Archive for November, 2010

Original Collection Date Q & A

Tuesday, November 30th, 2010


Can a creditor report to the 3 credit bureau’s an opening date that’s 6 years old. They dated a 6 year old debt as an opening date of 2010 instead of 2004.

Guthrie, FL


Hi Guthrie, I see this all the time. Especially if you have collections on your credit report that get sold to other collection companies. The  date opened comment seems to get messed up quite frequently. Yes, they are suppose to report the original date you opened the credit card. You can call the creditor and have them update this information correctly with the credit bureaus. If a call does not correct the open date comment on your report, you can dispute this information with the credit bureau that is reporting this information wrong.

Increase Credit Scores-How Long Does it Really Take?

Monday, November 29th, 2010

There are many ways to improve your credits scores. Some of these tips do require savings. Nether less there are ways to increase those scores fairly quickly. Here are some tried and true ways to get this done.

•    Pay Down Credit Card Debt
•    Increase your Credit Card limit
•    Pay off collections and charge-offs
•    Become a authorized user on a credit card
•    Pay off a debt

Pay Down Credit Card Debt
Amount owed on debt makes up 30% of your overall score. If you were to pay down your credit card debt you would see a boost in your credit scores. Example:

Visa Card
Balance owed: $4,000
Card Limit: $10,000

Master Card
Balanced owed: $6000
Card Limit: $13,500

American Express
Balance owed: $1,200
Card Limit: $10,000

Total Credit: $33,500
Total Utilized: $11,200

Your credit utilization is 33% of your credit limit. This would be a perfect example of how to increase your credit scores fairly quickly. Paying down the balance on Master Card or your Visa Card would work. The lower you can get that credit utilization number the higher your scores will increase.

Increase Your Credit Card Limit
The same principle applies here. Your credit utilization comes in to play. You could ultimately increase your credit card limits on your cards that have the highest utilization of credit. Granted FICO looks at the total number, your utilization of credit on each card is a factor. This is our least favorable solution.

Pay off Collections & Charge-offs
You can review your credit report if you have collections and charge-offs on it. Figure a budget to take care of the most recent collections on your report. Settle on those collections and you will see an increase in your scores. Once those collection balances report a zero balance you will see your scores increase.

Become an authorized user on a Credit Card
New credit makes up 10% of your score. Utilizing a family member’s good credit will help your score. This solution is for individuals that cannot get credit in their own name. Remember if their credit utilization is high, it may cause issues.

Pay Off Debt
Paying off your credit card debt is another part of the credit utilization scenario. So if you completely pay off your credit card balances this will increase your scores. Note: don’t close your credit cards as this could drop your credits score.

By following the mentioned practices you have have your credits scores increased within 30 to 60 days.

Signs of Identity Theft

Sunday, November 28th, 2010

Identity theft is the illegal use of someone else’s personal information or property such as a social security number to obtain credit or money.

Here are signs of identity theft.

•    Receiving calls from debt collectors about services or merchandise you did not buy.
•    Getting credit cards in the mail that you did not apply for.
•    Not receiving your bills or other credit related mail. If you did not receive a bill, this could mean that a identity thief has taken over your account and has changed your billing address.
•    Inaccurate or fraudulent information showing up on your credit report
•    Getting denied for credit or offered bad terms for no apparent reason

How to find out if your identity has been stolen

In most cases most consumers find out about identity theft after it’s already happened.

•    You may find out when you get something in the mail about a house you never owed, a job you never had or a apartment you never rented
•    You may find out when you apply for a car or mortgage and discover that you have problems with your credit worthiness.
•    You may find out when a collection companies start calling you at home for work for past due debts that you have never incurred.

Items you should monitor regularly

You can avoid identity theft by early detection. You should keep an eye out for any strange activity my monitoring all your information regularly.

Your credit reports. Your credit report will contain information about you, including all your accounts with creditors. Under federal law you have access to your free credit report every 12 months. If identity theft is taking place with your name, it will show up on your report. To get a copy of your credit reports go to

Financial statements. Always monitor your financial statements such as bank statements, investment accounts, credit card statements, etc…. regularly for charges you did not make.

Got your utilities, rental, cell phone, etc.. in someone else’s name? Not Good for Credit.

Friday, November 26th, 2010

We all know that no credit is better than bad credit. But have you tried getting a loan lately with no credit? Or have you tried getting a loan while your bills and rental is in somebody else’s name? Well, I will be the first to tell you that it’s extremely hard if not impossible to get a loan with the mentioned scenarios.

There are some situations where you might be concerned about acquiring new credit after being burned, because of bankruptcy and divorce. Maybe you are young and need to establish credit. And finally there are those who just have everything, such as lease agreements, cell phones, car loans, and utility bills in somebody else’s name. Let’s face it, you need credit and that credit needs to be in your name.

