Financial Consulting Team

Secret decoder ring needed YOUR CREDIT score isn't just about you !!

noreply@blogger.com (S Ryan) — Thu, 04 Apr 2013 21:55:00 +0000

Shoddy math. Making things even worse is just how FICO® scores are constructed. Here's practically everything Fair Isaac reveals about the scores, a bit of happy pap you've no doubt seen repeated on dozens of web sites: 35% of your score is influenced by account history (how timely you've paid), 30% to current account usage (how much of your credit is being used, with greater amounts being negative), 15% to length of credit history (the longer the better), 10% to new credit inquiries and accounts (with fewer being better), and 10% to the "credit mix" or variety of credit types present. Scores range from 350 to 850, with the mean value score being right at 725. In real life, favorable credit rates are typically extended to those with scores of 720 or above.

Now here's what they don't tell you:

Your credit score isn't just about you. If it was, providing it along with the rest of your credit report might not violate federal law, which stipulates that your consumer file must only (and obviously) be about you. Rather, it's about you and others. More specifically, Fair Isaac makes use of what they call "Score Cards," which groups consumers according to whatever criteria they choose. Then, they run what we statisticians call Pearson correlations between credit report items and subsequent late-pays for each consumer grouping. Through that continuous process, Fair Isaac stays on top of the variables du jour which may diagnose bad future news. The final step happens when your credit report is pulled and is analyzed through the use of those comparative algorithms, and a credit score is then reported which purports to predict the possibility that you are the type of person who may one day become seriously delinquent. Wowzah!

So does this sound kosher? Are prediction and speculation and comparisons with other consumers fair items to include in a credit report alongside the stuff that otherwise really is about a single consumer? Undoubtedly, the judiciary will eventually decide. Suffice to say, if I had a diagnostic FICO®-like score for corporate performance, I'd have to give Fair Isaac a 640, because I predict that the courts will one day kick their collective butts and force serious changes in the way consumers are manhandled.

Secret decoder ring needed. Needless to say, the underlying arithmetic upon which FICO® scores are based is kept top secret by the Fair Isaac Corporation. Put simply, if they gave away their for-profit secret sauce, somebody's business plan would likely be threatened.

Moreover, there are problems with the secrecy.

First, with so much at stake (mortgages, insurance policies, certain employment categories, car loans, and more), consumers rightfully want to know specifics regarding how to improve their scores. Fair Isaac's pat answers, stuff like "just pay everything on time, and pay down your debt," just doesn't satisfy. In fact, disappointingly, sometimes paying down debt simply has no scoring impact at all. For example, paying off an installment loan almost never helps a score, while paying down revolving credit card debt almost always will. Similarly, paying off a debt that was previously charged-off will also likely have no positive impact. (That said, doing the right thing merits other worthwhile life rewards.) For these reasons, Fair Isaac's summary statements which masquerade as score-enhancing advice often accomplish nothing.

Second, with certain government jobs and federally overseen home mortgages riding on the proprietary for-profit FICO® product, one would think that Congress would demand more transparency regarding a credit score's actual construction. And, of course, when citizens make enough noise about the matter, that will surely come to pass. Government dependence upon Fair Isaac provides another compelling reason for eventual systemic change.

Credit Scores are strictly psychological Numbers. What Happened?

noreply@blogger.com (S Ryan) — Thu, 04 Apr 2013 21:48:00 +0000

cajuncredit.com

First, credit scores are not the objective beacons they pretend to be, and consumers pay mightily as a result. To help fully understand why, Lexington should bring in an applied social scientist. Oops, right here! I'll say more about the statistical fallacies surrounding credit scoring shortly.

Second, some lawyers contend that the practice of providing credit scores to potential creditors, insurers, and employers may well violate the Fair Credit Reporting Act (FCRA), an interesting civic issue with profound implications for the entire industry.

Third, certain government-overseen housing programs like FreddieMac rely upon the predominant credit scoring system whose underlying mathematics are still kept secret by a single for-profit corporate monopoly. Such secrecy (untested and unaccountable secrecy at that) is quite the conundrum in a country where citizens demand to know how tax dollars are spent.

Finally, and perhaps most outrageously, consumers are offered precious little information which might help them to optimize their credit scores. Sure, there are plenty of web sites which detail the basic outlines of what comprises a score, and we'll review all of that here too. Unfortunately, though, such dazzlingly hypnotic and overly general information doesn't really help real-life consumers with street questions like, "What will help my credit score most today: Paying off a charged-off account from five years ago, or closing two or three of my fifteen credit card accounts? Paying off a student loan, or paying off a credit card? Paying down one account entirely, or paying down all my accounts a little bit?" (Toward that end, Lexington's Concord Premier level of service constitutes a rare lighthouse of individualized guidance.)

So as a result of the rampant unfairness, institutional secrecy, rotten science, and a virtual dearth of truly helpful information, Americans are roundly and routinely victimized.

Good intentions. Nobody ever sat down and decided to make things worse for consumers. In fact, the intention was quite the opposite. Credit scoring was an attempt to remove issues like RACE, GENDER, SOCIO-ECONOMIC CLASS, and INCOME from an overall assessment of every consumer's credit report.

Back in the Good Old Days before 1970, a credit report would very often include such things as whether you were black or white, whether you embraced a particular religion or were atheist, rich or middle-class, whether somebody thought you were an alcoholic, courtroom quotes from ex-spouses, and whatever else they could find. Likewise, bankers once withheld credit to those whose appearance just didn't fit their idea of what defined a good human being. You could even be denied because the loan officer simply thought you looked strange. Sadly, sometimes the actual reasons were based upon racial preconceptions or similar prejudices.

Strange as all of that may sound today, the FCRA still draws a distinction between "investigative consumer reports" (like subjective statements by ex-spouses regarding moral character), an activity which was practically legislated away, and the kinds of consumer disclosures we now accept as the norm. The basic idea, then, for credit scores was a good one. It was an attempt to inject science into the process

What Happened?

What happened was that a wacky group of Minnesota statisticians at Fair Isaac Corporation (FICO®) in the late 1950s decided to have a look at how historical variables (what a consumer did in the past) correlated with future behavior (what happened later). Not surprisingly, these brainiacs quickly found that the best way to predict whether a consumer is going to become seriously delinquent is to look at how he previously handled his accounts. So the "FICO® score" was born.

Now, all of that may sound fine, or even ingenious, but there are several serious problems afoot, and the first is scientific in nature. In statistics, results are measured by what us eggheads call the "R-value" -- whether a particular result just occurred because of dumb luck or whether it was real life stuff ("beyond chance" to use the parlance). The kicker is that you can get a VERY significant "R" when just a minority in your studied population tests positive. So, with credit scoring, if say 15% of people with scores in the 650-700 range are later found to be seriously late with their bills, then Fair Isaac will scream "Eureka!" and proclaim wild success with amazingly significant "R" but only at the expense of the other EIGHTY-FIVE PERCENT of the consumers in that group who would never even think of paying their bills late. Even worse, using this same example, if only a fifth of the delinquent 15% subset of this group actually defaults and never pays back the borrowed money (and the actual number is probably far less), then guess who in this 650-700 range gets blamed for that? Yep, the other 97%.

Next, consider what happens to the rest of the innocents in the 650-700 range. They simply bleed higher interest payments for mortgages and car loans and credit cards. They provide a terrific excuse for Citibank and Chase and Capital One to advertise wonderful interest rates but then actually offer much less favorable (and much more profitable) terms later on. Such consumers literally pay and pay and pay, all because of a cockamamie number that can predict statistically "significant" trends for large groups but so often tragically fails at the level of the individual person.

Another issue is strictly psychological. Numbers are seductive, and people love to be seduced. They want to know their height, their weight, their IQ, how high they can jump measured in centimeters, how many paint-balls can be hurled at an opponent, you-name-it. If a single number can provide the "right" answer, then we clamor for it. And of course, when it comes to considering applications for credit cards, just imagine how much easier it is now to simply use FICO® scores! Human beings are no longer required to read through credit reports to forge intelligent decisions. Instead, computers can electronically procure the FICO® scores and render instant judgments. Sadly, the problem of false positives (all those innocent folks in the 650-700 range mentioned above who are automatically judged by the worst behavior of their group's bad apples) is ignored.

Basically, with credit scoring, our society has traded the human problem of rampant subjectivity, where anything is ripe for discussion, for the mechanistic problem of impersonal automation, where nothing about a consumer's individual situation is considered. Clearly the first problem needed addressing, but couldn't smart people devise a better solution than this?

Where credit reports are concerned, there are essentially two sets of "truths.

noreply@blogger.com (S Ryan) — Thu, 04 Apr 2013 20:51:00 +0000

LET'S BEGIN with a startling notion: Most of your creditors don't want you to read this. Why? Probably because the world's most powerful banking interests desperately need consumers to buy into a few oft-told myths which perpetuate their businesses. Not knowing the truth, though, can cost a consumer tens or even hundreds of thousands of dollars during an average lifetime.

Where credit reports are concerned, there are essentially two sets of "truths." On the one hand, there is the fairly meaningless happy patter creditors want you to believe, which you can find repeated in just about every credit-related book and Internet site. And then, of course, there's the real truth which I'll shortly elucidate.

Unfortunately, in order to truly embrace stark reality we must first peruse the prevailing fiction. So we'll examine both here. This article will aim to demolish the various social psychoses perpetuated by your exploitative creditors (and abusive debt collectors, if you happen to be acquainted with those) and transport you to a veritable Valhalla of consumer mental health. Even better, maybe you'll end up saving a few bucks too.

So, without further introduction, consider this myth: Credit bureaus are official, perhaps even quasi-governmental agencies, and such vital American institutions work alongside your creditors to keep every adult citizen toeing the financial line.

There's so much wrong with practically every word of this fantasy that it's tough for a consumer advocate to know where to begin. To be sure, there isn't anything much official about the credit bureaus at all. Rather, the major consumer reporting agencies -- Equifax, Experian, and TransUnion -- are simply three large companies operating respectably within the private sector.

In fact, if you were so inclined, you could own a piece of Equifax and Experian yourself just by telephoning your stockbroker. (Forget about buying shares in TransUnion for now, though, as it's still privately owned.)

Sadly, too many creditors want Americans to believe that the credit bureaus enjoy an official, quasi-governmental franchise and will somehow punish consumers who dare to fight back against sloppy reporting, usurious APRs, exploitative late fees, inexplicable surcharges, unethical debt collection practices, and worse. Such creditors want consumers to believe that challenging a credit report item is like questioning a courthouse record. Fortunately, that's just not so.

So contrary to the prevailing perceptual reality, there are no official bureaus. And while most Americans perceive their credit reports to have at least the same legal standing as their driving records, the truth is that the government has no role in producing them. Put bluntly, no law mandates a credit report's existence, and such documents may be considered to be no more than a list of allegations remaining to be proven.

So long as consumers can be managed through skilled deception, creditors will continue to unfairly profit at our expense. Reified credit scores will continue to define our suitability for home ownership. Credit acquisition, insurance, and employment will continue to be lost as a result of sloppy data maintenance. Fundamental changes will only occur when consumers reject these untruths which are propagated so successfully within our culture.

Car Fax BUSTED by The Car Facts

noreply@blogger.com (S Ryan) — Mon, 01 Apr 2013 18:15:00 +0000

Lets talk about carfax !! People have been programmed by the ultimate tool called advertising. It seems to ring true that no matter what the actual facts are people believe what that hope to be true. Carfax has done a great job convincing the public that information found in a carfax report must be accurate and no matter what the cheezy car salesman says he must be telling a lie because if he does not show you the carfax report he must be trying to hide something. Well after 20 years of holding every position in the automobile industry, I am here to tell you that most carfax reports are at best lacking accurate history on roughly 70% of all reports. I have personally purchased cars from automobile auctions that have been in accidents and carfax shows a clean history. The reason for this is simple carfax only knows about an accident if its been reported to the current owners insurance agency or a police report was filed. That is the only way unless as they would like you to believe they hold a crystal ball with all knowing power . If we were to have a wreck and decide to handle it ourselves and not to involve our insurance holders carfax will show no accidents. They have mastered the art of playing on peoples fear. Lets talk about service records . When you take your car to the dealer(franchise) to have any type of service done they input the information and work done into the computer. The v.i.n. number is the 17 digit set of numbers and letters found on your dash board, its the social security number of your car. So if the car has been serviced at mom and pops auto shop carfax will show no history of any service done even if the service was done. Carfax only reports the work done at the dealership by simply buying that information that is linked to the v.i.n. number. This information is free to the general public by simply asking the service manager to print out a record for said car. The work might have been done at a dealership in Texas,Louisiana or any other state but it will still show as its all linked to the v.i.n. number assuming it was done at a dealer(franchised i.e. Toyota). Moving forward to how many owners the car has been through, again this is public information that can be obtained by simply calling the department of motor vehicles They handle the transferring of ownership and all needed documents because taxes are involved and again were taxes are involved its public knowledge. I now will share one of the worst cases I have seen with you ...The video you are about to watch I filmed personally no tricks needed its something I see all the time not this bad but you would be surprised how often carfax shows clean no accidents when I know based on 20+yrs experience most of the time its the other way around . The main reason I'm doing this is to try and continue my quest to teach people the truth aka car facts . I am also forced to use and pay carfax because of public fear created and exploited by carfax. As you know if I cant show the carfax I must be hiding something !! They have done well charging the consumer and the dealer for information that is wrong 70% of the time and the information they provide is FREE to obtain with a little work. You will also see the actual carfax on this suv. After you watch this and read the carfax I hope that blind trust will be something to work on . I will continue my CAR FACTS on carfax reports in future postings. Please email if you have any questions !!

