Archive for October, 2010

Marriage & Credit Score Myths

Sunday, October 31st, 2010

Have you ever wondered what will happen to your credit scores and credit reports once you are married? There are all kinds of credit myths out there as a result of couple’s becoming married. Fortunately these myths are nothing but myths. Here are the top five misconceptions about married credit scores and credit reports.

Marriage will cause my credit scores to drop- It is very common for newly weds to acquire huge credit card debt to pay for weddings and a honeymoon. The act of increasing credit card debt will lower your credit scores but the act of getting married does not merge your credit reports nor does it affect your scores. So bottom line, getting married will not lower your credit scores unless you rack up a lot of credit card debt.

I will automatically be added to my spouse’s credit cards – This simply is not true. You will not be added to your spouse’s credit card unless you call the creditor to be added. With some loans types you cannot be added to the loan unless a refinance takes place. Being added as co-signer can help your credit scores especially if you don’t have any credit. You will need to make sure your payments are made onetime and the credit utilization is low.

Changing my last name erases my credit history – When your last name changes make sure you report this change to your creditors. During this process you will see some updates to your existing credit reports. For example you will see your new name as an alias with your old last name. While all this name change is taking place it is important to check your credit report regularly. You will not need to rebuild your credit as your credit will be attached to your new name and primarily you’re social security number. There could be some inaccuracies during this process so make sure you stay on top of your report.

Our credit reports will merge together – While getting married the only debts that will merge are the debts you jointly acquire. Like I mentioned earlier, you can also merge your credit by being added as a cosigner. Your social security numbers don’t merge together when getting married and nor does your credit reports.

My spouse’s credit scores will affect my scores – this concern is very common for those about to get married. Luckily your spouse’s credit history has no affect on your credit rating. Only when you open joint accounts will your credit profile become a factor. Your spouse’s credit scores will however affect your ability to get a mortgage. If your significant other has credit issues, tackle that issue together so you can get good rates and terms on loans.

With all of this being said enjoy being married and remember your Credit is a big part of your life.

Author: Mike Clover

Don’t be Booed by your Credit Report…..

Saturday, October 30th, 2010

Halloween is tomorrow and I personally think it’s such a wonderful time of the year. It’s not too hot or too cold. The trees are changing different colors of orange, yellow and red. Everyone has their pumpkins out in the front lawn and the kids are geared up for the candy they will receive from trick or treating.

It’s time to start reflecting on what you have accomplished this year and to set new goals for the upcoming year. October is a great time to start assessing your budget and your credit scores. Our website is in the process of creating free budgeting and investment software that you simply just plug in the numbers. This new software that we are creating will display easy to understand graphs to show where your money is going and how much you could potentially save. So stay tuned for this easy to use free budgeting software.

In regards to your credit check, under the (FACTA) Fair and Accurate Credit Transactions Act of December 4, 2003 you are entitled to a free credit report every 12 months from with each of the national credit bureaus. Now this free government website does not provide your credit scores for free, but you can get your credit report with each credit bureau to check for any issues. If you are interested in getting your consumer credit scores you can buy them through the government site as well.

Hopefully when you pull your credit report you will not be frightened by the credit report goblin or credit score monster. When you don’t stay on top of your credit those little credit goblins can show up on your report.

This is a common problem that can be avoided with better credit management. According to the Federal Reserve roughly 79% of credit reports have inaccuracies on them. So don’t hesitate and take the Halloween plunge… Get your free credit report today. Also make sure you set down tonight and make a budget. Sometimes overspending or a lack of budgeting can cause those little credit monsters to show up on your report.

I wish everyone a Happy Halloween and encourage everyone to avoid those dreadful credit goblins with better credit awareness. Avoid getting credit booed!

Author: Mike Clover

How your spouses credit scores could affect you.

Friday, October 29th, 2010

There are some situations where your spouse’s credit scores will affect your rates & terms on loans. In some scenarios a spouses bad credit score could affect you getting a loan period. This means you cannot always hide your partners past or current credit issues.

Let’s assume you just got married. A house purchase is on the table. Well depending on your circumstances most will apply for a mortgage jointly. This means that both of you will have your credit report and credit scores pulled. All banks will look at the lowest credit score to determine the approval along with the overall credit picture. So if you have a low credit score and bad credit history your loan just went down to China Town…..

Some mortgage loan types such as FHA and VA require that both spouses have their credit reports pulled. Government loans look at both parties debts. That is why they require both credit reports to be pulled. In some cases where you need both incomes to qualify a bad credit score will cause qualifying issues or even a denial. Take note government loans during some circumstances will only look at your debt if your income is not being used for the loan. This is called a non-qualifying spouse scenario. This type of loan is where one spouse’s income is being used for qualifying, but both parties’ debts are used in this process.

The first thing creditors look at is your credit score. A low credit score will cause higher rates and terms for both spouses even though one spouse may have a 740 credit score. This is where matters get tricky while applying for loans.

So if you thought you could hide those bad credit scores and ride the coat tail of your spouse, think again… A spouse’s bad credit will catch up with you one way or the other and will ultimately cost you unnecessary money.

