How long can bad credit stay on your credit reports?

August 28, 2015 by · Leave a Comment 

How long can bad credit remain on your credit reports?

So you’ve made some credit mistakes.  With over 35% of the population scoring below 650 on the FICO scoring scale, you’re certainly not alone.  But now that you’ve made the mistake, how long are you going to have to live with it?

Each and every negative item has a reportable statute of limitations.  That means the credit bureaus can legally report it for some period of time before it must be removed.  The general consensus is seven years for the credit reporting of negative items.  And, while that’s correct for many negative credit items, it’s not always right and certainly not always that simple.

Bankruptcy

This one has possibly the most confusing statute of limitations so let’s get it out of the way first.  Chapter 7 bankruptcies (liquidation of all statutorily dischargeable debts) can remain on your credit files for ten years from the date filed.  Chapter 13 bankruptcies (Wage earner programs where you’re still making payments to the trustee) can remain on file for seven years FROM THE DISCHARGE DATE.  This is important because most people believe 13s have to be removed seven years from the filing date, which is incorrect.  It normally takes three to five years for a Chapter 13 to discharge.  That’s when the 7 years begins.  The cap on all bankruptcies is ten years so most 13s remain on file for a full ten years, just like Chapter 7s.

Tax Liens

This one has the longest statute of limitations and must be broken down into three categories; released, unpaid, withdrawn.

Released Tax Liens – Released liens can remain on file for seven years from the date released.  This included liens that have been settled for less than you really owe.

Unpaid Tax Liens – Sit down.  Unpaid tax liens can remain on your credit file indefinitely.  That’s the bad news.  Now the good news…

Paid and Withdrawn Tax Liens – Paid tax liens normally stay on file for seven years, but the IRS just announced that they will withdraw the lien if paid in full AND the taxpayer requests a withdrawal.  The credit bureaus do not report withdrawn tax liens so they will come off your files almost immediately if you get them withdrawn.

Defaulted Government Guaranteed Student Loans

Interestingly, the Fair Credit Reporting Act doesn’t govern the amount of time defaulted student loans can remain on your credit reports.  The amount of time is actually governed by the Higher Education Act instead.  Defaulted student loans can remain on your credit reports for 7 years from the date they are paid, 7 years from the date they were first reported or 7 years from the date the loan re-defaults.  The point you should take away from this…pay your student loans!

The Seven Year Club

The following items can remain on your credit files for seven years.

Delinquent Child Support Obligations

Judgments – Seven years from the filing date whether satisfied or not.

Collections – Seven years from date of default with the ORIGINAL creditor, not seven years from when the collection agency buys or is consigned the debt.

Charge Offs– Seven years from the date of the original terminal delinquency.

Settlements– Seven years from the date of the original terminal delinquency

Repossessions and Foreclosures – Seven years from the date of the original terminal delinquency.

Late Payments– Seven years from the date of occurrence.

You’ll notice that I use the term “terminal delinquency” several times above.  The seven year period actually begins 180 days AFTER the original delinquency that leads to a collection, charge off or similarly negative action.  So, technically these items remain on your credit file for 7.5 years from the date of the last delinquency that precedes the terminal delinquency.

The Forever Club

If your credit report is being accessed for a loan of $150,000 or more then none of the seven and ten-year rules are binding.  That means the credit bureaus COULD maintain this negative stuff permanently but only for credit reports where you’ve applied for a higher dollar loan.  They also have an exemption for credit reports sold for employment screening where the job is expected to pay $75,000 or more.  Thankfully the credit bureaus choose to use the seven and ten year guidelines regardless.  Whew.

You Don’t Have to Do Anything, Unless

Other than the tax lien withdrawal process described above the consumer doesn’t have to do anything in order to have negative credit information removed on or before the expiration of the applicable statute of limitations.  The process of removing negative information is autopilot and based on a passive date trigger or “purge from date.”

Now, since it’s based on a trigger date there is room for error in the cases of incorrect credit reporting.  If the bank says you defaulted in 2005 and you really defaulted in 2004 then the credit bureaus are going to use the 2005 date.  Then it’s up to you to argue with (or sue) the lender and the credit bureaus to get the dates corrected.

Re-aging

If you’ve never heard of this term let’s hope you never do.  Re-aging is the illegal process of changing the “purge from date” so the credit reporting extends past the allowable period of time.  This is not common but when it’s done, it’s usually a collection agencies or debt buyer who is breaking the rules.  It’s a clear violation of the Fair Debt Collection Practices Act and the Fair Credit Reporting Act but the debtor has to know it has happened.

There, now it’s all clear as mud.

by  John Ulzheimer for mint.com

 

Identity Crisis… What to Do If Your Identity is Stolen

August 27, 2015 by · Leave a Comment 

Recently, we have received information from our clients about a data breach in the County of San Bernardino, State of California. Here are 4 steps to take if you feel you identity information has been breached…Direct from the FTC Website

 

 

 

 

 

 

 

Identity Crisis… What to Do If Your Identity is Stolen

“I don’t remember opening that credit card account. And I certainly didn’t buy those items I’m being billed for.”

Maybe you never opened that account, but someone else did…someone who used your name and personal information to commit fraud. When an imposter co-opts your name, your Social Security number (SSN), your credit card number, or some other piece of your personal information for their use – in short, when someone appropriates your personal information without your knowledge – it’s a crime.

