Archive for May, 2010

If You Decide to Use a Credit Repair Company

Monday, May 31st, 2010


First, realize that in most cases, you can do everything they can do. So you need to be aware of what can and cannot be done.

No credit repair company can remove legitimate negative information from your credit file. Those who promise to do so are breaking the law. If a company tells you they have a “proven method” to remove all negatives from your file, run the other way. At best they’ll take your money and at worst they’ll get you into legal hot water.

What they can do is get errors corrected and see that items that should be removed are removed.

For instance, all negative financial information has a time limit, but not all companies honor that limit.

A consumer reporting company can report unpaid accounts for 7 years and bankruptcy information for ten years. If you have these items still showing in your credit file after their time limits have passed, the credit repair company can help you get them removed.

A credit repair company can also help you file Dispute Letters to remove information that is in error. This could be a simple data entry mistake that put someone else’s information in your credit file, or failure to remove unpaid debt that was charged off in a bankruptcy proceeding.

You can do all this yourself, but if you feel unsure and want help, do use caution in choosing a credit repair company.

The Credit Repair Organizations Act requires companies to give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract with them. And they must give you a contract.

They are not allowed to charge you any fees until they have completed the services promised in the contract, and they are not allowed to perform any services until three days after you have signed the contract. This gives you a “cooling-off” period in which to change your mind if you’ve acted impulsively in contacting them.

Your contract must set forth a detailed description of what the company will do for you, along with the total cost and the payment terms. They must also tell you how long the services will take and set forth any guarantees in writing.

Caution: Do not sign any agreements with a company that fails to give you their company name, business address, and phone number. The Internet is crawling with scam artists, so beware.

If you have been victimized…

If you’ve already fallen prey to a bogus credit repair company, do report it. Contact your local consumer affairs office or your State Attorney General. They may be able to help you, and they may be able to protect other consumers from the same kind of fraud.

Credit Counseling vs. Credit Repair

Friday, May 28th, 2010

iStock_000011169728XSmallWhat’s the difference between Credit Counseling and Credit Repair?

Credit repair is a two-part procedure. The first step involves removing non-legitimate negative information from your credit file. The second involves your own behavior.

Removing information that doesn’t belong on your credit report can give an immediate boost to your credit scores, and if there is no legitimate negative information then you need only to change some habits to raise your scores significantly.

Credit Counseling comes into play when your bills and your spending habits have gotten out of control and you need some help to rein them in.

A credit counselor will help you create a workable budget and hold you accountable for sticking to it. They’ll also assist you in working out repayment plans with your creditors. Many offer free workshops and educational materials to help you learn how to control your spending and get out of debt.  With their help, you can slowly repair your credit through making consistent on-time payments and learning to live within your income.

Credit Counselors, like Credit Repair Companies, can be good or bad. So before you act, do some research.  Don’t assume that because a company is “non-profit” that it will be free, or even legitimate. Some charge high fees or hide their fees by requiring contributions to their cause, and some are even more dangerous.

As with all things, consumers need to beware. Some legitimate organizations will help you by collecting a set amount from you each month and distributing it to your creditors under the repayment plans they’ve helped you establish. But since not all credit counseling companies are legitimate, so before you agree to such an arrangement, do your research.

If you choose the wrong one, you could find your credit becoming worse instead of better. Promises to pay on time on your behalf are not met – and in some cases, payments are not made for months at a time, if at all.

Contact your financial institution or a local consumer protection agency for a list of legitimate Credit Counselors. And be aware that if you are considering bankruptcy, you’ll be required to get credit counseling within 6 months of filing – and that counseling must be from a government-approved organization. You can find the list of approved organizations at

When you’re concerned about credit, the first step is knowing where you stand today. Get a copy of your free credit report and scores online and read the report. Correct any errors, then go on to the next step – getting out of debt.

Author: Mike Clover your resource for credit cards and online credit reports with scores.

The Entitlement Society Goes After Free FICO Scores

Thursday, May 27th, 2010

iStock_000008416722XSmallIs there anything we aren’t entitled to these days – especially if we have a low income? Month by month, Congress is adding to the list of services that citizens can have for free.

Right now FICO scores are the target. Senator Mark Udall (D-Colorado) wants them provided to certain individual free of charge.

Never mind that credit score requirements are highly proprietary and expensive to determine. Never mind that the credit scoring companies must employ trained personnel to compile the scores. Apparently, companies like Experian, TransUnion, and Equifax have joined the ranks of those “big bad companies” who make too much money and should thus perform their services for free.

Senator Udall introduced the FACS Act, or Fair Access to Credit Scores Act, as an amendment to the far-reaching Wall Street Accountability legislation now in Congress. It has passed the Senate and is awaiting final approval.

