Posts Tagged ‘creditor’

A Credit Card You Want to Toss

February 9th, 2008
Bank of America abruptly notified cardholders in good standing their rates would skyrocket if they didn’t opt out fast. Is BofA greedy or needy?

Credit-card issuers have drawn fire for jacking up interest rates on cardholders who aren’t behind on payments, but whose credit score has fallen for another reason. Now, some consumers complain, Bank of America (BAC) is hiking rates based on no apparent deterioration in their credit scores at all.

The major credit-card lender in mid-January sent letters notifying some responsible cardholders that it would more than double their rates to as high as 28%, without giving an explanation for the increase, according to copies of five letters obtained by BusinessWeek. Fine print at the end of the letter-headed “Important Amendment to Your Credit Card Agreement”-advised calling an 800-number for the reason, but consumers who called say they were unable to get a clear answer. “No one could give me an explanation,” says Eric Fresch, a Huron (Ohio) engineer who is on time with his Bank of America card payments and knows of no decline in the status of his overall credit.

Bank of America spokeswoman Betty Riess confirms some bank cardholders could be receiving rate increases for reasons other than declines in credit scores, such as running higher balances with their Bank of America cards or with other creditors. She says the increases are part of a “periodic review” that assesses customers’ credit risk. She declined to say if the Charlotte (N.C.) bank had changed its credit standards thereby bumping some consumers’ rates or how many cardholders were being affected by the review. Bank of America has 40 million U.S. credit-card accounts.

Buzz about the letters is building on the Internet. Since mid-January Credit.com, a credit-card information site, has received 40 complaints from consumers Bank of America had notified of sharp rate increases, even though they were current on their bills, says Emily Davidson, a Credit.com researcher. Complaint sites My3cents.com and BankofAmericaBadforAmerica.org say they have also received similar complaints.

The so-called “opt-out” letters give borrowers the option of no longer using their card and paying off the balance at the old rate. But they must write Bank of America by later this month if they plan to do so-otherwise their rates on existing and new balances automatically rise.

Arbitrary Criteria

What’s striking is how arbitrary the Bank of America rate increases appear, credit industry experts say. In recent years, many card companies have turned to a practice called “risk-based pricing,” where they will raise a regular paying consumer’s rate because of a decline in the person’s FICO score. FICO is a credit-risk score developed by Fair Isaac (FIC) that includes a number of risk metrics the Minneapolis company doesn’t disclose. Credit reporting bureaus supply creditors with FICO scores along with other data, such as late payments and debts owed.

In a December congressional hearing spearheaded by Sen. Carl Levin (D-Mich.), lawmakers slammed big card companies for using such pricing with customers who pay on time. By law, credit-card lenders can change terms as long as they notify borrowers. Even so, JPMorgan Chase (JPM) and Citigroup (C) announced ahead of Levin’s hearing that they would stop the practice of raising card rates based solely on FICO scores.

But Bank of America appears to be taking an even more aggressive stance because, beyond credit scores, it is using internal criteria that aren’t available to consumers. That makes the reason for the rate increase even more opaque. “Congress has faulted credit-card companies for lack of transparency in raising rates,” says William Ryan, a financial industry analyst at Portales Partners, a New York-based research firm. “Bank of America is bringing it to a new level.”

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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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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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Top Credit Tips: Credit cards, bankruptcy and counseling

December 24th, 2007

If you’ve suffered past credit issues or current money problems, here are the top tips to help you to a better financial future. Tips on credit cards, debt counseling and bankruptcy.

