What Is A Good Credit Score?

Believe it or not, there are a lot of ways to file a complaint against a bank. If you are using a credit card, the process is a little more indirect. But, every credit card is backed by a bank somewhere. So, you may just file a complaint against the bank rather than trying to file one against the credit card company.

Why Would Someone Complain About A Bank?

There are many reasons someone could be dissatisfied with the treatment they receive from their bank. It could be the way they handle or clear checking. It could be their requirements for accessing your account. It could be unfair lending practices. It could be confusing and/or deceptive contracts and agreements.

Many times, people feel they have no recourse when facing misconduct by a bank. They may just take the word of the bank as final and leave it at that. However, banking is a heavily regulated and controlled business. So, if you feel a bank employee is treating you arbitrarily or unfairly, you have a lot of options available to seek remedy.

Where Do I Go To File A Complaint?

Banks or financial institutions fall into a lot of different categories. There are credit unions, savings & loans, state banks, and national banks. Each is regulated by a different Federal agency or may be regulated by state banking regulators. First, you need to find out who regulates your bank. To do that, you need to know what the business name of your bank is.

Don’t be surprised if the legal name for your bank is different from the name you know!

Federal Reserve System.

If you use a national bank (e.g. Citibank, Chase, Washington Mutual – WaMU, Bank of America), you need to go to the Federal Reserve.

No matter where you bank, you may want to call the Federal Reserve System to find out where you need to go regarding your bank. They’ll tell you the legal name and the Federal agency to contact, if they can’t help you.

They are not always right, but they may get you started.

Website.

The Federal Reserve has a website that explains the process…

http://www.federalreserveconsumerhelp.gov/

Free Publications.

You could try a search for…

Federal Reserve Consumer Help

at https://www.newyorkfed.org/publications

All information is free and they mail it to your house (with FREE shipping and postage)!

FDIC.

Some banks are regulated by the FDIC.

The FDIC Complaint Center is

https://www2.fdic.gov/starsmail/index.asp

Office of Thrift Supervision (OTS).

For a savings association, you may have to go through the Office of Thrift Supervision (U. S. Treasury).

Their website is…

http://www.ots.treas.gov/?p=ConsumerComplaintsInquiries

Credit Unions and State banks.

If none of the Federal agencies can help you with a bank problem, you may have to look to your state’s bank regulators.

How Do I Make A Complaint Letter?

Typically, you describe your complaint, when it happened, and what your desired resolution is. Personally, if you could get a witness to the events, who is willing to sign an affidavit, that is great. But, it is not necessary. Mainly, you just want to clearly describe the problem(s), why you think it is a bank issue (not something frivolous), and what you believe is a reasonable solution.

The more reasoned and specific your complaint, the more likely you can expect a satisfactory outcome.

Document all interactions and save all your correspondence.

What Happens If I Am Still Not Satisfied?

If you still believe you have not been treated fairly by the banks and the regulators, you can always contact your elected representatives and/or file a lawsuit.

It may be worthwhile to file a lawsuit against the bank, no matter what the outcome of the complaint with the bank regulator. If they rule in your favor, use it as evidence in your lawsuit. You could try small claims court or if you feel really confident, hire an attorney.

Will This Affect My Credit Score?

No. But, if you feel it has, you will need evidence. The best way to do that is to get your credit score, credit reports, and some credit monitoring.

If you can compile and explain your evidence to make a solid case, you give yourself the best chance to resolve your complaint and/or win in court.

The way the credit markets are behaving, a big crash is on the horizon. There are several reasons for this and they are all approaching at the same time. You have a Federal government that is spending far beyond its means to cover its future expenses. The military is spending greatly for wars and bases in many other countries. There are too many loans that are either in default or underwater. Finally, gasoline costs will rise in the upcoming years.

While all of these circumstances are not fixed in stone (the wars may end and the loans could be repaid), they combine to create a very bleak outlook for the borrower. Since we all rely on credit in our daily lives, it is important to know how this will affect us and what we can do to prepare.

Manage Your Debt.