Click here and read ..Tell me this is not all based on financial gain.

10 States That Gouge the Unemployed

noreply@blogger.com (S Ryan) — Mon, 01 Apr 2013 15:35:00 +0000

Right now more than 5 million Americans receive unemployment benefits. And right now, in many states a big chunk of those unemployment benefits are going straight to the bottom line profits of the nation’s biggest banks because of junk fees tied to the prepaid cards used to distribute these funds.
While we can’t take banks entirely out of the process, it’s critical they get a smaller piece of the pie. We can certainly provide a more direct conduit from our tax dollars to get into the pockets of the unemployed without such a huge vig. It would be one thing if banks were mandated to use the profits from junk fees to hire more people, but they aren’t. As much money as possible should go to regular people so they can spend it, putting the American economy back on track
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Most states now provide unemployment benefits to workers using prepaid debit cards. While some states are much worse than others, most states allow banks to load these cards with hidden junk fees, according to a recent study by the National Consumer Law Center. In California alone — one of the better states — unemployed workers lose $1.8 million every year on their state-issued prepaid debit cards. That’s $1.8 million more in Bank of America’s profit column, and $1.8 million less for families to cover necessities like rent, gasoline and food.

If you take a look at the way the following states allow unemployment benefits to be nickeled and dimed by megabank prepaid card programs you will see why it’s time to change the system:
Alaska: JPMorgan Chase charges $5 every time cardholders talk to a teller, $1.50 to withdraw money from an ATM more than once week, and 35 cents just to call the automated customer service line. Chase even charges 40 cents to check the card balance from the bank’s own ATM.
Minnesota: U.S. Bank gets $3 every time someone calls the bank’s customer service department, after one free call per month.

Iowa: Wells Fargo charges unemployment recipients 50 cents every time they check their balance, plus another 50 cents every time a transaction is denied for insufficient funds.
Maine: Chase charges 25 cents every time an unemployment benefits recipient uses his or her debit card to make a purchase at a store using a PIN.
Ohio: U.S. Bank’s 750 in-network ATMs charge no fees, but 16 counties in that state don’t have a single U.S. Bank ATM. Vinton and Clinton Counties, in the southern part of the state, have some of the highest jobless rates in Ohio, lingering at between 12.6% and 15%. Neither county has an ATM those unemployed people can use for free.

It gets worse. The Electronic Funds Transfer Act (EFTA) mandates that consumers must have the choice between a check, direct deposit or a prepaid debit card.
Five states may currently be in violation of that law: California, Indiana, Kansas, Maryland, and Nevada. These states force unemployed workers into debit card programs, according to the National Consumer Law Center study. Three of those states — California, Kansas and Maryland — allow workers to set up automatic transfers from prepaid cards to their own bank accounts. In practice, less than 25% of unemployment benefits recipients take advantage of this feature. Perhaps that’s because these transfers can take up to four days, enough time to cause a crisis for families already trying to subsist on a fraction of their former wages.

Nevada and Indiana offer a prepaid debit card with all the hidden fees. No direct deposit. No paper checks. No fee-less transfer into your bank account.
It almost feels like the states are shilling for the banks. Regardless of intent, these state-mandated arrangements force people (who already don’t have enough to get by) to pay those hidden fees with little guidance on the matter. But riddle me this: Why should states allow banks to treat the prepaid cards issued to the unemployed like their own personal piggy banks?

We must do better. In its report, the National Consumer Law Center recommends many different ways that government could make unemployment benefits more efficient and less costly for recipients. Their suggestions include making direct deposits into workers’ bank accounts the first option for delivering unemployment benefits, mandating that all banks allow at least one free ATM withdrawal and teller withdrawal per pay period, and eliminating fees for balance inquiries and customer service. These are good ideas, and unemployed families would be well served if states implemented them.
The good news is that we already know how to help families while wasting very little money on junk fees and drastically reducing the role of banks in the process. The Food Stamp program, now officially called the Supplemental Nutrition Assistance Program (SNAP) has been transitioning from coupons to prepaid debit cards in recent years. Nearly $73 billion worth of food aid was delivered to needy families using such cards in 2011, according to a study by the Federal Reserve.

Banks are involved in the process because they issue the cards, but under the SNAP program, which accounts for 73 percent of all government funds disbursed by prepaid cards, issuers are prohibited from charging fees to cardholders. Other federal programs also disburse benefits using prepaid cards, including Temporary Assistance to Needy Families. For these programs, banks are allowed to charge fees, but they are modest. On average, ATM withdrawals and card purchases cost about 1.1 percent of each transaction’s value. State-run prepaid debit card programs take a similarly small slice of each transaction, and ATM fees associated are even lower, totaling .3 percent of the average transaction’s value.

This makes sense. Banks have costs. ATMs and in-store payment machines require constant maintenance, and each transaction costs banks a small amount to process. Federal and state programs that use those networks should contribute their fair share. No one gets a free ride, and no one gets ripped off. Unlike the current situation with unemployment benefits, the cooperation between government programs and bank-run infrastructure should not be an excuse to gouge.

We should extend the model of SNAP and other successful, low-cost debit card programs to unemployment benefits. Using its giant purchasing power as a bargaining chip, the federal government should negotiate with banks to set a ceiling for fees on unemployment benefit prepaid cards, even as states remain responsible for making the actual payments. These limits should be akin to the fees already in place for SNAP, averaging about one percent of each transaction’s value.

This approach would give banks steady, predictable and fair compensation for use of their systems. And it would protect jobless workers from high fees, unexpected traps and hidden tricks that currently bleed millions of dollars every year from their already depleted finances.
We can make unemployment benefits fairer for everyone, and we can do it without reinventing the wheel. Let’s use the tools we already have to put more money back into jobless workers’ pockets, and back into the economy.

20 million credit reports have ‘significant’ errors, FTC finds

noreply@blogger.com (S Ryan) — Fri, 29 Mar 2013 19:25:00 +0000

Image via CrunchBase

Millions of Americans have mistakes on their credit reports, some of which are serious enough to lower credit scores and result in worse credit offers, according to a new government study.
As many as 42 million consumers have errors on their credit reports, and around 20 million have significant mistakes, a Federal Trade Commission study of nearly 3,000 credit reports to be released Monday indicates.
“Errors in credit reports can cost you a loan, a competitive interest rate, a job, security clearance and insurance,” said John Ulzheimer, president of consumer education at SmartCredit.com.
Not all of these errors will impact your ability to get credit, however. About 13% of study participants saw their FICO credit score change once a mistake on their credit report was fixed, and those changes were big enough to potentially result in better credit offers for 2.2% of participants.
The Consumer Data Industry Association defended this 2.2% rate, saying in a statement that overall, the report “shows that 98% of credit reports are materially accurate.”
“[T]he measure of accuracy is tied to the question of when an error has a consequence for consumers, not just when a report contains an error that will have little or no impact on creditworthiness,” the CDIA said.
But since the three biggest credit bureaus — Experian, Equifax and TransUnion — maintain credit reports for about 200 million consumers, the 2.2% error rate still means millions of Americans are being denied loans or given higher-priced credit due to errors on their reports, said Ulzheimer.
To avoid being deemed a higher risk than you really are, it’s important to look at your credit report from all three major credit bureaus to make sure everything is correct. Currently, fewer than one in five consumers check their credit report, according to a separate study released by the Consumer Financial Protection Bureau.The reports are free once a year ! Go to Annual Credit Report to view all three major credit files.

Articles to Help You Rebuild Your Credit

noreply@blogger.com (S Ryan) — Fri, 29 Mar 2013 19:21:00 +0000

Many Americans who have seen their credit scores take a nose dive over the last few years, can blame this decrease on late payments, foreclosures, bankruptcies, and out of control debt. But take heart, with a little work you can repair your credit by removing negative items from your credit report. But, removing negatives is not enough to increase your credit score - you also need to rebuild your credit history. By adding new credit and paying your bills on time, you are proving to creditors that you are now able to repay your debts and you have turned your finances around. These are just a few of the steps we go over in the articles below to help you rebuild your credit and increase your credit score.

Rebuilding Your Credit With Credit Cards and Credit Unions
Join a Local Credit Union - Credit Unions not only save you money in bank fees, they are also more lenient in their lending practices. Which means, you can get a loan with them more easily than a major bank, thus, adding positive credit to your history.

How to Add Positive Credit - A secured credit card is just one excellent way to add good credit to your history. See our other ideas as well.

Secured Credit Cards Can Rebuild Your Credit - We show you how to find the right secured credit card that is best for your needs. We also have a list of secured credit cards we recommend.

Rebuild Your Credit Without Using Credit Cards - Yes you can rebuild your credit without using credit cards and this article will show you how.

Credit Card Limits Can Affect Your Credit Score - Many do not understand how their credit limit affects their credit score. If you are rebuilding your credit, you need to know how this all works.

Rebuilding Your Credit After Financial Ruin - Have you recently filed for bankruptcy or gone through a foreclosure? You are not alone. Read how to pull your finances back together after financial ruin.

Tough Credit Situations and Solutions - This article answers the most common questions we have received from our readers with respect to their tough credit repair issues. You have probably asked these same questions.

Settle Your Debts and Rebuild Your Credit
How to Settle Your Debts - This article is the first of six in our debt settlement series. Learn how to settle your debts for pennies on the dollar.

Negotiate Your Credit Rating When Settling Your Debt - If you are negotiating a debt settlement with a collection agency, make sure to negotiate your credit rating. We will show you the do's and dont's when dealing with collectors.

Get a Live Person On the Phone During Your Credit Dispute Efforts - Tired of calling collection agencies only to get a voice recording. We have tips on how to get an actual live person on the phone.

Is Paying Off a Collection Going to Remove it From My Credit Report? - A collection on your credit report is probably severly hurting your credit score. But paying it off alone will not help - there are a few tricks you need to know before you pay off that collection.

Debt Validation is the Ultimate Weapon Against Collection Agencies - Having a collection agency validate the debt they are trying to collect from you could mean the difference between paying it and having it come off your report.

Creditors, Collectors and Statute of Limitations on Debts
How Collections Affect Your Credit Score - A collection and a charge-off will cause a big hit to your credit score. But just how bad are they and how can you get them off?

Spot the Collection Agency Violations - Is your phone ringing in the middle of the night? Collection agencies calling your employer? These are just a few of the violations made by collectors. See what they can and can not do to you.

What Are My Rights Regarding Collection Agencies? - Yes, you as a consumer do have rights when it comes to dealing with collection agencies. See what they are and if your rights are being violated.

Collection Agency Harassment - If you are being harassed by a collection agency, you can legally do something about it. This article shows you how to file a complaint with the FTC.

Statute of Limitations on Debts by State - Knowing the statute of limitations on debt in your state is crucial in debt settlement. We have a list, by state, of the statute of limitations on various types of debts.

Statute of Limitations for Judgments - As with debts, judgments also have a statute of limitations.

Here's How Your Credit Score Is Generated

noreply@blogger.com (S Ryan) — Sun, 10 Mar 2013 21:33:00 +0000

Have you ever wondered how they come up with a three-digit number that can predict whether you're a good or bad credit risk?

Back in the 1980s, a group of credit grantors, Fair Isaac Corporation (FICO) and one of the three national credit bureaus got together to develop a way to help lenders better predict risk and comply with some of the various consumer protection regulations, such as the Equal Credit Opportunity Act.

They set out to develop an automated system that would rank-order the likelihood of a borrower paying on time each month, based entirely on information found in a credit report.

The hope was that such a system would enable lenders to approve more credit cards and loans to more people without increasing their losses, while ensuring regulatory compliance.

The result was a credit bureau risk score consisting of a three-digit number ranging between 300 and 850 that represented the odds of a borrower paying all credit obligations on time, with higher odds of paying as agreed leading to higher three-digit numbers -- and lower future risk to lenders.

Nowadays there are many companies developing and marketing credit scores, yet consumers remain mostly in the dark about how the formulas for these scores originate. And while the fine details of credit scoring formulas are both proprietary and quite complex, a basic underlying knowledge of how scores work can be helpful to anyone trying to manage their credit more effectively.

What follows is a very general description of how credit scores are developed:

Step 1: Get the data

First, a credit bureau will agree to provide the credit score developers with sets of credit information taken from the credit reports of millions of anonymous consumers, as of two points in time -- typically two years apart -- for each consumer.

While credit scoring can often seem more arbitrary than reality-based, the information used in credit scoring and the impact of that information on a credit score is entirely based on the real-life experience of millions of consumers.

Step 2: Identify the predictive characteristics

Next begins process of observing the various trends and correlations between the first and second sets of credit reports, focusing in on defaults, bankruptcies and other negative credit outcomes, in a search for characteristics among that first set of credit reports that might have predicted some of those outcomes found two years later.