The biggest problem? You may not know your identity’s been stolen until you notice that something’s amiss: you may get bills for a credit card account you never opened; your credit report may include debts you never knew you had; a billing cycle may pass without your receiving a statement; or you may see charges on your bills that you didn’t sign for, didn’t authorize, and don’t know anything about.

First Things First

If you’re a victim of identity theft, the Federal Trade Commission (FTC), the nation’s consumer protection agency, recommends that you take the following four steps as soon as possible, and keep records of your conversations and copies of all correspondence.

1. Place a fraud alert on your credit reports, and review your reports.

Fraud alerts can help prevent an identity thief from opening any more accounts in your name. Contact the toll-free fraud number of any of the three nationwide consumer reporting companies to place a fraud alert on your credit report. You need to contact only one of the three companies to place an alert. The company you call is required to contact the other two, which will then place an alert on their versions of your report.

  • TransUnion: 1-800-680-7289; www.transunion.com; Fraud Victim Assistance Division, P.O. Box 6790, Fullerton, CA 92834-6790
  • Equifax: 1-800-525-6285; www.equifax.com; P.O. Box 740241, Atlanta, GA 30374- 0241
  • Experian: 1-888-EXPERIAN (397-3742); www.experian.com; P.O. Box 9554, Allen, TX 75013

Once you place the fraud alert on your file, you’re entitled to order free copies of your credit reports; if you ask, only the last four digits of your SSN will appear on your credit reports. Once you get your credit reports, review them carefully. Look for inquiries from companies you haven’t contacted; accounts you didn’t open; and debts on your accounts that you can’t explain. Check that information like your SSN, address(es), and name or initials are correct. If you find fraudulent or inaccurate information, get it removed. See the FTC’s comprehensive identity theft recovery guide, Take Charge: Fighting Back Against Identity Theft, at www.ftc.gov/idtheft to learn how. Continue to check your credit reports periodically, especially for the first year after you discover the identity theft, to make sure no new fraudulent activity has occurred.

Fraud Alerts

There are two types of fraud alerts: an initial alert and an extended alert.

n An initial alert stays on your credit report for at least 90 days. You may ask that an initial fraud alert be placed on your credit report if you suspect you have been, or are about to be, a victim of identity theft.

  • An initial alert is appropriate if your wallet has been stolen or if you’ve been taken in by a “phishing” scam. Phishing occurs when scam artists steal personal information from you by sending email that claims to be from a legitimate company and says you have a problem with your account. When you place an initial fraud alert on your credit report, you’re entitled to one free credit report from each of the three nationwide consumer reporting companies.
  • An extended alert stays on your credit report for seven years. You can have an extended alert placed on your credit report if you’ve been a victim of identity theft and you provide the consumer reporting company with an “identity theft report.” When you place an extended alert on your credit report, you’re entitled to two free credit reports within twelve months, after placing the alert, from each of the three nationwide consumer reporting companies. In addition, the consumer reporting companies will remove your name from marketing lists for prescreened credit offers for five years unless you ask them to put your name back on the list before then.

To place either of these alerts on your credit report, or to have them removed, you will be required to provide appropriate proof of your identity, which may include your SSN, name, address, and other personal information the consumer reporting company requests.

When a business sees the alert on your credit report, they must verify your identity before issuing you credit. As part of this verification process, the business may try to contact you directly. This may cause some delays if you’re trying to obtain credit. To compensate for possible delays, you may wish to include a cell phone number, where you can be reached easily, in your alert. Remember to keep all contact information in your alert current.

The Identity Theft Report

An identity theft report may have two parts:

Part One is a copy of a report filed with a local, state, or federal law enforcement agency like your local police department, your State Attorney General, the FBI, the U.S. Secret Service, the FTC, or the U.S. Postal Inspection Service. When you file a report, provide as much information as you can about the crime, including anything you know about the dates of the identity theft, the fraudulent accounts opened, and the alleged identity thief.

Part Two of an identity theft report depends on the policies of the consumer reporting company and the information provider (the business that sent the information to the consumer reporting company). They may ask you to provide information or documentation to verify your identity theft in addition to that included in the law enforcement report. They must make their request within 15 days of receiving your law enforcement report, or, if you already have an extended fraud alert on your credit report, the date you submit your request to the credit reporting company for information blocking. The consumer reporting company and the information provider then have 15 more days to work with you to make sure your identity theft report contains everything they need. They are entitled to take five days to review any information you give them. For example, if you give them information 11 days after they request it, they do not have to make a final decision until 16 days after they asked you for that information. If you give them any information after the 15-day deadline, they can reject your identity theft report as incomplete, and you will have to resubmit it with the correct information.

Most federal and state agencies and some local police departments offer only “automated” reports – a report that does not require a face-to-face meeting with a law enforcement officer. Automated reports may be submitted online, or by telephone or mail. If you have a choice, do not use an automated report. The reason? It’s more difficult for the consumer reporting company or information provider to verify the information. Unless you are asking a consumer reporting company to place an extended fraud alert on your credit report, you probably will have to provide additional information or documentation if you use an automated report.

2. Close the accounts that you know, or believe, have been tampered with or opened fraudulently.

Call and speak with someone in the security or fraud department of each company. Follow up in writing, and include copies (NOT originals) of supporting documents. It’s important to notify credit card companies and banks in writing. Send your letters by certified mail, and request a return receipt so you can document what the company received and when. Keep a file of your correspondence and enclosures.