No one can get completely out of debt. If you pay property taxes, if you pay for car registration or insurance, if you pay taxes, you are in debt. Basically, you cannot avoid being in debt in the United States. That means you cannot avoid the credit score and the credit report.

Ideally, you only want to use debt for very specific things. Taking a credit card to the mall and engaging in shopping therapy is a very dangerous activity at this stage of the economy. Buying impulse items and luxury goods is not wise. Getting a new car when you already have one that works or buying a bigger house simply because you like it may lead you to financial ruin. You have to be careful with credit, starting now.

When you go into debt, expect it to stay with you for years. The banks, credit card companies, and financial institutions will make it very difficult to pay your debts. They are losing a lot of customers and profit due to new legislation and so many bad loans. So now, when you go into debt to them, they will do everything possible to extract the maximum profit from you while providing less in rewards, gifts, and bonuses.

How Can I Benefit?

Many, who used credit cards, are oblivious to the serious changes that have occured to the economy the past few years. They still believe home values will recover, jobs will return, and health care and education will become more affordable. Unfortunately for them, they are mistaken. Continuing spending patterns and a lifestyle based on a way of life that no longer exists is a path to distress.

Give yourself a chance to avoid being one of the new class of distressed Americans that we’ll see in the coming decade. Start by being very careful with credit. Watch your credit score and credit reports. Do not make any major purchases in the upcoming years. If you do, buy on sale, save and pay cash, or find deals from friends, family, or peers.

We are entering a new frugal period in the United States. The days of the spendthrift and the miracle of the mall are over! Accept this today and you will be in great shape as this coming decade unfolds.

Stay on top of your credit, with timely credit information.

The days of the credit card (and the debit card) are numbered. This is not some alarmist statement (or maybe it is), but the financial institutions are really trying to reduce the amount of credit available to borrowers. Why? It all goes back to the end of subprime.

The Credit Bubble.

Just after the dotcom bubble, the banks and credit card companies were struggling. The free-wheeling days of internet billionaires and instant millionaires was ending. That also meant the end of the first housing bubble from that era. People were borrowing less and saving more to face the new economic reality. In other words, things were returning to normal.

Unfortunately, normal was not a good thing for the banks and credit card companies. They needed new borrowers and they needed them to borrow, NOW! It was the only way for the bankers, the mortgage brokers, the stock market, and the government to continue lending, selling, investing, and financing. In other words, they all needed us (the average working American) to go into DEBT and lots of it!

Well, they got their wish. The central bank, the Federal Reserve, lowered rates artificially and the credit bubble was inflated like never before. It led to abundant credit cards, home equity loans galore, abundant lines of credit, and readily available easy financing.

By 2005, anyone who wanted credit, got it. The credit bubble was in full swing!

The End of An Era.

It was clear that all this easy credit was not normal, as evidenced by the ballooning real estate prices. But, this was only one symptom. The other was the flood of credit cards that were appearing. Add to this, the arrival of the debit card and you have a credit tsunami that hit the United States from 2002-2007. It was an incredible 5-year period to go into debt!

By 2008, the cracks were not only appearing in the financial world, they were threatening to bring it all crashing down. Consumers were falling behind under this crushing weight of easy credit. The banks began seeing more foreclosures and loan defaults. In response, they raised the interest rates on borrowers. That just compounded the problem.

It became harder to pay off credit cards as interest rates rose. The path toward bankruptcy and insolvency became more and more inevitable for many Americans.

Finally, it all came to a climax and the government stepped in to prevent the whole thing from collapsing. With that, came the end of the easy credit era. From that point, debt would no longer be a given. In fact, credit has become harder and harder to get with each passing year.

No More Free Lunch.

The credit reporting agencies failed the average American during the easy credit area. Experian, Equifax, and TransUnion used borrowers as a way to increase profits for the banks and lenders. Remember, they do not work for the consumer. You are not their customer. They have no obligation to you other than what’s required by law.

Getting a loan for college, a car, a home, or on a credit card will become increasingly difficult as the next decade continues. There is an incredible amount of debt that needs to be retired that probably will not given the current economic climate. That means the banks and other lenders will have losses that they need to recover first before increasing credit. Don’t count on a loan to get what you want unless you have a superb credit history WITH collateral.