For example, the data might show that consumers defaulting on credit card accounts were found to have comparatively high credit card debt in the years leading up to the default. If so, high credit card balances could be among the various predictive characteristics making up a credit scorecard.

Step 3: Build the scorecards

Once a reliable set of predictive characteristics has been established, each is weighted according to its predictive value and organized in a scorecard-like grid, with the various weights for each characteristic represented by a number of points that correspond to the attributes of the credit report being evaluated (scored).

Step 4: Calculate the score Once the scorecards are created, the credit reports are ready to be scored. But within each credit scoring model there are a number of different scorecards, each tailored to a specific credit profile that looks at categories, such as the length of credit history, number of credit accounts, and the presence of negative information, among other factors.

This multiple scorecard system enables the formula to predict consumer creditworthiness within a wide range of different credit experiences that includes people who have never missed a payment, those just coming out of bankruptcy, and everyone in between.

The first step in calculating a credit score is identifying the most predictive scorecard for a particular consumer, followed by compiling the points earned for each of the scorecard characteristics according to the information found in the credit report.

Step 5: Validate the score

Finally, there's that nagging bit of skepticism -- not only among consumers, but also among the score developers themselves at this stage of the process -- that questions whether the score actually does what it's supposed to do.

As one way of validating the scoring formula's ability to accurately predict future risk, a lender will instruct the credit bureau to use the newly developed formula to calculate scores retroactively on some of its own borrowers' archived credit reports, as of the date the credit was originally granted.

This vital step enables the lender to determine the accuracy of the scores through hindsight, such that a successful validation should result in the good performers scoring high and the poor performers having low retroactive scores.

Help Protect Your Tax Refund From Identity Thieves

noreply@blogger.com (S Ryan) — Thu, 07 Mar 2013 18:14:00 +0000

Unlike most of us, identity thieves can’t wait for tax season! It’s prime time to steal your information, file under your name and cash in on YOUR refund. Tax related identity theft has climbed more than 650% from 2008 to 2012, with more than 1.2 million cases in 2012 alone. Even worse, it can take 6 months or more to resolve these cases and provide refunds or other relief to victims.

A simple, yet important step everyone should take to minimize the risks of becoming a victim of tax identity theft is to file your return as early as possible!

Tax identity theft occurs before most people file their legitimate returns. So, the longer you wait, the more time identity thieves have to steal your information and your refund.

Considering all three ways taxes are filed, online, via a tax professional or on paper, we’ve developed some more tips to help keep you—and your refund—safe.

E-filing: The fast and easy solution

It’s safe to say that if around 80% of individual tax returns are filed electronically via tax-programs like TurboTax and H&R Block, it’s a faster, easier option. However, filing online still exposes you to security and privacy risks. Cyber scammers are just waiting for opportunities to capture your information, so help protect yourself by following these tips:

Be vigilant about imposters. Ensure that you’re filing your taxes with a legitimate, reputable tax program such as H&R Block or TurboTax.
Beware phishing schemes. Keep in mind that the IRS does NOT communicate with tax payers with email or phone, so beware of any “IRS email”—it could be a scam
Update your firewall and spyware. Hackers will try to get access to your personal information, so beef up the security software on all your devices.

Tax Preparers: The ‘not me’ method

If you enlist the help of a tax professional (or a friend/family member who happens to be a tax professional) to save yourself from…well…yourself, keep in mind what exactly you’re handing over. Here are some tips to guard yourself against deceitful or careless tax preparers:

Choose wisely. Avoid preparers who aggressively insist they can get you a larger refund, or who guarantee results or base fees on a percentage of the amount of the refund.
Ask for referrals. Ask your friends and coworkers to recommend a preparer they’ve known and trusted for a while.

Do some due diligence. Ask the tax preparer how your information will be stored. Will it be encrypted? Who has access to this information? Has he/she undergone a thorough background screening?

There are still some who prefer paper and/or aren’t eligible for e-filing. Unfortunately, paper filing is the least secure way to file taxes. Paperwork is easily stolen or lost in the mail. Some tips to minimize the risks associated with paper filing are:

Store paperwork securely. Keep your documents in a safe and secure location. Shred any paperwork you no longer need before you dispose of it.
Drop off your envelope at the post office. Too much mail is stolen out of mailboxes, so the safest option is to take your tax return to your local post office or put it in a secure drop box.

Use Certified Mail. This serves as proof of delivery in case the tax return or payment gets lost. You’ll also get a confirmation once the IRS receives your documents or payment.

Theft of CHILD identities continues to cause issue

noreply@blogger.com (S Ryan) — Sun, 03 Mar 2013 17:23:00 +0000

Identity theft remains a significant issue for many consumers, with the U.S. Postal Inspection Service calling it the fastest growing crime in the country. However, officials say a growing trend has been identity theft involving children.

In most identity theft cases, consumers may notice something is amiss when looking at their credit report. However, for children, who generally don't have credit reports because credit bureaus don't maintain files on those under the age of 18 who can't enter into business contracts, the crime can go unnoticed for longer periods of time.

One mother told NPR that she first noticed that her son's social security number had been used improperly when she applied for Medicare assistance. She was finally able to get the false information removed with the help of state officials.

"Kids don't know they're ... victims," Utah Assistant Attorney General Richard Hamp told NPR. "Their parents don't know they're ... victims, because they're not out there engaging in credit transactions. They're not going to know that someone's opened a credit line using their number, so child identity theft can permeate for years before it's ever discovered."

Many children have been impacted by the issue. A recent study by Carnegie Mellon University actually found that of the 42,000 children whose data was reviewed, 10 percent had someone else using their social security numbers for some other purpose.

Experts say annual checking not necessary

While child identity theft is an issue, many experts told MSNBC that it would be overkill if parents wanted to check their children's credit reports on an annual basis, and that every few years should be sufficient.

In addition, when children approach the age of 16 or are close to applying for some kind of credit, parents can pull their children's full reports.

However, if the reports do reveal any unfair marks or other issues, then there should be sufficient time to work with a credit repair company to fix the issue before it impacts college financial aid or anything else. However, if a young child received credit card offers or other suspicious mail, then it may be time to take earlier action.

Industry vs. Consumer Who is Winning ?

noreply@blogger.com (S Ryan) — Sat, 02 Mar 2013 16:00:00 +0000

Did you receive the dreaded ‘adverse action’ letter from your insurance company at renewal? It stated that after carefully reviewing your driving record, your premiums have been adjusted or you have been placed in a new company accordingly. Was credit cited as a reason? Was it the only reason? Believe it or not, consumers with perfectly clean driving records are being penalized based solely on this “insurance credit score”.

If you spoke with your agent, did he/she refer you to the “consumer” reporting agency listed on the letter? What was the response to your question of “what does my credit report have to do with my driving record”? Something along the lines of “we have proof that credit and claims correlate, there are studies that prove this is true.”?

So, what’s the deal with the studies?

Agents don’t have copies of these “studies” . This turns out to be true for most supervisors as well as many people who probably should have seen the studies.

The studies are discussed here.

It is NOT these studies that are important. It is what these studies measure and how they are used by the insurance industry.

One study involves the correlation of claims filed and credit report characteristics. They took the information of 170,000 policy holders that filed claims within a three year period and pulled their credit reports. They found that consumers with certain credit characteristics filed more claims and more expensive claims. These characteristics included the number and types of accounts a consumer holds, the number of late payments, duration of late payments, adverse public records (e.g. civil judgments, tax liens, bankruptcies, etc.), and the number of inquires a consumer had on the report. The insurance industry sees this as evidence that individuals who take risks in meeting financial obligations will also incur higher insurance losses.

What these studies do not take into account are individual circumstances. This practice does benefit some consumers in that affordable insurance is more readily available. However, there are several groups of consumers that are included in the study and therefore more prone to adverse action through no fault of their own.

So, what does my credit report have to do with my driving record?

Absolutely nothing. That is not what the insurance industry is measuring. What they are measuring is your reaction following an accident. In other words, the insurance industry is not concerned about whether you will have an accident or not, they are concerned as to whether you will want to be compensated for that accident.

The industry refers to this as:

Claims Consciousness: A person with the good credit score is more likely to settle the accident without the insurance company, the person who scored poorly is more inclined to file a claim and expect to be compensated for the loss.

Claims consciousness is just one of many factors the industry speculates is the reason behind their “evidence” to support the use of insurance credit scoring, the others include:

Fraud: Increased Frequencies
Fraud: Increased Severities
Maintenance: Improper care of homes and vehicles.
Morale Hazard: Considers insurance a ‘safety net’.
Stress that leads to negligence.

When did filing a claim become negligence or a crime??

And based on these studies, a “proven history of “bad” driving habits has less weight in insurance rating than a snapshot of one instant in time of a person credit history.. The industry regards insurance credit scoring as a more accurate predictor of loss.

Why? Because a consumer’s accident will not necessarily cost the insurance company but a claim filed on that accident will.

How many times have you heard someone say that he/she is going to settle his/her accident losses without the insurance company. They claim it is less expensive than facing the RISK of extremely high surcharges. (Consumers who pay for their losses with a credit card are penalized twice. First, by not seeking compensation from the insurance company and second, the ratio of their account balances to the credit limit available on the account scores poorly on the insurance credit score!)

“A 1990 survey of 39 states and the District of Columbia found that publicly available records contained information on only 40% of a sample of 27,629 accidents serious enough to meet each states accident reporting requirements.” Insurance Research Council, April 1991.

“The Economic Impact of Motor Vehicle Crashes 2000″ by the NHTSA reports that roughly half of all PDO (property damage only) accidents go unreported each year “due to concerns about insurance or legal repercussions.” Full report.

“In 2001, there were 6,322,795 police-reported motor vehicle traffic crashes. Of the total crashes, 3,033,000 were injury-only crashes and 4,282,000 caused only property damage. The National Highway Traffic Safety Administration (NHTSA) estimates 10 million or more crashes go unreported every year.” Full report.

The insurance industry is set up to discourage claims. Many times, an agent’s pay is dependent on the losses incurred through the policies he/she writes. Insurance employees are taught to “talk” clients out of filing small claims to keep the agent’s loss ratios low.

Therefore, those who did file claims did not have the financial resources necessary at that time to cover a loss without insurance. They found a need, for whatever reason, to file the claim and receive compensation.

Regardless of a consumer’s credit history, the consumer who filed a claim had his/her credit characteristics measured and noted in the studies. As a result, these credit characteristics are used in the scoring models to measure risk. Remember, insurance credit scoring does not follow traditional lending credit scoring guidelines, they are not measuring “creditworthiness”, they are considering credit characteristics.

So in effect, by measuring it this way, with claims and credit characteristics, the insurance industry is creating this correlation and then feeding the numbers back to themselves in order to have the “numbers” necessary to justify this practice. They are measuring your propensity to file a claim, based on your current financial situation, if you incur a loss. They are selecting those insurance consumers who they believe will not seek compensation from the insurance company in the event of a loss.

What about the “small” claims, just hundreds of dollars more than the deductible? Small claims make up most of the claimable patterns. The ones more likely to be filed by those with less disposable income? Those are the claims that the industry is apparently targeting.

Lower income Americans tend not to have the disposable income necessary to cover losses and need compensation. Therefore, their credit characteristics are included in the scoring models and as a result, they are exposed to adverse action.

In the 1998 Joint Economic Committee Study by the 105th Congress:

“Families at the bottom end of the income scale have very little disposable income, and every dollar spent on premiums for auto insurance represents money that could be spent on other essentials, such as food, shelter and health care. As previously indicated, owning a car can be extremely important in terms of finding and holding down a job.

The industry is taking action against those who need insurance the most! That leaves no doubt that the use of credit information by insurers discriminates against lower income Americans including minorities and may be just a sophisticated form of “redlining”.

Think about it, don’t the insurers have a vested interest in manipulating the market to reward their “high lifetime value” (those likely to buy their financial products) with lower rates?

When asked about a potential bias against lower-income families, the industry says, “We find no correlation between income level and credit rating. How you manage your money is not a function of net worth or income.

Another significant problem is the failure of the insurance industry to recognize other factors that result in certain credit characteristics. Certain lifestyle choices can very easily affect your insurance credit score and do not indicate financial irresponsibility at all.

Most Americans, responsible enough to carry insurance, are by now pretty well educated about their credit reports. They do strive to keep them “clean”. In most cases, it is due to outside, uncontrollable variables and lifestyle choices that lead to scoring poorly.

And due to the fact that truly financially irresponsible individuals are less likely to carry insurance, there is an additional large group of consumers whom will be adversely affected by insurance credit scoring due to circumstances beyond their control.

There is absolutely no link between credit score and the likelihood you will have an accident, he [Rep. Gregg Underheim, Wisconsin] said Monday.What they are doing is severing the link between risk and premiums, and that is a very bad insurance practice. It is very bad public policy.

How does this promote and encourage good driving habits? Should that not be the goal of the insurance industry? To make our roads safer for the consumers?

Who Benefits?

The insurance industry claims that 70-80% of consumers benefit from the use of Insurance Credit Scores.

“A key point is that most people have good credit and stand to benefit from insurance scoring. NAII member companies report that nearly 70 percent of consumers benefit from the use of insurance scores. This is a tool that is fair for all consumers and means lower insurance premiums for most consumers,” said Joseph Annotti, assistant vice president of Public Affairs for the National Association of Independent Insurers (NAII).

