Archive for 2009
Friday, March 20th, 2009
What if you had financial troubles 15 or 20 years ago and finally took bankruptcy in order to get a fresh start? You were no doubt told that the debts discharged in that bankruptcy were gone forever – not collectable.
And even if you didn’t file bankruptcy, but merely quit paying a credit card - after 4 years the statute of limitations runs out and they can no longer legally collect from you.
That’s the truth, but the truth doesn’t stop some debt collectors from interfering in your life.
You see, those old files are hanging around in debt collectors’ offices. And every once in a while they look at them, and check your current credit report. If you’ve gotten back on your feet and your credit is looking pretty good, you become their target.
Why? Because they can see that you have money again. All they have to do is convince you that you must pay that old bill.
So how can they do that? First they file a lawsuit against you. Then, they hire a person to serve you who provides what is commonly known as “gutter service.” That means instead of actually serving you with the notice of suit, they toss the papers in the gutter. I don’t know how they get around the fact that you’re supposed to sign for receipt, but when did crooks worry about the legalities?
Now that you’ve “been served” with notice of the lawsuit, you have a set number of days in which to reply. When you don’t do that, the court will rule against you by default. So now there’s a judgment against you – and that shows up on your credit report. Then they either begin hounding you for it, or sit back and wait for you to rush to payment in order to get it off your credit report.
Pretty slick – and pretty crooked. But you still don’t have to pay it.
Should this happen to you, simply Fax and mail a certified letter to the collection agency letting them know that you aren’t going to pay, and don’t have to pay, and WHY you are not obligated to pay. Include proof that the debt was discharged in your bankruptcy, or that you have no made no payment or charges on the account for at least 4 years.
Whatever you do, don’t let them scare you into giving them any money. Even a single dollar paid on that debt will re-set the statute of limitations, and they can legally hound you for another 4 years.
Next, you need to dispute the claim with each of the credit bureaus – and they have forms for that. Once you file a dispute, they’ll investigate – and they’ll find that the debt is not owed. Then it will come off your credit report – as long as the proper time has passed. A bankruptcy stays on your credit report for 10 years, while other information remains for 7 years.
Author: Mike Clover
Posted in collections | Comments Off
Thursday, March 19th, 2009
Q:
I have a state tax lien on my credit report. Once paid how quickly will this reflect in my score? Also, any idea roughly a tax lien reduces your score?
A:
Hello,
There is no set number with the credit scoring process for tax liens. Based on all the credit reports I have seen, usually any negative mark such as late payments, collections, public records etc can drive your credit score down 100 points or so. Typically when you pay off a collection or public record, such as judgements and tax liens you will see a credit score improvement of around 30 to 40 points. Results vary depending on your overall credit profile. How much good credit do you have ? What is your credit balance to limits ? How long have you had good standing payment hitory, etc………..
Mike Clover
CreditScoreQuick.com
Posted in Uncategorized | Comments Off
Thursday, March 19th, 2009
If you’re fearful of losing your job in this time of mass layoffs, you may be tempted to opt-in to a credit card protection offer from your card issuer. Before you do, keep in mind that these offers are just one more way for credit card issuers to part you from your money.
For one thing, these plans effectively increase your overall cost of credit by more than 100%. If you currently carry a balance on your credit card of say, $2,000, and you’re being charged 9.9% interest, you’re paying about $16.50 per month in interest. Now add a fee of 99 cents per month per $100 in credit. That’s 20 times 99 cents, or $19.80!
While some of the smaller card issuers charge “only” 50 cents per $100, the big players such as American Express, Discover, Bank of America, and JPMorgan Chase & Co. charge high fees.
So the first thing to consider is cost. The second is the contract itself. There is NO guarantee that if you need this coverage, it will be granted.
The advertising for these programs say that in the event of job loss or illness the program will suspend your account, stop interest accrual, waive payments and stop late fees for a certain time period.
