In a previous article we discussed how buying with a credit card rather than a check or money order can protect you if you don’t get merchandise you’ve ordered. But that’s not the only thing that can go wrong when you order on line or through the mail.

What if you get the goods you ordered but the quality stinks?

This part of the Fair Credit Billing Act can be confusing, because it contains several “ifs.”

For instance, goods must have cost at least $50. Then the purchase had to have been made either in your home state or within 100 miles of your mailing address. So… you can’t go on vacation far from home and then come back and complain about things you bought while you were away.

If your credit card purchase was on line or over the phone… who knows? You need to call your card issuer to see if you’re covered. You made the purchase at your own address, but…

And here’s another “If.” If the credit card issuer is also the merchant, or if the seller mailed you an ad and you purchased from that ad, then the restrictions don’t apply.

Before you can make a claim you are generally required to try to work things out with the merchant. Do so carefully, and be sure that everything you do to attempt to resolve your issue is done in writing. If you talk on the phone, back that up with a written note that says something like “As we discussed in our conversation of April 30 at 1:15 p.m. Eastern time…” Be sure to get the names of everyone you talk with. Depending upon the policies your credit card issuer has in place, you may have to show proof that you tried to return the merchandise or get a refund.

That isn’t always easy, if you’re dealing with unethical companies. I know one young man whose credit card was billed for a health club membership after he had verbally canceled his membership when he moved out of town. It turns out that the fine print said he had to cancel by certified mail, so he tried that, but the health club refused the letter.

Whatever you do, keep paying at least the monthly minimum on your credit card while you’re disputing the charges. Your credit scores will suffer if your account shows non-payment.

Author: Mike Clover

CreditScoreQuick.com your resource for credit cards, credit reports and ground breaking credit news.

Since thousands who thought their jobs and income were secure are now facing long-term unemployment, it follows that thousands who never expected credit problems are now in trouble.

With savings depleted, many are unable to pay the monthly minimums on their credit cards and those cards may eventually go into default – causing credit scores to tumble and leading to lawsuits for collection.

What does that have to do with your children?

It affects them if at some time you added them as authorized users on your credit card or cards.

Don’t panic – they aren’t responsible for your debts unless they were co-applicants.

But the “piggyback  rule” that allowed your good credit to help them establish their own credit scores can now work against them. The activity on your credit card and your credit report will be reported under their names as well as yours – and when that activity is negative, your credit woes will lower their credit scores.

If you think you’re headed for default on your credit cards, the first thing to do is contact your credit card issuers and have your children’s names removed. In fact, if your spouse was not a co-applicant, have his or her name removed at the same time.

If you’ve already been late, they may not be willing to help you, so do this as soon as you see trouble on the horizon.

Next, your children should get copies of their own free online credit reports and see if your troubled accounts are listed. If so, they can contact the credit bureaus and challenge the debt. They’ll need to submit paperwork verifying that they are not the responsible parties on those accounts.

Aside from hurting their credit scores, the real trouble for your kids can come if your account is sold to a third party. All they’ll see is the names, not the status. So they could sue your children as well as you. Even if they saw the status, they might not care. Some of these 3^rd party collection agencies are vicious. In fact, the tactics they use are such that you and your kids could receive a notice of judgment before even knowing you’d been sued.

If your children are sued you will have a good defense. But you’ll still have to pay for an attorney and your kids will still go through a hassle.

Author: Mike Clover

CreditScoreQuick.com your resource for credit cards, credit reports and Credit News…..

Both the Federal Truth in Lending Act and the Fair Credit Billing Act offer some consumer protections. But you need to pay attention to the limitations and your own responsibilities.

Here are some of the protections and restrictions:

Theft or loss: The Federal Truth in Lending Act protects you if your credit card is lost or stolen. Even if you fail to report it right away, your maximum liability is $50. But realize that a debit card and a credit card have different rules, even though they look alike.

