it. But… just because someone throws up a 10.00 web page doesn’t mean they are credit experts.

It’s so frustrating for me to see hundreds of so called credit repair experts littered all over the web. Just yesterday I found about 5 websites that had taken my information from other financial websites that I consult for and recycled the information into their own, and along the way, tried to make themselves appear as credit experts. I hope no one bought their shabby service (whatever it was they were selling).

Yes, credit repair is real but it’s not a secret trick. It’s not insider information locked within the vaults of the Big Three, (Experian, Trans Union and Equifax). It’s a real process just like balancing your checkbook, organizing your business expenses or any other business transaction. It’s a PROCESS. A process of not just writing mindless dispute letters but a process of validation and disputation.

When credit repair first started it was pretty much dispute letters sent off and you just sat back and waited (and prayed) for the bureaus to send back an investigation result that said “deleted”. Boy what a rush that is. But it’s not that easy nor should it be. I have been dealing with credit report issues for over 20 years and I remember when I sounded like the town crier trying to convince anyone who’d listen that credit repair isn’t just letters being sent out and hoping for the best. I would scream at the top of my lungs, “it’s validation, negotiations and disputation”.

Soon after, it seemed every knock off credit repair website was acting like they discovered it- invented it. No. It’s always been there and now I am going to tell you what it is.

Credit repair is like a good recipe. A recipe of knowledge and action. First, you educate yourself then you put that education into action. Credit bureaus are a for profit business. They make money selling information, not by standing by waiting for disputes. Because they are an information provider they also house information in databases. Millions and millions of information bits. They (the bureaus) are only a part of the PROCESS. On the other end is the creditor or the source- the entity that reports information about you to the credit bureaus. The two come together like a not so fine oiled machine. Mistakes in reporting happen and lots of them. Thats where credit repair comes in. The bureaus house your information, the source reports your information and you need to work those two to get the right results.

Consumers ask me all the time “Can’t I fix my own credit, why would I pay someone”. It depends. If you like to do the work yourself and you know what you are doing then do it yourself- save your money. If you have no clue what you are doing then hire someone to do it. Just be careful to hire someone who knows exactly what they are doing and either way, take responsibility for the results. Do your homework whether it’s researching credit repair methods yourself or researching the company that is doing it for you. Anti-credit repair lobbyists will say “do not attempt it, it’s illegal”. Not true. Questioning anything in your credit reports is legal. It’s a consumers right, but when I say take responsibility,  I mean, if you question a debt and it wakes a giant then that’s your fault.

Here are my tips for doing it right:

Know the laws that protect you
This is first on this list. After all if you don’t understand what rights you have about your credit how are you going to begin the process? The Fair Credit Reporting Act, (FCRA) is a federal law and it’s your weapon of choice. Study it. You’ll also want to know about The Fair Debt Collections Practices Act (FDCPA). It regulates third party debt collectors.

Be careful what you question
If you have debts that you consider to be wrong, by all means, dive right in and go to war. Question that item with all your might. Use any proof you have to show you’re right. On the other hand, if you have debt(s) that you know are accurate (like a charge off or collection account) then think it through before you question it. What if you send out a dispute on a debt that was previously written off and forgotten about, and your dispute has now been forwarded by the credit bureaus to the creditor or collection agency, and now they know you’re out there? You may have just created a lot of trouble for yourself. The point is, know what you’re doing.

Consider the source
Are you questioning a debt that belongs to an original creditor or a collection agency. A collection agency must abide by the Fair Debt Collections Practices Act while an original creditor does not. Many violations can be discovered when dealing with a collection agency and those loopholes can help you remove the item.

Keep records
This is really important. Keep a paper trail of everything you have disputed so that you have it handy for follow up. Seems simple but it’s often overlooked. Write down everything. Who you talked to, where you sent your disputes, what came back and why. It’s part of the PROCESS.

Review all three credit reports
What might be in one may not be in the other two so make sure you go over all three before you send out a dispute. If you don’t, you will waste time and risk opening up a can of worms. The bureau may contact the other two to confirm the item- thus inserting it where it once was not!

Consider the negotiation process
If an item is accurate and you’ve been unable to remove it, then you have to consider negotiations. This is where you’ll work to settle the debt in exchange for a deletion or better rating. This is only done if the item is 100% accurate and you want it removed. Also be sure to consider time limits of older debts before you negotiate anything. Debts have statutes’ of limitations for reporting and collecting. They vary by state and your debt may be legally expired – to report and or collect, and that would result in a deletion.  If you question a debt ready to expire, you cause a lot of problems for yourself so pay attention to dates of activity such as charge off date and originally reported date.

Resources
Here are some excellent resources to help you better educate yourself before you undertake the project of credit repair. These resources are invaluable in your efforts

Nolo: This is a great place to look up credit related matters. Lots of free articles and credit repair information. Nolo- law for all.

The Credit Library: This page has so many articles that it can be overwhelming. You can find credit bureau articles, collection agency issues and look up statute of limitations rules. Bookmark it so you can find it easy when you start your credit repair. You don’t need to register to read the articles that are free.

Financial Books: This page has some great credit repair books.

Credit Repair Service: If you’ve decided to hire someone to do the work for you, I recommend Lexington Law.

Article author:
Kristi Feathers is a credit and collection expert. This article cannot be reproduced without her permission. You can contact her at www.KristiFeathers.com

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