What they don’t say is that you must have been employed for a certain time period before you sign up, that you won’t be covered unless you’re a full-time employee, and that the self-employed get no coverage at all (even if they’ve paid for the coverage).
Many have waiting periods and require proof that you’re receiving State unemployment benefits. And of course, if you quit for any reason – tough. That’s not covered.
Job loss from temporary disability carries some stiff requirements too. Some of these plans state (in the fine print) that “You must be physically unable to perform any work or service for wages, gain or profit.” So if you have a broken leg and can’t perform your job as a cement finisher – you’re not eligible because you could physically go to work as a typist.
If you’re off work due to illness, most card issuers require a monthly note from your doctor. Fail to send the note and the coverage disappears.
Blogger Josh Smith says that when he wrote about this on his blog, he was inundated with replies from people who had been denied coverage. Some even had their plans cancelled as soon as they tried to file a claim – even those who had been paying for years.
Keep in mind that this is not an insurance plan – so your state insurance regulator can be of no help if you feel you’ve been defrauded through denial of benefits you’ve paid for.
One last note – credit card companies are also trying to sell a plan that will pay off your balance if you die. This is not only expensive, but completely unnecessary unless you have a co-signer on your account or you have an estate large enough to go to probate.
While they will try to collect from family members, they have no legal right unless that family member was a co-owner of your account.
Author:Marte Cliff
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news
Posted in credit card protection | Comments Off
Wednesday, March 18th, 2009
 You already know that credit card companies are lowering credit card limits right and left – and we’ve warned you that before you go shopping you need to go on line and make sure you really do have the available credit that you think you have.
But now, credit card companies are pulling an even dirtier trick!
According to an article provided to Yahoo finance by SmartMoney.com, some card issuers are now slashing credit card limits to less than your outstanding balance.
You read that right. Many consumers have had their available credit cut to a mere $2 or $3 over their outstanding balance – making them over-limit when the interest was added at the end of the month. Smart consumers called immediately and asked to have the over-limit fee removed, and were successful in doing so, as long as they hurried to make a payment and get the balance low enough to avoid triggering another over-limit fee the next month.
That tactic was outrageous enough, but at least the new credit limit was within range so that consumers could comfortably pay enough to get away from over-limit fees.
But now consumers are reporting cuts that could put some in a position of not being able to bring their balance low enough to avoid future over-limit fees.
The SmartMoney article quotes Paul Pensabene of New York – he received a statement from HSBC on December 8 showing that he had a credit line of $9,000 and owed $359.99 – so his available credit was $8,640. Luckily, he didn’t go shopping, because when he went on line a few days later to pay his bill, he found that his credit line had been reduced to $300 and he had been charged an over-limit fee of $35.
Another woman reported that she had caught the reduction to within $100 of her $3,000 balance on a Discover card when she went on line just days after it had happened. The letter notifying her of the change didn’t arrive until 3 weeks later.
This practice has the potential to bring thousands, if not millions of dollars in over-limit fees to the card issuers who are using it. Consumers who are unaware of the changes may innocently use their cards to charge purchases, while not having any idea that they are exceeding a credit limit. After all, if your statement says you have $8,000 in available credit, you really wouldn’t worry about charging a tank of gas.
Because the new regulations are taking effect in July 2010 and legislation currently in congress could move the time up by a year, card issuers are pulling every trick out of their hats to increase their revenues before these tactics are banned.
The advice for consumers: Be careful. Check every statement, read every piece of mail, and go on line to check available credit each and every time you use your card. If your credit limit is suddenly slashed from $8,000 to $300 and you make an expensive purchase, you could find yourself scrambling for the cash to pay for it – or face over-limit fees each and every month until you do.
My question: When this crisis is over and credit card issuers once again want our business, will we remember the names of the companies who hurried to fleece us while they had the chance? I hope so.
Author:Marte Cliff
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news
Posted in credit card limits | Comments Off
Wednesday, March 18th, 2009
 A dozen former Countrywide executives are now cashing in on the crisis that many feel they caused.
