If you’re paying high interest on credit card balances, you could be a target for the “Rate-reduction” scam artists. These are the folks who call and promise to get your credit card interest rates lowered – for a fee, of course.

One of the most prevalent goes by the name “Easy Financial,” and they’ve been actively marketing their program to unsuspecting consumers.

The calls may come from a live person, or could be automated, but the message is the same. For a payment of $600 to $1,500 – on your credit card – they promise to negotiate with your credit card companies and get your rate reduced.

Unless a consumer is carrying huge debt, the amount paid for the “service” will not be recouped through the rate reduction, making this scam even worse. At any rate, it’s money paid now, rather than over time. And to add insult to injury, you’ll pay interest on it.

In truth, they will either advise you to transfer your balance to a different card with a lower rate, or will simply make the same phone call to your card issuer that you could make yourself. In fact, they’ll get the phone number from you by asking you to read the customer service number from the back of the card.

Then they’ll set up a conference call with you and your card issuer, and they will simply ask for the reduction. There is no negotiation. And this is something that any consumer can do without any help from a third party.

While they do promise a money back guarantee, the “money back” has not been forthcoming, and the Better Business Bureau has been hearing from unhappy consumers. Few complaints have been resolved.

Section 5 of the Federal Trade Commission Act prohibits unfair and deceptive practices, and this practice does appear to be both unfair and deceptive. In addition, this company may be violating the Telemarketing Sales Rule and the Do Not Call list.

Authorities are warning consumers NOT to give any information to these callers. If you hand over your credit card information, they’re free to charge your account, even if you haven’t agreed to their services. This is just another form of identity theft.

If you’ve already fallen prey to one of these callers and have not received the promised rate reductions, call your credit card issuer and dispute the charge. Be sure to follow up in writing.

You can also report the scam to the Better Business Bureau, the Federal Trade Commission, and the Federal Communications Commission.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Assumable loans used to be common, but most are not legally assumable today.

Some FHA loans are assumable if they’re several years old, and VA loans originated before March 1, 1988 are generally assumable without approval from either the VA or the lender.

Different loans carry different fine print, but many homeowners have found themselves in trouble when the person who assumed their loan didn’t make the payments. Although they no longer had title, they did still have the financial obligation.

This can happen when people are well-meaning but get into trouble, or can be the result of a scam. Homeowners should think twice about signing over the deed to someone who offers to take over their payments and pay them their equity when they refinance. In a scam known as “Deed theft,” these new “buyers” get their own loan, which may include cash out, and simply walk away. The sellers have no legal claim because they have signed over the deed.

One very real concern in deeding property to someone and letting them take over payments is that newer mortgage loans usually contain a “due on sale” clause. The lender can call the loan due and payable, and it doesn’t matter that you’ve signed over the deed. It’s still your name on the financial obligation. If the lender calls the loan and neither of you is in a position to pay it off, the house could be subject to foreclosure.

Generally, if all payments are made on time, the lender won’t object – but that’s not a guarantee. Both you and your buyers could face difficulties if the loan is called.

A safer way to transfer ownership and get out from under a hefty loan payment is to enter into a lease-purchase agreement. Under this plan the owner keeps title to the house, the buyer makes payments, and a pre-set portion of that payment is applied to the down payment when the new buyer is able to secure a loan.

This arrangement can and should be done through a third-party, such as an escrow agency. The third party keeps records of all payments and can even forward the mortgage payment to the lender.

The contract between buyer and seller should contain safety measures for each, spelling out what will occur should the buyer cease to make payments. Under certain circumstances, the seller could be expected to reimburse the buyer for repairs and improvements to the property.

For the safety of all concerned, competent legal advice should be sought before entering into such an agreement. The actual contract should be drawn by a real estate attorney.

Author:Marte Cliff
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

You knew that when credit card issuers were given rules to follow, they’d find some new way to increase profits. Issuing cards with variable rates is one of those ways.

At least 4 of our major credit card banking giants have already switched part of their accounts to variable rates, and more are expected to follow. Variable rates are generally offered at a set margin over and above the U.S. Prime Rate, which will allow card issuers to float their rates up and down in keeping with prime.

Surprisingly, we learned that about 66% of all credit cards are already on a variable rate schedule, with that number expected to reach 75%.