Question 1:

I have most of my savings maxed out in FDIC secured savings accounts. How good is the FDIC guarantee? – Lugi, Florida

FDIC means it’s backed by the federal government – and that means it’s the best financial guarantee you can get.  This “insurance” protects you against the loss of your deposits if an FDIC-insured bank or savings association fails. And it doesn’t matter whether its checking or savings accounts, money market deposit accounts or CDs.  There are limits though – up to $100,000 in each banking institution. Some retirement accounts, like IRAs are insured up to $250,000. But keep in mind, The FDIC does not insure the money you invest in stocks, bonds, mutual funds, life insurance policies or annuities even if you purchased these products from an insured bank.  To make sure your bank is FDIC insured, call 1-877-275-3342. Generally you will see a FDIC sign where deposits are received.  For more info, check out FDIC.gov. Let’s face it, if the federal government doesn’t make good on the FDIC promise, you have bigger problems than losing your money.

Question 2:

Do those debt settlement companies really lower your debt and get it paid off in 3 to 5 years? Please help, I am not sleeping at night. – Mary, West Virginia

Generally we don’t advise going to debt settlement companies. These companies may advise you to stop paying your debt immediately. And this won’t only continue to damage your credit report, but you’ll still be accruing debt, late fees and interest with your creditor. Plus, these debt settlement companies often have fees you’ll be responsible for.  If you can’t create a workable budget yourself or negotiate a payment plan with creditors, your best bet is to chose a legitimate credit counseling organization.  Many state attorneys general have toll free numbers where you can check out such organizations, or call your local Better Business Bureau. You can also check out the National Credit Counseling Agency at nfcc.org.

Question 3:

I had to file bankruptcy in 2003. Now I am a victim of the housing/mortgage crisis. How soon can I file bankruptcy again? – Chris, Florida

It depends on what kind of bankruptcy you filed in 2003. If you filed chapter 7, it will be 8 years before you can file for Chapter 7 again. So you’ll have to wait. However, there is a type of bankruptcy called chapter 13 which you can do right away – this does not wipe away your debt, but forces you to pay it off over time. Remember, even if you do file again, your credit score is damaged. Bring yourself back from the brink by going to a credit counseling agency. It’s going to be hard to repair your reputation with creditors after declaring bankruptcy twice.

Question 4:

I heard that one of the ways to make money in real estate is to buy a foreclosed property. Should I go for this type of investment? – John

You can make money in foreclosed properties because you’re buying at such a steep discount. But there are some serious drawbacks to investing in this type of property. For example, the tenant may still be in property or you may not be able to see the condition of the property. And there may be other liens against the house that you may inherit as the new owner. You’ll need to be familiar with the laws in your state. To do this, go to the county clerk’s office.  To find what properties are being auctioned, you can also check the listings in your local newspaper. Or you can do your research online.  Yahoo has a site for foreclosed property. There are also places online that list foreclosed properties, like foreclosure.net and realtytrak.com.

Question 5:

I am sixteen years old and I’m trying to get my passport for the very first time. How much would it cost? How many days will it take to get my passport? – Emiley, Florida

Well, Emiley, you’ll pay $97. If you need your passport quickly, you can apply for an expedited passport. That will take about 3 weeks. Otherwise, it could take you 4 to 6 weeks to get your passport. Check out travel.state.gov for details.

Question 6:

What is the best way to rebuild bad credit? – Michael

Obviously you’ll want to start with paying your bills on time and putting away the credit cards. And it matters. If you have a poor credit score – we’re talking something below 620 – you’ll face higher-cost loans, more expensive insurance, and possibly even a little discrimination in the job search. If you’re credit problems simply stem from late bill payments – maybe you’re forgetful or a procrastinator – automate as much of your bill paying online as possible. That will keep you from missing payments. However, if you can’t cover your monthly bills and use credit cards to make up the difference, it’s time to do some soul searching. Get together your bills and look at your income with a new eye. Is housing just a third of your income or is it more? How much are you spending eating out? These are two items that people typically overspend on. Put together a budget and try to stick to it. No matter what the source of your money woes are, it makes sense to look at credit reports to make sure that your credit score isn’t suffering from bad information. Check the account numbers. Are they yours? Are you identified correctly? If the information is incorrect, you can contest it by writing the credit rating agency directly. Get your reports at www.annualcreditreport.com.