You are better off taking care of any credit issues on your credit report yourself. You can use our “Do it yourself credit repair guide”, to avoid costly and unnecessary credit repair companies.

If you know you have credit issues and are concerned it might affect you and your spouse, get busy right away…..the clock is ticking…

Mike Clover

Do the Rich want you to stay in debt?

Friday, October 29th, 2010

Most of the wealthy in this country either own a business or run one. Whether they are selling shoes, cars, jewelry, or perfume, they need a buyer to make money. Most of these entrepreneurs spend billions to entice you to buy their product. With TV, internet, and radio a company can get a product in front of millions.

These ads will have all kinds of reasons why you should buy what they are selling. Most of these companies are masters at selling bliss. That feeling you get when you meet the most beautiful person you have ever seen. A matter of fact you probably see this type of person in their ads.

Maybe you recently saw the Chase Sapphire credit card commercial where they are really living it up on credit, with the background music “Call Me”. Heck every time I see that commercial I want to go skiing….of course that is what Chase hopes you will do. Did you notice the lady with the new dress? My wife wants that dress…..

Folks, this is why we have debt issues in this country.These companies have commercials down to a science. A good advertisement is one that generates a feeling of bliss that will cause those inner emotions to boil.

Do you really think “The Rich Man Next Door” runs out and buys this stuff? The answer is no…

Media advertising is big business because it works. Companies spend billions on the psychology behind what drives you and I to buy something we really don’t need.

The next time an ad comes across your screen and you get that feeling of bliss, remember you could be making your neighbor richer.

When you and I stay in debt, “the rich just get richer.”

Author: Mike Clover

What to do with unused credit cards

Friday, October 29th, 2010

I received an email just this morning asking what to do with unused credit cards.  The consumer has $160,000 in available credit in total and has a $5,000 balance across her cards.  The math tells me that she is about 3% utilized, which is great for her FICO scores.  Her question was whether or not she could afford to close down some of those cards and still maintain her good scores.  The answer to her question is certainly yes.  If she closed down $60,000 worth of her cards she’d still be at 5% utilization (balance divided by limits).  But my question to her was “why?”  Do you want to close them for fear of ID theft?  If so, did you know that the law caps your liability at $50 and most issuers will waive even that amount?  Do you want to close them for fear that you’ll lose control and run up a bunch of debt?  If so, shred them.

I realize this sounds absurd to suggest that someone with $160,000 in credit limits keep them open for the sake of your credit scores.  But, the world of credit scoring has rules.  And the rules state that having a lot of available credit indicates that you’re low risk, and your score will benefit as a result.

John Ulzheimer is the President of Consumer Education for and owner of  He is an expert on credit reporting, credit scoring, credit score ratings, and identity theft. Formerly of FICO and Equifax, John is the only recognized credit expert who actually comes from the credit industry.  He is a weekly guest on FOX’s The Willis Report and is the credit blogger for the New York Times and  He has served as a credit expert witness in more than 65 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.

Don’t Ignore Current Notices from your Mortgage Company

Wednesday, October 27th, 2010

There are all types of headlines about the various states putting a stop on foreclosures currently. So there is no surprise this is going on while the various banks are being investigated in regards to their foreclosure paperwork process.

A warning was released today by the FTC that no matter what you hear on the news or web; don’t ignore a notice from your bank, mortgage servicer, or a sheriff requiring your immediate attention

The FTC states that this current freeze does not mean proceedings on your home will stop. This current freeze does not make your current foreclosure proceedings immune from moving forward.

If you get a notice in regards to your mortgage, don’t ignore it. Make sure you call the bank, your servicer or sheriff quickly.

So basically this current freeze is not a free pass to ignore any notices you are getting from your current bank. Obviously this applies only to those who are on the brink of foreclosure or have received documentation that foreclosure proceedings have been started.

Also there are lots of good government resources to get in touch with if you are heading down this path in some way. Make sure you avoid foreclosure scams. HUD has a website with all types of useful links to get help and counseling.

HUD’s Avoid Foreclosure site:

Author: Mike Clover

Do we really need an 800 credit score?

Monday, October 25th, 2010

Did you know that in the eyes of most creditors there really is no difference between a 740 credit score and a 800 credit score? It’s a myth that your credit score needs to be in the upper 700’s or even 800’s. You will find that this ideology is nothing more than an ego booster.

Now, I am not saying there is anything wrong with a 780 credit score or even an 800 credit score. We are getting pounded currently by experts that a credit score is crucial to the best rates and terms. While this is very true, there comes a point where we can go over board with this matter.

Most of my investors or even my bank starts dinging your interest rate when your score drops below a 740. Let’s assume you have a 780 credit score and another guy has a 740 credit score. Who do you think will get the best rates? With most lenders it does not matter…. Your risk is the same…

I don’t believe there is anything wrong with shooting for the stars, but just remember that your rates and terms will not be any better.

If you have discovered that your credit score is 740 or above, you have arrived. This means that you are considered part of the elite in the eyes of most lenders. Most creditors will not have an issue lending you money as long as you qualify.