Credit Card, Say Bye Bye.

If you use a credit card for your day-to-day expenses, I strongly recommend against it. The credit cards are becoming desperate with each pasisng year to increase profits. The new CARD Act eliminates a number of their more profitable practices. So, they will have to either come up with new ways to replace them or reduce their business.

Reduced business will result in many higher-risk card holders losing their accounts. Even lower-risk card holders may see credit lines cut, higher charges and fees, or higher minimum monthly payments, or yearly service fees. This will only get worse with time.

What Should You Do?

If you need to borrow (home, car, college, business), it’s best to do it as soon as possible. Take advantage of the opportunity while it is still there because there is a good chance it may not be in a year (or 2 or 3, etc.).

First, get your credit score. Find out what they are saying about you when getting a loan. This is critically important when getting credit.

Second, correct all the inacurrate information on your report. Fix old addresses, wrong names, and other contact information. Then, dispute any charges you see that are unfamiliar to you.

Third, get some credit monitoring. You will need this to track the corrections and disputes you made from the previous step.

This process takes some time. But, the sooner you do it, the sooner you can take advantage of the relatively stable credit conditions that exist today. Believe this… in 1 year, today will look like a credit paradise.

Be very careful when you read information like this. Credit is a very dangerous thing when you are using it as an income supplement. Given the current economic climate, it may be very tempting to try the approach described later. Just remember this, 2 years ago, the financial collapse was just beginning, the stock market was still rising, gas was $4 a gallon, and few knew about bank bailouts.

Secured Credit Cards.

Q:What exactly is a secured credit card? Do you just go to the bank, hand over 1000 dollars and say “I want a secured credit card for 1000 dollars?”

A: Exactly…but make it $500 and not $1000. Secured credit cards are for people who keep getting turned down for regular credit cards. If you can get a regular credit card to start just apply the same principles. Some people have problems controlling themselves. Folks who have cards in case of emergency see “AAAH! I am going on a date this weekend and I don’t have anything to wear! SWIPE.”

Banks do this because you are considered a risk. YOu haven’t shown you can be trusted, but, if you put up your own money as collateral then…you are no longer a risk. Ruining your credit is the #1 WAY TO NEVER EVER HAVING ANY CREDIT AND STAY BROKE FOREVER. You will pay double for things like a car or whatever. If something costs $20K, why pay $38K because you have bad credit?

Paying Your Monthly Bill.

Q:How does it work? Why not pay the entire bill every month and only pay 99% of it for a few months first?

A:You are proving that you can be trusted with credit. Paying only 99% of your bill shows that you can pay (it scares them if you aren’t being stupid with it).

Be stupid for a second. Don’t pay it all off. How much interest can they get off of $1? Not much. After a month to a few months of this…THEN start paying it off completely.

This is intended to not only increase your credit score. Paying off your credit card completely raises your credit score 20-30 points, so theoretically you can go from a 520 to a 600 in less than 6 months. This increases the amount they are willing to extend you in credit.

Once you get multiple credit cards in the mail, pick one without an annual fee and an interest rate in the teens. If one in the teens isn’t available, it is ok to pick one with a higher rate. Just remember to BE CAREFUL. You could pay $2000 when you only owed $700 if you are unable to pay the bill.

With them extending you more lines of credit, they are HOPING you are the typical SPEND SPEND type (let’s go to the mall!) that can allow them LEGALLY to make THOUSANDS off you paying the minimum payment on a maxed out card once you eventually get a REAL credit card. A maxed out $25,000 credit card with the person paying the minimum will get that company $13 THOUSAND off of that person. So, the person ended up paying $38,000 when they only owed $25.

Get it? It’s bad, isn’t it?

Credit Card Philosophy.

Credit cards are like Vegas. The house ALWAYS wins…unless you play smart. They expect you to put more on it than you can afford and then spend years and yeurs digging yourself out of debt.

Since Congress changed the bankruptcy laws, YOU STILL OWE WHAT YOU OWE WHEN YOU FILE BACKRUPTCY…or at least some of it.

