Posts Tagged ‘feathers’

Charge offs and delinquency rise for credit card issuers

November 1st, 2008

Credit card companies are next in line to feel the credit crunch. Credit card companies say that their charge-offs of delinquent debt from card-holders have spiked to 5.5 percent, and could jump to 8 percent in coming months, a level not seen since the dot-com bust in 2001, according to Washington Post.

Banks considering debt settlements
USA Today reports that banks are proposing that they forgive up to 40% of the credit card debt owed by the most financially stressed consumers, who are close to bankruptcy. These consumers would then get five years to pay off their remaining card debt, interest-free. Banks would pilot this program with 50,000 consumers, in hopes of expanding it to tens of thousands of others to avoid their debts being lost all together through a bankruptcy.

We’ve known for years that debt settlements is a very sound solution to critical credit issues. Banks have always been resistant to debt settlements but now, they may have little choice. It’s a simple question really. Would you rather get half or lose it all?

Banks seem to finally have their heads out of the sand on this issue and this could be great news for consumers. One, it will cause consumers to think twice about filing for bankruptcy if the banks are willing to work with them, and two- banks will decrease their total charge off amounts by recouping at least half of the debt.

“With consumers losing their homes at record numbers, the last thing they are worried about is credit card debt. If they are already in a position to lose their biggest (secured) asset, their home, then the credit card debt will do little to jar them. It’s unsecured and much easier to discharge in a bankruptcy”,  says Credit Expert, Kristi Feathers.

Bully Debt Collectors
The other issue that’s going to be at hand here is the on-slot of debt collector abuse to consumers with accounts referred to collections. Debt collectors are probably a few of the only businesses thriving in this downturn and they will be all over these debtors, and that is going to cause more complaints nationwide to groups like the FTC.

Right now, consumers with credit card debt mounting and considering bankruptcy need to contact the card issuers and try to work out a debt settlement. They should explain their situation and see if a 40% debt reduction is possible and above all, get these agreements in writing.

A settled debt on a consumers credit report is much better than a charge off and once the debts are settled, the consumer can focus on rebuilding their credit from a stronger standpoint. Remember, settled debts will show paid whereas a charge off is unpaid, so that’s motivation in settling your debts if you are able.

At least with the banks being open to the idea of debt settlement, you have an advantage that once was harder to achieve.

Remember the following;

  • Get all agreements in writing with your creditors/collection agencies
  • Follow up with the credit bureaus to make sure debts are reported accurately as “settled” not “charged off”
  • Be sure to ask the creditor to also settle the rating from paid collection to settled
  • Try to handle the issue BEFORE its assigned to the collection agency
  • Educate yourself on debt settlement issues (you can do so here free)
  • Report any abuse by debt collectors to the Federal Trade Commission at FTC.gov
  • Keep a log of all your communications with creditors and collectors
  • Use DIY help if needed (FDCPA, FCRA)

If you credit card issuer isn’t willing to settle or If you are not in a position to settle your debts, you can contact a credit counseling firm to spread your payments out, reduce interest and fees, and help you get breathing room. Debt settlements is different from debt management.

N2credit.com

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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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Set credit goals for 2008

January 1st, 2008

cco1.jpgWe’re all feeling the credit crunch. Mortgages we can’t afford, car loans lasting 7 years, high gas prices, slowed economics that only add to the pain, but 2008 is a perfect time to get back on track, especially when it comes to your credit. Setting some solid credit goals is achievable unlike New Years resolutions. Good, solid credit goals lead somewhere positive while resolutions just get pushed aside. Here are my tips for getting credit healthy in 2008.

Check your credit
It’s a new year and that means for many of us, it’s time to get our free annual credit report. By going to annualcreditreport.com you can order all three credit reports free of charge. If you haven’t looked at them in quite a while, make sure to take time to sit down and thoroughly go through each one. A good credit plan starts with knowing what your working with and that’s only possible by looking at your credit–even if the thought scares the bejeebies out of you.

Manage your ratios
Part of a healthy credit score is having low balances owed in relation to limits available. If you are up near the limits on your credit cards or even over the limit, this is going to really affect your credit score. If you do have a lot of unsecured debt like credit cards, lines of credit, home appliance loans (like furniture etc), those should be tackled first. Form a plan to start paying those down one at a time. Don’t try to pay more on each card, target one and hammer it until it’s gone then move to the next. This is the fastest way to get out unsecured debt so that you can eventually start targeting other bills. Make a sobering attempt to NOT charge anymore. If you cant pay cash, don’t buy it, at least until your finances are under control.

Fix mistakes
Chances are, your credit reports contain inaccurate information. The nature of the credit bureaus allow for many mistakes. You could find a lot of erroneous information between the three, so be sure a thorough audit is at the top of your to do list. Don’t look for obvious errors but look closer for smaller errors that still heavily impact your credit score. Things like date account opened, credit limit, date of last payment, balance owed, can all be stagnant information. Sometimes the credit bureaus fail to receive timely updates so your information may be 30-90 days old or longer. Check everything because it all adds up to a better credit score. Look for invalid addresses, incorrect or multiple inquiries, social security number variations, collection accounts, missing credit limits, false late payments etc. Even if you do find negative but accurate information such as a collection account or charge off, those still must be verifiable, according to the Fair Credit Reporting Act, so use that to your advantage because it may be removed.

