FinanceTalk's Blog

September 28, 2008

Credit Report Errors Mean Consumers Lose

In 1998 the Federation of State Public Interest Research Groups (PIRGs) published a now famous report called, Mistakes Do Happen: Credit Report Errors Mean Consumers Lose. This report detailed the results of the PIRGs sixth study on the accuracy of credit reports. The results, in their words, were troubling, and revealed that an alarming number of credit reports contain serious errors. Here are some of the highpoints (or low points) of their study findings.

Serious Errors can Have High Costs

Seventy percent of all of the credit reports investigated contained errors. The errors uncovered by the study were broken down into categories based on the severity of the errors. The worst of the errors occurred in twenty nine percent of the credit reports and were likely to result in the outright denial of credit. This type of error included accounts that are incorrectly marked as delinquent, accounts that do not belong to the consumer, and derogatory public records such as judgments that belong to someone else.

Not a Small Issue

The types of errors noted above are obviously very serious. It should be emphasized that twenty nine percent is a horrendously large number. This number alone indicates that you have more than a one in four chance of having errors on your report that will cause you to be denied credit. An additional result of this misreporting may include your placement into a sub-prime credit category and result in you receiving a higher cost loan than you would otherwise have received. Translated into dollars there is the potential for a life changing impact on your financial wellbeing.

Little Things Count

Forty one percent of the credit reports reviewed contained personal identifying information that was out of date or belonged to someone else. These erroneous items included incorrect Social Security numbers - often belonging to total strangers, wrong birthdates, addresses that had never been lived at, and employers that the consumers had never worked for. Here again it is essential to consider, not only the massive numbers of errors that are indicated by the study results, but the implications of these results. These statistics show a massive potential for every credit report to contain potentially costly errors.

Missing Accounts Can Hurt

Twenty percent of the credit reports reviewed were missing major account information such as auto loans, mortgages, and other consumer accounts that could have demonstrated the credit worthiness of the consumer. Credit repair programs like ours discover these omissions on a daily basis. In many cases a credit report is as damaged by the absence of these major accounts as it would be by the presence of erroneous derogatory accounts.

Closed Versus Open Accounts

Twenty six percent of the credit reports contained accounts that had been closed by the consumer but remained listed as open accounts. Keeping in mind the significance that the FICO scoring method places on the number and status of current accounts it is clear that even this seemingly harmless omission by the credit bureaus can potentially cause expensive and intolerable damage to ones credit. In the majority of these cases it was concluded that this error could make it appear that the consumer is currently over extended and cause the denial of a credit application.

Credit Bureaus Are Not Government Agencies

The information noted above is an indication of the severity of the reporting problems that occur. We have been helping our clients with credit repair since 1989. I often find myself correcting customers’ impression that the credit bureaus are in some way connected to the government. This belief is understandable. The credit bureaus have a major impact on your financial life. But although the bureaus seem like an omniscient Big Brother, they actually have no connection to the government at all. In fact, they are under constant scrutiny and have been fined many millions of dollars for their failure to cooperate with consumers’ efforts to fix reporting errors.

Your Rights

Significant legislation has been enacted to protect you from the impact of the credit bureaus inaccuracies. The right that you have to receive copies of your three credit reports for free on an annual basis is not a friendly public service by the credit bureaus. The bureaus have been required to provide this service as one of the protective measures included on the Fair and Accurate Credit Transactions Act of 2003. Your credit report can have a major impact on your financial life. Give your credit the attention that it deserves and review your reports regularly.

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Tips to handle a collection agent

September 28, 2008

Credit rating plays an important role in your credit report. When banks, credit card companies, or any other kind of loans are given away as funds to you, the creditor report to a company where your status in terms of repayments in time will be kept as a record. The company then makes a record of these details into a credit report, which is the at the most task to your credit rating. This will result as negative marks on your credit rating which will stay there for 7 years, controlling you from getting any kinds of loans.

After a (usually long) series of serious reminders, the creditor will thereafter hand over your debt to a collections company, as you begin to delay in making the payments to a creditor, whether it is loan payments or credit card or any financing payments, the creditor will take serious actions in order to get back the money. Basically, the creditor is under the impression that their chances of recovering the loan are not possible enough so they are willing to give up as much as half of its value in order to stop pursuing with it. When a creditor does this, they are transferring altogether "writing the loan off" as they usually sell the debt to a collection agent at a lower rate. When this happens the creditor will have a word with the credit reporting agency, and you will be figured with the lowest mark on your credit report, which will affect your rating for up to 7 years.