Even though a thief will say “credit” at the register in order to avoid entering a PIN, the theft of a debit card must be reported within 2 business days or you’re liable. So keep track of that debit card. If you don’t notice it’s gone until after 2 days have passed, a thief can empty your bank account and you’ll have no means of getting the money back.

Billing “Errors” can be accidental or intentional.

You may have ordered from a company and your package was lost in transit, a computer may have stuttered and entered a charge twice, someone could have forgotten to give you a credit for goods returned – or, unfortunately, you may have ordered from a bogus company that never intended to ship the goods.

The Fair Credit Billing Act gives you the right to dispute these “errors,” and to have your dispute taken seriously. So whatever the reason for the error, you can probably get the charges reversed, but only if you act quickly. You must send a dispute letter within 60 days of the charge appearing on your monthly credit card statement. Then the card issuer has 90 days to follow up with an investigation.

This is one reason why using a credit card when ordering from an “unknown” company is far safer than sending a check or money order.

When you contact your credit card issuer, be sure to include all the information. Your name, address, and account number; a complete description of the charge in question; and the reason why you dispute the charge.

You aren’t obligated to pay for a disputed charge unless the card issuer determines that it is valid, but if you have other charges on the same statement, be sure to pay at least the minimum.

Otherwise, someone else’s mistake will show up as a reduction in your credit score!

Author:Marte Cliff

CreditScoreQuick.com your resource for credit cards, credit reports and credit news.

Q:

If I have filed a dispute with Equifax, do I need to file one with Transunion and Experian?

Nick..

A:

Hi Nick,

I am going to assume that what ever you are disputing on your credit report is also reporting to the other two credit bureaus. If this particular issues is, then yes you need to dispute to the other two bureaus as well. You can do this through our on-line credit report dispute links to Experian and TransUnion.

Mike Clover

CreditScorequick.com

You know your credit score matters – it’s the yardstick by which you are evaluated and judged by lenders, landlords, employers, and even would-be spouses.

The FICO credit score assigns each consumer a score from 300 to 850. And while they don’t reveal the mathematical formula used to assign that score, it’s common knowledge that your use of credit determines your score.

Consumers wanting to improve their credit scores have long wondered how much different activities would raise or lower their scores. And no one will say, perhaps because the answer is: “It depends.”

The truth is, the impact that an activity will have on your credit score depends upon which scorecard you are on.

FICO scoring uses 12 different scorecards that categorize consumers into groups of their financial peers. If you’ve had a bankruptcy you’re on one scorecard, while you’ll be on a different scorecard if you’ve had late payments but no bankruptcies. If you have a clean credit record but little credit use, you’ll be on a different scorecard from a consumer with clean credit and extensive use.

The number of points assigned to a given activity varies depending upon the scorecard you’re on. A credit application will “cost” a young person with little credit history a different number of points than it will cost a consumer who has been using credit for 30 years.

While this alone seems ridiculous, it gets worse. Your score is partially determined by comparison to others on your scorecard. So here’s what happens:

Say you’ve had a bankruptcy. You’ll be on a scorecard with others who have had a bankruptcy. Say also that you’ve worked hard to build and maintain a good credit record ever since. Your score might be at the top limit allowed for people on your score card. Then you reach the magic 10 year mark and the bankruptcy comes off your credit report.

It seems like that would be a good thing – that it would raise your score. But instead it could lower it, because you’ll automatically be moved to a score card with people who have not had bankruptcies – and you might not compare as favorably. You move from the top of one group to the bottom of another – and your credit score goes down.

The good news is that by maintaining good financial habits you can eventually rise to the top of the next scorecard.

In the meantime, do keep track of your credit scores on a regular basis. Get your free credit report with scores today and see where you stand. Then keep working toward a score of at least 760 – which will get you the best rates next time you need credit.

Author: Marte Cliff

CreditScoreQuick.com

Are falling credit scores, the high rate of foreclosures, and personal bankruptcies the result of Americans feeling so insecure about themselves that they overspend in an effort to “keep up with the Joneses?”