When you open new accounts, use new Personal Identification Numbers (PINs) and passwords. Avoid using easily available information like your mother’s maiden name, your birth date, the last four digits of your SSN or your phone number, or a series of consecutive numbers.

If the identity thief has made charges or debits to your accounts, or to fraudulently opened accounts, ask the company for the forms to dispute those transactions. Also request the transaction records relating to the identity theft, such as the fraudulent credit application.

Once you have resolved your identity theft dispute with the company, ask for a letter stating that the company has closed the disputed accounts and has discharged the fraudulent debts. This letter can help you if errors relating to this account reappear on your credit report or you are contacted again about the fraudulent debt.

3. File a report with your local police or the police in the community where the identity theft took place.

Then, get a copy of the police report or at the very least, the number of the report. It can help you deal with creditors who need proof of the crime. If the police are reluctant to take your report, ask to file a “Miscellaneous Incidents” report, or try another jurisdiction, like your state police. You also can check with your state Attorney General’s office to find out if state law requires the police to take reports for identity theft. Check the Blue Pages of your telephone directory for the phone number or check www.naag.org for a list of state Attorneys General.

4. File a complaint with the Federal Trade Commission.

By sharing your identity theft complaint with the FTC, you will provide important information that can help law enforcement officials across the nation track down identity thieves and stop them. The FTC can refer victims’ complaints to other government agencies and companies for further action, as well as investigate companies for violations of laws the agency enforces.

You can file a complaint online at www.ftc.gov/idtheft, by phone at 1-877-IDTHEFT (438-4338); TTY: 1-866-653- 4261, or by mail: Identity Theft Clearinghouse, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580. Be sure to call the Hotline to update your complaint if you have any additional information or problems.

Next, Take Control

Although identity thieves can wreak havoc on your personal finances, there are some things you can do to take control of the situation. Here’s how to handle some of the most common forms of identity theft.

If an identity thief has stolen your mail for access to new credit cards, bank and credit card statements, pre-approved credit offers, and tax information or falsified change-of-address forms, (s)he has committed a crime. Report it to your local postal inspector.

If you discover that an identity thief has changed the billing address on an existing credit card account, close the account. When you open a new account, ask that a password be used before any inquiries or changes can be made on the account. Avoid using easily available information like your mother’s maiden name, your birth date, the last four digits of your SSN or your phone number, or a series of consecutive numbers. Avoid the same information and numbers when you create a Personal Identification Number (PIN).

If you have reason to believe that an identity thief has accessed your bank accounts, checking account, or used your ATM card, close the accounts immediately. When you open new accounts, insist on password-only access. If your checks have been stolen or misused, stop payment. If your ATM card has been lost, stolen, or otherwise compromised, cancel the card and get another with a new PIN.

If an identity thief has established new phone or wireless service in your name and is making unauthorized calls that appear to come from – and are billed to – your cellular phone, or is using your calling card and PIN, contact your service provider immediately to cancel the account and calling card. Get new accounts and new PINs.

If it appears that someone is using your SSN when applying for a job, get in touch with the Social Security Administration to verify the accuracy of your reported earnings and that your name is reported correctly. Call 1-800-772-1213 to check your Social Security Statement.

If you suspect that your name or SSN is being used by an identity thief to get a driver’s license, report it to your Department of Motor Vehicles. Also, if your state uses your SSN as your driver’s license number, ask to substitute another number.

Staying Alert

Once resolved, most cases of identity theft stay resolved. But occasionally, some victims have recurring problems. To stay on top of the situation, continue to monitor your credit reports and read your financial account statements promptly and carefully. You may want to review your credit reports once every three months in the first year of the theft, and once a year thereafter. Stay alert for other signs of identity theft, like:

  • failing to receive bills or other mail. Follow up with creditors if your bills don’t arrive on time. A missing bill could mean an identity thief has taken over your account and changed your billing address to cover his tracks.
  • receiving credit cards that you didn’t apply for.
  • being denied credit, or being offered less favorable credit terms, like a high interest rate, for no apparent reason.
  • getting calls or letters from debt collectors or businesses about merchandise or services you didn’t buy.

Get Your Credit Report

Order a copy of your credit report from the three nationwide consumer reporting companies every year to check on their accuracy and whether they include only those debts and loans you’ve incurred. This could be very important if you’re considering a major purchase, such as a house or a car.

An amendment to the federal Fair Credit Reporting Act requires each of the major nationwide consumer reporting companies to provide you with a free copy of your credit reports, at your request, once every 12 months.

To order your free annual report from one or all of the nationwide consumer reporting companies, visit www.annualcreditreport.com, call toll-free 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. The form is at the back of this brochure; or you can print it from ftc.gov/credit. Do not contact the three nationwide consumer reporting companies individually. They provide free annual credit reports only through www.annualcreditreport.com, 1-877-322-8228, and Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

For more information, see Your Access to Free Credit Reports at ftc.gov/credit. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Chart Your Course of Action

The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

 

How Many Credit Scores Do We Have Anyway?

August 26, 2015 by · Leave a Comment 

Think you have three credit scores? You may have 50 or more

scores
Paul Sakuma / AP, file
By Bob Sullivan, Columnist, NBC News

You probably know you have a credit score, and that score dictates much of your financial future. You might know you have three credit scores, thanks to aggressive advertising from companies that sell access to them.