It’s Not Free!

My wife’s cousin had $100,000 in credit card debt! Only a few people go in with a game plan and stick to it. Most people go in with a game plan…get offered a higher credit limit (“Hey, we’re increasing your limit to $2,500…now $15,000…now $25,000…SPEND IT SPEND IT SPEND IT.”) and the person uses it all.

What You Should Do.

What you are supposed to do is say, “That’s nice”. And keep doing what you are doing. Only put things on your card that you can pay off NOW. Just because your limit is $5000 doesn’t mean you spend $5000. Keep doing what you did before.

Don’t buy your girlfriend jewelry or even your mom. Do exactly what you did before. One gas fill up a month. Never charge more than you have in the bank to pay. One idea is to open a checking account and do online/automated telephone banking and move funds from your main account every time you use your credit card.

Remember, why pay $5,000 for something that costs $2000. It doesn’t make sense, does it?

Get A 700+ Score.

Stick to this. Pass it on. You will have a credit score of over 700+ in less than 2 years. Maybe about 6 months into it you will be offered a REAL credit card. Be careful of super high interest rates. It doesn’t make sense to pay $500 for something that costs $300, does it?

Watch out for yearly fees (don’t sign with a credit card company that makes you pay to have the card).

Paying Utilities with a Secured Credit Card.

Q:Should you have phone and internet bills paid by the secured credit card and then pay that every month too?

A: Those are small bills, so you could do that. As long as it is less than $100 and you can afford it, it’s fine. As I said, don’t put more on a credit card than you have in the bank. Don’t put stuff on a credit card because you don’t have any money and you want to keep your internet/phone. PUT NOTHING ON THE CARD THAT YOU DON’T HAVE IN THE BANK BY YOUR NEXT CHECK. If you lose your job, it is ok to let your phone, internet or TV/Cable get cut off rather than charging a bill you cannot pay to your credit card.

For instance, you can get your phone or cable or internet back when you get a new job. But if you just put those payments on your card and then stop paying your credit card because you can’t afford to pay it, your score can dip to what it was before you built credit. Plus, it will be harder to build back up. All the time you spent trying to build up your credit score will be wasted.

While it may have taken 2 months to get a new job, the year or so you wasted building up your credit is gone. You are back at a 520 score, or less!

Don’t Forget.

While this information may seem useful, remember that credit is a very fickle thing. It is true the time you spend building up a credit score and cleaning your credit reports has benefits today. But, developing a sustainable financial plan will last a lifetime. It will outlast any changes in credit or lending that the banks, financial institutions, and Federal government impose on so many borrowers.

If you choose to pursue the credit building strategy, use a good source for credit report information and credit monitoring.

The days of the credit score may be numbered. That is not to say it will happen tomorrow, next month, or next year. But, there is a possibility that it will come before you retire, before your kids are grown, or when you need regular medical care.

Throughout history, banking panics, crises, and failures have resulted in extended periods of reduced economic activity. During the past 100 years, this was often very localized, with certain areas being devastated while others left relatively untouched. Whether it was the Great Depression or the stagflation of the 1970s/1980s, the United States always had areas that were not as affected by the economic disruption.

How Did We Get Here?

After World War 2, the United States was in a unique position to benefit from the devastation of Europe, Japan, and Soviet Russia. It was a time where the country was the only industrial power able to produce the manufactured goods the world so desperately needed. While the rest of the world rebuilt itself, the United States companies supplied the materials and goods to get them back on their feet.

By 1970, the rest of the world had caught up to the United States. The country no longer had any competitive advantage and factories and plants began closing all over the country. Former industrial cities like Chattanooga, Cleveland, St. Louis, Baltimore, Detroit, Gary, and Flint began their slow descent into de-industrialization.

The Bank Economy.

As the producing power of the country declined, its financial power increased. The banks and financial industry began to take a more prominent role in the economy. With this, came increased access to credit and the demand for credit services to determine the creditworthiness of borrowers. The 1980s saw the rise of the credit score!