FICO recently reported that 25.5% of consumers have credit scores 599 or below, that is roughly 43 million people. If you have found yourself in this group of Americans, then its time to get to work. If you are part of the elite, don’t sweat it, just maintain your good credit standing by practicing the following.

Maintain good credit score practices with the following:

1. Making your payments on time.

2. Don’t charge up your credit cards.

3. Don’t co-sign for loans.

4. Don’t close out good credit on your credit report.

5. Don’t apply for too much credit at once.

Author: Mike Clover

Do the Credit Bureaus Own FICO?

Monday, October 25th, 2010

This is a very common myth and misunderstanding.  The credit reporting agencies, Equifax, Experian and TransUnion, do not own FICO or the FICO scoring models.  They instead have an agreement with FICO, formerly Fair Isaac, to calculate credit scores using FICO’s scoring software and then sell and deliver them to lenders and whomever else has purchased them.  The perception is that because the credit bureaus deliver the scores to lender that they somehow own the FICO system.  FICO is actually a publicly traded company traded under the stock symbol FICO.  So, technically, you, me, and anyone else who owns FICO stock own a piece of company and the assets of the company, such as the scoring system.

The credit bureaus only wish they owned the FICO score.  If they owned it then they wouldn’t have to pay FICO a royalty and they wouldn’t have had to credit VantageScore as an effort to replace the FICO scoring system.

John Ulzheimer is the President of Consumer Education for and owner of  He is an expert on credit reporting, credit scoring, credit score ratings, and identity theft. Formerly of FICO and Equifax, John is the only recognized credit expert who actually comes from the credit industry.  He is a weekly guest on FOX’s The Willis Report and is the credit blogger for the New York Times and  He has served as a credit expert witness in more than 65 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.

Debt Settlement company sued by FTC for $1.75 Million

Thursday, October 21st, 2010

Debt collection companies are not above the law

The company Allied one of the largest debt collectors in the nation will pay $1.75 million to the FTC for making multiple phone calls to the wrong person and to collect the wrong amount. This is the second largest civil penalty obtained by the FTC from a debt collector.

This goes to show you that no one is above and beyond the Fair Debt Collection Practices Act or Federal Trade Commission Act. Which both were violated in this law suit. David Vladeck, the director of the FTC’s Bureau of Consumer Protection stated today that debt collectors had better make sure their information is correct, or they might end up paying big fines. He stated that there is no excuse for trying to collect a debt from someone if you can’t verify they actually owe the debt.

According the FTC, Allied continued collection efforts, between 2006 & 2008, even after the consumer told the company they did not owe the debt. They proceeded with this process without verifying the accuracy of the disputed information. The company was accused of making improper harassing phone calls to the consumers, using abusive language, calling multiple times a day, and sometimes hanging up when the calls were answered. The company also allegedly made calls to third parties without the consumers consent or court permission, and threatened court action that it did not attend to take.

The FTC sets some rules for Allied. The decree states the following.

(1) A consumer disputes that he or she owes the debt or the amount of the debt, or (2) a reasonable person would consider the information on which allied is relying to collect the debt implausible, facially unreliable, or missing essential information. With either circumstance the debt collector must either close the account and stop collection efforts or suspend collection until they have conducted a reasonable investigation and verified that the information about the debt is correct and complete. If allied cannot produce this information the company cannot sell the debt to any other business other than from the client that which the debt was obtained.

The consent decree also bars Allied from:

- Violating the Fair Debt Collection Act

- Communicating with third parties about a consumers debt without the consumers permission or court consent

- Using obscene or profane language or harassing consumers with repeated phone calls

- Making claims that a debt is owed or about the amount without reasonable basis

- Asking third party for a consumer’s location more than once without that third party’s consent or a reasonable belief that the persons earlier response was incomplete or wrong and that that person has the correct location information.

- Making false statements to collect a debt or obtain information about a consumer

- Making any other false or misleading statement in collecting a debt, including threatening action it does not intend to take

- Making fales statements to collect a debt or obtain information about a consumer


Author: Mike Clover

Credit Bureau Updates Q & A

Thursday, October 21st, 2010


I recently paid off and closed two loans that I had. I was told that it may take up to 90 days for it to show on my credit. I am now looking to finance a car and they showed as still open. Is there a way to speed up the process so that it will show as paid or closed sooner? Any info is appreciated.

Thank you.



When paying off debt, you are at the mercy of the creditor to report that information to the credit bureaus. Typically this process should only take 30 days to get that information updated with all 3 credit bureaus. There are some other options. You can get this information in writing from the creditors and send it certified mail or update it via online. There is a online solution with each bureau, that allows you to let them know there is a change with your information. Another option is to get with a mortgage broker that you have a relationship with and do what is called a rapid update. There is  a fee involved with this, but it may be worth it with your situation. The mortgage broker or bank will require that you have documentation supporting the update required. This process usually takes 5 business days to force the bureaus to do an update on your behalf. You are welcome to use our online resource with the credit bureaus.

Mike Clover

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.