Funny thing is, how can that be? According to Richard Le Febvre of the AAA American Credit Bureau:

“We found out that 70 to 80 percent of consumers had a least one error in their credit file.

And more recently:

” Washington, D.C. – Millions of Americans could pay more for – or be denied – credit, insurance, or utilities because of inaccurate credit scores, according to a new study, Credit Score Accuracy and Implications for Consumers, released this morning by the Consumer Federation of America (CFA) and the National Credit Reporting Association (NCRA).” Full article.

Insurers claim they have been using insurance credit scoring for some time now with success. It may have worked well for them and allowed for them to keep it from public scrutiny for a time – but not after September 11th and the resulting new economy. Now that layoffs are an everyday occurrence and the length of time between positions is increasing, consumers with traditionally excellent credit are needing compensation from the insurance company in the event of a loss. Those with excellent credit are filing claims resulting in consumers with excellent credit being adversely affected by insurance credit scoring. At this point, it appears no one is immune to the adverse effects of insurance credit scoring. To the point, it is the way insurance credit scoring models work and not the financial management of individuals that determines who is affected and how they are affected.

So, what’s is the Score?

Scoring model vendors refuse to divulge the methodology of these studies, the underlying data for independent verification, or the details of the study results. They claim these models are a “trade secret” and ‘fear’ that disclosure would lead to outside infringement.

Add to this, the ability of the insurance companies to raise or lower the insurance credit score they will accept at will! The use of credit scoring models allows for insurance companies the ability to raise rates without ever applying to the department of insurance for a rate increase. Rates are regulated, underwriting is not. Companies can adjust the underwriting models by changing the cutoff points for the credit tiers. So, if they want to write more business, they lower the score the will accept; less business, they raise the score. As insurance credit scores are also run on existing customers, they are at the mercy of the insurance companies and are exposed to rate increases, moves to subsidiaries and losing their insurance altogether.

Finally, it must be addressed that there is a loss if and only if the consumer has a loss. Without evidence of reckless driving, (speeding tickets, etc.) and prior losses, there is no proof that any insurance consumer will have an accident and file a claim or will be hit by a hail storm. The insurance company does not have a crystal ball.

The bottom line is that consumers are losing this ballgame and when it comes to insurance required by law and the banking industry, the insurance industry shouldn't even be allowed to play the game.

Understand the Impact of Student Loans on Credit Scores

noreply@blogger.com (S Ryan) — Fri, 22 Feb 2013 16:23:00 +0000

Student loan payments can positively impact your credit score.
Given the continued rise in student debt (including six-figure student loan debt), a question the Student Loan Ranger hears a lot is, "Will my student debt have a negative impact on my credit score?"

The answer is no. In fact, it can even positively impact your score if you handle it responsibly.

It's helpful, as a starting point, to understand how FICO scores work. Back in 1956, Fair Isaac and Company (hence, FICO) developed an algorithm to determine how risky it is to lend a person money. While the exact nature of the algorithm is proprietary, it is based on five categories in roughly these proportions: payment history (35 percent), amounts owed (30 percent), length of credit history (15 percent), types of credit in use (10 percent) and new credit (10 percent).

The three major credit bureaus (Experian, TransUnion, and Equifax) use software developed by Fair Isaac and Company and information they keep on file about you to develop your FICO scores. Your scores will change (for better or for worse) as your financial history changes. The scores range from 300 to 850; higher scores are better.

When you apply for credit, most lenders ask the credit bureaus for your FICO scores as part of assessing the risk of lending to you and therefore to determine how much and on what terms they will lend to you. Improving your FICO scores can help you get better terms, including better interest rates, from lenders.

With this in mind, let's look at an August post from the FICO Banking Analytics Blog, "Is Growing Student Loan Debt Impacting FICO® Scores?," which addressed the question of the impact of student loans on FICO scores. The post concludes that, despite a continued rise in student loan debt that outpaces the growth of other types of debt, large amounts of student debt do not result in lowered FICO scores.

In fact, borrowers with more than $50,000 in student loan debt tended to have higher FICO scores than average consumers in the 500 to 749 FICO score range. Although their scores tended to be lower in the bottom (300 to 499) and higher (750 to 850) FICO score range, approximately 7 percent of consumers with at least $50,000 in student loan debt have FICO scores in the 800s. The blog also notes that student debt is considered like any other installment credit and that deferring a student loan will not necessarily have a negative impact.

Once you understand the basic algorithm behind FICO scores, you can see how responsibly managing your student loans can potentially have a positive impact on your FICO scores. It can be a positive, for example, to have a longer credit history and add a different type of credit to your financial history.

What has the biggest impact, however, is making your payments on time and building up an excellent payment history. Remember, that accounts for roughly 35 percent of your FICO score.

In order to do that, the Student Loan Ranger recommends relying on federal loans as much as possible to finance your education and taking advantage of protective provisions like income-driven repayment plans, including President Obama's new Pay As You Earn plan, as well as deferment and forbearance, if you need them.

There are a few other things you should be aware of regarding your FICO scores and student loans. As FinAid.org notes, although federal Stafford and Perkins loans are available entirely without regard to credit history, you cannot have an adverse credit history—including being more than 90 days late on any debt—and be eligible for a PLUS loan. Most private lenders will rely in part on FICO scores to determine your eligibility for student loans and the interest rate you will receive.

Credit Questions and Answers

noreply@blogger.com (S Ryan) — Thu, 21 Feb 2013 22:36:00 +0000

Below are some frequently asked credit questions and answers that will help you make smarter decisions about your credit.

What are the different types of credit?: Generally, credit is organized into three major buckets: Revolving credit: where a consumer borrows money from a lender and pays it back at the end or makes partial monthly payments (e.g., Visa and MasterCard). Charge credit: where the lender provides the consumer with a loan under the presumption that it is going to be paid in full at the end of the month (American Express). Installment credit: occurs when the consumer agrees to finance a debt with monthly payments over a predetermined period of time (e.g. mortgage).

How do you begin to establish credit?: Consumers desirous of establishing a good credit record should start off by applying for a credit card. The companies that monitor credit history compile information based on your payments and responsible consumers build up a good credit report by promptly paying off what they owe. A second consideration, especially if the consumer did not qualify for a conventional credit card, is to apply for secured credit. This method lessens the lender's risk by having access to some kind of guaranty from the borrower in case of default. An alternative way is to have a person with a proven history of good credit co-sign a loan. These co-signers are a form of guarantee diminishing the lender's risk of non-payment.

What happens if your request for credit is denied?: There are a variety of reasons dictating why credit may not have been extended. Reasons ranging from insufficient income, short-time at a job or address, and/or poor credit history. You should evaluate your situation and know that you are entitled to receive a credit report delineating your denial. You should also know that the credit bureau is obligated to investigate and correct whatever legitimate errors you find therein.

What type of bad credit loans can I get?: A short term loan (a.k.a. payday/cash advance loans) is one common type of bad credit loan that is available to you. This type of loan requires no credit check or co-signer. However, you do need collateral to qualify for a short term loan and a checking account for the funds to be transferred to.

Why do unsecured credit cards for bad credit have higher interest rates?: When creditors provide unsecured credit to those individuals with bad credit, the credit issuers face higher financial risks. So, to protect themselves, creditors set higher interest rates and fees for those with bad credit.

Why should I pay a company to repair my bad credit if everything is going to reappear after a few months?: If you use a reliable credit repair service, everything WON’T reappear after a few months -- if you have been the victim of identity theft, all of the wrong information should be removed. Most reputable bad credit repair services correct your entire credit file and stick with it until all issues are resolved and cleared. Your bad credit might have a long and deep trail, so it could take time to completely clear your credit file of all issues.

When do I need debt counseling?: There is no established debt amount or situation that dictates the need for credit counseling. Whenever you feel overwhelmed by debt, regardless of the amount, and need assistant with your credit debt, credit counseling can help you steer clear of huge financial troubles.

How do I know if a Credit Counseling Service is Legit?: When selecting a credit counseling service, make sure the credit counselor you will be working with is certified. Many credit counselors are required to have and maintain a Consumer Credit Counselor certification. The certification process involves specialized and comprehensive credit counseling training as well as the passage of the certification exam. Also, check with the Better Business Bureau.

How will Credit Counseling Affect my Credit Rating?: The existing condition of your credit report will influence how credit counseling will affect your credit; however, there is no hard and fast rule regarding credit counseling and your credit. Most creditors will report your usage of a credit counselor while other may not; and there’s no predicting how future creditors will interpret it. Many lenders perceive credit counseling as a consumer "work-out" program. Credit counseling will NOT impact your FICO score.

Is Credit Repair Illegal?: Credit repair is LEGAL. You may have heard some mention that credit repair is actually illegal; but the fact of the matter is there is nothing illegal about credit repair and disputing inaccurate information about your credit file. The Fair Credit Reporting Act (FCRA) actually encourages people to dispute inaccurate information.

What can be taken off my credit report?: Any inaccurate, unverifiable accounts such as inquiries, old addresses, additional names on the report (you must have at least one name on your report), unpaid collections, charge-offs, repossessions, bankruptcies, medical bills, credit card debt, and divorce debts.

What can't be taken off my credit report?: There are certain things that just can’t be removed from you’re your credit report. If accurate, those things are federal and state tax liens, child support, new student loans, and any bankruptcies reported by the bankruptcy court.

What is a Good Score?: The higher your credit score, the better; however, there is no real industry standard. Credit scores range from 350-850. Each creditor/lender judges your credit score differently and takes other factors into consideration when determining your eligibility and/or risk. Typically, anything above 690 is considered a great score. Below a 620 is frequently referred to as "sub-prime."

How often do Credit Scores Change?: Your credit score is fluid; it changes as your credit information changes. Anytime new information is added to your credit report, your credit score can change. The credit reporting agencies (TransUnion, Equifax, Experian) usually update their credit data every 90 days.

I have a Number of Credit Cards. Will that Affect my Credit Score?: Your overall credit history will determine how your credit is affected by having numerous credit cards. However, having an overabundance of credit cards with high balances or credit availability can negatively impact risk scores if your credit history is questionable.

How do I begin to establish credit?: Consumers desirous of establishing a good credit record should start off by applying for a credit card. The companies that monitor credit history compile information based on your payments and responsible consumers build up a good credit report by promptly paying off what they owe. A second consideration, especially if the consumer did not qualify for a conventional credit card, is to apply for secured credit. This method lessens the lender's risk by having access to some kind of guaranty from the borrower in case of default. An alternative way is to have a person with a proven history of good credit co-sign a loan. These co-signers are a form of guarantee diminishing the lender's risk of non-payment.

Is There a Rule of Thumb Regarding the Number of Credit Cards to Have?: In general, it is better to have a few credit cards with high credit limits than a large number of cards with limited credit limits. Having credit cards with high credit limits demonstrates that you are responsible enough to carry a high credit limit on multiple cards.

Is it a Good Idea to Transfer my High Credit Card Balance to a New Card with a Rock-bottom Rate?: If you want to transfer your credit card debt to a different card, you need to make sure that there are no catches with the introductory rate of the new card. For example, sometimes the low introductory interest rate on a card is only for a very limited time and then it skyrockets to an exuberant amount. You also need to ask if there are annual fees, late charges, or any other stipulations that might make transferring your credit card debt to a new card counter-productive.

So what is Credit Monitoring?: Credit monitoring is the automated process of keeping an eye on your credit. Credit monitoring helps protect you against identity theft and monitors any changes and/or inquiries made to your credit file by alerting you within approximately 24 hours of any major changes made to your credit file.

Will Credit Monitoring Hurt My Credit Score?: No. Credit monitoring has no affect on your credit score. It’s simply a service that keeps your credit in check. The only time it affects your credit is when you ask a creditor to inquire about your credit.

Does Credit Monitoring Monitor my Credit with all Three Bureaus?: The specific credit monitoring service you use will determine which credit bureau is referenced in monitoring your credit. Each credit monitoring service uses only one of the three bureaus to monitor your credit; however, since the activity you’re looking out for affects your credit across the board, it won’t matter which bureau your credit monitoring service uses. They’ll still be able to identify unexpected changes or discrepancies in your credit report.

How do I get a Hold of My Credit Report?

Three major credit bureaus offer credit reports:

Equifax	Experian	TransUnion
800-685-1111	888-397-3742	800-916-8800
Equifax.com	Experian.com	TransUnion.com
File a credit dispute online at Equifax	File a credit dispute online at Experian	File a credit dispute online at TransUnion

To get a hold of your credit report, contact one of these three credit reporting agencies or AnnualCreditReport.com. Each bureau interprets your credit information differently, so you might want to get a report from all three.

Can I get a Copy of My Credit Report at Any Time?: By law, you're entitled to one free credit report annually from the credit bureaus. This can be accessed at: AnnualCreditReport.com. You can also request a no-cost copy of your credit report if you were denied credit; however, you can only request a copy from the specific credit bureau that supplied the credit report to the creditor who denied you.

What Information do Credit Bureaus Collect about Me?: Credit bureaus collect your identification information, employment history, credit inquiries, and any additional public records and data.