It will initially cost you money to get the electric, cell phone, and rental etc… in your own name especially if you have bad credit or no credit. Most utility companies and cell phone companies may require a large deposit initially. But it’s a part of establishing credit.

Now keep in mind that none of these services report to your credit report unless you don’t pay them and they go to collection. When I say establishing credit, I am talking about alternate lines of credit to get a mortgage loan. Example, if you are trying to get a FHA loan and have no credit, you can use one of the mentioned services as an alternate line of credit for government loans as long as the bill is in your own name and the payment history is on-time. Government loans allow you to get a letter from one of these companies stating you have been on time for the last 12 months with payments. This is considered what is called an “alternate line of credit.” Now there is one issue, you must have credit scores to get a loan in this current market. This requirement is with banks, not FHA or VA.

So let’s recap here. If you had issues in the past with credit, get re-established. It’s a must to get loans in today’s lending market. If you are young and you have zero credit, go here. If all your bills are in someone else’s name, get them in your name. Having no credit or credit in somebody else’s name does not help your credit, it actually hurts it.

If You’re Rich Do You Need Good Credit?

Thursday, November 18th, 2010

Many of us believe that if we could become rich then all of our troubles would magically disappear, but this isn’t necessarily the case. The rich have problems too, even when it comes to their credit and credit scores. This might seem a bit ridiculous seeing as how these people might make more in a year than many of us do in a lifetime, however; there are a multitude of factors that can come into play as to why rich people still have credit issues.

But this begs the question, if you’re rich, do you really need good credit anyway? Can’t you just buy whatever you need in cash, leaving all the trouble of maintaining a good credit score, applying for loans, and waiting expectantly to see if you’ve been approved, for those with lesser incomes?

It’s a good question, and one not without some merit. And there are arguments for and against the rich needing good credit, many of which hinge upon a person’s personal financial situation, lifestyle and needs. Let’s start with why a rich person might still need good credit.

The Liquid Issue

There are numerous aspects to the argument as to why the rich still need good credit. First off, the fact that someone is considered rich doesn’t necessarily mean that they are cash rich. The definition of what makes someone rich is often in the eye of the beholder. How and why someone is considered rich might be based upon their income level, their personal property holdings, their worth based upon business ownership or company stock holdings, or an inheritance in the form of a trust fund.

However, things like stock, a business, a trust fund, or property may not be easily convertible into liquid cash, making the need for credit often necessary for making basic purchases. In such situations, credit might also be needed for items such as homes, boats, cars, and other large purchases for which a regular income, even a hefty one, might not provide enough cash to buy outright. But there are other reasons as to why the rich might still need good credit.

The Rich Like to Stay Rich

In the majority of cases, the rich are probably looking to stay rich, and in many instances, they didn’t become rich by making poor financial decisions. This means that the rich may prefer good credit because good credit often means cheaper credit. With a better credit score they might be likely to getter better rates on their credit and have larger credit lines available to them to make the purchases, investments, and take advantage of opportunities that can make them richer and allow them to maintain the lifestyle to which they are accustomed.

Time is Money

To many wealthy individuals, time is money. Not only can having credit and the availability of credit cards at their fingertips make their lives easier and more efficient, it can save them time. Stopping at the ATM machine numerous times to reload on cash, or writing checks for purchases can be time consuming and inefficient. It can also leave a bad impression on business partners or clients. Therefore, having access quick and easy credit for everyday purchases can leave time for more important matters like making more money.

That being said, there are reasons why the rich might not be bothered with the need for good credit.

Cash Savvy

It could be that some of the rich out there just don’t need to be troubled with worrying about good credit. They might have a large enough income or enough liquid cash not to have to worry about their credit scores. And even if they did need credit, having a poor rating that results in higher interest rates may not bother them since they would be rich enough to pay ridiculously high amounts for the credit.

It might also be that they already have the large ticket items they desire and can meet everyday expenses with the cash they have on hand. If they have ample incomes or plenty of money in the bank, and items like homes, boats, cars, etc. are paid off or can be paid for in full, the need for credit just might not be there.

A Moving Target

For some rich people, maintaining good credit could feel like putting a target on their back. With the prevalence of identity theft these days, someone with a good credit score can be a prime target for criminals looking to steal pertinent personal financial information. With this financial information in the wrong hands and a good credit score, it might be even easier for criminals to utilize a rich person’s identity for medical, credit card, bank, mortgage or similar fraud.

David is the co-founder of a leading credit card comparison website in Australia including a range of business credit cards that allow you to earn rewards as you make purchases.

You’re Rights under the Fair Debt Collection Practices Act (FDCPA)

Wednesday, November 17th, 2010

The FDCPA was put into place because of abusive, deceptive, and unfair debt collection practices by debt collectors. Here is what you need to know to protect yourself.

