Section 1075 of the Dodd-Frank Wall Street Reform and Consumer Protection Act addresses the fees that merchants pay every time we hand over a credit card to make a purchase.

Over the next nine months, the Federal Reserve will be required to establish “reasonable and proportional” standards for these fees – called “interchange fees.”

At present, these fees cost merchants an average of 1 to 2 percent of each debit card transaction and 2 percent of each credit card transaction. However, smaller merchants have been subjected to fees as high as 4%.

Part of this fee is in the form of a fixed charge every time a consumer swipes a card. Thus, retailers who accept cards for a small purchase may actually be losing money on that purchase, as the card fees eat up more than the profit on a low-markup item.

The National Retail Federation estimated that retailers in the U.S. paid $48 billion in such fees in 2008 – which was triple the amount paid in 2001. This is not surprising, considering the number of consumers who now use debit cards rather than taking the time to write a check for a purchase.

Of course retailers aren’t going to pay these fees without rolling them into the cost of the merchandise they sell. The NRF estimates that the average household pays about  $427 per year in these “hidden” fees.

Retailers are prohibited from adding a surcharge at the till for use of a debit or credit card, so all consumers pay – whether they pay by cash, check or plastic.

They’ve also been prohibited from refusing to take cards for small purchases or from giving discounts to consumers who pay with cash. That is about to change.

Under the new rules, retailers still won’t be allowed to impose a surcharge, but they will be allowed to refuse cards for purchases under $10 and to offer discounts to consumers who use cash or checks.

But are the banks going to take this sitting down? Of course not.

Just as banks raised fees to credit card holders to make up for losses they suffered through the CARD Act, they’re now considering how they’ll make up for this loss.

One way will probably be the imposition of higher fees for the right to accept credit and debit cards. What else they’ll do to retain profits remains to be seen – they have a few months tofigure it out.

CreditScoreQuick.com

While we doubt that any rule is the “final” one when it comes to government regulations, this Final Rule is good news for consumers who need debt relief services.

This rule, which comes to us from the Federal Trade Commission (FTC), goes into effect in two steps. The first, effective September 27, requires debt relief companies that sell their services over the telephone to make specific disclosures to consumers, and prohibits them from making misrepresentations. But perhaps the most important provision is that the Telemarketing Sales Rule will now be extended to incoming as well as outgoing calls.

The second portion of the Final Rule, which takes effect on October 27, 2010, clearly prohibits debt relief companies from charging an up-front fee for settling a consumer’s debt.

Telemarketing debt relief companies have preyed on consumers in distress with false promises of reducing credit card debt by half or more – in exchange for large up-front fees. When it was impossible to reduce the debt, the consumer was simply out the money paid to the company.

Under the new rules, debt relief companies may not collect any funds up front, and the fee they do collect must be clearly agreed upon in advance.

Before the debt relief company is paid, they must successfully change the terms of at least one of the consumer’s debts. This change must be reflected in a written settlement agreement or debt management plan between the creditor and the consumer. And finally, the consumer must have made at least one payment to the creditor as a result.

If a consumer has several debts, but the company is able to negotiate only one or two, the fee must be in proportion to the total debt relief provided. If the fee is percentage based, the percentage must be the same for each debt – and charged only when negotiations have been successful.

Under another provision of the Final Rule, debt collectors may require consumers to set aside debt repayment funds in a dedicated account. However, that account must be maintained in an insured financial institution and remain under the consumer’s control at all times. The debt relief provider may not have any affiliation with the financial institution nor may they exchange referral fees.

Legitimate debt collectors who want to be sure they are in compliance with the new rules can find the FTC compliance guide at: http://www.ftc.gov/bcp/edu/pubs/business/marketing/bus72.pdf.

There is no doubt that in spite of past regulations and this “Final Rule,” some companies will still attempt to defraud consumers – and not just with regard to debt relief. Should you become a victim of fraudulent, deceptive, or unfair business practices, you can file a complaint by calling 1-877-382-4357 or by visiting http://www.ftc.gov/ftc/complaint.shtm

CreditScoreQuick.com

Everyone now encourages you to get your free online credit report and to read it carefully. We agree.

You can get it free each year from AnnualCreditReport.com – but those reports don’t include your credit scores, and the scores are important for you to monitor. In order to get your credit scores, you need to get your free credit report from this or a similar site, or you can purchase your credit scores from each of the bureaus separately.

Much of the information on your report is self-explanatory. The first few sections give an overview of your credit history and your personal information. They list your employment information, your address, etc.

