I was on a well respected credit website today reading their recent blog and I was blown away by the misinformation they were giving about the pros and cons of filing bankruptcy. Having gone through a bankruptcy personally and having counseled hundreds of clients who have filed a bankruptcy, I can tell you that bankruptcy is not the kiss of death for your credit. While I am not an advocate of people running out and filing bankruptcy without careful consideration, I am advocate for truth.

I often wonder when I see an anti-bankruptcy campaign whose interest is really being considered. Credit card companies will do all they can to have you believe bankruptcy is a horrible thing and you are a horrible person for filing. Consumer credit reporting agencies TransUnion, Equifax, Experian (The Big Three) would have you believe the same.
Why? Obviously the credit card companies want to you pay up, not only what you owe but all of the extras they tack on. I’ve seen a $300 credit card become an over $1000 collection. So why do The Big Three want to avoid bankruptcy? Because they make money every time your account gets sold to another collection agency. And, the worse your credit score the more money they make.

Ok, I know what you are thinking… Victoria, people should take responsibility and pay what they owe. I could not agree with you more. But, what do you tell the family who never missed a payment until the major wage earner was stricken with cancer and the insurance company stopped paying? The number one cause of bankruptcy is…You guessed it – medical bills. And, yes doctors deserved to be paid. The problem is that often doctors will not set up payment arrangements. So good people end up filing bankruptcy.

Now to debunk bankruptcy myths:

Myth 1: A bankruptcy will affect your credit score for 10 years.
Truth: While bankruptcy may stay on your credit report for 10 years (chapter 7 only), your credit score will not be affected for the entire 10 years. With proper reestablishment of credit your score will begin to recover quickly.

Myth 2: Filing a bankruptcy will lower your score to the 500′s.
Truth: If you are not paying your credit cards and have maxed them out. Your credit score is more than likely already in the 500′s.

Myth 3: Accounts included in a bankruptcy will remain on your credit report for 7 years.
Truth: Seven years is a MAXIMUM not a MINIMUM amount of time an account included in bankruptcy may remain on a credit report.

Myth 4: You will not be able to get a good mortgage rate for 5 years after bankruptcy.
Truth: Many consumers can qualify for an FHA (federally backed mortgage) 2 years after bankruptcy with very attractive rates. Three years if a home was involved in the bankruptcy.

Myth 5: Employment and insurance can be severely affected after a bankruptcy.
Truth: The impact on insurance is typically much less than the interest, fees, and late charges charged by credit card companies. And, under United States Bankruptcy Code an employer can not discriminate against you for filing bankruptcy. However, they can and most likely will for judgments, late pays, and multiple collections.

As I said before, I am not an advocate of people running out filing bankruptcy. If you are contemplating filing bankruptcy, make sure you weigh all of your options.

I have spent almost two decades empowering my clients financially through credit education. If you have filed bankruptcy and need help re building your financial life, call me at 317-527-1440. I am here to help.

Tags: banking, bankruptcy, business, checking, collections, credit, Credit Education, credit score, Credit Scoring, credit tip, debt collection, Fair Credit Reporting Act, FICO, FICO.credit, money, Money Tips, Real estate

You’ve seen the ads, “Get your credit score now” “Instantly get your credit score” and so on.  Buyer beware! Not all credit scores are created equal.  Fair Issac and Company set the standard for the credit scoring model that we use in the United States.  Most lenders will use the FICO score to determine your credit worthiness.

In an attempt to compete with FICO the big three credit reporting agencies, TransUnion, Equifax, and Experian have come up with their own scores. On the surface this does not sound like a bad idea.  But, here’s the rub.  Many lenders only use the true FICO score.  So, the score most consumers buy is worthless.

I have many clients come to me not understanding why when they pull their credit they have a different score than what the lender has. Typically this is because the client bought the wrong score.  True FICO scores can be purchased from myfico.com .

I urge my clients to concentrate not on their credit score, but on managing their credit. I urge them to pay their bills on time, keep revolving credit balances  low or at  zero dollars, and do not open unnecessary lines of credit.  Unless you are looking to purchase a home, auto, or need to take out additional credit,  you do not need your credit score.

Tags: banking, budget, credit, Credit Education, credit score, Credit Scoring, credit tip, debt collection, dominate your destiny, Empowerment, FICO, FICO.credit, finance, savings, Wealth

Tags: banking, budget, business, checking, credit, Credit Education, credit inquiries, credit score, Credit Scoring, credit tip, dominate your destiny, entreprenuership, Money Tips, saving, Wealth

Tags: banking, buiness ownership, business, dominate, dominate your destiny, entreprenuership, lending, money, productivity, small business, social media, success, time management, Wealth, workflow

Everyday hundreds of Americans apply for a home  mortgage. Unfortunately, many lenders do not instruct their clients on the do nots of home financing. Consequently, before the loan process is complete, an approved buyer becomes unapproved.

Chuck Bricker of Bank of America  and his team has put together a list of what they call  “Thou Shall Not”.   According to Chuck Bricker of Bank of America the following  things  should NOT be done between the time of submission of your home loan and closing.

