There is a lot of misinformation out there about what a credit score really is.  Simply put – a credit score is a 3 digit number that seeks to quantify how likely a borrower is going to be 90 days late on a payment. Why 90 days? At 90 days, lenders spend more to maintain the account. Calls increase, increased notices go out, the lender may turn the file over to another department or collection company.

Each score is specific to each bureau.  The score is generated by analyzing the information in the consumer’s credit report at  THAT particular point in time. The higher the score the less the odds of default. For instance statistically, a consumer with a credit score of 800 and above has a 1292 t0 1  chance of becoming 90 days late while a consumer with a credit score between 620 to 659 has a 38 to 1 chance of being 90 days late.

Your credit score is more important than ever. When it comes to credit what you do not know can cost you big. Stay tuned for more Credit 101.

Tags: finance, Real estate

Today credit is more important than ever. Financial institutions are supposed to loosen their lending requirements, but the opposite has happened. As recently as 18 months ago,  you could qualify for prime lending with a 720 credit score. Now,  in most cases, you need at least a 750 credit score.

As lending requirements go up, so must your credit knowledge. When it comes to credit what you don’t know will hurt you. Below I have listed  five reasons I believe consumers do not get the credit help they need.

1. Credit denial. “My credit is not THAT bad.” Your credit may not be THAT bad, but if your score is not a 750, you need to work on it.

2. Procrastination. “I’ll get around to it.” The fact is that many consumers do not get “around” to working on their credit and the financial damage continues.

3. Timing. “I am not going to apply for credit, so I can wait to fix my credit.” Credit restoration can be a long, drawn out process. If you wait until you need it, it may be too late.

4.Affordability of credit repair. “I can’t afford to pay someone to fix my credit.” The fact is, there is nothing a credit repair company can do for you that you cannot do yourself. If you are not going to take the time to work on your own credit, you cannot afford not to get help. Which brings me to number five.

5. Underestimating what your credit is costing you. Even with today’s rates you could be paying more than over $3400 per year in interest on a $200,000 home if your credit score is a 620 versus a 760. That’s OVER $280.00 per month. Could you use an extra $280.00 per month? For more information see mortgage calculators on banrate.com and myfico.com.

Do not play into the hands of the banks by not working on your credit. If you do not have the time, knowledge, and patience to work on your own credit, hire a professional. Working with the right professional will save you thousands of dollars in the long term.

Tags: Credit Scoring, credit tip, FDCPA, homebuyer, Money Tips, saving, savings

It’s 8:00am on Saturday morning and you are looking forward to sleeping in. Suddenly you are awakened by the telephone ringing. You answer the phone only to be greeted by, “Is this….”  it is a debt collector. As you wipe your eyes, the debt collector begins to telling you “This is a an attempt to collect a debt, any information obtained will be used for that purpose.”

Most debt collectors are very good at informing consumers that they are attempting to collect a debt, how much the alleged debt is, and telling you to pay up. But there are things you need to know that a debt collector won’t tell you. Knowledge is power. A debt collector won’t tell you:

1. You do not have to disclose personal information such as place of employment, banking information, and  sources of income.
2. You can prevent debt collectors from calling you by notifying them in writing to stop calling you. Once the debt collector recieves written notice they can only contact you to tell you they won’t call you anymore or to notify you what actions they may take such as filing a lawsuit.
3. You may be “judgment proof” or “execution proof”. If you are unable to meet your current living expenses or you recieve certain types of income they cannot collect from you.
4. They are attempting to collect on a debt that is past the statute of limitations. If you make a payment, you renew the debt.
5. They may not report to the credit bureaus. Not all collection companies report the credit bureaus.
6. Debt collectors cannot call you before 8:00am or after 9:00pm,. This time is based upon your local time not theirs.
7. Debt collectors cannot use profane or abusive language.
8. You can report any problems you have with a debt collector to your state Attorney General’s office (www.naag.org) and the Federal Trade Commission (www.ftc.gov),
9. It is imparative that you familiarize yourself with the Fair Debt Collection Practices Act (FDCPA). This federal law protects consumers against unfair debt collection practices.
10. That you may be able to settle with the debt for pennies on the dollar.
11. That medical collections should not appear on your credit report due to current privacy laws. Your medical information is protected under the Health  Insurance Portability and Accountability Act (HIPAA).

Knowing your rights is the first step to dealing with any debt collector. Familiarize yourself with the FDCPA and other consumer protection laws by visiting www.ftc.gov,

This article is also posted on http://www.examiner.com

Tags: collections, debt collection, Fair Debt Collection Practices Act, FDCPA, HIPAA

If you received a discharge in bankruptcy and believe that you had errors on your credit report, you could get benefits from a class action settlement.

A settlement has been proposed with Trans Union, Experian, and Equifax (“Defendants”) in a class action lawsuit about whether they violated the Fair Credit Reporting Act (FCRA) and state laws when reporting debts that had been discharged in bankruptcy as not discharged and whether consumers were damaged as a result of  this.

The settlement will provide payment of damage awards from a $45 Million Settlement Fund. The lawsuit alleges the the Defendants violated the FCRA and state laws by failing to employ reasonable procedures to assure maximum possible accuracy in reporting debts discharged in bankruptcy or by failing to properly investigate disputes from consumers regarding such debts.

You are a class member eligible for benefits if you received a Chapter 7 Bankruptcy order of discharge and your report issued by defendant between March 15, 2002 and May 11, 2009 (or for California residents in the case, of Trans Union between May 12, 2001 and May 11, 2009) reported debts as due and owing which were discharged in your bankruptcy.

To see if you qualify for benefits and to get more information, call toll free 1-866-237-3432 or visit www.BankruptcyDischargeSettlement.com. Claims are due by November 30, 2009.

This post has also been published on Examiner.com

Whenever I mention keeping credit separate from your spouse to my clients, I often get a deer in the headlight stare.  You too may be thinking that this is a bold statement, but consider the following:

• Joint accounts affect you equally. If one spouse spends more than the other. Both scores are affected.
• If there is an emergency and you need to apply for  credit, it may not be available.
• A divorce decree does NOT take prescedent over creditor agreement. Creditors will collect from whomever they can.

Now, don’t panic and close out your joint accounts. This too can hurt your credit score. Fifteen percent of your credit score is based upon credit history. My advise is that if you have joint accounts, make sure you both monitor the accounts.