He states that any time a person is turned down for credit, he or she is entitled to know the credit score that was used to determine the denial. At present, thanks to the Fair Credit Reporting Act, individuals who are turned down can request a copy of the credit report used in that determination, but not the scores.

Under the FACS Act, consumers will not even have to make the request. The credit report and the score will be sent to them automatically. In many, if not most cases, the score will be the FICO score, since it is the one most often used by banks and other lenders.

Does this place an unnecessary expense on the creditor? Of course it does. But apparently, that’s OK, because the creditor probably makes “too much money” anyway.

In arguing for his amendment, Senator Udall aks, “Would a doctor say that someone’s blood pressure reading is their information and not their patient’s?”

And of course they would not. But… the patient (or an insurance company or welfare agency) has paid the doctor to take that blood pressure reading, determine its significance, and convey the information to the patient.

Consumers who apply for mortgage loans are generally given their credit scores by their mortgage lenders. These consumers have paid in advance for their credit report. If their scores are low, their mortgage lender offers advice on raising the scores so they can qualify for a home loan. This is similar to the doctor who advises patients on ways to improve their blood pressure ratings.

When making application for credit cards and other kinds of loans, consumers generally do not pay. I believe that makes them ineligible to receive the scores, but under the FACS Act, it will become a “privilege.”

Author: Marte  your resource for the Credit FACTS…..

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When to Refinance your Home….

Wednesday, May 26th, 2010

iStock_000008060318XSmallWhen interest’s rates are low like they are currently, you need to be cautious of ads for mortgage refinance via the mail, TV, and maybe the phone. You probably are asking yourself, when is the best time to refinance my current rate and terms? Please don’t fall prey to the sales calls and ads. If you are not careful, the only person that might benefit from the refinance is the bank. Remember that banks are in business to make money and I think most forget that.

Top reasons to refinance your current mortgage

-          You will be staying in your home for at least 15 years. A refinance typically takes about 7 years just to recover the 3rd party fees applied to your principal note. So if you are in your current home short term don’t refinance your home.

-          Interest rate reduced a minimum of 2% from current rate. If you cannot reduce your current rate 2%, it’s really not worth refinancing your current mortgage because of costs that will be rolled into your loan.

-          You have an escrow shortage and you don’t have the money to cover the shortage. Lots of homeowners get into trouble with not escrowing their taxes and insurance. If you find yourself in this predicament, it is not a bad idea to refinance your home and set up your escrows with the bank.

-          You are getting a divorce. If your spouse is awarded a home in a divorce make sure they refinance that home into there name only. A divorce decree does not protect your credit score, a refinance does. So make sure you refinance your home out of your name if you are not paying the mortgage as a result of a divorce.

-          You’re ARM (Adjustable Rate Mortgage) is set to expire. Again if you are going to be in your home long term and your rate is about to go up due to a ARM loan, you will more than likely need to refinance your home. Typically I would recommend refinancing your mortgage to a fixed rate.

When refinancing your home, make sure you determine if refinancing your home makes financial sense. Don’t fall prey to a refinance sales call or advertisement. Don’t make the mistake of only benefiting the mortgage companies’ pocketbook. I personally will not refinance someone’s home if I can find benefit in it for the homeowner. Unfortunately most mortgage lenders are not honest; they are only interested in a quick buck.

Author: Mike Clover


Credit Card Do’s and Don’ts

Wednesday, May 26th, 2010

iStock_000003753458XSmallCredit scores are sensitive – reacting to everything you do and don’t do. Here are 4 ways to respect your credit scores’ sensitivities and stay in their good graces.

Do ask for a credit limit increase – but don’t use it! Some financial advisers tell consumers to ask for a reduction in order to limit their own spending. But it’s far better to set and respect your own limits. Keep your credit limits as high as possible and your use as low as possible.

A large gap between available credit and use will raise your credit scores. A 70% cushion is good and more is even better.

Note that this limit should be imposed on each and every card you carry, which brings us to a mistake that many consumers make in their efforts to save money: Consolidating accounts.

Don’t consolidate accounts if it means you’ll “max out” a card.

You can be sorely tempted to move all your high-interest balances to a card offering a low promotional rate. After all, the less interest you pay, the more you can apply to the balances, but think twice.

As long as your consolidated balances stay below 30% of the credit limit on your low interest card, you’re safe. But when you “max out” one card your scores will drop – even if you have zero balances on 3 or 4 others.

Do pay attention to old credit cards.