A new company – the Private National Mortgage Acceptance Company, commonly known as PennyMac – is led by Stanford Kurland, Countrywide’s former president.
He and his team have raised hundreds of millions of dollars – from selling their own stock in Countrywide and from big investors. They’re using those millions to buy delinquent residential loans – at a staggering discount rate. They now hold $800 million in loans and hope to increase that to $15 billion over the next year and a half.
PennyMac’s largest deal to date has been with the Federal Deposit Insurance Corporation, which held $560 million in loans left over after the failure of the First National Bank of Nevada. Most of these loans were adjustable rate mortgages whose interest rates had suddenly ballooned, leaving the homeowners unable to meet the new high payments.
Penny Mac purchased those $560 million in loans for only $43.2 million – or 38 cents on the dollar. Under the terms of the agreement with the FCIC, PennyMac can keep 20 cents on every dollar it collects from those loans – with the balance going back to the government.
This can turn into nothing short of a miracle for homeowners whose loans were purchased, because PennyMac is more than willing to re-structure those loans to keep the borrowers in their homes. Under restructure, the homeowner might exchange an 8% interest rate for a new low rate of 3%. That means a cut of about 50% in their monthly payment – and PennyMac still makes a good profit.
After all, collecting 3% on $100,000 amounts to a lot of money when you’ve only invested $38,000.
When homeowners are unwilling or unable to take part in restructure, PennyMac begins foreclosure proceedings. Those homes can then be resold at fair market value – and at fair market interest rates.
For some, this new venture smacks of executives profiting as a direct result of their own mis-management at Countrywide. Margot Saunders, a lawyer with the National Consumer Law Center, was quoted in the New York Times as saying “It is sort of like the arsonist who sets fire to the house and then buys up the charred remains and resells it.”
Several pending lawsuits against Countrywide accuse Mr. Kurland of being a major player in promoting the kinds of loans that his new company is now buying for cents on the dollar. And he admits that he pushed Countrywide into the kinds of high-risk loans that have now gone into default.
On the other hand, homeowners who are desperate and about to lose their homes say they don’t care who profits. Keeping their homes is top priority for them, and PennyMac is making that possible.
Author: Mike CloverCreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news
Posted in Countrywide | Comments Off
Friday, March 13th, 2009
Q:
Hello, We are at our wits’ end about what to do with Sallie Mae and my husband’s student loans. He never defaulted but was delinquent for a good amount of time. Since we started our house hunt (over 2 years now and not able to get anything) we have done consolidation , lowered our payments to something we can afford and have been current for over a year now. The delinquency still shows up on all 10 accounts on his credit report. We have spent many hours on the phone trying to get an answer as to why nothing is upgraded on the credit report , not even to show we consolidated. They never give us an answer. They say it’s the credit bureaus’ fault. Because of this his credit score is too low to qualify us for an FHA loan and we are getting desperate about not being able to get a home and having to shell out $1000 in rent every month.Any tips/help/information would be greatly appreciated it.
Thank you, Ana Ortiz
A:
Hi Ana,
I see how this could be frustrating. It is very typical for debt consolidation companies to blame the credit bureau for not showing what debts are in debt consolidated. I personally don’t see any advantage in them showing anything is in debt consolidation. I would not worry about that, typically what you need to worry about is them paying your creditors late. This is very common with debt consolidation companies.
The previous late payments will be on your credit report for seven years from late payment date. So you will have to wait seven years before that is removed. In order to get your credit scores up, I hope you have other credit on your credit report. Typically you need a couple of credit cards along with other types of credit. You also need to make your credit balances well below your allowed credit limit. This needs to be at least 20% of the allowed credit limit. If its higher, you will be considered a credit risk, which will lower your overall credit rating. Here is a good article we wrote, and it discusses what determines your credit score. You might need to work on other ares to increase your husbands score.
