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

According to FICO the creator of our current credit scoring model, maxing out credit cards can reduce you credit score by as much as 45 points.

Tags: credit, Credit Education, Credit Scoring, credit tip, Empowerment, Fair Credit Reporting Act, Fair Debt Collection Practices Act, FICO, FICO score, finance, home purchase, money, Money Tips, Wealth

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

Today Victoria and Jeff was joined by Author, Motivator, Divine Inspirational Speaker, Dr. CJ Koen.  Today’s scripture is: “For I know the plans I have for you, “declares the LORD,” plans to prosper you, and not to harm you, plans to give you hope and a future.” Jeremiah 29:11 (NIV)

We had a blessed wonderful time today with Ms CJ Koen on BlogTalkRadio,  Below are a few nuggets from today’s show.

• Prosperity  is not your economic situation but your heart situation.
• God wants us to prosper.
• God does not give us spirit of fear, but of power, love , and of sound mind. 2 Timothy 1:7
• God knows what is coming down the road.
• When God gives you something he gives you peace with it. (Psalm 29:11)
• God knows what is best for us. People want to buy a home, but may not be financially, or emotionally ready to purchase that home.
• Seek God’s wisdom before making major decisions.
• God wants us to have plenty of  joy.
• Money is not evil. The LOVE of money is evil. (1 Timothy 6:10) Listen to how Ms CJ breaks down the truth.

Click here to download today’s show and get all of the golden nuggets from today’s show.

For more information about Ms. CJ Koen visit her on the web at mscjandyou. Follow her on twitter @mscjandyou. Join her on facebook,   Listen to Ms CJ Koen on BlogTalkRadio, Her show is uplifting and inspirational.

Tags: credit, Credit Education, Empowerment, finance, Inspiration, Life, Money Tips, Wealth

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

Today on  the Transform Your Credit From Good to Great show, Co-Host Jeff Dalverny and I spoke with special guest Scott Doerhman of  The Finance Coach in a episode called Taking Control of Your Money.

There were several nuggets from the show that I thought were very important.

1. Families need to budget monthly not yearly and divide by 12. Each month your needs change. For example, some months children are out of school and usually requires more food to be brought into the home.
2. Put your budget on paper. By writing down your budget, adjustments can be made if necessary.
3. Look at your cash flow. Many people do not know how much they actually make and/or  bring home monthly.
4. Have a goal. Studies show that when we have set goals and we write down our goals we are more likely to achieve them.

I also promised the link regarding Parents’ 5 other card choices for college-age children. Click here to read the article in full posted on creditcards.com.

For more information contact The Finance Coach at 317-858-7270 or call Integrated Credit Specialists LLC at 317-527-1440.

Tags: budget, business, credit, Credit Education, debt collection, finance, money, Money Tips, saving, savings, small business

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

I know you are wondering how in the heck can paying off an account lower my credit score. Yes, I know it sounds backwards that by trying to do the right thing you get penalized. Here is he scoop. I have long taught that 35% of your credit score is past delinquencies. Obviously, paying your accounts in full and on time has the greatest positive impact on your score. So why would paying a collection potentially lower your score?

Here’s why, the last 24 months of activity has the greatest impact on your score. The newer the item the more impact it has. The credit scoring model uses the date of last activity to determine when the 24 month countdown starts. (Note: accounts older than 24 months still have an impact on your credit score). If you have an older collection that has not had any activity on it and you make a payment, you have restarted the clock because you have moved the date of last activity.

Many times collection agencies will try to contact you in order to have you make a payment so that they can keep the account on your credit bureau longer. Per the Fair Credit Reporting Act, collections can stay on your report up to 7 years plus 180 days from the date of last activity. Do not fall for it!

I am not suggesting that you not pay your debts. I am letting you know that there is a strategic way to handle past collections. Here are 3 simple steps:

1. Begin with accounts reporting in the last 12 months.
2. Before you pay anything, write to the credit bureaus and request validation of the debt. Validation is not verification. Federal law specifies what is considered validation. See Fair Debt Collection Practices Act for more information.
3. If debt comes back verified, contact the collection company and negotiate for a lower payment. We suggest that you ask for a pay for delete. A pay for delete is a request that the collection company deletes the entry from your credit report when payment is received. Pay for deletes are becoming increasingly more difficult to get. But, a paid collection is better than an unpaid one.

If you are applying or going to apply for  a home, we suggest you wait until you are instructed by your lender to pay off ANY collections. If your lender tells you pay off a particular account, then they have prepared for the impact it may have on your credit score.

There is nothing anyone can do for you that you can not do for yourself when it comes to your credit. However, if you want guidance and education about credit please contact us at info@intcredit.net.

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