The older your credit history the better, so hang on to the cards you’ve had the longest, and use them every few months to keep them active in your credit file. If you let them gather dust they’ll stop carrying much weight toward your credit scores and you’ll also run the risk that the card issuer will cancel them for non-use.

This will reduce your overall available credit, lowering your scores.

So take out the old card every 2 or 3 months, use it for a purchase you were going to make anyway, and then pay the bill when it arrives.

Don’t ask for more if you have plenty.

If you already have enough credit cards, don’t ask for more. Resist those in-store promotions offering you a percentage off today’s purchases when you apply for a card and just use the ones you already have.

On the other hand, if you’re in the credit-building stage, go ahead and get a new credit card or a store line-of-credit every few months. Having 3 or more credit accounts that you always pay on time shows creditors that you can manage money.

Author: Marte

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Credit Repair Scams Abound – Here’s How to Protect Yourself

Tuesday, May 25th, 2010


When your credit scores have plummeted due to bankruptcies, liens, and non-payment of debts, the big promises made by bogus credit repair companies can be very tempting. But all they really are is a way to separate you with whatever dollars you have in your pocket.

Remember, when a promise sounds too good to be true, it isn’t true. So when you get an email or a postal mail promising to solve all your credit problems and remove all the negative information from your credit file, you’re looking at a scam attempt.

The truth is, the only information that can be removed is information that’s incorrect – and you can do that yourself at no cost.

How to recognize a credit repair scam:

• They ask for money up front.
• They promise to get rid of all negative information
• They don’t tell you your rights or let you know what steps you can take for free.
• The advise you to cut off contact with your creditors.
• They tell you not to contact the credit reporting agencies.
• They advise you to dispute every negative entry on your credit report, even if it’s true.
• They suggest that you create a new identity.

Under the Credit Repair Organizations Act, credit repair companies are barred from collecting money from you until and unless they complete the promised services. And, if you follow their advice about creating a new identity, you may be committing fraud – which is much more serious than poor credit!

Under the law you are entitled to an annual free copy of your credit report from each of the nationwide consumer reporting agencies: Equifax, Experian, and TransUnion. In addition, you’re entitled to a free report if you ask for it within 60 days of being denied an application for credit, insurance, or employment based on your credit rating.

Reading your credit report regularly is a wise financial practice, because over 70% of all credit files do contain errors.

To dispute an error, simply write to the complaint department of the reporting agency. Identify the incorrect item, tell why it is incorrect, include supporting documentation (such as a statement showing that the bill is paid or court documents showing you no longer obligated to pay) and ask that the error be corrected.

When you file a dispute, the reporting agency has 30 days in which to investigate and get back to you. Part of their investigation will be to gather proof from the information provider. If the information is found to be incorrect, the reporting agency will change your credit file and send you a new copy of your credit report.
In addition, you can ask to have a corrected copy sent to anyone who has accessed your file in the past 6 months. You can also ask that a corrected copy be sent to anyone who reviewed your credit file for employment purposes during the past 2 years.

Author: Mike Clover

When Should You Dispute Your Credit Report?

Tuesday, May 25th, 2010


Experts agree that as many as 70% of all credit reports have errors. In addition, identity theft is rampant, so reading your own credit report often and checking for errors is vital to maintaining good credit scores.

Some errors, however, aren’t worth correcting, because they have no effect on your credit scores. Those include:

  • Misspellings of your name
  • Listing of an old address or an incorrect address
  • An old employer listed as current
  • Incorrect reporting of who closed an account – you or the bank

As long as those items aren’t tied to a new account that is clearly not yours, you don’t need to make the effort to correct them.

An address where you have never lived or an employer you’ve never worked for, on the other hand, could be a sign of identity theft, so should be investigated.

Errors that can affect your credit scores and thus should be corrected immediately include:

  • Accounts listed as unpaid that were included in a bankruptcy
  • Current accounts that clearly are not yours
  • Negative items older than 7 years – or 10 years in the case of a bankruptcy
  • Closed accounts listed as anything other than “paid as agreed” if you’ve paid on time and in full
  • Credit limits reported as lower than the limit listed on your credit card statement
  • Late payments, charge-offs, or collections that aren’t yours.

This last one could also be a sign of identity theft, so look into the source of the report immediately.

One caution – while it should always be beneficial to get your credit report clear of any negative information, removal of old items can actually lower your score.

The FICO credit scoring method groups consumers together in a very strange way. When your credit history is spotty you’ll be included in one of several groups, and when it’s clean you’ll be included in another group. You can be at the bottom of a group or at the top – based on all the components that go into determining a credit score. And your standing within that group will affect your credit scores.

Thus, removal of an old negative could move you from the top of one group to the bottom of another – and your scores will drop accordingly.