Some financial gurus say yes. Along with envy, a belief in entitlement, and a need to spend in order to “feel better about oneself,” trying to keep up with the Joneses has led far too many Americans into crushing debt.

Think how many times you’ve heard statements such “I really can’t be seen in last year’s swimsuit!” or “I work hard, so I deserve this.”

Of course many don’t say those things out loud, they just feel that somehow they “should” be able to install a swimming pool, drive a new SUV, or buy a 52” flat screen plasma TV because their neighbors or their friends have them. If they didn’t do the same, those friends and neighbors might look down on them. Can’t have that.

So, armed with little pieces of plastic called credit cards, Americans marched off to the vendors and came home with the goodies – at a price that became impossible to pay when credit card issuers suddenly raised their interest rates and reduced credit lines.

So now what? With their credit scores in the basement and their credit lines gone, those consumers don’t have the means to continue buying all the “stuff” they didn’t need in the first place.

The possible up side of this crisis…

Change is often hard. But perhaps this change can turn out to be a good thing in the long run. Perhaps children growing up in this different atmosphere will learn to be happy without a steady flow of new toys and distractions. Perhaps adults will learn to enjoy what they have instead of trying to find fulfillment through spending.

This credit crisis may even be good for the earth. When people don’t have credit card lines to spend on trinkets that are quickly tossed aside, perhaps our landfills will cease to be overburdened with cast-offs.

My prediction: Those who can take this in stride and quit judging their own worth by their ability to engage in conspicuous consumption will be the winners in the next few years.

They’ll cut back on unnecessary spending and find ways to save even on necessary spending. They’ll get those credit card bills paid and rebuild their credit scores – and will have learned enough not to use their credit to excess in the future. And, hopefully, they’ll teach their children by example, so the next generation won’t get into the same mess.

Who knows, maybe people will begin taking pride in thrift.

Author: Mike Clover

CreditScoreQuick.com

On March 26 the government announced yet another program designed to help homeowners keep their homes. The new program, named the Temporary Assistance for Unemployed Borrowers program, will go into effect until later this year and many of the details are yet to be worked out.

Will it be more helpful than the Making Home Affordable Modification Program? It’s too early to tell, but one hopeful word in the early reports is “requires.” However, it may only be available to those whose loan servicers are already HAMP participants.

This new program isn’t for everyone. In order to qualify, the homeowner must first request assistance while the loan is still current, or within the first 90 days of delinquency. Then he or she must prove receipt of unemployment benefits. That eliminates the self-employed and those whose unemployment benefits have run out.

The program will require lenders to offer three to six months’ of lower mortgage payments – not over 31% of current income – in the form of forbearance. Forbearance means that the unpaid amount is not forgiven, but deferred. So the program will not reduce the debt load.

Using the program will appear as a negative on the borrower’s credit report, but of course, delinquency is also a negative. Either way, the borrower’s credit scores will take a hit.

Why 3 to 6 months? Perhaps as a result of reports from the U.S. Bureau of Labor Statistics, which says the median length of unemployment is approximately four and a half months. This figure may come as a shock to those who have been seeking employment for a year or more.

They also report that the unemployment rate stands at 9.7%, but as we all know, the true figure may be as high as 22%. Statistics only count those receiving unemployment and actively seeking work.

What if there’s still no work after 6 months, or if new employment pays far less? In that case, participants will be considered for a loan modification through the HAMP program.

Due to another change in regulations, HAMP program loan servicers will be required to consider an approach that includes a write-down of some principal for loans that are more than 115% of the current value of the property.

But as with all these programs, the test for eligibility will be what benefits the lender most – not what benefits the homeowner. If loan modification is more beneficial to the lender than foreclosure, the homeowner will stand a good chance. If not, modification will be refused.

Author: Marte Cliff

CreditScoreQuick.com your resource for credit cards, credit reports, loans and credit news.

Consumers with low credit scores and limited down payment funds have long relied on FHA loans as the path to home ownership. But under FHA guidelines, they are limited in their choice of homes.