Question 7:

How can I safely freeze my credit with all three bureaus? – Dave

A freeze is essentially locking your credit file against anyone – lenders, ID thieves – who may be trying to open up a new account in your name. It’s effective, but it can be inconvenient and it’s not free. You’ll have to mail separate certified letters to each of the major credit reporting agencies, TransUnion, Experian and Equifax, and pay $30 bucks for the privilege. And if you want to apply for credit, you’ll have to unfreeze your account a few days before you apply for any loans. That will cost you another $30 in most states.  A better solution is credit monitoring. A credit monitoring service will alert you when there are inquiries into your account or any new accounts that are opened in your name. But it’s more expensive – $10 to $35 a month. For my money, I do the cheap and easy stuff: get off junk mail lists and shred credit card offers before tossing them in the garbage. I also keep a close eye on my credit card.

Question 8:

Is it good or bad to cancel the credit cards you do not need? – Mohamed

Unfortunately, there’s no easy answer here. Lenders look at two things: how much debt you have and how much credit is available to you. When you close accounts, you have less credit available to you compared to your debt. That can hurt your score. Plus, you benefit from having a long credit history. On the other hand, if you find that having too many cards tempts you to run up more balances, or you just want to simplify your financial life, closing accounts may work in your favor. You’ll have a better sense of your debt levels too.

Question 9:

How do we cut down on the amount of “junk mail”? – Katherine

Most of us get at least a few credit card offers and other junk mail every week. But if you want to stop these offers here’s where you need to go: optoutprescreen.com. You can also call 888-5OptOut. This is a free service set up by the credit reporting industry. Once you give this info, you’ll be taken off mailings for five years. As a note, if you signed up for this service more than five years ago, it’s time to re-register. If you want your name removed from Direct Marketing members – this may include businesses in your community, coupons or catalogues – go to DMAchoice.com. You’ll have to pay a one-time fee of a dollar. But that’s a small price to pay.

Gerri Willis- CNN money

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Fixing your credit from divorce

December 11th, 2007

Getting divorced is stressful enough but the effects on your credit reports can literally ruin you- financially. The good news is however that you can clean up your credit after a nasty divorce using some pointers below along with a lot of patience.

Determining your credit issues

First of all it is absolutely necessary to evaluate your credit as it stands now. Are there major issues like a pending foreclosure, unpaid credit card debts or even back child support hindering your credit? If so you need to approach each issue separate and use any documentation you have to prove that the item doesn’t belong there. Of course in a marriage both partners are usually responsible for debts incurred during the marriage but if the debts were incurred while you were separated or without your knowledge then you may not be liable for those debts. Sitting down and reviewing all three credit reports is a must.

One item may not be on all three credit reports so before you can begin disputing the entry to a credit bureau you have to determine which bureau is picking up the item and then write your dispute to that particular bureau. In your dispute be concise and include any documentation you have such as a copy of your separation agreement and who is to pay the debt and or your divorce papers to prove the debt was incurred after the divorce and without your knowledge.

Please note however that even a court ordered agreement of who pays what from the marriage does not overrule a contract that was created during the marriage. The creditor doesn’t care who the judge ordered to pay the debts and if one person defaults they have the right to go after either or both.

Contacting the credit bureaus

Once you have determined which debts you are going to challenge you then need to draft your dispute letters to the credit bureaus. There are three major credit bureaus and soon there may be a fourth bureau that you will have to consider.

Equifax P.O. Box 740241 Atlanta, GA 30374 800-685-1111

TransUnion Consumer Disclosure Center P.O. Box 390 Springfield, PA 19064-0390 1-800-888-4213

Experian P.O. Box 2104 Allen, TX 75013-2104 1-800-682-7654

Be sure to send your disputes CMRR- certified mail return receipt so that you will have a paper trail of your communications with the credit bureaus. By law the bureaus have 30 days to investigate the items and send you a new updated version of what they decided. If any portion of the item they investigated was obsolete or unverifiable, it will be removed. Even accurate but negative credit can be removed because the credit bureaus must be able to verify everything as 100% accurate. If they cannot, the item must be removed. This is how many charge offs, judgments, liens and even bankruptcies are removed. The Fair Credit Reporting Act governs these actions.