Remember, however, that you can’t attain the highest scores available as long as you remain in one of the “lower” groups. So even if you have a temporary setback, it’s still worthwhile to work on creating a clean credit file.

Protecting Your Credit Scores: Three Steps to Take

Monday, May 24th, 2010

iStock_000008837234XSmallRight now, due to the current economic crisis, 30 million Americans have credit scores of 620 or lower. So if you’ve been having troubles, know that you aren’t alone.

While all of your payments are important, credit card use seems to have a greater impact on your credit scores. So here are a three ways to raise your scores – or keep them from falling unnecessarily.

If you’ve got good credit scores – 700 and above – a mistake like a late payment can cost you as much as 100 points.

But mistakes happen – a crisis in your life or mis-routed mail can cause you to overlook a payment, even if you’ve never been late in your life.

If that happens to you, contact your credit issuer immediately. Since you have a good history with them, they may be willing to make a “goodwill adjustment” and erase that one late payment from your credit history. Call first, and then send your request in writing.

If your credit is already in the basement, one more late payment isn’t going to do much additional damage, but every little bit counts, so if you’ve got a good record with this card, make the call.

If you’ve had trouble making payments in the past, but are now back on track, a credit card issuer might be willing to “re-age” your account – erasing previous delinquencies after you’ve made a year’s worth of on-time payments.

You may be carrying a ding on your credit history because of an old disputed account. You wouldn’t be the first one to refuse to pay a charge you felt was billed in error, or even fraudulently.

You can try reasoning with the creditor, but that may not be effective. Instead, file a dispute with each of the credit bureaus that report the account. File your dispute under the reason: “Not mine.”

Next, since the amount you charge in relation to your credit limit counts heavily in compiling your credit scores, read your credit report to see that your credit limit is being reported correctly. Contact your creditor and ask that they revise their report to reflect your true credit limit.

The better your credit scores the less interest you’ll pay on everything from a credit card to a car to a house, so it pays to protect and raise those scores no matter where you stand today. One exception: Once your score is 760 or higher you don’t need to raise it – only to protect it.

Author: Mike Clover

Credit Repair “Do it yourself” Don’t get Scammed!

Sunday, May 23rd, 2010

Woman with laptop.Credit Repair is one of those services that is very shady…. Being a mortgage lender, we have credit repair companies knocking at our door all the time. I am amazed that credit repair companies will walk in our door and actually state they can remove bankruptcies, judgments, collections and slow pays from a credit report. They also claim they can increase your credit score. I will be the first to tell you that these credit repair companies are not telling the truth. Here is the only and quickest way to repair your credit report. I guarantee that if you follow my instructions your credit will get better.

-Pull your credit report

You can go to to get a free credit report at no cost to you once a year. If you want to know your credit scores you can pull your credit report with scores through our You need to know what is on your credit report before you can do anything to help your credit situation.

-You must have money saved

This is a very interesting topic, because I get people wanting credit repair help all the time, but they have no money saved. Your credit does not get better by waiving a magical wand and poof your bad credit is gone. You need money in order to get matters resolved. If you don’t have any money saved, STOP reading this article, bookmark it and come back once you have money saved. Most credit repair candidates need $2500 to $4000 in the bank to repair their credit report. Credit Repair companies will typically take around $1000 to $2000 dollars, and get absolutely nothing done for you. So save your money to pay off collections and don’t give it to a credit repair company.

-Study your credit report and make notes

If you have money saved to get started, then print out your credit report and get ready to make notes, highlight and write down collection company numbers. Look over your credit report and find the most recent collections that are small collections. I find that medical collections and utility collections are typically a good starting point. Once you have determined what is on your credit report, write down the numbers to at least 10 collection companies along with the collection amount owed. Also make note of any discrepancies on your report, if they are indeed discrepancies, you can get inaccuracies removed from your credit report.

-Negotiate Collections

This is where I lose most people, because this requires effort and some money. “Most credit repair company’s dispute collections that you actually owe and you will find this is a waste of your time and money.” By now you should have a list of collection company numbers. Determine the total amount owed to all 10 collections. If you only have 4 collections, then calculate the totals of those 4 companies. All collection companies will allow you to pay pennies on the dollar. So if you have a medical collection for $350 dollars, offer them $150 bucks to settle. You will find that these companies typically will settle for 30 to 40% of the balanced owed. This process is the quickest way to repair your credit report I promise. I have helped tons of people with this method, and those whom listened are happy home owners now. If you have collections that are 3 years old, I recommend paying them off. Collections stay on your credit report for 7 years, so you would need to wait another 4 years before your credit rebounded. Plain and simple, negotiate the collections you owe and your credit score will recover. I read article after article stating not to pay off collections, which is completely wrong.