However, those hardly scratch the surface of the collection of credit scores lenders might use to judge you.  There are, most likely, dozens of scores that might control your ability to get a mortgage, buy a car or obtain insurance.

Banks often use their own scores, tweaked versions of the FICO score that began the credit score craze. Auto lenders also have their own scores. So do car insurers. And old scores, based on old formulas, are still in use by many lenders.  U.S. consumers may have 50 different credit scores — or more — that could impact their ability to borrow money, and that number is rising, experts say.

“The idea of there being a one true credit score, well that’s just not accurate,” said Michael Schreiber, editor in chief at Credit.Com, a consumer advice website.

John Ulzheimer, a credit score expert who formerly worked for FICO score inventor Fair Isaac Corp., produced a detailed infographic for CreditSesame.com in September which detailed 49 different scores based on the FICO. He has found another five or six since them. And that number doesn’t include competitors like Vantage Score, invented by the credit bureaus in an attempt to cut out Fair Isaac, or other proprietary kinds of credit scores.

Getting your actual credit score is a like game of roulette at this point,” said Ulzheimer, now president of consumer education at SmartCredit.com. “Getting the wrong number can be overwhelming to a consumer. The lender is using one score but you don’t know which score.”

There are also exotic credit-based scores, such as a “revenue score,” which predicts how much interest revenue a credit card holder will generate; a bankruptcy score indicating the likelihood someone will file for legal relief of debts; and a collection score that helps debt collectors prioritize their efforts.

Credit scores were once held completely in secret by the credit industry, but are more available to the public today. Credit monitoring services include them with monthly subscriptions. Fair Isaac, the inventor of the credit score, sells FICO scores at MyFico.com. Wells Fargo gives them away to consumers who walk in and ask about new accounts. Credit.com gives away a free score to site visitors. But with more scores being invented all the time, it’s hard to say what consumers are looking at when they receive a credit score.

“It does irk people when they find out there’s a very different number they get from one scoring model to another,” said Gerri Detweiler, scoring expert at Credit.com. “People wonder, ‘What good is it to check my score if the score banks see is different?’”

If any credit score provider implies consumers are getting a comprehensive view of their creditworthiness by ordering three credit scores — based on their three credit reports at Equifax, Trans Union, and Experian — that’s misleading, Detweiler said. It’s also misleading for any firm to suggest their score is the one used by most lenders.

Ulzheimer think so, too.

“If you go to MyFico and you get a score, that is the same brand of score that lenders are using predominantly,” said Ulzheimer. “Going past that is an embellishment. … MyFico does sell you a FICO score, but it may not be the same FICO score that lenders use.”

In fact, many banks have their own scores, which sprinkle their own criteria into the complex algorithm.  Car loan issuers, for example, often choose to weigh previous car loan payment history higher than other lenders, Detweiler said.

The proliferation of scores is partly the result of continuous updates to scoring formulas that are expensive for financial institutions to adopt, Ulzheimer said.

“Scores are really nothing more than generations of software,” he said. “Think of how many generations of Microsoft software are out there, for example.  Every year, there’s something new that’s a little better but kind of does the same thing.  Scoring systems are like that.”

For example: Last week, the group behind the Vantage scoring system announced VantageScore 3.0. It has some consumer-friendly features, such as ignoring collections accounts that have been paid off (such accounts generally lower a consumer’s FICO score), and providing exceptions for consumers who don’t pay bills because of natural disasters like Hurricane Sandy. But firms may continue to use VantageScore 2.0 for a long time.

“A large bank that didn’t want to update its systems could force providers to keep old scoring systems going for years,” Ulzheimer said.

Given the proliferation of scores, should consumers even bother trying to see one of their credit scores?  Absolutely, says Detweiler. She says any score will offer a helpful reference point.

“Don’t focus so much on the number as much as what direction you are moving,” she says. “The number will give you some information about what areas of your financial life you need to work on.  But if there is a drop, you will know something significant has happened.”

The number itself doesn’t matter as much as how a consumer compares to the general population, she said. Armed with this information, consumers should be able to ensure they are getting a fair interest rate when borrowing money for a home or a car or applying for a credit card.  Consumers who rank near the top of a scoring scale should get a bank’s best rate.

Because she thinks consumers should track their score over time, Detweiler says it’s important to stick with the same score than trying to compare a free score doled out by a bank with another score purchased from a website.

Ulzheimer said it’s fruitless and frustrating for consumers to obsessively follow their credit scores as they pop up and down, given that lenders see different scores anyway. He recommends “managing” to your credit report instead of your credit score, since the report is at the heart of all score formulas.

“What’s constant across all scores is that doing the right thing will lead to a better score across the board,” he said. “If you pay your bills on time, your scores will go up. So worry about that. Managing to three credit reports is easier than trying to manage all those credit scores. …Consumers have to let go of that, because the number of scores will continue to get larger, not smaller.”

That’s not to suggest variations among credit scores aren’t important. In September, the Consumer Financial Protection Bureau published a study of credit scores revealing that variations among different scoring models could impact as consumer’s borrowing costs about 20 percent of the time.

The study recommended that firms that sell credit scores “should make consumers aware that the scores consumers purchase could vary, sometimes substantially, from the scores used by creditors.”

The best way to avoid paying too much for credit because of a credit score variation is to shop around. Never take the auto dealer’s word for it that they’ve gotten you the best deal on your car loan.  The variations matter less with mortgages, where banks usually get three credit scores and throw out the lowest and higher score.