Dealing with the source
Some times you may find that the bureau has determined your information to be timely and accurate. You may feel differently about it and may even have a good argument. That is when it is time to turn your attention to the “source reporting it”- the creditor. The creditor holds all the power in how they report your accounts and ultimately they are the one who can remove a negative mark. Some strategies to dealing with the creditor is to provide them with a written history of what you believe happened. Maybe they charged a late fee inappropriately or maybe they agreed to re-age a late payment but did not follow through or possibly you had an agreement with them to remove a negative mark in exchange for settling a debt. All of these reasons need to be dealt with on the creditors end- not the bureau. The bureau is good for ‘spring cleaning” a report but the real results come from dealing with a creditor. Follow the same strategy as above getting everything in writing and keeping good records of exactly who you spoke to and where you mailed your letters.

Giving your credit a break
Some of us overuse our credit and rely on it for everything. Overusing your credit is also a bad idea because it adds up before you know it. Sometimes the best credit RX is to leave it alone. You may not look at it often so you’d be surprised to see how much you’re using it. Give your credit a rest by reducing the number of inquiries, stop transferring balances back and forth and use it only when absolutely necessary.

Manage it long term
If you’re in the credit rebuilding process remember that it takes time. You didn’t ruin your credit overnight and it can’t be rebuilt overnight. Stay the course of paying your bills on time always. Keep track of how much your spending as to keep your credit card balances in check. Give your accounts time to reflect a good payment  history before you attempt opening more. Most of all. Check it often and pay attention to it like you would your checking account. Consumer initiated inquiries do not lower your credit score so don’t be afraid to check it every six months or so. Set up a lifelong plan of paying on time because you’re credit will pay you back tenfold.

Author: Kristi Feathers is an author and credit expert. She can be reached at www.KristiFeathers.com

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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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Sample letters for credit bureaus and creditors

November 20th, 2007

If you’ve got issues in your credit reports, you can clear those items up by sending out a request to the associated credit bureau, for which the item appears. I do a lot of consulting and the best place for sample letters is CarreonandAssociates.com. A lot of sites charge up to 25.00 per letter and CarreonandAssociates gives you 44 letters plus free credit management tools for a one time fee of 39.95. It’s the best deal possible if you are interested in managing your credit.

You can download the sample letters, all 44, and included is a credit management ebook written by our resident expert, J.Kristi Feathers and you receive lifetime access to the Members only area where you can research statutes and codes and learn about credit problems including identity theft, collections and debt.

Look how many sample letters you get!

Collection Agency Letters
-Defense of expired debt to collection agency
-Settle collection debt with collection agency
-Collection agency warning of possible FDCPA violation
-Collection agency letter for medical debt using the HIPPA law
-Cease & desist letter to collection agency
-Cease & desist letter #2 to collection agency
-VOD: Validation of debt to collection agency
-VOD to collection agency- strong letter
-Expired Statute of Limitations defense (SOL)
-Estoppel letter to collection agency
-Admission by Silence- validation of debt to collection agency
-Offer to settle debt as PIF with collector/creditor
-Debt settlement offer to collection agency or original creditor
-Offer to settle debt to improve credit rating
-Offer in compromise (OIC)
-Unilateral Release for settling debts to collection agency

Credit Bureau Letters
-To credit bureaus regarding inaccurate credit rating
-Opt out letter to all three credit bureaus (external link)
-Request for investigation to the credit bureau
-Dispute bankruptcy listing with credit bureau
-Request to merge spouse’s credit history
-Request to correct credit report after bankruptcy
-Request for free credit report based on credit denial
-To credit bureau to remove inquiries especially collection agency
-Identity Theft Notification to credit bureau
-Credit bureau (CRA) for disputed item(s)
-Demand letter to credit bureau for investigation results
-More aggressive letter to (CRA) for disputed item(s)
-Reply to a CRA accusing you of credit repair
-To credit bureau intent to file suit

Judgment Related Letters
-Offer to settle judgment with creditor in exchange for dismissal
-Send to court to set aside judgment after settlement
-Judgment proof letter to OC or CA

Original Creditor Letters
-Letter advising creditor/collector of bankruptcy filing
-Reaffirmation agreement to creditor after BK
-To original creditor to pull back debt from collection agency
-Request to creditor to insert positive information into your credit report
-Debt reaffirmation letter to creditor after bankruptcy
-To creditor that you have filed bankruptcy
-To creditor to remove inquiry
-Goodwill letter to original creditor

Misc. letters
-Correspondence log for record keeping
-External budget worksheet- complimentary link
-Chexsystems letters to dispute and request file

Take a look!

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