-Collect Letters from Collection agencies

Once you have paid off your collections, the creditor will send a letter stating the nature of your collection account to the credit bureaus. The letter will either say “paid in full” or “settled for less than balance owed.” That collection company will report the change to the credit bureaus which will result in a $0 owed being reported. This is what increases your score, the balanced owed changing to a zero balance. I personally know people that at one time worked for the bureaus tell me this is not true. I know for a FACT it does work, because in the mortgage business we use a trick of the trade called rapid rescore that updates the bureaus once a collection status changes. In some rare cases the score did not change, but 99% of the time the credit score went up. Make sure you collect all the letters the collection companies sends in the mail, just in case a collection does not get updated properly with the bureaus.

Dispute information that is incorrect

There is always information on a credit report that is wrong. Find that information and if you find that its reporting to all 3 credit bureaus, dispute it with Equifax, Experian, and TransUnion. You can use our online disputing process. Online Credit Dispute. You may also write letters to the credit bureaus if you want to dispute that way. Example Dispute Letter. Here are the addresses below to each credit bureau. Once you dispute, depending on which method you use, the credit bureau has 30 days to respond. Don’t dispute something you actually owe, unless that collection has expired. Go here for credit collection expiration examples.

Credit Bureau Addresses:

P.O. Box 9556
Allen, TX 75013

Equifax Information Services
P.O. BOX 740256
Atlanta, GA 30374

Customer Disclosure Center
Trans Union Consumer Relations
P.O. Box 2000
Chester, PA 19022-2000

Re-establish credit

Once you have negotiated your collections you need good credit reporting to the credit bureaus. The Fair Isaac scoring model has different determining factors that make up your score. Here is how they are broking down…

- Payment History 35% of score

- Amounts Owed 30% of score

- Length of Credit History 15% of score

- New Credit 10% of score

- Types of Credit Used 10% of score

If you have nothing reporting on your credit report, go immediately and get 2 secured credit cards. Secured credit cards are the best way to re-establish your credit. After about 6 months you should see improvement to your overall credit rating. Be patient, this process could take up to 12 months of hard work. I promise it’s a lot better than paying some credit repair company just to take your money.

- Recap

Hopefully after 2 – 3 months you have paid off as many or all the collections you can afford. If you found you had no good credit revolving on your credit report, you also established new credit. Maybe you found some inaccuracies on your credit report that you disputed either online or through the mail. What ever your situation was, your credit report and credit scores will be improving with the method discussed. If you find you have questions feel free to e-mail me.

Author: Mike Clover

The Mindset That Can Put Small Businesses Deep in Credit Card Debt

Friday, May 21st, 2010

iStock_000002350816XSmallWhen you have a small business, it’s easy to think of it as a separate entity with expenses and debts unrelated to your own. The fact that most credit card issuers don’t report your business credit card activity on your personal credit report file adds to the misconception.

And that makes it easy to get your business deep into credit card debt.

Because small business people believe that they need to put on a good front to customers, clients, and even employees, it becomes easy to over-spend on non-essentials, or even unproven advertising venues. And, when cash flow is not flowing well, it becomes easy to lean on the credit card.

This was especially true when credit card companies were filling mailboxes with checks pre-written for $3,000, $5,000 and more – but it is still a danger today.

Most small business entrepreneurs share a basic optimism that things really will be better tomorrow. So it’s easy to say: “Well just use this check to pay this months’ expenses, and by next month we’ll have the money to pay it back.”

If you have a business credit card, think twice before you use it. Is this purchase or expense essential? And if it is essential, do you need to spend this much? You may actually need a new desk chair, but do you need the $500 chair? Perhaps the $150 chair will do just as well.

Obviously, if you have payroll to meet or tax payments to deposit before you’ve received customer payments, having the credit card to fall back on is a big help. And if you have a lot of miscellaneous expenses such as gasoline, office supplies, and meals, the credit card accounting services can help you keep track of spending. Used as a tool, your business credit card can be an asset.

But carrying a balance from month to month can drag your business down and cause you to spend too much of your hard earned money on interest.

Business credit cards are not covered under the Credit CARD Act. That means carrying a balance in today’s economy is dangerous. The credit card issuer can and might raise your rate at any time – and they’re not required to warn you ahead of time. $20 in interest charges last month could easily turn into $50 next month.

So get a business card and use it for the convenience and the bookkeeping features – but strive to avoid carrying a balance.

Author: Mike Clover

CreditScoreQuick your online resource for credit cards and credit reports.

Disclaimer: This information has been compiled and provided by 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.