What does this mean to you as a consumer? It means that your credit card issuer will be free to step around the new rules and raise your interest rates with no notice. Under the new laws, the old “rule” that required 15 days’ notice was changed to 45 days. But because it’s tied to Prime, a variable rate can change at any time without notice.

The new law that changed notice time from 15 to 45 days is scheduled to go into effect on August 20, along with a provision that restricts interest rate increases during the first year of card ownership. That provision also goes out the window when the card is offered at a variable rate.

The only exception is if you get in on a Promotional Rate. Those still come under a rule that says promotional rates must last for at least 6 months.

Read all the fine print in offers, and look for cards that still offer fixed rate options. Some will, because they’ll see it as a marketing tool to set them apart from the competition.

Financial analysts expect interest rates across the board to continue on their upward spiral. Your credit card issuer may give you 45 days’ notice instead of 15, but if you carry a large balance and do not have the means to pay it off or move it within the 45 days, you’ll still be stuck with the high interest.

The best advice they give is to pay down accounts as fast as you can, before your interest rates rise, causing the bulk of your payment to go to interest rather than principal reduction.

The Administration may want people to spend more in order to “stimulate” the economy, but the best individual course of action right now is to spend less and pay off debt.

Author:Marte Cliff
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

You know about the safeguards that credit card issuers try to implement to keep unauthorized people from using your cards. Well, now some smart identity thieves have figured a couple of ways around them.

The first deals with actually stealing your cards from your mailbox before you ever see them. Card issuers thought they could eliminate the danger for you by requiring you to call from your home phone to activate your cards.

That worked until a new website came along that enables you to place a call from any phone and make it appear to be coming from a different number. All a thief has to do once your card is in his possession is check the local phone directory for your number.

So if you’re expecting a new card in the mail and it doesn’t arrive, do call your credit card issuer to see if it has been activated.

A second scam is done over the telephone. The thief already has your credit card numbers, your address, and your phone number. All he’s missing is that 3-digit code from the back of the card.

The person who calls will give their name and state that they are from the Security and Fraud department at your card issuer’s company, calling because they’ve noticed unusual spending and wanting to verify that you did indeed make some recent purchases.

You may have gotten such a call in the past when you’ve used your card in an unusual manner or in a different location from usual. Some card issuers do call to check that the card is being used by an authorized person.

This call, however, is a classic “phishing” scheme. The caller will identify the bank that issued your card and ask if you made a certain purchase or purchases. Of course you’ll say no, because there was no such purchase. They’ll then tell you they’re starting a fraud investigation and that they’ll credit your account and send verification to your address. They’ll state your address and all you’ll do is verify.

Then comes the theft. The caller will say that he or she needs to verify that the card is in your possession, and will ask you to read the security numbers from the back. When you do, the caller will say “Yes, that’s correct.” It all sounds very legitimate.

This is just one version. In other versions of the scam, the caller will ask for the expiration date on the card, your billing address, or even your social security number.

The thing to remember is NOT to give out any personal information to anyone who calls you. If you’re worried that some unusual activity did take place, hang up and place a call to the credit card company yourself. Don’t use a number that the caller gave you – go on line to get it or call information for the number.

Author:Marte Cliff
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Rates are down and the mortgage market has loosened up a bit lately, so if you can qualify, now is a good time to buy a home or refinance. The catch is that qualifying for that loan is much more difficult than it was a year or two ago.

First, you need good credit and a down payment. Lenders (and the Federal Government) have figured out that people are more likely to work to keep their loans current when they have something to lose, so the days of “zero down” are gone.

FHA loans require 3.5% down and non-FHA loans require 10%. The good news is that if you qualify for a mortgage insured by the Federal Housing Administration (FHA) that down payment money can come from a family member, an employer, or a charitable organization as a gift.

“Gift” is the operative word here and you must be able to document the fact that you won’t be expected to repay the money. You need a letter that clearly states that the money is a gift. Also, be sure to keep documentation when you deposit the money in your account.

Next is your FICO score. Check your own credit report before you approach a lender and see if there are items you can “clean up” in advance. If you have any late payments, get them up to date. Then pay off or pay down any outstanding debt. Be sure to check for errors on your credit report and have them corrected.

Gathering your paperwork is the next step. Today’s lenders want to know everything and they want it documented. So gather up your bank statements, your W-2 wage and tax statements, and your pay stubs. If you’re currently renting, take your rent receipts. If part of your income comes from overtime, take documentation showing that the overtime is a normal part of your income, not a “once-in-a-while” occurrence.