Detweiler said for personal sanity, consumers should avoid treating credit scores the way they treated SAT scores in high school, or grade point averages in college.

“Don’t get too hung up on a number,” she said.  “You know the serenity prayer? There are some things you have control over, and some you don’t. Take care of the things you can control, like paying your bills, and the score will take care of itself.”

Follow Bob Sullivan on Facebook or Twitter

OG Article here http://redtape.nbcnews.com/_news/2013/03/19/17361604-think-you-have-three-credit-scores-you-may-have-50-or-more

Opt Out of Credit Card Offers – Junkmail

August 25, 2015 by · Leave a Comment 

Here is something you need to know about opting out of those credit card offers ; aka Junkmail

Top 5 – No “Happy Ending”- Loans

August 24, 2015 by · Leave a Comment 

 

 

 

 

 

 

 

Beware, there’s no asset ownership at the end of these loans

1. Student Loans

The topic of whether or not to borrow a lot of money to go to college, thus incurring installment debt, is a lightening rod, to say the least.

I don’t think you can say that an education and a degree aren’t assets. But, I do think you have to consider the “I didn’t go to college and I’m still successful” argument, which is possibly why so many people think student loans don’t yield any sort of asset. In the strictest definition of an installment loan, an education isn’t tangible and it doesn’t secure any sort of loan obligation. I mean, a lender can’t repossess your knowledge for non-payment. Semantics, I know.

2. Auto Leases

Now we’re talking. Borrowing money to buy a car is one of the worst investments you can make because of the quickly depreciating value of the asset. But, at the very least you’ll own the car after 36, 48 or 60 months of payments. With a lease you’re essentially renting a car for some fixed period of time.

Even when you’re done making lease payments you don’t own a thing. In fact, in many cases you’ll owe still more at the end of the lease because of mileage that exceeds the maximum contractual allotment. If you like a new car every few years then leasing is a good option but you’ll be making car payments perpetually. If you want to drive something supercool every once in a while then call HERTZ instead. You can give it back at the end of the weekend.

3. Rent

You own nothing after satisfying your rental agreement, which is technically an installment agreement. The tenant gets a place to live (the “extension of credit”) and makes an equal payment to the landlord (the “creditor”) for a fixed number of months per contract (the “loan term”).

Don’t get me wrong; there are tens of millions of homeowners who would rather be home-renters right now because they’re upside down on the home loans. That’s a familiar position to be in with auto loans, but not mortgages. Tax deduction notwithstanding, renting ain’t a bad deal right now.

 

4. Title Loans

You know what these are, right? You take your car title (yes, you have to have clear title in hand) to this vulture of a lender who then gladly let’s you borrow about 50% of your car’s appraised value and expects you to smile about it while he hopes you default.  You make payments of some amount over some period of time and you get your title back.  I fully agree that a car’s title is a tangible asset, but you’ve already earned it by paying off another loan.  Buying it back again…not so much.

5. P2P Lending

Yes, and no. P2P loans (peer-to-peer) occur when you borrow money from another person or group of people who act as the “lender” in the transaction and cobble together the funds to lend. There are several sites that facilitate P2P loans but since I’m not a fan of them I’ll let you find them on your own.

Peer-to-peer loans are, in fact, installment loans and some of them are attached to an asset. Some P2P loans are taken out to pay for orthodontic work, business equipment and yes, even plastic surgery. Still, just as many are taken out to pay for vacations and other non-tangible items. Regardless, defaulting on a P2P loan won’t result in the consumers/lenders showing up at your door. I think that’s a contributing reason for their high default rate … it’s hard to think about Joe the Consumer Lender like you think about Wells Fargo or Citibank.

What about plastic?

So, here is a sixth…What about credit card debt? Yea, this is one also- Have you ever heard of a credit card issuer repossessing clothing, vacations, dinner out, or anything else charged on a credit card?

by  John Ulzheimer onwww.mint.com/blog/how-to/no-asset-ownership-loans-042011/

SQUARE ONE: What you will/won’t find on your Credit Reports

August 21, 2015 by · Leave a Comment 

Do you know what type of information is on your credit report?

With all the credit reporting and scoring advice circulating the internet, sometimes it’s refreshing — and helpful — to just get down to the very basics. Namely: what exactly is in your credit report, and what isn’t?

Credit reports are generally broken down into five to seven areas, depending on what credit report you’re looking at and whether it’s a “consumer” version or a “users” version.  Here’s are the sections and what you’re likely to find in each:

Personal Identification Data

This is where you’re going to find your name, any variations of your name, current and former addresses, date of birth, social security number, and perhaps your current or previous employer.

Inquiries

This is a list of who pulled your credit reports and on what date.  The “consumer” version of the credit report is going to have all of your inquiries.  The “user” version is only going to have hard inquires.

Collections

There is a separate section on a credit report for 3rd party collections.  This is not the internal collection department at your bank or credit card issuer.  This is when your creditors have either sold or consigned your delinquent debts to an outside company for collection efforts.

Trade

The trade section is going to make up the bulk of your credit report.  This is where all of your accounts with lenders are going to show up.  Some times they’re called “trade lines” as well.

Public Records

On some old credit report formats the Public Records’ section also houses 3rd party collections despite the fact that a collection is hardly a public record.  In the newer consumer versions they are called out as their own unique item leaving the public record section to only house liens, judgments and bankruptcies.