In an economy defined by one’s ability to borrow, rather than one’s ability to produce, a credit score takes on an importance not seen before in United States history. Where borrowing was limited to production activities and land, now borrowing includes entertainment and leisure, shopping at the mall, college, home equity loans, and even plastic surgery!

Have Debit Cards Tipped The Scale?

The availability of debt for discretionary, luxury, and personal expenses has created a tremendous demand for credit reporting services. The banks and other lenders rely on these scores to basically determine what standard of living you can expect to have. As mentioned before, it is unprecedented for lenders to have this much impact on the lives of an average American.

Once the debit card became available, it may have signalled a tipping point for credit availability in this country. Since the debit card is still a credit card (since it is drawing from the accounts of Mastercard or Visa and not directly from yours) and basically anyone with a checking account can get one, credit has extended to just about every aspect of daily life. This can not last.

Credit Scores Will Be Meaningless.

With so many relying on credit (credit & debit cards) to get through their day, they are extremely vulnerable to changes to their credit score. However, cedit scores, and ultimately lending, were never intended to be used to buy groceries, a movie ticket, or a new dress. It is intended for production (farming, manufacturing, trade) or land.

With such a misallocation of credit, it is inevitable that this current financial situation will end. Credit will become much harder to get and will be restricted to very specific purposes. In that environment, the credit score will be useless for many types of loans you take for granted today. This is certainly true if you don’t have any assets or collateral to secure it.

Use That Credit Score While You Can!

To avoid being caught when the credit score becomes less important in lending, first be sure that your ability to borrow today is not impeded. Check your credit reports and make sure to remove anything that is not appropriate. Do this while you still can.

Second, learn to avoid going into debt for food, clothing, fuel, and the other necessities of life. Credit should be reserved for very specific circumstances, such as a business or land purchase.

Third, when you do use credit be sure to use it for durable and long lasting purchases. For instance, a stove, refrigerator, or washing machine are good examples of long-term purchases that can be justified by debt.

Lastly, use the credit you have. It makes no sense hoarding credit lines or open accounts if you have no plan to use them. More than likely, when the time comes when you really need them, they will not be available. So, use it or lose it, because you will lose it eventually whether your credit score was good or not once the banks and financial institutions end this era of easy credit.

Given how critical credit has become in our everyday lives, it has become more important than ever to know what is in our credit file. This affects our credit reports, credit scores, and ultimately, access to credit.

Checking Bad Information.

Too often, the information found in a credit file is inaccurate, outdated, or unverified. This bad information is used against us in credit decisions, insurance, housing, and even employment. These are real reasons to make sure the information creditors, insurers, and potential employers see is accurate and up-to-date.

This priority of maintaining a current credit file has attraced credit reporting comapnies to offer credit monitoring services. These services do more than just give you a credit report. They are services that let you pull many credit reports during the year without any penalties for the inquiries. They monitor any changes to your credit file and send you alerts when new items appear.

The major credit monitoring services are provided by the 3 credit reporting agencies, Equifax, Experian, and TransUnion. There are also very popular services offered by Credit.com, FreeCreditReport.com, and many others.

Beware of the Auto-Bill.

Too often, you hear the complaint that a credit monitoring service is billing whether the customer wants the service or not. It is ironic that one of the reasons you want the service is to find and remove erroneous debt items on your report. Yet, the credit monitoring service you hire is the very cause of this problem.

One common solution to this is to use a debit card rather than a credit card when you purchase a service. If a service continues to bill after you’ve finished with the service, you can always cancel the debit card. Canceling a credit card can have a negative impact on your credit file, so using a debit card saves you this headache.

Credit.com’s Identity Guard.

Credit.com is not a credit reporting agency (CRA). However, it does offer credit scoring services and identity theft protection. Identity Guard is one of their services. Remember, just because a company is not a CRA, does not mean it can’t offer competitive services.

Identity Guard seems to be the standard for credit reporting services. Their report is very close to what the actual CRA’s report.

Equifax Score Power

The advantage of Score Power is that it is offered by Equifax. Since Equifax is a credit reporting agency, they have direct access to one of the three major credit scores you want to monitor.