Will Requesting a Credit Report Affect My Credit?: No. Requesting a credit report will NOT affect your credit. You have the right to look at your credit report without it affecting your credit or score. When you request your credit report it's called a "consumer pull" and has no affect on your credit. The only time when requesting a credit report can affect your credit is when you ask a possible creditor to inquire about your credit. This is because it implies that you're possibly opening a new line of credit.

Should I Consolidate my Credit Card Debt?: If you have multiple credit cards, each with their own increasing debt, credit card debt consolidation might be just the thing you need. Consolidating your credit debt will allow you to make just one payment to a consolidator, instead of numerous smaller payments to multiple credit card companies. Frequently, you can also obtain a lower monthly payment.

Can I Get Arrested for Not Paying my Debt?: As long as fraud and theft are not involved, you cannot be arrested and jailed for failing to pay your debt. However, creditors can pursue civil monetarily to reclaim the amount owed to them.

Do Joint Credit Cards Help Build Good Credit?: Joint credit cards can work both ways. Since the credit card account is placed on both holders' credit accounts, the activity on the card as a whole affects both parties equally. So, if the card is maintained properly, it can help improve credit. However, if one of the card holders abuses the card and ranks up thousands of dollars in debt, it can adversely affect the other holder's credit rating.

Is insurance credit scoring legal?

noreply@blogger.com (S Ryan) — Wed, 20 Feb 2013 18:43:00 +0000

Is insurance credit scoring legal?

Yes. The Fair Credit Reporting Act (FCRA) allows for insurers to obtain credit reports in connection with insurance underwriting. Fortunately, the FCRA also allows States to enact legislation the provides greater consumer protection than the FCRA can provide and some States have set restrictions as to the use of insurance credit scoring. If you are in Hawaii, it is illegal.

If your policy is affected by your credit in any way, the insurer is REQUIRED to notify you as per the FCRA. This notification must include the reasons for the increase, the consumer reporting agency from which the information was obtained and a way to get that information.

If you believe your policy was impacted by your credit and you did not receive an adverse action letter, pull copies of your credit reports to see if the insurer is listed as making an inquiry and then file a complaint with your Department of Insurance.

FYI- If your insurance company requests a Social Security number then you probably were credit scored.

How can I have a credit score of 720 and still not qualify for the lowest rates?

Because “lending” credit scores are calculated differently than “insurance” credit scores. Insurance credit scoring is not the difference between good credit and bad credit, it is better defined as the “right” credit or the “wrong” credit.

My new company quoted me one price and then came back later and told me that due to my credit score I would have to pay higher premiums or cancel the policy. Can they do this?
This is known as a credit “bait and switch” tactic. You are forced to pay the higher premiums or attempt to find other coverage while the new company keeps the down payment for the policy you do not want. If this has happened to you, I encourage you to file a complaint with your Department of Insurance.

I received notice that due to my insurance credit score, my company was removing my “premier customer discount”. I did not even know I had this discount. What is the difference between removing a discount and adding a surcharge?
There is no difference.
If we are not borrowing the money, why do they have to do a credit check?
Again, this goes back to the Studies. Insurance companies believe that certain credit characteristics are indicative of insurance losses. This is an unproven theory.
What is a CLUE report?
Comprehensive Underwriting Loss Exchange A CLUE report is a listing of damage and or claims paid to you or for you by the insurance company. This report may also list any claims that were not formally filed, settled and/or adjudicated. You can dispute the information contained in the CLUE reports.

To dispute a loss record, call or write them at:

ChoicePoint Consumer Center
P.O. Box 105108
Atlanta, Georgia 30348-5108
http://www.consumerdisclosure.com
1-866-718-7684

Be sure to include in the dispute:

the C.L.U.E. reference or consumer number
the name of the insurance company
the date of the loss
a brief explanation of the facts
As with credit reports, the information will be verified with the reporting insurance company and they will notify you of the results within 30 days.
Submit your questions here.
When it comes to Insurance Credit Scoring, many other questions come to mind. This will be updated as answers are found or received. Do you know an answer? Email..
Q. What was the original intent in including Insurance in the FCRA?

Q. Who wanted this study and why? Who would they have thought that credit and
claims correlate?

A. See one theory here.

Q. Why is insurance credit scoring so important to the insurance industry?
Obviously, this practice has proven to be quite profitable. “A few years ago, after the Arizona state Senate had passed a bill prohibiting insurersï¿½ use of credit scoring, the National Association of Independent Insurers (an industry trade association) and Progressive sent out hundreds of thousands of letters to consumers telling them that their insurance rates would go up if the state House of Representatives concurred with the Senate. The bill did not pass.” 2

As a matter of fact, the Insurance Industry ranks first in lobbying expenditures ($77,206,908.00) and campaign contributions ($31,223,078.00) in 1998. (Last data assembled.) In case you are interested, the Republicans received 70% and the Democrats received 30%.

Add these amounts to the high cost of leasing scoring models and running credit reports and you can see why premiums are rising. Using Insurance Credit Scoring is simply adding cost to the bottom line and the insurance industry want to make sure you cover those costs.

So why is the insurance industry fighting this so fiercely? For one theory, click here.

Q. Why is insurance credit scoring becoming a big issue now if they have been using it for
years?
A. Credit scoring has been used for years in insurance underwriting as one of the permissible purposes as defined by the Fair Credit Reporting Act. But the reasoning goes deeper than that. Insurance companies, like consumers, have done very well with their investments (yes, they invest your premiums) for years. Last year, like many consumers, the insurance companies lost significant amounts of money in the market. Now the insurance industry sees premiums as the key to profitability. Stocks go down, premiums go up. So they, unlike consumers, have a way to make up their losses and it appears they are using an unfair trade practice to do so. See why in Industry Vs. Consumer.

Q. The insurance industry claims that the Fair Credit Reporting Act (FCRA) authorizes the
use of credit reports in insurance underwriting as a “permissible purpose”.

Why then did they ignore the portion of the FCRA that states that if adverse action is taken
based on information in the credit report that a consumer must be notified? Why has it
taken time and taxpayer money to enact laws that enforce the FCRA?

Q. Could there be another underlying reason they want to see your credit report?
A. Scoring models not only provide insurance credit scores but underwriting, retention, cross selling, claims handling, prospect targeting and collections as well. Credit reports may be a valuable commodity not just for the purpose of determining rates.
See Industry vs. Consumer II.

Q. For a married couple, they have both SS#, whose do they run? Or do they run
both? How is this factored into the insurance credit score, how do they choose
which one to use if they only use one?
A. They run both credit reports. Do they take a combined amount? An agent’s answer?
“I don’t know, I am receiving conflicting answers from home office.”

Q. The insurance industry has a system in place to recoup losses after an incident
with surcharges, etc. Why do they need a system in place based on the
likelihood you are going to have a claim?
A. Received an answer on this one:

Insurance rating is entirely for the purpose of trying to match expected claim costs with premiums paid. Accident surcharges exist within the rating system because people who have accident histories are more likely to have future accidents. Therefore their insurance premiums should be higher in the future than those who are less likely to have future accidents. Surcharges do NOT recoup past losses. This would be called retrospective rating. Auto insurance is rated prospectively, not retrospectively. Past losses are paid for by the premiums of people who didn’t have accidents during that same time period. The rating system is built for the sole reason of estimating a given person’s future likelihood
of having an accident, and generating a premium that matches the risk level.

Comments or questions?

Interesting quote in the Journal of Insurance Regulation published by the National Association of Insurance Commissioners (NAIC) in 1989:

“As a further consideration, prices presumably set to cover the cost of accidents cannot be surcharged when an accident occurs without calling into question the correctness of the original price. Simply expressed: Aren’t accidents what premiums are supposed to pay for”.

“There is a question of propriety with respect to penalizing an insured for the very occurrence for which he purchased insurance… Questions may arise as the soundness of penalizing such an insured when he is unfortunate enough to have the accident for which he is insured against” – J. Lemaire, Automobile Insurance, 1985.

Q. If you do not have a claim are they going to refund your excess premiums? Will
they not charge a surcharge following an accident because you were ‘covered’
for expected losses beforehand?
Q. The industry states that insurance credit scoring benefits consumers. We know
that a poor insurance credit score will move you into a substandard company,
how many people have been moved out of a substandard company based on an insurance
credit score?
Q. Why do they stress it helps competition when the underwriters all originate in
just a few companies?
Q. Not many business stress the good of competition, why do they? They claim
credit scoring increases competition and that is good for their industry.
Q. Why does a Texas auto policy state, “We may not refuse to renew this policy
based solely on the fact that you are an elected official.” What is the story
behind this??

Insurance & Credit Scores ! Really ?

noreply@blogger.com (S Ryan) — Wed, 20 Feb 2013 18:01:00 +0000

This is a real scary answer! It bounces all around the question but never gives a direct answer.

"I have an excellent credit rating; does this mean I qualify for the best insurance premium?

That depends. Since insurance scores measure items related to insurance losses and credit scores measure creditworthiness, these scores may be very different. Items on a credit report considered by an insurance company may not be ones considered by a lender. Likewise, there may be items on a credit report used by a lender that are not relevant to an insurer. Additionally, insurance companies consider a number of other factors when determining your automobile premium such as driving record, prior loss history, and vehicle type. For your homeowner premium, insurers may consider prior loss history, construction type, distance to fire stations and fire hydrants, and presence of protective devices such as smoke detectors, theft alarms, and deadbolt locks. State laws and regulations also vary, so the factors insurers may use to calculate premium or determine eligibility may differ by state."

My concern is why when applying for automobile insurance do they even pull your credit ? It would seem that my driving record is the only thing that matters. I will not need a loan to have this policy , they are not extending credit to me as its paid either up front or on a monthly bases and a missed payment will result in a canceled policy. My personal credit has nothing to do with automotive insurance !

When I asked this company would the inquiry affect my score this was the answer

There is no affect on an individual's credit rating when ABC 155 makes an inquiry into their credit history. No banks or other lending institutions will be able see the credit record inquiry made by ABC 155. The only record of the inquiry by ABC 155 will be on the copy obtained by the consumer, if he or she chooses to receive a copy of their credit report.

My next question was a simple one. What is the difference between a credit score and a Insurance score?

While insurance scores predict insurance losses, credit scores predict credit delinquency. Both are calculated from information in a credit report, such as outstanding debt, bankruptcies, length of credit history, collections, new applications for credit, number of credit accounts in use, and timeliness of debt repayment. Insurers or scoring agencies then calculate the insurance or credit score by taking the information in the credit report and assigning positive weights to the favorable information and negative weights to the unfavorable information. Information such as income, ethnic group, age, gender, disability, religion, address, marital status, and nationality are not considered when calculating an insurance score.

Again its a answer but not one that actually answers my question. Not to mention its filled with false statements. One that stands out is the information they state is not used such as address,marital status. I know your marital status is top of the list on questions asked that are needed. I believe they have a good idea depending on your zip code what they expect from you, I use zip codes for advertising and It tells me allot about the people living under that zip code. So again seems like a flat out lie.

My last question

What type of credit information is generally associated with a favorable insurance score?

Lengthy, established credit history
Absence of collections
No late payments
Low credit balances relative to limits available
Few recently opened credit accounts (new accounts opened only as needed)

Right back to things I believe have zero use to calculate insurance premiums.It also contradicts the answers on my other questions. Just so everyone understands I actually called and asked these questions. I have left out the company name because I was allowed to use there training answers as a friend of mine works there.
This world of credit and credit scores is getting out of control. Insurance company's have no reason to pull your credit file but yet they do.Even if you pay cash upfront for your policy your credit will be pulled. The things that make you ask whats really going on?
http://en.wikipedia.org/wiki/Insurance_score#cite_note-13 Gives some detailed information how each state has allowed this practice and why.

How Bad Credit Affects You

noreply@blogger.com (S Ryan) — Wed, 13 Feb 2013 02:50:00 +0000

Very few things in life can have a more devastating effect on your lifestyle than a poor credit score. A low credit score can cost you hundreds or even thousands of dollars per month.

Credit Cards

Most prime credit cards are entirely out of reach to consumers with bad credit. And the few credit cards that are available to them (known as "sub-prime" cards) typically require exorbitant setup fees or recurring monthly fees, offer very low credit lines, often require cash deposits, and in most cases do not even report your positive credit activity to the credit bureaus.

Automobile Financing

If you are making payments on a car, you are probably paying between $5,000 and $9,000 more just for having bad credit. This added interest shows up every month in a higher payment. Take a look.

$20,000 car paid over 5 years:
CREDIT STATUS	RATE	PAYMENT	COST OF BAD CREDIT
Perfect Mildly Damaged Damaged	10% 14% 20%	$424.94 $465.37 $529.88	$0.00 $4,722.54 $8,593.30

Home Mortgage

Bad credit in auto financing can really hurt, but it is nothing compared to the cost of bad credit when a home is involved. A typical home can cost between $50,000 and $130,000 more in interest if you are buying the home with bad credit.

$100,000 home paid over 30 years:
CREDIT STATUS	RATE	PAYMENT	COST OF BAD CREDIT
Perfect Mildly Damaged Damaged	7% 9% 12%	$655.30 $804.62 $1,028.61	$0.00 $50,155.24 $130,791.63

Learn More.

