March 25th, 2009
 Consumers with no credit history – and those who are trying to rebuild credit after experiencing financial difficulties – often find it nearly impossible to get that first loan or credit card to begin building a good credit score.
Unless you have a credit record to show that you’re a responsible debt payer, no one wants to give you credit. It gets even worse if you’ve got a past record of non-payment. And if you need to show responsible use of credit in order to get credit, it feels like you’re stuck between a rock and a hard place.
If you find yourself in this situation, you may feel very alone, but you’re not. It turns out that over 50 million Americans have little or no credit history. And millions more have a credit history that needs to be repaired.
The good news for you is that a company called Pay Rent Build Credit, Inc. (PRBC) is offering a solution. Called America’s Alternative Credit Bureau, they’ll help you build credit for bills you’ve already paid, even though those bills are typically not reported to traditional credit bureaus.
These are monthly expenses such as rent, telephone bills, insurance bills, cable and satellite TV bills, power bills, and even day care expenses. Typically, these are only reported to credit bureaus if your payments are late or in default.
For a small fee, PRBC, using information you supply, will verify your past payment of these accounts. Then, if you sign up through them for on-line bill pay, they’ll keep an ongoing record of payments.
Creditors with whom you’d like to do business can then request copies of your PRBC credit report - just the same way they request a credit report through any of the “Big 3″ Credit Bureaus. The difference is that you must first give permission.
Once you’ve shown a good record of payment of rent and 3 other bills for 12 months or more, a PRBC credit report can even help you qualify for a mortgage loan. In the meantime, it can help you get a credit card – or a better rate on a credit card, and can prove to a potential landlord or employer that you are a responsible consumer.
Often, consumers who have made a life-long habit of paying cash for every purchase are shocked and angered to find that they don’t qualify for a mortgage loan. They feel that they’re being penalized for responsible behavior – and they are. Mortgage companies, along with other credit issuers, want to see a track record of monthly payments. PRBC is helping those consumers prove that they are indeed credit worthy citizens.
Because the size of this market offers vast opportunities for profit, several other companies – including Fair Isssac – are either implementing or working on plans to implement some version of an alternative credit reporting service.
Author:Marte Cliff
Posted in building credit | Comments Off
March 24th, 2009
You’ve been told many times that it isn’t smart to let a salesperson check your credit unless you’re ready to make a purchase. In fact, you may have been told that credit checks are so damaging to your score that you don’t even dare look at your own credit report.
That part isn’t true. You can check your own credit report as often as you like with no damage to your score. And you should – it’s one way that you can be alerted quickly if someone else is using your identity.
In addition, you don’t need to worry the checks that credit card companies make before they send you one of those “pre-approved” offers. Not that you’ll be receiving many of those in the near future – credit card companies are trying not to extend credit right now – not searching for new borrowers.
Those checks, which are really nothing more than unauthorized snooping, are not used in compiling your score. They, along with account reviews and inquiries from potential employers, are known as “soft” inquiries.
The inquiries that affect your FICO score are the “hard inquiries.” These are made when you apply for retail store credit, credit cards, auto loans, and mortgages. They affect your score because they show your positive intent to obtain credit.
The more inquiries, the more they’ll affect your score – except in one instance. The credit bureaus and FICO understand that people shop for the best deals, and they take that into consideration.
So if you’re shopping for a car and you visit 6 different dealerships within a 2 week time frame, all 6 inquires will count as one under the old scoring model. The new model extends that time frame even farther – to 45 days.
The same is true for mortgage loan inquiries.
Even better for shoppers – any inquiries younger than 30 days are completely ignored by the scores. This gives you more leeway to shop for the best mortgage or car loan without fear of lowering your score.
Credit inquiries stay on your credit report for 2 years, but the FICO scoring model only counts them during the first year.
If you’re thinking about a car or a house, check your own credit first and work to get it into the upper 700′s before you let any lender do a hard inquiry. And then, don’t get the inquiry until you feel certain you’re ready to go forward.
It would be a shame to knock yourself down if you’ve been working hard to get to that place in life where lenders offer you the lowest rates!
Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.
Posted in credit check | Comments Off
March 23rd, 2009
 Not too many months ago, most consumers’ mailboxes were filled on an almost daily basis with offers for new credit cards. Most of them were emblazoned with “You’re approved” in bright red letters across the front as an enticement to open the envelope and say “yes” to the opportunity.
Along with those offers were envelopes filled with cash advance checks from current card issuers. Some of them were already printed out in amounts of $3,000, $5,000, or even more. The message was clear: “Just sign the check and deposit – and go indulge your every whim!”