The Score Power number is the Beacon score. This is Equifax’s version of the FICO score.

Score Power is one of the few monitoring services that notifies you of deletions. Well, it does it in a round-about way. Equifax Score Power notifies you when your score goes up or down. A notification stating your score went up, may or may not be due to the deletion though.

MyFICO

When you want to check your credit scores (not reports), MyFICO offers a comprehensive service for you. Their business is providing you with the credit scores you need to track your progress as you clean up your credit files, remove incorrect information, and delete negative items.

Take Advantage Of The Grace Period.

Almost all the credit monitoring and score providers offer a free-trial period. Take full advantage of that. Use it as an opportunity to determine what each service provides and whether it is giving you the information you want.

The basic cost to get started with these services is less than $20. So, you are not taking a big financial risk by trying them. Besides, if you use a debit card (credit cards are too easy to auto-bill), you give yourself a chance to get out of a service you no longer want.

What is a charge-off?

A “charge-off” is a balance owed that has been deemed a “loss” for accounting purposes in the creditor’s financial statements.

Consumers.

For consumer debt, government regulations REQUIRE a charge-off on an account after a specific period of delinquency. This is to keep the records of financial institutions realistic and healthy.

Let’s say if a credit card company claims it has a million dollars in business on its books. Their financial standing changes substantially if three-hundred thousand of that million is UNCOLLECTABLE.

Statistically, the longer a account is unpaid the less likely a recovery becomes. So, government regulations require a delinquent consumer credit account to be a charge off, loss, etc., after a certain amount of time.

Impact.

Obviously, a charge-off looks bad on your credit report. Your credit rating can be severely impacted by one. This is especially true for newer credit histories.

A charge-off stays on your credit report for up to 7 years. However, the effect on your credit score fades over time. Sometimes, it can be removed through various dispute/verification and other processes.

Do You Still Owe On A Charge-Off?

Generally, yes. The balance is still due and subject to collection attempts. This can be by the original creditor and/or a collection agency. A charge-off does not retire the debt. It simply is changed on the books of the creditor.

How can a charge-off be sold, if it’s worthless?

A charge-off is like a discounted asset. It is like an old piece of equipment that’s 7 years old. On the books, it may be worthless. Yet, it might still have significant value. If the creditor can find a buyer for that charge-off by collecting on it themselves or selling it to a debt buyer, they may do that.

Can a charge-off still have interest charges?

Yes, if the credit agreement allows it. If so, it’s usually at their default rate. But, if there’s a conflict with state law, they cannot. This only applies to the original creditor, not to a debt buyer.

A debt purchaser (JDB) may not have the legal right to charge interest on a charge-off. When facing a junk debt buyer demanding interest on an alleged debt, tell them to send you competent evidence of their legal right to do so. Ask for proof that the amount they claim has been determined in accordance with applicable state and federal laws. This is part of the debt validation (DV) process and they must provide evidence supporting their claim, on your request.

It seems the banks are still reducing their credit lines, into the first half of 2010. This means it will continue to be a challenge to get credit, whether your credit history is perfect or not.

In fact, now may be the best time to apply for credit. The banks will continue to reduce their exposure to borrowers over the course of the year. That will make it more and more difficult to get new credit lines or to increase existing ones. Either you won’t get a loan, they will ask for more security, or you will be charged a higher interest rate.

The Banks Need To Reduce Credit.

Since the housing bubble burst, the banks have been forced to reduce the amount of credit available. This is because housing prices have collapsed. People are no longer able to use their homes as an alternative source of income by accessing their equity. So, the banks are reducing credit to prevent borrowers from using loans to pay for their living costs.

The cuts don’t just target the most vulnerable borrowers. It is across the board and affects everyone. It doesn’t matter if you are a local government, a Fortune 500 company, or a private individual trying to make ends meet. Everyone will be facing higher borrowing costs as the year progresses.

Why Will Borrowing Costs Rise?

This is primarily due to the upcoming Social Security costs, military expenditures, health care reform, and bank bailouts. Individually, any one of these can raise the cost of credit for you and everyone else. But, together, they are an almost guarantee of higher costs for years to come.