Consumer Statement

You might not know this but you have the right to add a short statement to your credit reports.  In most states this is limited to no more than 100 words so you’ll need to bust out your best Twitter or text messaging skills to fit an explanation of why you stopped paying on your credit cards.

So now that we know what you WILL see on your credit reports, let’s address what you probably won’t see on your credit reports.

Under most circumstances you won’t see…

Gym Memberships

These were reported at one time but only when they went delinquent.  Do you remember when gyms would sign people up for 3-5 year contracts and if you decided you were buff enough and cancelled they’d try and hit you up for the full amount?

Public Utilities

You won’t normally see your gas, power, cable, or telephone service account on your credit reports while they’re in good standing.  There are some exceptions.  I’ve seen NICOR accounts on credit reports reporting month after month just like any other loan.  NICOR is a gas provider in Illinois.  Most of the time if you see these types of accounts on a credit report it’s because they’ve been sent to collections and the collector is reporting it.

Rental Payments

You’ll rarely, if ever, see your rental payments on your credit report because most landlords don’t have accounts with the credit reporting agencies and they are unable to report.  Even if you are living in an apartment complex with hundreds or thousands of units it’s unlikely you’ll ever see the payments on your credit reports.  Of course if you default on your lease they’ll turn it over to a collection agency and you’ll see that on your credit reports lickety split.

Insurance Payments

Almost all insurance companies will allow you to pay your insurance premium in installments.  I’m quite certain most people would consider that a form of extending credit, and I’d agree with them.  However, insurance companies do not report the installment payments to the credit reporting agencies.  If you don’t pay them they’ll just cancel your coverage.  And of course driving without insurance is illegal.  Talk about the ultimate leverage over their borrowers!
by JohnUlzheimer for Mint.com

 

How can I stop credit card offers?

August 20, 2015 by · Leave a Comment 

How Can I Stop The Credit Card Offers?

Everyday millions of consumers get home from work to find a small stack of credit card offers in their mailbox. These offers, many of them from the same credit card issuers who sent you an offer last month, purport to offer you new credit cards. These are called “pre-approved offers of credit” and account for hundreds of millions of dollars in revenue not for the credit card issuers…but for the credit reporting agencies.

The credit reporting agencies, in addition to selling credit reports and credit scores, sell lists of consumer names and addresses to credit card issuers so they can send you those offers. The list of consumers has been “screened” by the credit reporting agencies and meets certain minimum credit score requirements. For example, a bank can buy a list of consumers who have FICO scores greater than 650, thus eliminating very risky prospective customers.

Thankfully there is a way to have your name removed from those screened lists. And, even better news, it’s free to do so. By going to this site you can have your name removed for 5 years or even permanently. But don’t worry, you can always opt back in if your mailbox starts having separation anxiety.

Opting out is easy, but giving out the amount of information you’ll be asked to give is going to be hard. You’ve got to provide your name, address, Social Security Number, Date of Birth and your phone number. They need this information to ensure the correct credit file has been “blocked” for screening purposes.

Some people don’t like the opting out idea because they can get a proxy of their credit scores by the offers they’re receiving. For example, if you’re getting Platinum style offers then you’ve got great credit scores. If you’re getting “classic” card offers with limits of “up to” $1,000 then your scores aren’t that great.

Just because you’ve opted out it doesn’t mean you’re going to stop getting offers. First off, your name is probably already on several pre-screened lists and you can’t get your name off of them after the list has been delivered to the lender. And, opting out just gets your name removed from screened lists sold by the credit bureaus. It doesn’t remove your name from other lists that are sold by other companies.

Finally, the website I sent you to is the legitimate unified “opt out” site sponsored by the national credit reporting agencies pursuant to Federal law. There are companies who, for a fee, will opt you out. Don’t get tempted into thinking you have to pay for this.


Read the original article by John Ulzheimer

Statute of Limitations for Credit Reporting

August 19, 2015 by · Leave a Comment 

When Does The 7 Year Period of Negative Credit Reporting Actually Begin?

ball and chain

If you have made credit management mistakes in the past then I have some great news for you. Negative credit information cannot remain on a consumer’s credit report indefinitely. Thankfully, the Fair Credit Reporting Act (FCRA) requires the credit reporting agencies to remove negative information from a consumer’s credit report after a certain period of time. The date which an account must be removed from a credit report is often referred to as the “FCRA compliance date of first delinquency” or the “purge from date.”

Depending upon the item, the credit reporting statute of limitations can differ. However, a majority of the negative items on a consumer’s credit report must be removed after about 7 years.  But, 7 years from when?

There is a great deal of confusion regarding specifically when an account can be expected to age off a consumer’s credit report. If you were to perform an internet search for the question “When will a collection account be removed from my credit report?” you would likely find dozens of different answers. However, the true answer to the previous question is “it depends.”

For credit items which have a purge date after 7 years, i.e. collection accounts, charge-offs, repossessions, etc., the item will be removed 7.5 years from the date of first delinquency or 7 years from the date of default. The date of first delinquency (DFD) is defined as the date that the original account went delinquent (past due) for the first time leading to the default. The default date can also be expressed as the date the original account became 180 days past due.

So, as an example, if you defaulted on a credit card account in June 2013 then it can remain on your credit report for either 7 years from that date (deleted no later than June of 2020) or 7.5 years from the date the credit card account went delinquent leading to the default. Either way, the default cannot be reported more than 7 years.