You need to check that section to ensure that no one has stolen your identity and transferred one of your unused accounts to a new address – and that they haven’t used your work history and experience to land a job that they couldn’t get using their own information.

But what does the rest of it mean? The payment history section of your credit report will include codes that mean nothing to you.

First understand that Equifax, Experian, and TransUnion use different codes – and that the free online credit reports you can get are following different scoring models. Experian uses the FICO scoring model, while TransUnion uses Empirica, and Equifax uses Beacon.

This is one of the reasons that the credit scores will not be exactly alike. The other reason is that some of your creditors may report to one credit bureau and not another. Thus, the information they’re using to compile your score will not be identical.

Your payment history code will include a number from 0 to 9. 0 indicates up-to-date payments while 9 indicates a collection or bankruptcy. Numbers 1 through 8 indicate varying degrees of financial difficulties. Each of the credit bureaus offers a free online tutorial to let you know what each of those numbers indicates.

Next, look at the letters. On your Equfax and Experian report, C will indicate an account in good standing while G means collection and K means repossession. H indicates a foreclosure and J reveals a voluntary surrender. TransUnion uses more numbers rather than letters.

Your credit score will range between 300 and 850. Most consumers who are not in serious financial trouble will have scores between 650 and 750. These are considered good and they can usually be made even better with a little financial planning. Very few consumers attain a score of 850, but you should strive for the highest score you can get. The higher the score, the lower the interest you’ll pay on homes, cars, and credit cards.

Scores below 450 will generally mean that you need to do some work to rebuild credit before you can get a loan. Secured credit cards can help you accomplish this, as can becoming diligent about making every other payment – such as utilities – on time and in full.

CreditScoreQuick.com

Here in the U.S. we have a multitude of laws to protect consumers. The Credit CARD Act of 2009 added many, and many were in place before.

So why do we need a new Consumer Protection Bureau?

Apparently, the problem has been lack of enforcement. The new agency is supposed to fix this problem by concentrating all the financial watchdog agencies under one roof – thus facilitating enforcement.

The new agency will cover almost every kind of financial transaction affecting consumers – and will have both money and a new mission: That of protecting consumers from bad practices in the financial industry. This protection will be it’s one and only job.

Does that mean that in the past the laws were in place, but no one was charged with the responsibility of enforcing them?

The new agency will be required to act on consumer complaints. They will conduct investigations, and as a result, dishonest companies will be fined or sued for damages, or referred to the Justice Department for prosecution.

Our new watchdogs believe that some of us need more protection – or better protection – than others. Thus, those groups that are most frequently targeted by dishonest lenders will be protected by  special offices within the Consumer Financial Protection Bureau. These offices will concentrate their efforts on investigating complaints from minorities, active military personnel, and senior citizens.

It looks like this new agency just became a new agency with three sub-agencies. But no, the new law also charges the new agency with the creation of an Office of Financial Education. This office will begin a campaign to educate consumers. So make that four sub-agencies.

Some provisions of the new Act are a repeat of the CARD Act – such as the requirement that banks and credit card issuers must clearly disclose their terms and fees, and that bills must be clear and understandable. Others are an addition.

For instance, under the new Act, creditors who turn down an applicant or raise fees must provide the consumer with the credit score that was used in decision-making. In addition, upon request, financial institutions must furnish consumers with a usable electronic copy of their financial history with that institution.

Two exceptions…

Interestingly, auto dealers who broker loans will not be regulated under this act. They broker billions of dollars in consumer loans every year, but remain exempt from the new regulations and consumer protections.

Securities transactions will still be overseen by the Securities and Exchange Commission.

CreditScoreQuick.com

The Dodd-Frank Wall Street Reform and Consumer Protection Act has been signed into law by the President. Hidden inside that Act are tidbits that many will see as beneficial, but which all add to the cost of running both the government and the banks.

In addition, many of these new provisions assume that consumers are incompetent, and unable to understand or deal with their own finances.

For instance, the law requires banks to inform homeowners that their adjustable rate mortgage is due to reset in six months. Lenders will have to include a good faith estimate of the new monthly payment, inform them of financial options, and give them contact information for credit counseling agencies.

This provision assumes that borrowers didn’t pay attention when they took out an adjustable rate mortgage – and that the reset will come as a surprise. Unfortunately, that seems to be the case in many instances. But is it government’s role to protect us from ourselves?

Another provision calls for the creation of a new Office of Financial Education. This new office will offer financial counseling and publish consumer information to improve consumer’s financial literacy.