Ceasing Communication- If you notify a debt collector in writing that you refuse to pay a debt or you wish to cease communication with the debt collector, the debt collector must cease all communication with you.

Communication with 3rd parties – A debt collector may not communicate with 3rd parties stating you owe a debt. The debt collector can only call 3rd parties trying to find your address and phone number or place of employment.

When a Debt collector can call you – A debt collector cannot call you before 9 a.m. or after 8 p.m. your local time.

Harassment or Abuse – A debt collector may not in any way harass, oppress, or abuse you in any way.

• The use of violence or criminal means to harm you, your reputation, or your property
• The use of obscene or profane language.
• The publication of your personal information other than to the consumer credit reporting agency.
• The advertisement for sale of any debt to coerce payment of debt
• Telephone calls that repeatedly or continuously with intent to annoy, abuse, or harass any person at called number

False or Misleading Representation – A debt collector may not use any false, deceptive, or misleading representation as a means to collect a debt.

• False representation that the debt collector is represented by the United States or any branch of local or national government
• False representation that the debt collector is an attorney.
• False representation that nonpayment will result in arrest, imprisonment, seizure, garnishment, attached to the sale of any property or wages unless such actions is lawful and the creditor intends to take such action via courts.
• The threat to take action that cannot be legally taken or that the debt collector did not intent to take.

Validation of Debts – The debt collector must notify you within five days after initial communication the following
• The amount of debt
• The name of creditor to whom the debt is owed
• That you must dispute the debt within 30 days or the courts will assume you agree to the debt
• If you dispute the debt in writing within 30 days the debt collector must verify the validity of the debt, by providing name and address of original creditor.

I have touched on some of the key points from the Fair Debt Collection Practices Act. I hope this helps with any concerns you may have in regards to debt collection practices.

If you feel a debt collector has violated any of these laws you may contact your states attorney general office or FTC. Some states do have their own debt collection laws outside the federal laws of the FDCPA. A collection company could be violating federal law (FDCPA) and your local state debt collection laws. Your attorney general will be able to inform you of your rights.

If you are trying to get in touch with your attorney general for your state, use the Consumer Action Website at

To get in touch with the FTC to file a complaint go to:

Handling Your Credit Cards for Financial Success:

Thursday, November 11th, 2010

Do You want to Boost Credit Scores or Get Out of Debt?

Consumers today have two separate goals when it comes to credit. Some just want to get out of debt. Others want to boost their credit scores so that when it comes time to make a major purchase, they’ll pay the lowest interest rates.

That’s why consumers should think about the consequences before taking advice from credit counselors or well-meaning friends. Good advice geared toward getting out of debt may be the direct opposite of good advice that will increase your credit scores.

The way credit scores are created can be puzzling to many. While it seems like using very little credit would make you a more credit-worthy person, the opposite is true.

Lenders want to see that you have credit and you handle it well. Thus, when credit counselors advise consumers to close out credit cards, they’re giving credit score crippling advice. The only reason a consumer should cancel a credit card is if they have no self-control and will ultimately charge it “to the max.”

Why? Because a good portion of your credit score rests on how much credit you have available compared to how much you use. Creditors like to see that you are not so desperate that you’re using all your credit.

But then comes another strange twist…Using one card to its maximum will hurt you, even if you have six others with no balance.

That’s why debt consolidation will help you get out of debt but lower your credit scores. When you receive a promotion from a credit card offering you an low interest credit card, as low as zero for the first 6 to 12 months, it may or may not be a good idea to transfer all your credit card balances to that card.

What you should do depends upon your financial goals.

If you can discipline yourself to continue paying the same amount to that one card that you’ve been paying to all cards combined, that move will obviously help you bring your debt down quickly.

However, using one card to its limit will lower your credit scores. Eventually they’ll come back up – if you maintain that discipline and use the low interest or interest-free period to reduce your balance.

Credit card companies don’t really like to carry accounts that are unused for months and years at a time. They’re earning nothing, but bearing the cost of record keeping. To offset this cost, some are now charging annual fees just for keeping an account open. The good news is that some of them will waive that fee if you use the card occasionally.

Thus, it can help your cash flow and your credit scores if you use each of your credit cards once every 2 or 3 months. To have the annual fee waived and still avoid paying interest, pay the balance in full when the statement arrives.

A Credit Report & Credit Score are not the Same Thing

Tuesday, November 9th, 2010

There obviously is some confusion that a credit score and a credit report are the same. I have seen some top credit experts and media outlets claim they are synonymous. Well, they are wrong. They are two very different items being reported on your personal credit file.

Your credit score is assessed by the FICOs scoring model used by Experian, TransUnion and Equifax. The three national credit bureaus then sell those scores to Lenders and others. The three credit bureaus have a license agreement to use the FICO score model and thus report those scores on their own credit file.