Here is a cheat sheet which you can use as a reference when you want to know specifically how long a negative account can legally remain on your credit reports.

Collection Accounts – Accounts reported by a collection agency are purged from your credit reports 7 years from the date of default on the original account. The FCRA does not allow collection agencies to “re-age” collection accounts when they are purchased from the original creditor in an attempt to keep a negative account on a credit report longer. If a collection agency tries to re-age an account by manipulating the FCRA compliance date that is illegal.

Charge-Offs – Accounts with a charge-off status should be purged from your credit reports 7 years from the date the charge-off occurred.

Judgments – The purge date for a judgment is 7 years from the date it was filed. If the judgment is re-filed and thus has a new filing date, it will remain for 7 years from that new date.

Repossessions – You can expect a repossession to be removed from your credit reports 7 years from the date your auto loan went into default (or 7.5 years from the date of first delinquency on your auto loan that lead to the default).

Chapter 13 Bankruptcy – A chapter 13 bankruptcy should be removed from the credit report 7 years after the date discharged, not the date filed. Note, it can take several years for a chapter 13 bankruptcy to be discharged after the original filing date. Therefore, a chapter 13 bankruptcy cannot remain on a credit report for longer than 10 years from the date of filing. All bankruptcies are capped at 10 years for credit reporting.

Paid Tax Liens – The purge date for paid tax liens is 7 years from the date the lien was released. Unpaid tax liens have no purge from date and can remain indefinitely if the credit bureaus so choose.

Chapter 7, 11, and Bankruptcies Which Have Not Been Discharged or Dismissed – Bankruptcies which fall into 1 of these 4 categories are purged from credit reports 10 years after the filing date.

The Insider – October 22nd, 2013
By John Ulzheimer

Original Article – http://www.creditcardinsider.com/insider/when-does-the-7-year-period-of-negative-credit-reporting-actually-begin/

 

The 7 deadly credit card sins

August 18, 2015 by · Leave a Comment 

 

 

 

 

 

 

 

Carrying the plastic means you’re susceptible to a host of temptations and mistakes that can bring regrets later. Savvy cardholders know to resist them.

Credit cards can be a great asset or a great liability, depending on how a cardholder uses them. While you probably won’t go to hell for committing any of these sins, the financial situation you will find yourself in afterward can certainly cause some pain to your pocketbook and damage your credit score. Read on to find out the seven deadly credit mistakes you should avoid at all costs.

1. Gluttony: Bumping up against your credit limit

Just because your issuer awarded you a $6,000 credit limit doesn’t mean you should max the card out. For starters, those who aren’t able to pay off their balances in full increase the likelihood of winding up in debt, since they’ll be subject to the interest on their purchases. Secondly, bumping up against your credit limit is likely to have a negative overall impact on your credit score.

“The closer you get to your credit limit, the riskier your credit profile is going to look,” says Chris Mettler, the founder of CompareCards.com, since it leads to a high credit-to-debt utilization ratio. Mettler says it’s best to use credit in moderation, using only 15% or less of your total credit at any given time. And yes, you should also pay off all those balances in full by the end of the month whenever possible.

2. Pride: Not checking your credit report

You might assume your credit score is in fine standing based upon a presumably stellar payment history, but the truth of the matter is that credit reports can easily contain errors. And the more egregious ones, like inaccurate delinquencies or improper credit limit information, can cost you more than a few points on your accompanying credit score.

Consumers therefore should check their credit report at least once a year — especially since you’re entitled to one free copy each year, thanks to the Fair Credit Reporting Act — or right before you apply for a big loan, to minimize the chances that you’ll encounter any surprises.

3. Lust: Applying for too much credit

Lucrative sign-up bonuses can certainly be attractive, but that doesn’t mean you should apply for every credit card that’s touting one. Too many credit card inquiries — generated by lenders that are looking to see if you deserve a new line of credit — in a short time frame can also negatively affect your credit score. Instead, apply for credit as you need it, and add a new card to your payment arsenal about once a year until you’ve got three or four you can consistently pay off on time at your disposal.

4. Greed: Taking out a cash advance

It may seem like a great idea to use your credit card to get a cash advance at a casino so you have some cash to gamble with, but in addition to the lousy odds you’ll have trying to make the money grow, the paper comes with a price.

“You’re going to be charged a significant amount of interest,” Mettler says, estimating that most transactions will carry an interest rate around 23% or higher. As such, it’s best to use a credit card only in instances where the plastic itself can be used to make the purchase and you can pay back the funds by the subsequent bill’s due date.

5. Envy: Applying for a card that’s out of your league

Your globe-trotting friend may continually flash a credit card that grants access to swanky airport lounges, earns free airfare and avoids foreign transaction fees, but don’t let jealousy lead you to sign up for one of your own. Typically, cards of that caliber contain high annual fees that are worth paying only if you travel enough to justify the rewards.

Instead, ask yourself a few questions to figure out what type of credit card is more suitable to your lifestyle. (You’ll also want to check that your credit score qualifies you for the account so you don’t rack up any of the unnecessary inquiries we were talking about.) There may be a great rewards card with no annual fee that will look much better with your name on it.