For one thing, the home must meet certain standards. FHA contends that home buyers with lower credit scores and little cash for a down payment don’t have the financial means to make home repairs soon after purchase. But for the last 7 years there’s been an additional restriction.

In 2003 the Federal Housing Administration imposed an “anti-flipping” rule designed to reduce mortgage fraud. Under this rule, a FHA buyer could not purchase a home that had been owned by the seller for less than 90 days. In many cases, home buyers didn’t become aware of the rule until they attempted to purchase such houses and learned that they couldn’t use a FHA loan.

Now, in an effort to make more affordable homes available to these consumers, FHA has instituted a 12-month waiver to the rule.

Investors who buy foreclosure homes at auction generally need to spend some money on repairs before those homes can be offered for sale – especially if they’ll be offered to FHA buyers.

Thus, one of the provisions of the waiver could be a tripping point in the effectiveness of the waiver. FHA says that if a buyer agrees to pay more than 20% above the price the investor paid, the loan will come under more scrutiny. Some banks are just saying “no” to lending on such purchases.

So depending upon the price of the home plus the extent and cost of repairs, many homes could still be excluded. Waiting the 90 days isn’t a viable option, because the period begins when the sale to the investor is recorded and ends when the purchase contract with the new buyer is signed. Few investors will be willing to “hold” a home for a buyer who hasn’t signed a purchase contract.

Earlier Federal programs promised to help distressed homeowners through mortgage loan modification, refinance, and short sales – but fell short of success because banks were not willing to cooperate. This program, like the others, will only be as beneficial if the banks cooperate.

The best course of action for any future homeowner is to become qualified for a conventional loan by raising his or her credit scores, and to begin gathering funds for a down payment. The first step is to order a free online credit report with scores and see where you stand. Then follow the suggestions given on the free credit report and begin the climb to restriction-free home buying.

Author: Mike Clover

CreditScoreQuick.com

Q:

In December 2009, consumers fed up with high credit card interest rates and the seemingly anti-customer practices of “too-big-to-fail” banks launched the “Move Your Money” movement. And it seems to be taking hold.

However, the shift began even before this launch. Membership at credit unions grew by 2% in 2009. As of February 55% of community banks and credit unions reported that they had seen an increase in new deposit accounts.

Credit card interest rates are one reason for the switch. A study last summer showed that credit card interest rates at the 12 largest credit unions averaged 3-4% less than interest rates at the 12 largest banks. And, unlike banks, Federal Credit Unions must adhere to an 18% cap on interest rates – whether for credit cards or consumer loans. As we’ve seen, the big banks have no cap on the interest rates they can and will charge.

But there’s more. Small banks and credit unions also tend to pay more interest on deposits and often run specials to attract new depositors. And since credit unions are member-owned nonprofit organizations, they also pass surplus profits back to their customers in the form of dividends and low fees.

Another advantage to moving to a small bank or credit union is personal service. These institutions pride themselves on getting to know their customers. So if you appreciate being greeted by name when you enter your bank, moving your money might please you.

The move isn’t for everyone…

If you rely on the services that only a large national bank can offer, you may be frustrated by banking with a smaller institution.

For one thing, you could find yourself having to use another bank’s ATM when you want to withdraw money. Fees for that service run from $1 to $3 for every withdrawal. However, most of these smaller institutions do belong to an ATM network that provides fee-free access at over 25,000 locations nationwide. You just have to keep track of which banks belong to this Co-Op Network.

Customer service, while friendlier, probably won’t be available 24 hours. In fact, if you need to contact customer service, you may be limited to calling between 9 and 5, Monday through Friday.

Not all small banks and credit unions offer full service online. Some do, some don’t, and some charge for the service. So if you enjoy online bill paying and mobile banking, check for availability before you make the switch.

As with any financial decision – get all the details before you act. Along with fees and practices, be sure to check the details associated with the credit cards they offer.

CreditScoreQuick.com