How long can bad credit remain legally?

That depends. It is 7 years for debts and 10 years for bankruptcy although some credit bureaus only report a bankruptcy chapter 13 for 7 years because at least the debtor is attempting to repay his debts. Judgments can remain until the statute of limitations expires to collect it.

Following up

Just as disputing is the only way to get results so is follow up. Without a solid plan of attack you will accomplish very little. Be sure you are diligent about following up on the bureaus investigation and if need be turn your efforts to the original creditor or the source reporting the item. If you are a patient person you can use credit repair aids and do the work yourself. If you are looking for convenience then you can hire a credit repair attorney to do the work for you. Either way the same methods are used which are disputing to the credit bureaus using the FCRA- Fair Credit Reporting Act, validating debts, checking SOL’s (statute of limitations for the collectibility of the debt) and and being persistent.

Kristi Feathers is an author and speaker on credit issues. To reach Kristi you can visit her site at http://www.kristifeathers.com/ or http://www.carreonandassociates.com/ to purchase her credit management guide for consumers

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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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What to do if a bill collector crosses the line

November 22nd, 2007

Here’s what to do if a bill collector uses abusive tactics.

It’s stressful to be unable to pay your bills on time. It’s even more stressful to hear from a bill collector about those overdue debts. Although bill collectors can be persistent (that’s their job), many are careful to follow the law when contacting you. Unfortunately, some are not. If a bill collector oversteps the bounds of the law, you can take action.

The Fair Debt Collection Practices Act

The federal Fair Debt Collection Practices Act, or FDCPA (15 U.S.C. § 1692 and following), prohibits certain debt collectors from engaging in abusive behavior. It covers debt collectors who work for collection agencies. It does not cover debt collectors that are employed by the original creditor (the business or person who first extended you credit or loaned you money). If a debt collector that works for a collection agency breaks the law, you can take steps to make sure it doesn’t happen again.

What Bills Collectors Can’t Do

Bills collectors from collection agencies cannot do any of the following:

  • Call you repeatedly or contact you at an unreasonable time (the law presumes that before 8 a.m. or after 9 p.m. is unreasonable).
  • Place telephone calls to you without identifying themselves as bill collectors.
  • Contact you at work if your employer prohibits it.
  • Use obscene or profane language.
  • Use or threaten to use violence.
  • Claim you owe more than you do.
  • Claim to be attorneys if they’re not.
  • Claim that you’ll be imprisoned or your property will be seized.
  • Send you a paper that resembles a legal document.
  • Add unauthorized interest, fees, or charges.
  • Contact third parties, other than your attorney, a credit reporting bureau, or the original creditor, except for the limited purpose of finding information about your whereabouts (collectors can also contact your spouse, your parents if you are a minor, and your co-debtors unless you have asked them in writing to stop contacting you).

 Here’s what you can do if a debt collector engages in illegal activity:

1. Tell Them to Stop

Under the FDCPA, you have the right to tell a collection agency employee to stop contacting you. Simply send a letter stating that you want the collection agency to cease all communications with you. All agency employees are then prohibited from contacting you, except to tell you that collection efforts have ended or that the collection agency or original creditor may sue you.

You can do this even if the collector is not breaking the law, but many debt counselors feel that, unless you’re judgment proof (that is, broke) or truly plan to file for bankruptcy, the best overall advice is not to ignore the debt or try and hide from the debt collector. Usually, the longer you put off resolving the issue, the worse the situation and the consequences will become. Whether you negotiate directly with the collector or obtain a lawyer’s assistance, many counselors feel the best strategy almost always is to speak to the collector.