Chuck Bricker goes on to state, “Some of these may seem very rudimentary and even silly, but I promise you that each one is from at least one real life event in my years of experience.”

Thou Shall Not:

1. Quit your job.
2. Overdraft your checking account.
3. Stop paying your rent or mortgage.
4. Change employers or compensation structure with current employer, at least without notification to your loan officer first.
5. Open any new accounts – including to finance appliances, etc, for your new house.  Tempting as it may be, get the keys first, please.
6. Make any CASH deposits to your account(s).
7. Liquidate any major accounts, like 401k, without, first, getting proper instructions on documenting the withdraw or loan & deposit into your checking account properly.
8. Get gift funds from a friend or family member – Contact me first for proper instructions on how to transfer the money from donor to you & document it for your loan file.
9. Do anything that will result in a new collection, judgment or tax lien, etc.
10. Finance a new Harley Davidson & make your first excited phone call about the new purchase to your me, your loan officer.  Sorry, I probably will not share in your excitement.
11. Change your marital status without notifying your loan officer.
12. Change your target closing date without notifying me first.
13. Forget to inform me that the home has a huge hole in the roof that could second as a shower when it rains.
14. Withdraw a large sum of money from your account(s) to make a major purchase – appliances, automobile, Michael Jordan rookie card, etc.
15. File bankruptcy.
16. Stop making payments or pay late on your current debts.
17. Get an loan of any type for your down payment.

Situations that reflect these items above do sometimes arise.  If a client has the possibility of experiencing one (or more) of the above items – or anything similar – please contact  your loan officer.  There are others involved in helping during the loan process, such as  processors, assistants, etc… According to Chuck Bricker, for matters like the above, your loan officer is best equipped to help you navigate potential problems.

Finally, Chuck Bricker suggest that if you have applied for a home loan and perceive any bumps in the road, be proactive and up-front with your loan officer.

Tags: banking, credit, Credit Education, credit tip, Home Buying, home purchase, money, Money Tips, Real estate, saving, savings

Effective May 21, 2010  – Housing and Urban Development (HUD)  has issued a one year temporary waiver of the  “flipping rule” permitting FHA financing of a resale within 0-90 days of the seller’s acquisition of the property.

Tags: banking, budget, Credit Education, home purchase, homebuyer, low downpayment, money, Money Tips, Real estate, savings

On April 12, 2010 at 10:00am on BlogTalkRadio on The Credit and Finance Show Credit Expert Victoria Finch and Finance Coach Jeff Dalverny will be joined by special guest Chuck Bricker of Bank of America.Chuck has been in the banking industry for over a decade and will provide insights into home ownership, lending changes, and information for those facing possible foreclosure. For more information click here.

Tags: banking, budget, business, credit, Credit Education, credit tip, finance, Home Buying, home purchase, low downpayment, money, Money Tips, Real estate, saving

It is not wise to make credit decisions based upon your credit score. Base any credit decision on the following:

1. Your overall financial situation
2. Your need for the account
3. Your ability to repay the debt

If you make the right decision based upon the above criteria, your credit score will take care of itself.

Tags: banking, budget, business, credit, Credit Education, Credit Scoring, credit tip, finance, money, Money Tips, savings

Past delinquencies make up 35% of your credit score. Obviously paying your bills in full and on time will have the greatest positive affect on your credit score. The credit scoring model looks at the level of delinquency. For example a judgment will have a greater negative impact on your score than a collection. Always try to avoid  public records such as bankruptcy, tax liens, and judgments.

Also, activity in the last 24 months has the greatest affect on your score. When looking a credit repair strategies concentrate on activity in the last 24 months first. Pay off collections in Escrow NOT before. By paying an old collection you will make it new again because the date of last activity will change.

If you would like to learn more about credit scoring  and how past delinquencies affect your credit score, please contact us at info@intcredit.net.

Tags: banking, budget, collections, credit, Credit Education, Credit Scoring, credit tip, debt collection, Fair Credit Reporting Act, finance, money, Money Tips, savings

After a bankruptcy filing many consumers feel that their credit is ruined. Consequently, they do not check their credit reports. There are two major issues with that train of thought. First, bankruptcy will hit your credit hard, but your credit can recover. Secondly, even though your credit score is typically lowered by a bankruptcy there are steps you can take to minimize the impact.

Steps To Take:

1. Get a copy of your credit report. You can obtain a free one by going to http://www.annualcreditreport.com (I suggest you do this 3-6 months after discharge).
2. Carefully review your credit report for errors.
3. Make sure any account listed in the bankruptcy is notated as “Zero” balance and “Included in bankruptcy”
4. Also review the public record section of your credit report to ensure that judgments included in the bankruptcy have been released and are notated “bankruptcy”
5. If you find errors on your credit report, send a letter of dispute to the 3 credit reporting agencies.

Be diligent in your efforts. Dealing with credit reporting agencies can be time consuming and frustrating. If you feel you would like to consult a professional please contact me at 317-410-4110 or email: info@intcredit.info.

Tags: banking, bankruptcy, credit, Credit Scoring, credit tip, money, Money Tips