With many non-profit, free counseling opportunities already available, and with the wealth of consumer information available on sites such as this one, do we need a new government bureaucracy to educate consumers?

Because consumers pay outrageous interest rates for Payday Loans, the new law provides grants for experimental small loan programs that could be a less expensive alternative to payday loans. To obtain these loans, consumers must take advantage of financial literacy and education opportunities such as free debt counseling.

Next, the new law seeks to protect consumers from foreclosure rescue scams through an intensive awareness campaign. Granted, many such scams are proliferating as the credit crisis deepens. They range from bogus counseling services to fake loan modification assistance, to tricks that have caused homeowners to sign over their homes entirely.

And for low and moderate income homeowners facing legal action from mortgage lenders, taxpayers will now be providing grants to cover legal assistance. Tenants involved in legal disputes with landlords will also be eligible for assistance.

One provision that even I can agree with is a new ability to report lender misdeeds. The financial reform act establishes a single toll-free number to call should you encounter unfair or deceptive landing practices. Complaints will then be routed to the appropriate agency and “must” be responded to in a timely fashion.

In addition, the law calls for the establishment of an Internet site for the submission of complaints.

Author:Mike Clover

CreditScoreQuick.com

The new FICO® 8 Score is fast becoming the new standard. According to a release on July 27, it has now been adopted by more than 2,500 banks and other financial institutions. Forecasts are that it will improve credit risk predictions by up to 15% over earlier FICO Score models – and result in millions more in profit to credit issuers.

But is it good news or bad news for you as a consumer?

Under the new scoring model, small slip-ups will carry much less weight than in the past. This model recognizes that one late payment could be the result of events beyond the consumer’s control – such as an accident or illness.

However, multiple late payments will now carry a heavier penalty than in the past.

FICO 8 also ignores debts and public record items that have an original balance of $100 or less. This is good news for consumers who are in dispute over a small bill. It will no longer be necessary for a consumer grit his teeth and pay a small bill he feels he does not owe in order to get a better interest rate on a car or home loan.

Another change is that the penalty for using too much of your credit lines will be higher. We’ve long said that the best plan for keeping high scores is to use 30% or less of your available credit. This now becomes even more important. A maxed out card will cost more points under FICO 8.

The new score also deals differently with the “piggybacking” issue that has come under fire in the past. At one time, parents or other family members could add someone as an authorized user on a credit card and that person’s credit score would receive the benefit of the parent’s good credit rating.

Then opportunists saw a money-making opportunity and began selling “authorized use” on seasoned credit card accounts. It became a business in itself. In reaction to that, FICO scores stopped recognizing authorized use at all.

Now, under the new model, authorized users will benefit, but only if they have a legitimate relationship to the primary cardholder.

Consumers may well be confused when reading their reports, as each of the credit reporting agencies is giving it a different brand name. TransUnion calls it Classic 08, Equifax calls it Beacon 09, and Experian calls it the Experian/FICO Risk Model v08.

Right now the FICO 8 model is not available for sale to consumers, but that may change within the next few months.

CreditScoreQuick.com

Q:

While I was deployed I was unable to pay a credit card because of Soldiers passing away and all communication were turned off until the Soldiers family were contacted.  I’ve tried to correct this matter with the business and I was told I would not be able to have them erase the negligence due to a law.  The account is old and has been paid in full.
The credit bureaus will not fix the negligence until the business does.
Is there any way I can have my credit fix from this problem?  You can contact me via email or phone.

Jesse

A:

Hi Jesse,

this sounds like a tough situation.The collection still falls under the 7 year rule. The rule is the collection will be on your credit report for 7 years form collection date. Its is great that you paid the collection, because usually that will cause your credit score to increase. Contrary to popualr belief its better to pay off a collection .vs do nothing.You will have to wait until that 7 year expiration date arrives. Once it does make sure the collection gets removed from all credit bureaus.

Here are collection expiration dates.

Derogatory expirations guidelines:
• Chapter 7 – 10yrs
• Chapter 13 – 7 yrs
• Tax Lien – Until paid off
• Child support – Until paid off
• Collections – 7yrs
• Chare Offs – 7 yrs
• Late payments – 7yrs
• Inquires – 24 months
• Foreclosure – 7 yrs
• Repossession – 7 yrs
• Judgments – 7yrs

*Expirations date starts ticking from the original collection date.

Mike Clover

CreditScoreQuick.com

FTC sends warnings to following sites about Free Credit Report offers.