If you receive income from Social Security or Disability, take copies of your award letters.

If you want to refinance, equity will be the key. Lenders no longer want to lend 100% of the value, although if financial troubles are your reason for refinance, you may qualify for help under the Making Home Affordable plan.

In some cases you can refinance, and in others you can work out a loan modification, which changes the terms of your mortgage so you can afford the payments.

Before you consider a refinance, sit down with a mortgage lender and go over the numbers carefully. A typical refinance costs $3,000 to $5,000, so the reduction in interest rate must justify that expenditure. Usually, if you plan to sell within 5 years, you’re better off sticking with your current loan.

Author:Marte Cliff
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Consumers and the media have been talking about provisions of the new Credit CARD Act of 2009 since some time last winter. After much worry and debate over whether it would make it through Congress, it was finally signed into law by President Obama on May 22.

Because banks insisted that it would take months for them to change their methods of billing, advertising, and marketing, most provisions won’t go into effect until February 2010. However, one small section of the bill will become effective on August 20.

Lawmakers felt that this section of the bill needed to be on a fast track in order to help families who are struggling to pay credit card debt.

Knowing that they had no time to lose, many credit card issuers have responded by raising interest rates and slashing credit lines at a fast pace to get it done before the changes become law. The banks who followed this path have come under fire from lawmakers and others who see the interest rate hikes as a “money grab” by the banks.

The banks defend themselves by saying they’re just reacting to the bad economy and the increased risk they face by giving credit to people who may already be struggling.

The result: Families who were struggling to pay $150 per month on a credit card balance are faced with a higher interest rate and a higher minimum payment. Now they can struggle even harder to pay $200 per month while not making any more progress at paying the principal balance.

Will this move result in more profits for the banks, or will the grab for higher profits result in more charge-offs as consumers “give up” on trying to keep up with ever-increasing payments? Are the banks contributing to a worsening of the “bad economy?”

The three provisions that will become effective in August won’t stop the card issuers from raising rates or slashing credit lines, but they will give consumers advance notice. They are:
1. Replace 15 days written notice with 45 days written notice of interest rate increases and other significant changes to a consumer’s account.
2. Inform consumers that they have a right to NOT accept the higher interest. They may instead cancel their accounts – and apparently will be allowed to pay off balances at previous rates. Right now this option is offered by some card issuers, but is not a law.
3. Mailing monthly statements to consumers 21 days prior to the due date – allowing time for consumers to receive the statement, pay it, and mail back the payment in time for it to arrive by the due date. This provision should at least help consumers avoid paying late fees.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Analysts are cautiously optimistic over predictions that credit card issuers have seen the “peak” in delinquencies and charge-offs.

While there has been a slight drop in delinquencies on loans that are as much as 6 months’ overdue, there is a rise in loans overdue by only one or two months. Since charge-offs occur after a loan has been in default for 6 months or more, analysts are seeing the new wave of 30-60 day late payments as a sign of new charge-offs to come.

They are guessing that the lull in charge-offs was a seasonal reaction to consumers receiving income tax refunds and using them to keep balances current. Now that the tax refund money has been used and unemployment is still rising, more delinquencies and defaults could be in the offing.

Apparently this is a phenomenon to be expected, even in years when the economy is not failing. Banks generally see a few month’s of declines in delinquencies during tax-return season, and then an increase in delinquencies in June.

In other words, consumers are trying to meet their obligations – even when it means using the coveted tax refund to pay a creditor they may not be able to pay the next month.

The state of the economy is making it impossible for many consumers to keep up – especially those consumers who are among the 9.5% of the job seeking population who have lost employment. Unemployment benefits simply don’t stretch to cover all the expenses that a regular paycheck covered.

Charge-offs at U.S. banks offering credit cards have almost tripled in the past 30 months – partially as a reaction to the high unemployment rate. Unfortunately, more job losses are expected in the coming months.

Charge-offs are expected to reach 10% – 14% this summer, putting a definite dent in profits made by major credit card issuers.

Since everything in the economy affects everything else, one must wonder if the credit card issuer’s aggressive tactics to ensure their own profits has played a significant role in their subsequent losses. By dramatically increasing card holder’s interest rates, slashing their credit lines, and acting in a manner that many consumers describe as “bad faith,” card issuers may be directly responsible for those card holders’ inability and lack of desire to keep their accounts current.