You should act as soon as you are being informed of the same. The first thing you should do is contact your creditor - not the collections - and ask if you can find ways to clear the debt with them immediately. A disapproving method of credit repair is by taking steps to avert this "writing off" of your debt. In many cases, if you agree to repay the debt immediately to the creditor, they will delete the "gone to collection" mark from your credit rating and the essential thing will be done to quick credit repair.

In case if your creditor is not agreeing to do this, you’re grounded with the collection agency. Usually, the collection representative will contact you in a very aggressive manner demanding immediate and full repayment of the debt, or else they will take you to court if this doesn’t happen. In terms of credit repair, always remember that the mark on your credit rating can’t get any more damaging at this point - the debt is already gone to collection - so take time to think of all possible aspect that u can take.

Try and convince to pay less than the full value of your debt as soon as possible. It is you who will have to take assistance of this situation to understand that the collection company has likely bought your debt at something nearest to half of its amount, so any payment made greater to that will result in a profit for them. In most cases the collection agent will be in a hurry to close your file as soon as possible to avoid the process getting delayed. They will usually agree to accept a quick payment at a discount so they can proceed.

Full payment to a collection agent should only be offered as a last resort. When the issue has gone to collections please try to pay back the creditor and not the collections company by any chance. If that does not work out, offer the collection agent a lower figure than the full loan amount.

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Credit Repair: Tricks of the Trade

September 28, 2008

Great Credit is Within Reach

The benefits of great credit are significant. The effort that you put into improving your credit score will be well rewarded. Here are the some powerful credit repair strategies that can produce dramatic results in a short period of time.

Check Your High Credit Limits

The relationship between your current balance and the available credit limit on each of your revolving accounts has a major impact on your credit score. Consumers often overlook this important issue. Each and every revolving account on your report should be examined. If the high credit limit is understated send a dispute letter to each of the three credit bureaus asking them to update the information. Don’t bother calling the credit card companies directly. The credit bureaus are responsible. Let them do the work. The results will be better and faster.

Increase Your High Credit Limits

There is one additional course of action that you should consider that can also reduce the ratio of your current balance to your high credit limit. Call each and every credit card company and ask them to increase your available limit. They may or may not agree, but you might be surprised. By the way, please keep in mind that you are doing this to improve your credit. Having a higher credit limit does not mean that you should use it.

Check the Age of Your Accounts

New accounts count against your credit score. Conversely, the credit bureaus will reward you for the accounts that you have maintained over time. When reviewing your three credit reports be sure to look carefully at the initial reporting date for each revolving and installment account. If the age of the account is incorrect on your credit reports send dispute letters to the bureaus. Here also don’t bother contacting the creditor directly. You will find that this is well worth the time involved.

Resurrect an Old Account

It is not unusual to discover an account on your credit report that you forgot about years ago. If you don’t have much credit please don’t cancel the account. If you no longer have the card in your possession I suggest that you call the company and obtain a replacement card. When you get it you should make a small purchase. The exact algorithm used in the FICO score is a secret, but based on our observations it is best to have some occasional activity on a credit card. Old accounts are good accounts!

Secured Cards

If you have limited credit and want to improve your credit score it is essential that you get a few credit cards. Secured credit cards are an excellent option that is available to everyone regardless of credit history. In the credit repair business we recommend this course of action. It is true that opening a new account will have an adverse impact on your score, but it is worse to have a lack of credit. In this situation secured cards will have an important and positive impact. Typically there are some fees involved with these cards as well as relatively high interest rates.

Authorized User Cards

In addition to getting a couple of secured credit cards you should also ask a trusted friend or relative if they will make you an authorized card member on one of their accounts. Currently the FICO scoring model seems to give new authorized card members the full score benefit of the principle card members credit history. Please be aware that authorized user status is not the same as additional card member status. Authorized user status does not require that you qualify, and either your friend or you can cancel your status at any time. I suspect that both you and the principle card member will favor the authorized card member status.

Post Bankruptcy Cleanup

If you have had a bankruptcy you should take action to clean up your credit with all three bureaus immediately upon receiving your discharge. If you don’t feel up to the task of dealing with the paperwork I suggest that you hire a reputable credit repair company. A reputable credit repair company will be inexpensive and be able to do this for you very quickly. The credit bureaus are required to remove all of the derogatory information from each account that was discharged. If you don’t take action to clean up your credit report it will not happen by itself. A comprehensive post bankruptcy clean up can have a dramatic impact on your credit scores within as little a sixty days after your discharge.