6. Wrath: Closing all your credit card accounts

Those who have gotten burned by their plastic may be inclined to cut up all the credit cards in their wallet and close all the accompanying accounts, but it’s best to curb your anger. Closing accounts can negatively influence your credit-to-debt ratio, especially if the one card you’re leaving open — or transferring a balance to — is bumping up against its credit limit.

It’s better to keep the account open but not use it, since that will keep your credit-to-debt ratio positively intact and not jeopardize the average age of your credit report.

7. Sloth: Not checking your monthly credit card statements

It can be easy to set up automatic bill pay on your account and then forget all about your credit card, especially in instances where you use it infrequently. However, it’s a bad idea to skip checking your monthly credit card statements.

“You can be paying for things you’ve signed up for and forgotten about,” Mettler says, in addition to any fraudulent charges that may appear, courtesy of errors or, even worse, identity theft.

By Jeanine Skowronski, MainStreet http://money.msn.com/credit-cards/the-7-deadly-credit-card-sins-mainstreet.

The History of The Credit Bureaus

August 13, 2015 by · Leave a Comment 

 

I found this article and thought it was useful and relative as ever. Get your learn on as we dive into a bit of history.

The History Behind Credit Bureaus, And The Founding Of The Big Three

When you’re in the process of buying a home, looking for a new car or trying to get a credit card, one of the first things the banks or credit card companies will do is check your credit score and pull a copy of your credit report. They want to see how well you handle borrowing money, and whether or not you’re going to be worthy of receiving a new line of credit.  If your credit history is bad enough you may be denied a loan, or at least be given a higher rate because you’ve shown yourself unable to handle credit very well.

Having our credit checked when we borrow money has become a fact of life these days, and we’ve all come to expect it as part of the process.  But where did the credit bureaus come from, and how long have they been around?

 

Credit Bureaus In The 1800s

Back in the day when a merchant or business was asked to extend a credit line to an individual, all the merchant had to go on was their personal knowledge of that person, and whether or not they might be a good credit risk.  As you might imagine that doesn’t always work out well if someone is new to town, has no history with local merchants, or the merchant just doesn’t know them.

As a solution to this problem as far back as the 1860s local merchants began to maintain lists of individuals who were poor credit risks, and then would share the lists with other merchants.  In essence they became the first credit bureaus. By sharing information about people who were poor credit risks, they lessened their own risk and were able to offer more credit to more people.

Populations in the U.S and elsewhere began to move more freely about the country with the advent of mass transit via train and automobile, and as a result more merchants across the country needed to have information about a wider range of individuals (especially those from outside their local area).  Larger regional and national credit bureaus as we know them today began to start cropping up.

Credit Bureaus: The Big Three

As the numbers of people seeking credit grew, so did the amount of data about those people – and the need to have consolidated sources of credit information for financial companies to access.

NOTE: In the U.S. there are around 2 billion data points entered every month into credit records, and there are around 1 billion credit cards actively being used.

There have been quite a few bigger national and smaller local and regional credit unions on the scene over the past century and a half, but most lenders and financial institutions now use one of the main “big three” credit bureaus.  They include Equifax, TransUnion and Experian.  Here’s a brief history of the big three.

Equifax – The First Of the Big Three Credit Bureaus

Back in 1899 Equifax was founded under the name of the Retail Credit Company.  They quickly grew over the years to the point where they  had offices all over the United States in the 1920s.  By the time the 1960s arrived RCC had credit information and files on millions of Americans and would share it with just about anyone.

When the Fair Credit Reporting Act was passed in 1970 credit bureaus had limits placed on what information they could share, and with who.  Up until that point it had been a bit of the wild wild west and regulators knew there had to be laws in place to govern the credit industry, as well as to protect consumers.  Retail Credit Company suffered some bad PR around this time, and by 1975 they had re-branded as Equifax.

TransUnion – From Rail Equipment To Credit Reporting

TransUnion was founded in 1968 to be the holding company of Union Tank Car, a rail transportation equipment company. TransUnion became a part of the credit reporting industry  in 1969 when they acquired some regional and major city credit bureaus.

They’ve continued to grow over the years and now have over 250 offices in 24 countries including the U.S.

Experian – Newcomer Of The Big Three

Experian is the new kid on the block when it comes to the Big Three. They were founded across the pond in England in 1980 as CCN Systems.

They only came to the U.S. in 1996 when they bought a company called  TRW Information Services.  They’ve continued expanding their credit reporting operations to grow to the point where they now have a presence in 36 countries.

Things Have Changed From The Early Days

In the early days of credit bureaus local merchants were sharing information about local residents who might be bad credit risks, and it didn’t consist of much more than a list of people who hadn’t paid off their debts.

Today credit bureaus process billions of points of data every month and monitor activity on at least a billion credit cards in the United States.  Based on the myriad of data they collect they make decisions about the credit-worthiness of individuals and assign them credit scores. Consumers can also access their credit reports online these days and make disputes about the accuracy of the data held there.  In the past it would have been much more difficult.

Thanks to the Fair Credit Reporting act consumers can go to the government’s website at AnnualCreditReport.com and check their credit report from each of the big three. Not only that, but there are ways to get a look at your credit score via free or paid services, so it’s easier than ever to determine how good, or bad, your credit situation is.  Much easier than it would have been back in the early days of credit bureaus.

 

by Peter Anderson for Bible Money Matters

http://www.biblemoneymatters.com/the-history-behind-credit-bureaus-and-the-founding-of-the-big-three/