The credit score that you receive from Equifax, TransUnion and Experian is assessed based on the information being reported to each bureau independently by creditors. This is why the bureaus have different information on your credit file. Some creditors may not report to all three credit bureaus.

Remember these credit reporting agencies are independent of each other and don’t share your information with each other unless it is a fraud alert.

The graph below shows how Fair Isaac determines yours credit score with their FICO algorithm that the bureaus currently resale to creditors.

A credit report is information that is gathered by Experian, TransUnion, and Equifax. The three credit bureaus gather information that is reported to them by companies that have extended credit to you.

Your personal information such as your social security number, current and past residential address, birth date, and previous employers will be in this file.

Credit history will also be reported. Credit history is the majority of this record which includes accounts opened with creditors, payment history, authorized users, credit limit, revolving credit history, open dates, closed or inactive accounts, and payment terms.

Credit inquires are also reported on your credit report. A credit reporting agencies will show an inquiry when your report is showed to a 3rd party such as banks, credit card companies, landlords, and insurance companies.

A public record is part of this report as well. This record is obtained from government sources such as courts, which include bankruptcies, child support, and judgments.

You can easily see how a credit score and a credit report are different. Both do however work in conjunction with each other to determine your creditworthiness.

Now it is possible to have a credit file with no credit score. However you cannot have a credit score with no credit file. A credit history must be present to determine a score. Typically this history must be at least 3 to 6 months  before FICO will calculate a credit score.

Author: Mike Clover

Debt Collectors Could be Calling You to Collect on the Dead

Monday, November 8th, 2010

When death of a loved one takes place we all are under great remorse. To make matters worse the FTC is currently taking comments on how debt collectors can go about collecting a debt from bereaved.

Under the FDCPA there are laws in place to protect you and your family. The problem is some of these collection companies don’t adhere to those laws and end up harassing people to collect a debt.

Currently under the FDCPA debt collectors are only allowed to collect debts from the debtor or a cosigner. This law strictly prohibits debt collectors from calling neighbors, friends, or family members except to obtain contact information.

This new proposed law could open the door to debt collectors to poke and prod grieving family members and friends into thinking they owe something they really don’t.

According the Star Tribune of Minneapolis creditors such as JP Morgan, Nordstrom, Citigroup, Chase, and Discover financial service currently employ specialists that solely try to collect on the deceased.

Under this new proposal the FTC will not take law enforcement action from anyone alleging that a debt collector violated the FDCPA by communicating about the descendant’s debts with a spouse, executor of an estate or anyone else that is authorized to pay debts from the descendant’s estate.

So in a nut shell this new provision to the FDCPA could open all kinds of issues. We all know that debt collectors buy these debts for pennies on the dollar. The people they hire are commission based and have all the incentive in the world to collect.

Robert Hobbs an attorney and collections expert at the NCLC encourages consumers to go to the FTC and make comments on this new provision to the FDCPA, especially those who recently have been targeted by debt collectors on behalf of a deceased friend or family member. This comment session has been extended to December 1st 2010.

Author: Mike Clover

Credit Score Boost with a Rapid Rescore.

Friday, November 5th, 2010

Rapid rescoring is a process that I have talked about before. This tool is used within the lending community. A rapid rescore is the process of forcing an update on your credit report after you have paid down a credit card, settled on a collection or paid off a debt. Rapid rescoring is used when you are trying to get a loan and run into a snag due to credit issues on your credit report.

A professional loan officer will review your credit report. Once he/she has determined what you need to do to get your score up, you take action.  You will need to get documentation from the creditor that you have either settled/paid a collection, paid down a debt or paid off a debt. This information is sent to a 3rd party credit reporting company that the lender uses. This credit reporting company will then go directly to the credit bureaus and force an update on your credit report.

Take note that when you take action with a creditor you will need documentation of this action. For example account numbers need to match and so does the creditors name. If this information does not match or make sense, the credit bureau will reject the rapid update.

This process normally can take up to 5 business days. Rapid rescoring is a great way to get the score you need to qualify for a loan in this tough lending market. I have seen credit scores go up as much as 30 points or so in one round of rapid rescoring. I have used this process many times over the years and got the results we needed.

Also be aware there is no guarantee this will work every time. We do however use a tool called credit expert that will give what if scenarios. This is risk based calculation software that will determine what your score will be if you take certain actions. This software actually is pretty accurate but in some cases did not produce the results we needed.

There is a cost associated with this entire process. So when you do this service expect cost to be involved. The cost will vary from lender to lender. Typically there will be a $15 fee for each trade line with each bureau. One update with a creditor could cost you $45.

Here is a good interview by John Ulzheimer on this process with CBS New York. I thought I would elaborate on what he already said in this interview….

Author: 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.