New Goal for Your New Life Together: Becoming Credit-Wise

noreply@blogger.com (S Ryan) — Mon, 11 Feb 2013 17:17:00 +0000

Credit Scores (Photo credit: Casey Serin)

Many people planning to be married take time to reexamine financial priorities, set a new budget, and establish savings or debt reduction goals. Being credit-wise consumers means realizing that managing your credit requires similar planning and care-and doubly so when you are entering into marriage.

Think about your special personal and financial goals for the coming year. Are you planning a major purchase or a trip abroad? Are you working to establish financial stability and security? Since good credit takes time to build, planning for your future together should include checking your credit report. This is a great time for each of you to request a copy of your credit reports and look them over--not simply for inaccuracies, but for ways you might improve your overall credit status.

Many of life's major changes, such as marriage, can impact your credit, but keeping these credit-savvy tips in mind can help you keep and build your credit together, so it's always available when you need it.

Your Marriage and Future
Getting married brings many financial opportunities to couples who can combine their resources. As you plan your wedding day, plan for your future too and take these steps to keep your credit in tip-top shape.
Notify creditors and credit bureaus if you change your name. When you change your name at marriage--or any other time--it's important that you make sure your creditors and the credit bureaus are notified of the change. Otherwise, you might lose your credit history.

Keep credit in your own name in addition to joint accounts. Women especially must take care to keep some credit in their own name. (e.g. "Jane Smith" rather than "Mrs. James Smith"). Every year women who have never paid a bill late are denied credit because they have no credit history in their own name.

If either you or your spouse-to-be has had trouble getting credit alone, try setting up a joint account to capitalize on your shared income and/or one person's stronger history. As your joint account history grows, you should each acquire and maintain an account of your own as well, to establish your credit on an individual basis. As you establish individual accounts, you might close some extra joint accounts, keeping only those you actually use.

If you anticipate making a large purchase with one of your credit cards, you might want to request a credit line increase now, so you know the credit is available when you're ready to buy.

Building Good Credit Together

When you apply for credit, the lender will undoubtedly check your credit report. The information in your credit history helps lenders decide how much credit and what interest rate you are eligible for. The better your credit history, the more likely you are to qualify for the best credit deals, including rates on a mortgage. But what will creditors be looking for?

Pay Your Bills on Time

Creditors always look for indications that the prospective borrower is a good credit risk: a person who will pay back his or her debts in a timely fashion. Obviously, a history of on-time payments demonstrates that you are just such a person. But that doesn't mean your credit history must be perfect for you to qualify--few people's are, after all. "Good" credit can include a few minor dings in your report, such as up to two credit card payments 30 days late or one installment payment, such as an auto or student loan payment, 30 days late. No payments of any kind should be more than 60 days late and there should be no outstanding public record debts such as judgments or liens.

Keep Your Debt Load Reasonable

One factor any creditor must assess before offering credit is the total debt of the person applying. If a large portion of your income each month is already committed to paying off other debt, the lender will wonder if you may have trouble paying back an additional loan. As a rule of thumb, financial experts say that non-mortgage debt payments should not exceed 10-15% of your take home pay each month. If your debts are currently too high, consider ways to pay some down before you apply for new credit.

Avoid Unnecessary Inquiries

Whenever you authorize a creditor, employer, or other business to check your credit report, an "inquiry" is added to the report itself--a note that someone has checked your credit. An inquiry usually stays on your credit report for two years. A lender considering you for a loan will look at the number of inquiries recorded there and when they took place. A large number of inquiries occurring in a short period of time may be interpreted as a sign that you are either applying for lots of credit because of financial difficulty or overextending yourself by taking on more debt than you can actually repay. (Checking your own credit report, however, does not impact your credit rating.) Therefore, it's always a good idea to minimize inquiries into your credit report. If you're shopping around for mortgages, for example, don't let every lender you consider run a credit check. You might have to settle for slightly more approximate estimates on what the lenders can offer you, since they can't verify your credit history. But that's still better than doing all that shopping around only to find that the lender of your choice now perceives you as a less solid credit risk and wants to charge a higher rate.

Eliminate Excess Unused Credit

Just as a high number of inquiries suggests you may be overextending yourself, a lot of available credit means you have the capability to overextend yourself in the future, even if you have not done so in the past. Although people may perceive having several credit cards with high limits a sign that they have good credit, too much of this good thing can make them seem like a poorer credit risk. The lender needs to be reasonably sure that you will continue to be able to repay your debt in the future. But if you have thousands of dollars of unused credit available, you might spend it all the month after your loan goes through and suddenly have more debt than you can pay off. To prevent this concern from arising, you should close unused credit accounts before applying for a large loan, and/or consider having your credit limits reduced. If you do either of these things, make sure to ask the creditors to record that the account was closed or changed at the consumer's request--you don't want anyone to get the impression the bank closed the account because of problems with your payment habits.

Of course, as with most worthwhile plans, building good credit together requires a long-term commitment. So set your credit-wise plans for your new life together in motion now and stick with them. By doing so, you may reap the benefits of that commitment for a long time to come. Click Here.

The Law is on Your Side ! Protect Yourself.

noreply@blogger.com (S Ryan) — Mon, 11 Feb 2013 17:01:00 +0000

The Law is on Your Side

Many consumers have the mistaken idea that credit bureaus are federally supported organizations backed by a vast array of laws meant to protect creditors. Nothing could be further from the truth. Aside from the government simply recognizing the need for credit reporting, credit bureaus have absolutely nothing to do with the government. Credit bureaus are simply huge bureaucratic companies which exist for the soul purpose of making money by selling information about you-information they never bothered to verify.
Because of the vast potential for error in the credit reporting system, the United States Congress has enacted laws to protect the consumer from being victimized by the credit bureaus. It is your right and responsibility to make use of these laws.

The Law versus Practical Reality

As the credit bureaus computerized their processes and greatly expanded their reach and influence in the late 1960s and early 1970s, consumer complaints began to mount at the FTC and state attorney general offices. The credit reporting agencies quickly became huge bureaucracies second only in size to the federal government. The credit bureaus expressly served only the needs of their clients, the credit grantors. Many consumers were negatively affected by the credit bureaus, but they had no way to correct or change their credit information.
The American consumer lay completely at the mercy of the credit bureaus. The United States Congress enacted the Fair Credit Reporting Act (FCRA) in 1971 to insure that the credit bureaus investigate the credit items disputed by consumers. This federal law set procedural guidelines, which gave the consumer the right to challenge the accuracy, validity, and verifiability of the credit listings appearing in their consumer credit report. It also required that the credit bureau delete any credit listing if it was inaccurate or could not be verified. Learn More.
In theory, the FCRA charges the credit bureaus with responsibility to the consumer as well as the credit grantor. In reality, the credit bureaus resist, resent, and reject consumer disputes. The credit bureaus would rather be left alone to make a profit. And, each time a consumer challenges his credit, profit is lost.
The credit bureaus first defend their profits by erecting walls of stall tactics, including requests for more information, further clarification, and additional identification. The vast majority of consumers give up before they even receive copies of their credit reports. If a consumer manages to get a credit report, decipher the codified information, write a coherent dispute, and mail it, the bureaus may still find some reason to disregard the challenge. The entire dispute system is designed to frustrate and discourage the consumer.
Many consumers have the idea that the credit bureaus must complete their investigation within thirty days or be forced to remove all disputed information. They threaten to sue the credit bureaus if they don't conclude their investigation in time. In practice, such thinking is delusional. Nobody forces the credit bureaus to do anything. However, if you manage to submit a valid dispute letter, and the credit bureau investigates your dispute, the chances of success are good.
If a credit bureau cannot verify an item before completing its investigation, that item will be removed. Many creditor grantors are simply reluctant to take the time to verify the data. While the credit bureaus are in the business of reporting credit histories, creditor grantors are not. Click Here.

Common Myths of Credit Repair

noreply@blogger.com (S Ryan) — Mon, 11 Feb 2013 16:49:00 +0000

Credit repair is needed by many. The amount of false information
about helping yourself or getting help is designed to discourage
the public from attempting to take control of their lives. Financial
knowledge is key to being able to understand how this works.
Please read the facts and judge for yourself !

When I pay off a past-due account, such as a charge off or a collection account, will it show "paid" and no longer be considered negative?
It is quite difficult to repair your credit without somehow satisfying your outstanding debts. However, the act of paying off a debt will not improve your credit rating much, if at all. Negative credit is allowed to stay on the credit report for a maximum of seven and one half years, except for bankruptcy which may remain on the credit report for ten years. Under the old Fair Credit Reporting Act (FCRA), the seven year clock began ticking on "the date of last activity" or, in other words, when the last action took place on the account. Under the revised FCRA, the credit bureaus must start the seven year clock on the first payment that you missed that led to the collection or charge off status. Now, creditors and collection agencies aren't allowed to extend the reporting period by passing the account back and forth between agencies.
However, by paying an outstanding, delinquent debt you will change the account status to "paid collection," "paid was late," or "paid was charged off" - which will still stand out as a very negative listing. When you have outstanding debt, it is almost always prudent to seek professional help so that you may settle your debts without further damaging your credit. In some cases, it is even possible to negotiate the deletion of negative credit as part of the payoff.

If I succeed in deleting a negative item, will it come right back on my credit report?
The credit bureaus have cleverly spread this myth through the news media and government agencies to discourage credit repair. In truth, the credit bureaus will sometimes temporarily delete a negative listing if they haven't heard from the credit grantor after approximately thirty days. If the credit grantor reports late, say after six weeks, and then verifies the negative listing, the credit bureau will often reinsert the negative listing on the credit report and reverse the credit repair. This is often known as a "soft delete." Usually, though, the creditor simply fails to respond and the negative listing is permanently deleted and repaired. If the item is verified by the credit grantor, either before thirty days or after, the account may still be repaired again at some future time.
Under the new Fair Credit Reporting Act (FCRA), the credit bureaus must follow strict procedures to notify you if they decide to re-report an entry on your credit report. These new procedures have reduced the frequency of the re-reporting of listings, and they have increased the risk of lawsuit for the credit bureaus when they do it.

Are there negative listings, such as bankruptcies and foreclosures, that are impossible to remove from the credit report?
There is no type of negative listing that hasn't been reparied and removed from a credit report thousands of times. Negative items, such as bankruptcy or unpaid debts, are certainly more difficult to repair and remove from the credit report, but this has more to do with the operational systems of the credit bureaus than with the severity of the bad credit item. For example, judgments and tax liens are severely negative listings, yet are, overall, easier to repair.

I've heard that disputing the credit report is easy and any person can do it himself for the price of a few postage stamps. Is that true?
Disputing the credit report is easy. Getting results (and actually repairing bad credit) is amazingly difficult, complex, and infuriating. It isn't a coincidence that the Federal Trade Commission receives more complaints against credit bureaus than any other type of business. If you call the FTC today to report a complaint about the credit bureaus, their phone mail system will ask you if to press one if your complaint is about the credit bureaus, and press another number if your complaint is about anything else. Clearly, this situation evolved out of deep consumer frustration with the uncooperative nature of the credit repair process.
Remember, the credit bureaus are primarily interested in protecting their profits. Investigating your challenge consumes these profits. Short of sparking a large number of lawsuits, the credit bureaus seem to do everything in their power to discourage consumers from making progress with their credit repair. Repairing your own credit is like repairing your own transmission or representing yourself in court; it is possible, but you must decide if your are willing to take the time and assume the risks of doing it yourself.
Unless you hire a professional to help you, credit repair will have to become a full-fledged hobby.

If I declare bankruptcy, can I begin my credit report all over with a clean slate?
Many bankruptcy attorneys do not adequately understand or explain the effects of bankruptcy to their clients. Stated simply, bankruptcy is to the credit rating what the atomic bomb is to the battlefield.
When you file for bankruptcy, every credit account that you decide to include in bankruptcy will become an "included in bankruptcy" item. Additionally, a bankruptcy filing and bankruptcy discharge listing will appear in the court records section of your credit report. Because so many negative items are attached to the bankruptcy, it becomes very difficult to remove all trace of the bad credit. If at all possible, you should avoid bankruptcy.

Can I file a "100'word statement" on my credit report explaining my side of the story and will creditors read my statement and take it into consideration?
No known creditor considers information given in a 100-word statement. It makes one wonder why they included this meaningless stipulation into the Fair Credit Reporting Act.
Most creditors will not even look at the credit report when a credit application is made. Rather, they will simply take a numerical score from the credit report and make a determination as to whether or not they should extend the credit. This score does not take into consideration the contents of a 100-word statement.
The statement does, however, verify that some of the negative listings on the credit report are technically accurate. This just makes your credit repair job more difficult. Make 100-word statements the first things you delete from your credit file (if you ever added one in the first place.)

By changing numbers in my social security number or by using an EIN tax number, can I fool the credit bureaus into creating a completely clean, new credit file under my name?
Many credit repair operators have promoted this scheme, known as "file segregation". Technically, we have seen some few people that have succeeded in using a false Social Security Number and have fooled the credit bureaus into giving them a new identity. The scheme is complicated: one must change almost all identifying information about oneself and be very careful never to use the old information again. Most often, we've seen people embark on these schemes only to slip and, at some time, provide the old information mixed with the new. Then, both credit reports merge and the consumer is left with a tangled mess of deception and suspicious credit reports.
In the worst cases, people have been charged with crimes, or terminated from jobs, for using the false information.
This scheme has proven to be complex, difficult, and (according to the FTC) illegal. Lying about any personal information on a credit application is usually a federal crime. Using these "file segregation" credit repair schemes requires an enormous amount of coordination, not to mention personal risk.
Recently, the FTC has gone out of its way to shut down any credit repair company that promotes literature discussing file segregation. It remains to be seen if they will be successful under the First Amendment.
If asked for our recommendation as to whether a person should try a file segregation credit repair program, our answer is always, "No, it is too risky, difficult and legally problematic."