When a monthly minimum payment suddenly jumps by $100 or more, and the card holder has already been struggling to meet the lower payment, it stands to reason that he or she might choose that time to simply “give up.”

Ironically, many of the major banks are the direct cause of rising unemployment numbers. Along with other changes, their discontinuation of sub-prime lending led directly to thousands of their employees joining the ranks of the jobless.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Credit card issuers say the new laws will hurt consumers across the board. Consumer advocates say they won’t. Who will be proven correct remains to be seen.

We do know that credit card issuers will attempt to regain their profit positions by making consumer-unfriendly changes. They’re already making changes quickly in an attempt to secure their positions before the new laws take effect. They’ve been raising interest rates and slashing credit lines ever since the talk of the new rules began. They’ve also been closing accounts left and right – sometimes even for consumers who have always paid on time.

In the months prior to the law being signed, bank industry lobbyists began issuing warnings about the dire consequences to consumers if banks were limited in their practices. Now bankers are still warning that regulations will harm consumers.

Until now, card issuers have reaped huge rewards from penalty fees, as well as interest rates. Under the new laws, many of those penalty fees will be eliminated. Thus, they are contemplating adding some new fees and changing policies that were not addressed by the lawmakers.

One of those policy changes may be a return to the annual fee – especially for those card holders who pay their bill in full each month. When they use their cards, the only revenue comes from the retailer, and banks want more than that. Thus they may be charged a fee for the privilege of using the card.

Other moves that Credit card issuers have suggested in their warnings:

• Less rewarding rewards – A scaling back on cash-back incentives and other rewards.

• No more grace period – Interest will begin to accrue from the day you use the card, rather than from the statement date. This will allow card issuers to earn interest from those card holders who pay their bills in full each month.

• Variable rate interest on all accounts. No longer will it be safe to purchase a high-ticket item knowing that your interest will only be 9 or 10%. Unless you purchased during a promotion governed by the new laws, your rate could change at any time.

• Rate hikes across the board. The rates offered to banks’ “best customers” will go up along with everyone else’s.

• Dumping riskier consumers. We’ve already seen a move away from banks offering secured cards and high-interest / low credit line accounts. Now that the “fee harvester” cards will be severely restricted in fees they can charge, these may disappear altogether.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Q:

Hi Mike,

I just read over your guide to credit repair. I read it after the fact, but thankfully I followed everything you stated in your site on credit repair. My husband and I rent a home, which has just been offered for us to purchase. Our landlord is upside down on her mortgage and the price of the home is too good to pass up, considering where we live. We live in the Bay Area and the home price is about $250K. There are amazing deals right now with all the short sales and foreclosures. So, my immediate reaction was excitement and then realized that our credit was so bad, I didn’t think it could happen.

So I took on the task of cleaning up our credit reports. We each had 7 negative items on our reports. My husband’s FICO score was 577 and then when I got him a high fee credit card it dropped to 560. My credit score was 527. So I made it my full time job to clean it all up. I bought a binder and dividers. Each divider represented a different collection agency. I wrote down in each section the collection agency, the amount owed, the date of last activity to see how old it was for leverage and a few other miscellaneous items. I then began calling. I paid many of them immediately and some I extended out a little bit, as we still need money to live on. We still need to pay our regular bills. I finally got to the two largest accounts which were over $1000.00. I was able to get a loan from my father, negotiated a settlement with one of the collection agencies but the other was very stubborn. I just needed it off my credit report or at least paid, so I decided to pay it. We get a security deposit back when we buy the home, which will go to pay off my father for lending me the money. I started this credit repair three weeks ago and as of August 14th, 2009, our credit reports will be all cleaned up with nothing outstanding. Oh, I left a couple accounts alone because they are over six years old and my lender said they weren’t going to focus on that. They were just too old and too small.

I checked on Credit Karma, which provides TransUnion’s credit score for free. My husband’s credit score went from 560 to 601 in two weeks. This was exciting. I also disputed a couple items and when I did, noticed some of the collection agencies had deleted items, despite saying they wouldn’t. I was quite excited about this.