The FTC warned the following sites that they are in violation of improper disclosure of the FACT that Free Credit Reports are available at www.annualcreditreport.com with no strings attached. On April 2, 2010 this new FTC law went into affect. The new law states that any site offering a free credit report offer, must properly disclose at the top of the site where to go under law to get your free credit report.

Companies in Violation

Some of these sites are being warned because of affiliate traffic. Affiliates are companies that push traffic to these companies for a commission. I talked to Jeff Barlett at ConsumerTrak and he confirmed my suspicions. Nether less the FTC is watching out for any violators to make sure the consumer is protected and aware of where to go for a free credit report.

You can go to:

http://www.ftc.gov/opa/2010/07/freecredit.shtm to read about this matter.

Author: Mike Clover

CreditScoreQuick.com

Attain Financial Freedom by being Educated about your Credit.

Typically most problems could be avoided with a little more education. We all have been in the boat of making the wrong decision which resulted with issues down the road. I personally believe life is like following grandmother’s recipe for your favorite peach cobbler. If you leave something out of the recipe, the end result will be less favorable.

Being educated about a particular topic is going to be more favorable .vs not being educated. Credit is the same way. Had you known what to do, you may have taking a different route. Now you have found yourself in the same situation so many others are in. You have financial problems, low credit scores, and the stress is mounting.

Here is some tips to start implementing immediately……

The first step to better credit is to avoid impulse buys. This is one of the hardest parts of money management. How in the world can you save, if you are impulse buying all the time? Stop buying stuff you don’t really need and start saving your money. Any financial advisor will advise you on this matter.

The second step is to save 6 months of income in the bank. If you make $5,000 a month, you will need $30,000 in your money market account. This is a must. You need savings for emergencies.

The third step is to know your credit rating. How do you get your credit rating? Well there is only one source on the web where you can get your free credit report. However this source does not provide your credit score with each credit bureau for free. Annualcreditreport.com is the site that provides your credit report for free once a year by law. If you want to see your credit scores you will need to pay for them. Pull your credit report and make sure everything is accurate. I recommend getting a copy of your credit report with scores. Being educated about your credit rating will help you get better rates and terms on loans. Make sure you check your credit report with scores every 3 months or so.

The fourth step is to keep your debt low. Don’t charge more on your credit cards than you can pay off the following month. Credit Cards are not for buying stuff you don’t need. They are for small necessity purchases and emergencies. When buying something on credit, make sure you can pay that debt off in full within a couple of month’s minimum. Debt accounts for 30% of your overall credit rating. So it’s very important to keep your credit card debt at a minimum.

The fifth step is to build credit if you don’t have any. There are a couple of ways to do this. You can get a secured credit card or get a family member to add you to their credit card as an authorized user. You will need a couple lines of credit on your credit report. This will help establish credit scores.

The 6^th and final step is to repair your credit report. If you find you are in need of credit repair, make sure you repair your credit report yourself. Don’t pay someone money to do so. You can use our Help Yourself Credit Repair guide.

Here are some more online resources for “Do it Yourself Credit Repair.”

• FTC & Credit Repair
• E-How Credit Repair
• About.com Credit Repair
• Bankrate.com Credit Repair

These are all good resources to repair your own credit. There is no easy or quick way to repair your credit. Depending how bad your credit is, the process could take 12 months or so.

Being educated about money management will make life a lot easier. Good money management will result in good credit as well.

Author: Mike Clover

CreditScoreQuick.com

Community Property State Barriers for Married but Separated couples.

Over the years I have dealt with all kinds of situations. One particular situation is someone trying to buy a home but the other half is gone to “who knows where.” They are not legally divorced for what ever reason. I will get calls to buy a home, but that individual is still married and to make matters worse the other half is nowhere to be found.

In some states this can be a huge problem when trying to buy a home. Currently there are 9 states that are community property states.

They are:

• Arizona
• California
• Idaho
• Louisiana
• Nevada
• New Mexico
• Texas
• Washington
• Wisconsin

A community property state is where the law requires all assets you acquire while married be split 50/50. When trying to purchase a home in a community property state and you are separated but married, you will not be able to buy without your spouse. When buying a home even if your spouse is not on the loan, the lender will require your spouse to sign the “Deed of Trust” at closing. This is where you run into issues with mortgage loans. The Deed of Trust gives the ownership a 50/50 scenario of all proceeds after a sale. There is no way to get around this other than both parties showing up for closing or legal divorce.

Author: Mike Clover

CreditScoreQuick.com