I hope this helps,and gets you in the correct direction. Its hard to say exactly what the issue without looking at your credit report.
Mike Clover
CreditScoreQuick.com
Posted in Uncategorized | Comments Off
Monday, March 9th, 2009
Q:
We are in the process of buying a house (closing this Friday). Perhaps this question is too late, but I still would like to know:
When we were in the process of getting approved, we learned we needed a co-signer. No problem, my father-in-law signed on. Upon obtaining credit scores, his came in lower than ours. (His was 699, ours in the mid 700s). Because he is our co-signer we were told the rate would have to be based on his score. Furthermore, the rate would be higher because he came in at a more “risky” score of 699.
However, while looking at our credit reports in front of the lender (broker, actually) – my father-in-law noticed a credit card statement that was not his, and it had a balance of over 10K. His son has the same name, so we’re pretty sure that the credit report had his son’s info on there in error. We brought this up to the broker, and she suggested we take care of it someday, but not now, as we wouldn’t want to mess with the credit score while going through the process of trying to buy a house.
A:
Hi Jim,
This is very common out there. When getting loan lenders always take the lower middle credit score out of everyone involved. This is the case even though someone else might have a higher credit score. The lender did direct you correctly, since SOMETIMES when removing credit from your credit report, could TEMPORARILY have a negative affect on your credit score. There is no Legal recourse that I can think of. Not sure what type of loan you got approved for, and what your terms are, but I always recommend checking with a couple of good lenders just to make sure you are not getting ripped off. I am a lender and I know that everything is negotiable.
I hope this helps.
Mike Clover
CreditScoreQuick.com
Author: Mike CloverCreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.
Posted in fixing credit report | Comments Off
Sunday, March 8th, 2009
Secured credit cards have long been the method of choice for building or re-building credit. Consumers with no credit or bad credit could simply pay the deposit for a secured card and begin proving their ability to make payments on time by using the card wisely.
As that wise use was reported to the credit bureaus, the consumer began to build a good credit score. They’ve been easy to get because they present zero risk to the card issuers.
So why, all of a sudden, are banks discontinuing them?
Two reasons:
• They don’t provide a high revenue
• They no longer want to associate with people who need them
That sounds a bit harsh, doesn’t it?
We know that card issuers are all about making money – that’s why they’re in business. It’s just become more apparent over the past few months while we’ve been watching them raise rates and fees in an effort to rake in more dollars.
Some of us have wondered about their new policies of reducing credit limits for even customers with good credit and stellar payment histories.
It almost looks as if they are using some kind of secret scoring system to determine which of their good customers could possibly become defaulting customers. And of course, they’re not very interested in consumers who pay their bills in full each month – because there’s no profit in that for them. That part makes sense.
Secured cards are generally low limit cards, so while the interest rate is high – usually at about 18 – 20% – the revenue from a small balance is still not much revenue. Often the card’s largest revenue is from the annual fee, the set up fee, the processing fees, and the usage fees.
Since the new regulations set to go into effect next year will limit those fees, many card issuers are hurrying to get out of the secured credit card business now.
HSBC, New Millenium Bank, and Bank of America do still offer secured cards – but all of their offers are not alike. So if you want one, check all the details before you apply.
Here’s what you need to look for:
• Make sure the card reports to the credit bureaus
• Comb the terms and conditions for disclosures about fees you may not expect
• Check the rates – I’ve seen from 7.99% to over 20%
• Be sure there’s a grace period – 20-25 days interest free after you make a charge if your previous balance was paid in full.
• Look for a “graduation” provision – to ensure that you can move on to a larger, unsecured credit limit after a set period of favorable use.
Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.
Posted in Uncategorized | Comments Off
Wednesday, February 25th, 2009
Many homeowners facing foreclosure have been in limbo now for several months – being assured by their mortgage companies that work-out options were in the offing and that they shouldn’t worry.