If I build enough good credit, will it offset my bad credit and make me credit worthy?
Any amount of bad credit is devastating to your chances of being approved by a credit grantor. Most credit grantors never actually look at your credit report. A computer pulls your credit report, rates your credit standing, income, indebtedness, and stability, generates a number (or FICO score,) then spits out an acceptance or denial. Even one or two slow pays will usually trigger a credit card or personal loan denial. The slightest amount of negative credit will cause the interest on an auto loan to skyrocket. You will probably find that even a little bad credit, regardless of how much good credit you have, is an unacceptable barrier to credit approval.

If I'm having trouble paying my bills, can I go to Consumer Credit Counseling Service and will they help me to repair my credit?
Consumer Credit Counseling Service or CCCS is a nonprofit debt counseling service that assists consumers who are over their heads in debt. CCCS is funded and controlled by the credit grantors and the credit bureaus.
Often, CCCS provides a beneficial service to the consumer. Because of the obvious allegiance between CCCS and the credit bureaus, you cannot reasonably expect CCCS to do anything that the credit bureaus would frown upon, such as help you repair your credit.
In fact, if you decide to leave CCCS before you have finished their program, they can list your failure to complete the process as a negative listing on your credit report (though this is rare.) When you are participating in the CCCS program, your creditors will often note it on your credit report. If you have perfect credit, and wish to keep it, you may not want to use a credit counseling service. These services usually create negative listings because their process will generally make you late on your bills at least 30 days.
The fact that you resorted to a debt counseling program is a red flag for prospective credit grantors. Remember, paying off your debts is a step in the right direction, but it does not repair your credit.
With these factors in mind, consumer credit counseling can be a life-saver if you're over your head and need some help and some breathing room.

Is it illegal for creditors to take a negative, accurate listing off my credit report? They tell me that the law requires that these items remain on the credit report for at least seven years.
When you speak with credit grantors, collection agencies, or credit bureaus, their typically under-educated staff may tell you all manner of such pseudo-legal nonsense. The law demands that negative listings appear on your credit report for no longer than seven years. The credit grantor or the credit bureau can choose to delete the negative credit listing whenever they see fit.

How hard is it to repair my own credit?
Repairing your credit by yourself is possible. But remember, the credit bureaus are committed to the failure of credit repair efforts, and the credit bureaus have far more experience in discouraging hopeful consumers than you have in beating giant credit bureaus.
Yet, some consumers have achieved results in repairing their credit without professional assistance. The following is a guide to help you determine whether or not you should seek professional assistance in your credit repair efforts.
Attempting to repair your own credit while failing to dedicate sufficient time or attention can result in further damage to your credit rating and may make it impossible for anyone to repair your credit for you. For this purpose, we'll give you a preview of the time commitment required to repair your credit. Examine very carefully your capabilities and your schedule before deciding to repair your own credit.

Example of a Month's Activities in Restoring Your Credit (for a couple)
Activity	Hours Required
Monitored calendar daily to check deadline of each of six credit bureau correspondences	2 hours
Drafted six new original credit bureau query challenges	4 hours
Visited post office six times to mail correspondences by Certified Mail/Return Receipt Req.	2 hours
Carefully analyzed and marked six credit reports to find negatives/deletions/ positive changes	3 hours
Drafted 4 tardy credit bureau response follow-up letters	2 hours
Visited post office 4 times to mail follow'up letters by Certified Mail/Return Receipt Req.	2 hours
Responded to 2 credit bureau stall letters by providing further information/ challenging time loss	2 hours
Visited post office 2 times to mail stall responses by Certified Mail/Return Receipt Req.	1 hour
Responded to 2 "frivolous or irrelevant" credit bureau rejection of dispute letters	2 hours
Visited post office 2 times to mail "frivolous or irrelevant" claim Certified Mail/Return Receipt Req.	1 hour
Requisitioned six new credit reports at $8.00 each through local credit bureau	2 hours
Contacted ten creditors and made creditor-direct challenges	8 hours
Drafted 20 letters to creditors (one per spouse) to challenge and demand further documentation	4 hours
Visited post office once to mail letters to creditors Certified Mail/Return Receipt Req.	2 hours
Contacted ten creditors by telephone to negotiate deletion of negative listing	4 hours
Carefully analyzed ten responses from creditors with billing histories and promissory agreements	5 hours
Contacted six state, federal, and licensing organizations to locate addresses and forms for complaints	2 hours
Prepared complaints to six state, federal, and licensing organizations	3 hours
Visited post office to mail complaints Certified Mail/Return Receipt Req.	.5 hours

Total hours per month (first month)	51.5 hours

This chart shows liberal estimates of time required to repair your own credit. If you are a single person working on his/her credit alone, you can subtract 25% from the total time required. This time investment will continue on a monthly basis, gradually shrinking as creditors agree to delete their listings. On the average, you can expect the process to take between twelve to eighteen months, unless you have very little negative credit (meaning, one negative item per report.)
Each response to a creditor or a credit bureau must be an original and must pertain specifically to your present situation or you may be red-flagged as a frivolous credit repair troublemaker or be ignored altogether. There are no effective "form letters" or "fill in the blank" responses that yield results. Credit bureau checkers spot form letters easily as the sign of someone attempting to repair their credit. As such, these letters generally earn a swift "frivolous and irrelevant" response.
Dueling with the credit bureaus and credit grantors requires an aggressive and tenacious personality. You must be willing to wade through rejection after rejection until you achieve your desired credit repair.
The credit bureaus will shoot down the majority of your claims and disputes. They will treat you like a disreputable person and a liar. You must take this rejection without becoming discouraged. If you are the kind of person who tires quickly from an emotional struggle, you should seriously consider hiring a professional to repair your credit. If you are the kind of person who becomes angry when dealing with the slow, bureaucratic employees of big bureaucracies, you will not fare well. Patience is an absolute requirement. If you are thick-skinned and have the fortitude to fight the credit bureaus and your creditors for as long as it takes, then you may have the proper disposition to repair your own credit.
In the process of repairing your credit, you will have to track and monitor dozens of communications at once. This will require organized, disciplined habits. Every day, you must check up on each of these communications to make sure that the credit bureau or credit grantor hasn't overextended their time limit. You must spend at least one-half to one hour per day tracking your responses, results, and taking appropriate actions. Remember, you will be dealing with three credit bureaus per person, plus you will be communicating with each credit grantor appearing on each credit report. In most cases, the number of simultaneous communications will exceed twenty or thirty. If you are not a very organized person, you are definitely not in a good position to attempt to repair your own credit. Click Here To Learn More About Credit Repair.

The Fair Credit Reporting Act

noreply@blogger.com (S Ryan) — Sun, 03 Feb 2013 22:40:00 +0000

Below is a summary of the FCRA. The full Act can be obtained directly from the Federal Trade Commission's web site here.

Fair Credit Reporting Act (Summary)

Public Law 91-508

The Fair Credit Reporting Act (FCRA) allows a consumer to challenge the information on his credit report on the basis of "completeness and accuracy." If, after a reinvestigation by the credit bureau, the disputed information "is found to be inaccurate or can no longer be verified, the [credit bureau] shall promptly delete such information."

The credit bureaus are required to complete the investigation within a "reasonable period of time." This period has been set at thirty days.

The credit bureaus can ignore the consumer dispute if they have reason to believe that the dispute is "frivolous or irrelevant." The FTC commentary on the FCRA cites, as an example of a frivolous dispute, a dispute wherein the consumer challenges all negative items on his credit report without providing any allegations regarding specific items in the credit file. However, "A [credit bureau] must assume a consumer's dispute is bona fide, unless there is clear and convincing evidence to the contrary."

When a consumer challenges a negative credit listing on the basis of extenuating circumstances, such as health problems, divorce, job loss, etc., the credit bureaus are entitled to ignore that dispute.

When a consumer submits a dispute which is neither frivolous nor irrelevant by credit bureau standards, the credit bureau must "at a minimum... check with the original sources or other reliable sources of the disputed information and inform them of the nature of the consumer's dispute." In some cases of consumer dispute, "Reinvestigation and verification may require more than asking the original source of the disputed information the same question and receiving the same answer."

In other words, when a consumer files or re-files a valid dispute, the credit bureaus must contact the source of the credit information (the creditor) and confirm that the information is accurate, verifiable, and not obsolete. In some circumstances, the credit bureau is required to go beyond a simple verification of the creditor's own computer record. If, within 30 days, the credit bureau has not received verification from the creditor, then the credit bureau must promptly delete the credit listing.

In theory and law, the process is deceptively simple, thus leading many people to think that they can easily handle this themselves "for the price of a few postage stamps." Most quickly discover that the credit bureaus have made it much more difficult than one would imagine. For help in this, we recommend using Lexington Law a professional credit report repair company.

Five Reasons to Check Your Credit Report Regularly

noreply@blogger.com (S Ryan) — Tue, 29 Jan 2013 18:32:00 +0000

In much the same way that a resume displays your work experience to a prospective employer, a credit report provides prospective creditors (and in some cases employers and insurers too) with a detailed picture of your credit history. And like a resume, your credit report can influence whether you will receive what you are applying for.

Ideally, your credit report is an accurate, up-to-date reflection of your credit history. However, since we don't live in an ideal world, there are many reasons that your credit report could contain inaccuracies that might prevent you from receiving the credit you deserve. The good news is you can take action to keep your report accurate. Here are the top five reasons why you should make a practice of regularly reviewing your credit report:

Inaccuracies & Mixed Credit Files

Many inaccuracies on a credit report can be the result of simple human error, and are therefore are not difficult to dispute. Of course, if you don't order your credit report, you might never know about it. Whether the inaccuracies relate to payments not credited, late payments, or data mixed in from the credit file of someone else with a name similar to yours, you will want to contact the credit bureau to dispute inaccurate information promptly.

Tracking Payments

One of the most important elements of credit is a demonstrated history of on time payments. Once you send the check though, anything can happen--a delay in the payment being received can kick you over to a 30-day delinquency. If you call your creditor and explain the situation, they might adjust the information. Of course, if you don't read your credit report, you won't necessarily know which payments are being received and reported properly.

Identity Theft

This issue alone is reason to order your credit report immediately. Identity theft is an insidious crime, involving a thief who assumes your name to open new accounts, divert your card statements to another address, and run up all sorts of bad debt without you ever knowing about it until collectors come calling. Over time, identity theft could jeopardize your ability to obtain further credit. The best way to catch a thief who is using your name is by getting a copy of your credit report, which will show you if there are accounts listed you know you haven't opened. For example, if a thief has intercepted a pre-approved credit card offer in your name and sent it in with a change of address, your credit report will include the account.

Inquiries

If you're shopping around for a loan or more credit, you should know that when creditors check your credit, it places an inquiry on your credit report. Inquiries can add up, which is often interpreted as a negative by creditors. For this reason, too many inquiries can
actually make getting credit more difficult. Moreover, if you didn't authorize
someone to look at your credit report and they did, they may have broken the
law.

Credit Fraud--Unauthorized Charges

Credit fraud involves the theft of your credit card or
account number to make unauthorized charges to your account. Though consumers
are protected financially from this abuse, other creditors may take note of
all this activity and decide to raise your interest rates or refuse to grant
you a loan. Ordering your credit report will help you catch new activity on
accounts that you haven't been using, or may have closed.

When it comes to managing your credit worthiness, your
credit report is your best resource. Ordering your credit report gives you the
opportunity to manage your credit wisely today, while planning your credit
strategy for achieving future goals--a credit-savvy move every consumer should
make!

Click Here to Learn More About Credit Repair

What is a Credit Report?

noreply@blogger.com (S Ryan) — Sun, 27 Jan 2013 19:51:00 +0000

What is a Credit Report?

Whenever you apply for any type of credit or financing, a credit report is pulled from at least one of the three major credit bureaus. While there are hundreds of smaller credit bureaus around the country, virtually every credit bureau is affiliated with Trans Union, Experian, or Equifax. These credit bureaus collect and maintain information on the vast majority of Americans, but they are not affiliated with the government in any way. The credit bureaus are for-profit corporations that sell your personal information for money.

The credit bureaus receive your personal information through the same lenders who grant you credit. They have agreements with each of these credit grantors that require the credit grantor to inform the credit bureaus of everything that occurs in your relationship with the credit grantor. If you make a payment late, the negative credit listing is quickly reported to at least one of the three major credit bureaus and is added to your credit history.

Credit reports are not just a record of how you are currently managing your credit accounts. Credit reports are histories of everything you are doing with your credit now, and everything you have done in the past. The credit bureaus collect this information, list it on your credit report, and then sell it to credit grantors who wish to see your credit history before they decide to lend you money. The credit grantors who review your credit are especially interested in any negative credit. If you have shown any tendency to pay late, or to disregard your financial commitments in the past, then the creditors' computers will immediately reject your application. Just like when you were in grade school, your credit report is your financial report card to the world. Learn More.