Our lender said he will re-run our credit reports in 30 days to see what they look like. Our goal is to have the home by November 15th, so we can take advantage of Obama’s tax incentive of $8,000.00. It is the middle of July right now and I am done. I wanted to tell you that you can have success and it can happen in less than a year if you persevere. Granted, most of our collections were not large amounts, but enough of them lowered our FICO score. Mine ha gone from 527 to 537. I do have a MasterCard which is also high fee based. I got it almost two years ago and have never been late on it. They continue to raise my limit. My problem was that I hovered around the high limit, which doesn’t look good on your credit. I have decided not to use the card anymore. I have brought the card down from a $750 limit to $630.00. I am working towards a zero balance or close to it. I have set up online payments for the next few weeks of $50 per month to lower the balance on the card. I know this will help my scores.

I just want to know, is there anything else I can do right now? I do write letters to the collection agency, along with proof that the debt has been paid, via my online bank statement. I request them to notify the credit bureaus and to delete the item from my report. I’m aware they don’t have to, but I still try. I then write a letter to each of the three credit bureaus disputing the entry. I attach proof of payment and ask them to delete the entry. I know they must contact the collection agency to see if the debt is valid. However, this may be so much work that they just refuse to do it since they have my money. I’m just trying to be pro-active in all of this.

I finally see a light at the end of the tunnel. I truly believe that we will be buying this house now and the November 15th deadline is clearly going to happen for us. If you have any feedback, that would be great.

Sincerely yours,

Robyn K.

A:
Hi Robyn,
I am glad you did what our site recommends. Most people think that there is some credit repair miracle out there, and find out quickly its takes what we teach, along with what you have done yourself to make progress. I always recommend to everyone to make sure you have good credit reporting on your credit report. You will typically need a couple of credit cards and maybe an installment loan. Make sure you don’t close out any good credit cards. This will lower your credit scores. You should never close out good credit. If anything you should charge small amounts on your cards and pay them off every month. Its sounds to me the only thing you might be lacking is more credit. You can access all of this through our site. We provide credit cards and loans that will help improve you scores overtime. Also pull your credit report regularly and make sure that the collection companies are reporting your settlements on your collections to the credit bureaus. This is a common problem, you pay off the collection and they don’t update with the bureaus.

In regards to asking the bureaus to delete a debt that was recently paid, I personally believe your time could be better spent. A collection will stay on your credit report for 7 years from collection date. Normally a credit bureau will not remove a paid collection if it’s within that time frame.

Keep up the good work and I hope you get your Dream home in the Bay area……

Mike Clover
CreditScoreQuick.com

You’ve read all the basic advice on how to raise your credit scores – they include actions such as: pay off outstanding debt, use your credit cards sparingly, and pay all your bills on time.

If your scores are low right now and income isn’t coming very fast you may think there’s not much you can do about it, since you don’t have the money to pay off outstanding debt. But that’s not so. Even if you aren’t able to make ends meet right now, you can manage your money in ways that will be less damaging to your credit scores.

Maybe your situation is such that you simply can’t pay all your credit card bills any more. Pay one of them. Stay absolutely faithful and on time with just one account – preferably the oldest one. Also pay your utility bills on time. They used to report only delinquent accounts, but more of them are now reporting “paid as agreed” accounts.

Avoid finance companies. Doing business with them looks bad on your credit report. So if you can manage it, pay them off and then don’t go back. Avoid Pay Day Loan stores – they’ll suck you into a never ending spiral of debt. Resist the temptation to apply for an in-store credit card. Some experts say applying for one of those cards can reduce your score by up to 20 points.

Prioritize: Pay the most important debts first, and pay them on time. Your house, your car, your utilities, and your credit cards.

If your credit scores are suffering because you refused to pay an account in dispute, or if you had a temporary credit problem due to illness or other personal setback, add that information to your credit file. Simply write a letter to each credit bureau that is reporting the negative information, and explain the reason. You have a right to do this under section 611(b) of the Fair Credit Reporting Act. Ask that the information be added to your file exactly as you have written it, then ask for a copy of the updated report.

Not all creditors look at your report entries, so not all will read your note, but some do.

Take care in composing the letter, and don’t write it at all if there isn’t a very valid reason for your delinquencies. Experts disagree over the benefit of such a note, and while some believe it will help, others believe it could be harmful to your credit scores.

This will stay on your report for 2 or 3 years before being deleted and will be seen by anyone who accesses your report. Thus, don’t use foul language or name-calling – simply state the facts as you see them.

Author: Mike Clover
CreditScoreQuick.com