Some, who had missed so many payments that their mortgage companies rejected payments they attempted to make, were told to keep putting that mortgage money in the bank. The idea was to have funds available when options for keeping their homes were announced.
Now, less than 3 weeks before the foreclosure moratoriums were set to end, those consumers still don’t know what solutions might be available to them, or whether they will qualify for the programs. Right now the end date is set for March 13, but that could be extended if mortgage lenders are still unsure of the details of President Obama’s home loan relief plan.
In fact, Bank of America announced recently that it will not engage in any foreclosure sales until the details of the Homeowner Affordability and Stability Plan are released.
Bank of America officials stressed their desire to use any and all tools available to help borrowers with sufficient income and the desire to keep their homes.
Wells Fargo, Countrywide, and subsidiaries of Merrill Lynch have also extended their moratoriums on foreclosure, pending details of the plan.
An announcement by Obama last week indicated that a large part of his plan is aimed at homeowners who are in default or at risk of default.
While he stressed that the measure is not intended to bail out borrowers who have acted irresponsibly, he said that those who meet eligibility requirements could see a drop in monthly payments. It is possible that through a home-loan modification, up to 4 million borrowers could qualify to have their monthly payments lowered to 31% of their pre-tax income.
This reduction will likely come via a reduction in interest rates, with the Federal Government making up the difference between the mortgage lender’s stated rates and the rate the homeowner is able to pay.
In another part of the plan, homeowners whose mortgage loans are guaranteed by Fannie Mae or Freddie Mac may be able to refinance at a lower rate. Any loan up to 105% of the home’s current value will be eligible – not as a cash-out refinance, but as a refinance of a home that has lost value in today’s housing market.
Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.
Posted in Uncategorized | Comments Off
Tuesday, February 24th, 2009
 Everyone is wondering what effect the American Recovery and Reinvestment Act of 2009 – otherwise known as the stimulus package – will have on their own lives.
We’ve heard that some folks on social security and/or disability will receive checks for $250 each – but haven’t heard when that will happen, or exactly who will be eligible.
We also heard that “everyone” will get a $400 tax credit – whether they owe any tax or not. Now we’ve found a few more details. “Everyone” only refers to those taxpayers earning under $75,000 per year – or couples earning under $150,000. Those earning more may get a small credit.
Most expected that this would show up as a tax credit at year end, but now the plan is to put it into paychecks throughout the year. New tax tables will be mailed to millions of employers in mid-March, resulting in about $13 per week more in eligible workers’ take-home pay.
Self-employed individuals who pay quarterly estimates are reminded to take the credit into consideration when depositing their taxes.
Other breaks apply to those citizens who have good credit and some money in the bank.
For instance, $2.3 billion is earmarked for encouraging you to buy a new car. If you buy a new domestic or foreign car by December 31, and pay $49,500 or less for that car, you can deduct the sales tax you paid at the time of purchase.
That is, you can if your earnings are $125,000 or less ($250,000 for couples.)
This deduction will be “above the line,” which means you can take it even if you don’t itemize deductions. If you purchased a $40,000 vehicle and paid 6% sales tax, your deduction would be $2,400. But remember, this is a deduction, not a credit. It reduces your taxable income, so the actual savings will be dependent upon your tax bracket.
U.S. car sales were down 37% in January compared to January 2007, and lawmakers are hoping this extra incentive will push consumers to new car lots.
This deduction might not be enough to convince you to buy a new car in this troubled economy, but car manufacturers are doing their part to convince you as well. As long as your credit is good, you can get extremely low interest – especially if you choose one of their less popular models.
If this does get you dreaming of a new car, be sure to check your credit scores before you go out to shop. If they’re a bit low, work on improving them before you buy. (You do have until the end of the year, remember.) Your credit scores can and will make the difference between paying a lot and paying a little when it comes to interest.
Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.
Posted in Uncategorized | 1 Comment »
Disclaimer: This information has been compiled and provided by CreditScoreQuick.com as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.
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