Often those messages came with enticements such as free gifts, reward programs, and interest-free trial periods. But that was last year.
Now, that deluge has slowed to a drip – and it only lands in selected citizen’s mailboxes.
Instead of seeking new card holders, credit card companies are closing unused accounts, slashing credit limits, and raising interest rates so high that most consumers can hardly wait to pay their debts and get out from under.
American Express, while also using those tactics, has taken an additional step: They’re offering significant “bribes” to current account holders to pay off their balance and close their accounts.
American Express isn’t revealing how many consumers received the letters offering them a $300 pre-paid credit card in exchange for paying off their accounts between March 1 and April 30.
Although other card issuers, such as Chase, offer similar (smaller) bribes to customers in default, American Express is targeting those customers who might go into default. One or more of the various scores kept on each of us has indicated that they’re a higher than average risk.
This is just one more step being taken by card issuers who are seeing near record numbers of defaults and charge-offs.
The result for consumers is anything but good. Low interest rates on both credit cards and mortgages require high credit scores. High credit scores rely on many factors – one of which is the ratio of debt to available credit. So every time a card issuer closes an account or reduces a credit line, the consumer’s credit score takes a hit.
This is a self-perpetuating cycle with no end in sight as yet. Hopefully the credit bureaus will begin taking notice and adjusting scores accordingly. However, there’s been no news of that happening.
One has to wonder – when the credit card companies “weed out” all those consumers who have been carrying balances and paying interest, they’ll be left with those who pay their balances in full each month. That will cost them money, so the next logical step will be to begin closing those accounts as well.
Then where will their income come from?
Author: Mike Clover
Posted in credit card | Comments Off
March 22nd, 2009
Teaching your kids to understand and respect credit could be one of the most valuable lessons you can impart. People all around you are buried in debt – you may even be buried in debt. If you can keep your children from falling into the same trap, you’ll be doing them a great service.
You really need to start when they’re very young – with savings accounts, or even a box at home where they can save up money to buy something special. As they get a bit older and proficient at math, they should learn about checking accounts and how to track expenditures. They should also learn how to balance the bank account.
Learning those things early on will make them much less apt to go crazy with spending the first time they hold a piece of plastic with their own name embossed on the front.
If you didn’t start early, there’s no better time than now. They need to understand the basics before they have access to plastic money. That said, when the time is right, you have choices in how you’ll introduce him or her to the world of credit.
A simple way is to add your child’s name as an authorized user on your own card. As long as your credit is good, it will help your child to build credit as well. But that might not be the best choice.
If you add your child’s name to a card on which you carry a balance, the lesson may be lost. It’s better if the card your child uses is used for nothing but his or her expenses. That way you can both see and track purchases, and your child can see clearly how many dollars it costs when that balance isn’t paid in full each month. This is part of the lesson you want to teach.
If your teen has an “I can’t live without this item” and wants to charge it, you should first sit down together and go over the real cost. If the item is $100 and he or she can only pay $10 per month – show him how much extra he’ll pay in interest.
This is a good time to teach budgeting, so your child can see that if he runs up debt he’ll have that much less to spend next month.
You also need to establish some clear rules about how the card will be used. Will he buy his lunch every day with the card and then pay it off in full at the end of the month? Is the card for clothing, music, or entertainment? If so, who pays the bill? And what are the consequences for not making the payment – or not making it on time?
A second method is to help your child get his or her own card. You will probably have to co-sign, however. That means you will still be liable for the debt and your own credit will suffer if bills aren’t paid on time.
Both of these methods leave you open to “spoiling” the lessons. Because you won’t want a late payment on your credit report, you will probably jump in and bail out your child if he or she gets in a mess. And as we know, being rescued from our mistakes isn’t the way to learn lessons.
Stored-value cards are another option for helping kids learn how to handle money. These are actually pre-paid cards, so have no value in building a credit report. They’re convenient, because in most cases, your teen can have their paycheck deposited directly into the card.
Stored value cards are really the same thing as a checking account – except plastic.
Several banks are offering stored value cards, but they come with a big drawback: Almost every action – such as an enrollment, a reloading deposit or a balance inquiry – comes with a fee. There’s even a fee for inactivity if you don’t use the card for a few months.
It might be safer to set up a checking account. But if you choose that route, take the time to explain the consequences of writing a check for more than your available balance.
Posted in credit education | Comments Off
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
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
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
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
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
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
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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Consumers with no credit history – and those who are trying to rebuild credit after experiencing financial difficulties – often find it nearly impossible to get that first loan or credit card to begin building a good credit score.