What Kind of Information Appears on the Credit Report?

Merchant Trade Lines These include all regular credit lines such as department store cards, auto loans, mortgages, and credit cards. If there is any history of late payment, or if the trade line was included in bankruptcy, charged off, or put into repossession, the listing will be considered negative by all credit grantors.

Collection Accounts When an account is referred to collections because of delinquency or because of a bad check, this appears on the credit report as a collection account. Collection accounts can appear as paid or unpaid accounts. Any type of collection account, whether paid or not, is considered very negative by all credit grantors.

Public Records Public records include bankruptcies, judgments, liens, satisfied judgments, and satisfied liens. All court records, including satisfactions, are considered negative by all credit grantors.

Inquiries Every time a potential credit grantor looks at your credit file, a credit inquiry appears on at least one of your credit bureau reports. If the number of inquiries is very few over the last two years, then there may be no negative effect on your credit worthiness. However, if there are many recent inquiries showing on your credit report, credit grantors may become nervous and deny you credit.

Learn More.

How Long Will Negative Information Stay on My Credit Report?

The Fair Credit Reporting Act (FCRA) requires that most negative credit items be deleted from your credit bureau file in no more than seven years, except for a Chapter 7 bankruptcy which can be reported for up to ten years. These are the time limits for reporting negative credit. The creditor or the credit bureau can choose to have the negative credit information deleted whenever they please. Inquiries may remain on the credit report for up to two years. Lexington Law is a professional credit repair company that can help you with this.

Can I See My Credit Report?

Most credit grantors are not allowed by the credit bureaus to show you your own credit report. But you can purchase your credit report from the credit bureau for a fee. Once you receive your credit report, you may find that you cannot read it because the information is listed in an unfamiliar code. Trans Union and Equifax credit reports are particularly difficult to interpret and understand. Experian credit reports, however, are relatively easy for most people to read. Your best bet would be to order a 3-in-1 combined bureau report since they are the easiest to read. To order one, visit www.creditrepair.com.

How Much Bad Credit Does it Take for Me to be Denied Credit?

As you may have already experienced, even one small late pay listing may result in credit denials. It is a myth that a large amount of positive credit can outweigh some negative credit. Any negative credit whatsoever can become a substantial credit obstacle. Learn More.

Who Looks at My Credit Report?

With the passing of each year, your credit report is used more and more often as a yardstick to measure your character. Prospective creditors will always review at least one of your credit reports before granting you credit. Today it is increasingly common for insurance companies to review your credit before extending auto or health insurance. Many employers now check credit before they consider you for a position. If you rent, you may have already been through a credit check to determine your worthiness as a renter. Learn More.

Are Free Vehicle Maintenance Programs Worth It?

noreply@blogger.com (S Ryan) — Sat, 26 Jan 2013 22:07:00 +0000

In recent years, many automakers have begun to offer free vehicle maintenance as an extra incentive to purchase their cars. But does it really save you any money?

Coverage varies greatly from one automaker to the other and can range from a free tire rotation to full maintenance coverage for up to four years. To help you sort through this issue, the Edmunds.com data team has compiled a detailed chart of all the automakers that offer free maintenance. It also lists the services covered and includes the time or mileage limitations.

It's best to think of these maintenance programs as a type of warranty. The programs apply whether you buy or lease the car and are transferrable to subsequent owners. It's important to note that in some cases there are time and mileage limitations. For example, some automakers require that the free maintenance be performed within 1,500-2,000 miles of the recommended service intervals.

BMW's Ultimate Service is the most comprehensive of all these programs. Its free vehicle maintenance program lasts four years or 50,000 miles (whichever comes first) and even includes wearable parts such as brake pads, brake rotors and wiper blade inserts. Mini, a BMW brand, is the only other manufacturer to include wearable items in its maintenance program. However, Mini's coverage is offered for only three years.

The only "domestic" automaker to offer free vehicle maintenance is Saab, a policy that may soon shift as General Motors seeks to sell the ailing Swedish marque. Unlike rival German brands, Mercedes-Benz offers very limited free vehicle maintenance. Customers are given a free diagnostic check in which technicians answer any questions you may have about your vehicle, and will perform a free tire rotation before 6,500 miles. Most dealerships include a free tire rotation in any scheduled service above an oil change, so the value of Mercedes' gratis tire shuffle was not included in our chart.

New and Improved Coverage
For the 2009 model year, Volkswagen launched its first Carefree Maintenance program; it covers the scheduled maintenance visits at 10,000, 20,000 and 30,000 miles in most of its models. If you have a Volkswagen Routan, the free maintenance will cover up to six services, due to its shorter maintenance intervals.

At first glance it may seem that Scion has scaled down its free vehicle maintenance from the previous model year. From 2004-'07, the automaker offered three free oil changes. Beginning in 2008, Scion changed its maintenance coverage to include the first two scheduled maintenance visits. In this case, less actually is more. The scheduled maintenance visit also includes a tire rotation and an inspection of brake and suspension components. When you compare the price of the oil changes versus the more comprehensive scheduled maintenance, Scion's new offering saves you roughly $54.

Volvo has strengthened its maintenance program for 2009. In 2008, the company only offered one free service at 7,500 miles. For 2009, it has extended the free maintenance for up to 36,000 miles. Under the recommended maintenance schedule, this covers the first four required services and could save you about $355.

Coverage Downgrade
Not everyone has made improvements to their complimentary vehicle maintenance programs. Last year, Land Rover offered the first six maintenance visits at no charge to the customer. Under normal driving conditions, this would last you about 45,000 miles. But for the 2009 model year, only your first scheduled maintenance visit is covered, at the 7,500-mile mark. According to our data, you are potentially missing out on about $700 in free maintenance.

Is "Free" Maintenance Worth It?
Does free maintenance add up to real savings for you? You can save money on maintenance, but the brands with the better coverage often have higher-priced vehicles, offsetting any savings from the free maintenance. For example, people looking for a BMW 3 Series typically also consider the Audi A4. When comparably equipped, the BMW's $2,053 advantage in maintenance isn't as impressive when you realize you have to pay a few thousand dollars in sticker-price premium for that service.

Some people may be drawn to buying a car covered by a free vehicle maintenance program simply because of the convenience it offers. There is true appeal in knowing all you have to do is bring your car in at the proper mileage interval, and the service department will take care of the rest. In the near term, there's no need to worry about the difference between a minor and a major service. This also eliminates the need to shop around at different dealers in search of a less expensive labor rate.

Getting your car serviced at a dealership isn't cheap, and prices can vary greatly from one dealer to the next. Having the work done for free can make the experience more pleasant and comes with the peace of mind that your car is getting factory-qualified service.

Famous Historical Bankruptcies

noreply@blogger.com (S Ryan) — Fri, 25 Jan 2013 15:31:00 +0000

Abraham Lincoln
Did you know that it takes more money to produce a penny than the penny is actually worth? Abraham Lincoln himself was so behind in debt, selling his assets still didn't pay off half his debts.

Lincoln was an amazing leader during a tumultuous time in the United States history, but as a business owner, he wasn't able to keep his business on the right footing. He bought a general store as a young man, and then continued to buy out other stores inventories on credit even though his store was gaining much of a profit.

He eventually sold his share of the stores, but when his former business partner died, the back taxes came back to Lincoln. He had to sell his surveying gear and his horse (his last two assets) and continued to pay off debts until the mid-1840's.

Other Presidents that filed for bankruptcy; Ulysses S. Grant (bad investment-banking venture), Thomas Jefferson (numerous times for lavish lifestyle), and William McKinley ($130,000 in debt while Ohio's governor).

Henry Ford
Seeing that the auto industry is in peril now, maybe this article will be republished in a few months, but as now the auto industry is probably reminiscing about the early 1900's. Henry Ford started the Detroit Automobile Company in 1899 with the help of three politicians. Over the next two years the engineer only made 20 cars (blamed on his perfectionism), which led to bankruptcy in 1901.

Ford reorganized into the Henry Ford Company, left that group, and reorganized again in 1903 as the Ford Motor company. Ford had his fair share of opportunities (and bankruptcies), and left a very rich man- and the company went on to be called the Cadillac Automobile Company.

Another auto moguls that went bankrupt was William Crapo Durant, the General Motors founder. He went bankrupt during the depression and afterwards ran a bowling alley in Flint, Michigan.

Walt Disney
Imagine life without Mickey Mouse. It just doesn't seem right, does it? In 1922 Walt Disney and a partner started a film company in Kansas City, Kansas. After buying a used camera, Disney shot and produced short advertising films and cartoons; he even signed on with a New York company to distribute his films for the newly created Laugh-O-Gram studios.

The deal didn't work out as planned as the New York offices took advantage of the young entrepreneur, and Disney had no choice but to go bankrupt in 1923. As it's said, if one door closes, another opens. Disney moved to Hollywood and after a few years he found his meal ticket: M-I-C-K-E-Y.

Milton Hershey
If chocolate is heaven on earth, Milton Hershey is God- just not all-knowing, powerful one. Hershey knows how to make candy; he just wasn't the best at running businesses. Instead of schooling, he learned the old-fashioned way by apprenticing at a candy shop for four years. After his adventures there, Hershey started his own business in Philadelphia in 1876.

Six years later his business went bankrupt. He also failed at selling sweets on the streets of New York City. Hershey then returned to his hometown of Lancaster, Pennsylvania and started the Lancaster Caramel company. The company later sold for $1 million, which is when he started his concentrations on the smooth, rich milk chocolate we know today.

H.J. Heinz
Last year the H.J. Heinz Company, started by Heinz, his brother and his cousin, made over $10 billion in revenue. All because of the red condiment we call ketchup.

His business wasn't always that rosy color. Heinz started a company, with two others, to make horseradish. Even though it's one of the famous 57 varieties, it didn't agree with everyone's pallet, and eventually hit Heinz's wallet. In 1827 the business went bankrupt, and Heinz reorganized with his family in Pittsburgh, Pennsylvania. Somewhere between fries and scrambled eggs, ketchup was created and the rest is history.

Can Consumers Fight Back Against Credit Fraud?

noreply@blogger.com (S Ryan) — Thu, 24 Jan 2013 16:04:00 +0000

Credit card (Photo credit: Wikipedia)

In this age of information, credit fraud is not a difficult crime to perpetrate. The idea that a thief could gain access to your account information or personal data is not as implausible as you might think--social security number misuse has increased over the last two years, resulting in a variety of credit-related crimes.
Fortunately, you can fight back against credit fraud by learning how credit fraud and identity theft occur, and by actively monitoring your credit report for unauthorized account use on a regular basis. Your credit report will list any new activity on accounts you haven’t been using, as well as new accounts that you did not open.
One of the best ways to keep track of new information that is added to your credit report is the CreditCheck Monitoring Service, which provides Online Monthly Monitoring Alerts to inform you of new derogatory information, recent inquiries into your credit, and several indicators of possible credit fraud.
To have credit report information at your fingertips is the best way to shut an identity thief down--you can begin the process of notifying your creditors of the fraud, changing your passwords, and closing down fraudulent accounts before they wind up in the hands of collectors and compromise your good credit.

How Credit Fraud and Identity Theft Occur
Specific personal data, such as your Social Security number, home address and mother’s maiden name, can be all a thief needs to obtain a fraudulent driver’s license, take over existing bank or credit accounts, divert card statements to a different address, or even apply for new credit card accounts under your name. Thieves can obtain this information in variety of ways, including fishing through trash for account statements, lifting cards from lost or stolen purses, wallets and briefcases, or through telephone or Internet scams.

How to Prevent Credit Fraud and Identity Theft
Customers may be in a position to prevent potential identity theft by closely guarding their personal data. For example, never give out your Social Security number over the phone unless you know the company you are dealing with and have initiated the call.
Similarly, if your mother’s maiden name is not likely to be a secure password, consider changing it to something a little more difficult for a thief to obtain. Also, carry only the cards you are actually going to use, and leave official documents like Social Security cards, passports and birth certificates at home or in a safety deposit box.

Account Takeover Fraud
Credit card account statements contain a lot of sensitive information that you don’t want thieves to get a hold of, and even store receipts will frequently have your credit card number printed on them. Sometimes an account number is all a thief needs to make charges and obtain cash advances. It’s a good idea to shred all financial documents before discarding them.
A thief in possession of sensitive information about you may also be able to go one step further, and commit account takeover fraud, simply by calling your creditor, reading off your account number, a partial Social Security number and your mother’s maiden name, and asking them to change the mailing address on the account. For this reason, if you don’t receive a credit card statement on time, you should call your creditor immediately to verify that the address has not been changed.

Pre-Approved Credit Offers
Another source of potential credit fraud is pre-approved credit offers. A thief who intercepts one may fill out the application and change the address to obtain a credit card in your name for which you will never receive a statement. (To combat this, some creditors will not issue a card to a new address on a pre-approved offer certificate, but this policy isn’t universal.) This makes checking your credit report especially important, because it will show you if there are accounts being reported in your name of which you are not aware.
The thief may even make the minimum payments for a while, until such time as the card is maxed out. Then the account would eventually be turned over for collections--in your name, and listed on your credit report. Click Here to learn more about credit repair.

Financial Consulting Team

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