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Prevent Identity Theft

September 28, 2008

“Prevent identity theft” is a slogan used by companies who want to warn you about how to stop this very real crime. You may not realize it, but there are many steps you can take to reduce your chances of becoming a victim.

Tip 1: Prevent identity theft
One way to prevent identity theft is to use a post office box. Remember, identity thieves can steal the mail from your residential mailbox while you are not at home. You may just assume no mail arrived when, in fact, the thief is rifling through your credit card bills, bank statements, and utility bills to find information about you and how to access your finances. When you use a post office box instead, you are guaranteeing that the only person who has access to your family’s mail is your family.

Additionally, you should never leave outgoing letters or bills in your mailbox for your postal worker to pick up for you. These are popular targets for identity thieves and can give them easy access to your money and your credit.

Tip 2: Prevent identity theft
You can also prevent identity theft by purchasing and using a paper shredder. It may be hard to believe, but so-called “dumpster diving” is still practiced by identity thieves today. This means that the thief steals your garbage and rifles through it in search of old bank statements, bills, voided checks, and other paperwork that includes personal and financial information about your family. By shredding all of your mail and important papers before you throw them in the garbage, you’ll make it impossible for identity thieves to get their hands on your discarded correspondence.

When you provide information to businesses or stores, such as hotels or rental car companies, ask them if they shred hardcopies of your information before disposing of it. If they don’t, you should request to have all of your paperwork returned to you so you can discard it properly. By not shredding your information, these companies are not doing their part to prevent identity theft.

Tip 3: Prevent identity theft
You can also prevent identity theft by using a safety deposit box or a locked box for your home. More than 10% of identity theft victims claim that they knew their attackers — it was a family member, friend or neighbor. In most cases, known attackers gained access to the information just by walking around the victims’ homes or by going through their purses/wallets. By keeping all of your personal and financial papers locked away from prying eyes, you’ll be able to prevent identity theft.

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Making Sure You Have Good Credit

September 28, 2008

Credit reports are the very reason why you’ve got bad credit and there’s a need for credit repair. A bad credit score or a report can adversely affect your ability to seek financial products such as loans, credit cards and the like. Adverse credit history is more commonly known as impaired credit, poor credit, or bad credit tracked by the national credit bureau.

Nearly every single credit report we see, has some form of violation of your rights committed by collection agents. This report is analyzed by most financial companies before they sanction your loan application.

They, in fact, make late payments and your account is rated R2 - which mean that payments were made after 30 days lowering your credit score even further. The determining factor on how credit agencies will handle and charge your credit will rely on your credit score. If your credit score is below 600 you should start thinking about how to get your credit repaired, this is the first sign so start right away.

Once your credit information is in a bad state it will take some time before you can fix the problems with your credit and bring your score back up to higher score. If you filed for bankruptcy it will take a lot longer to remove this from your credit report. Try to pay all of your bills on time and apply for loans the rates will not be competitive but your with time your credit rating will get better.

Removing negative items from your credit reports should improve your credit score. Some credit repair companies suggest that you dispute every negative item on your credit report. You do not want to dispute “good” information, only negative items. Consumer credit counseling services are non-profit counselors that help people create a budget and repay their debts. You will even find credit counseling services. The credit counseling services and the credit repair companies do not provide the same services, though they may be listed side by side in a directory. Credit counseling services help consumers create budgets and negotiate repayment plans with lenders. There are credit repair specialists, credit repair lawyers, credit repair kits and credit repair counseling; the list goes on and on.

While there are many things companies can do to help you fix your credit, there are a number of things you can do yourself to get back on your feet. So you must find ways to fix or improve your credit. Credit repair services are set up to help people legally, ethically and morally fix their bad credit issues.

When the time comes and you need to consolidate your debt you will need to find people that can consolidate the debt in a non homowner system. The only bad part is that unlike debt consolidation companies, when consolidating your debt many will charge a interest rate that is higher than the industry, the reason for this is because they are taking a risk. It is where debt consolidation companies get an edge over such lenders. The credit card debt consolidation loans can help out the customers to move all the debts into one particular loan.

Today is the start of a new beginning, think positively and really believe you will come out of debt. Each morning be grateful for things you have and believe and get ready to receive financial freedom.