2. Document Illegal Behavior

If a debt collector breaks the law, document the violation as soon as it happens. Start a log — and write down what happened, when it happened, and who witnessed it. Then, try to have another person present (or on the phone) during all future communications with the collector. In some states, you can record phone conversations without the debt collector’s knowledge. In others, this tactic is illegal. Check with your state consumer protection agency to find out what is permitted where you live.

3. File a Complaint

File an official complaint with the Federal Trade Commission (FTC), the federal agency that oversees collection agencies. Ask the FTC to send you a complaint form, or just write a letter. Contact the Federal Trade Commission at 6th and Pennsylvania Ave. NW, Washington, DC 20580, https://rn.ftc.gov/pls/dod/wsolcq$.startup?Z_ORG_CODE=PU01. Include the collection agency’s name and address, the name of the collector, the dates and times of the conversations, and the names of any witnesses. Attach copies of all offending materials you received and a copy of any tape you made.

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Credit inquiries can lower your credit score

November 21st, 2007

Shopping for credit online can have serious hazards to your credit report. Every time you shop for a loan it results in a credit inquiry. Those individual inquiries can reduce your credit score. Credit scores range from 300 to 900 with 900 being best. Each time you apply for credit, your credit reports will place an inquiry at the bottom of your reports. While a few inquiries are fine, too many can result in lowering your credit score and denial of credit.

Creditors or potential lenders look at too many inquiries as “desperate” and base part of their credit decision on those excessive inquiries. In addition, the potential creditor has no idea that those inquiries have not resulted in a recent loan which could disqualify you from being approved. The good news however, is scoring models have now been adjusted to count multiple inquiries within a 14-day period as a single request.  Too many inquiries seems to be the topic of the day with consumers. Many don’t realize the impact of too many inquiries and only begin to understand the affects after being turned down for loans because of it.

Protect yourself and your credit score by following a few simple rules:

  • Reduce & unauthorized: You should limit your inquiries and dispute any that you do not recall or agree with. Disputing inquiries to the credit bureaus is pointless. They are not responsible for removing those and do not investigate them unless the originating creditor instructs them to. Take your complaint directly to the lender with a certified letter.
  • You reviewed your credit: This is where you have have requested a copy of your credit report. This is a “soft” inquiry and does not negatively affect your credit. It is not seen by potential creditors. (Neutral)
  • Credit Bureau Review: This again, has no impact on your credit and simply means the bureau reviewed your file. (Neutral)
  • Creditor review: This is simply a standard review that is done by existing creditors. It also does not impact your credit. (Neutral)
  • Credit Request: This can be negative if you have too many. Inquiries remain in your profile for 2 years, so too many of this type can be negative and result in denials. (Negative)
  • Collection agency review: Very negative. If you have any inquiries from a collection agency who has begun collecting on an expired debt (expired under the statute for reporting, which is 7 years) then that does not qualify for a permissible purpose and should be removed. Inquiries from a collection agency are very negative.
  • IRS: Very negative. Inquiries from the IRS usually tell a potential lender that you are either being audited or have a tax lien pending.
  • Tenant Screening: This type of inquiry is O.K. It simply shows you are moving or did move and the landlord ran a credit check. (Neutral)

Dispute Process
To dispute inquiries you need to write to the creditor direct. Simply send a certified or registered letter to the creditor and ask for removal.

Here is a sample of what to write:

Dear Creditor:

In a recent review of my credit reports I discovered an inquiry from your company. I do not recall authorizing you to review my credit. Accordingly, I would like to be sent proof that I initiated or requested for you to review my credit. Please respond at your earliest convenience.

Based on the FCRA, I must have authorized you to review my credit with written permission. Please forward a copy of that written authorization. If you are unable to provide me with proof or do not retain records of such authorization, please promptly remove the inquiry from my credit report (name which credit bureau) and send me written confirmation of the removal.

Thank you for your timely reply.

Sincerely,

Joe Consumer

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