As the government increases its borrowing to meet these demands, everyone will have to compete to get access to credit. Because of this, it can be argued that you should borrow today, rather than tomorrow to take advantage of the lower interest rates and more plentiful credit. So, if you are thinking about a new car, a new house, or college education, now may be the time to access the credit for them.

Before you decide to go into debt, to save on interest later, it helps to have a clear idea how you are being represented to potential creditors. Considering that most credit is long-term, it may be worth the effort to take a look at your credit reports before applying. You can almost be assured that inaccurate information on your report will be used against you to increase your costs to borrow.

Monitor Your Report.

The best way to track what is in your credit file is to do it yourself. Find your own tools and don’t rely on “specialists” to do it for you. Only one person is in the best position to contact the credit reporting agencies, creditors, and the attorney general, and that is you.

A few resources to try, that are popular with those who monitor their own credit are…

MyFICO Credit Scores,
Equifax Credit Watch, and
Credit.com Bureau Watch.

Each of these will let you access and monitor your credit reports, send you updates, and give you a chance to correct information before you apply for credit.

There are businesses that offer to help solve your debt problems. While it may seem to be a reasonable solution for unmanageable bills, be careful. First, check with the web, look at forums, do a search with the business name and the keywords scam, complaint, fraud, or lawsuit. Call the local consumer protection agency or the Better Business Bureau where the company is located.

Debt Relief.

Businesses that offer to help you with your debts may only be offering to help you with bankruptcy.

With consumer debt at an all-time high, many are filing for bankruptcy. An illness, unemployment, or overspending can leave you with what seems to be overwhelming debt. While you try to get solvent, be careful with ads offering seemingly quick fixes.

Deceptive Ads.

Be alert when reading ads in newspapers, magazines, or telephone directories with the followng…

“Consolidate your bills into 1 monthly payment without borrowing.”
“STOP credit harassment, tax levies, foreclosures, repossessions, and garnishments.”
“Keep Your Property”
“Wipe out all your debts! Consolidate your bills today! How? Just use the protection and assistance provided by federal law. For once, the law works for you!”

The Truth of These Ads.

While many ads promote the promise of debt relief, rarely do they say relief may be b-a-n-k-r-u-p-t-c-y. While bankruptcy is just one option for confronting financial problems, it’s generally seen as the option of last resort.

Bankruptcy has a long-term negative impact on your ability to get credit. A bankruptcy remains on your credit report for 10 years. It can hinder your ability to get credit, a job, insurance, or even find a place to live. Plus, it can cost you attorneys’ fees.

Advance-Fee Loan Scams.

The typical target of the advance-free loan scam is consumers with bad credit problems or no credit. For an up-front fee, these businesses “guarantee” applicants get the credit they want. Usually, it is a credit card or personal loan.

An up-front fee can be as much as several hundred dollars. Resist advance-fee loan guarantees. They could be illegal. Generally, legitimate creditors extend credit, such as credit cards, loans, and mortgages through telemarketing. They require an advance application fee or appraisal fee.

Legitimate creditors NEVER guarantee in advance you’ll get credit. Under the federal Telemarketing Sales Rule, a seller or telemarketer guaranteeing or representing a high likelihood of getting a loan or other extension of credit may not ask nor receive payment until you get the loan.

How Do You Identify an Advance-Fee Loan Scam?

Advance-fee loan ads often appear in local and national newspapers and magazines. You will find them in the classified ad section. They may appear in the mail, you may hear them on the radio, or on local cable stations.

Avoiding the Law.

Often, advance-fee loan ads feature “900″ numbers. You get charged just to call them! These companies often use overnight or courier services. This is to avoid being caught and prosecuted by postal authorities.

They Will Try To Confuse You.

It’s easy to confuse legitimate credit offers with advance-fee loan scams. Generally, a credit offer from a bank, savings and loan, or mortgage broker requires verbal or written acceptance of the loan or credit. Usually, the offer is subject to a credit check after you apply. This is to be sure you meet their credit standards. Typically, they do not require you to pay a fee to get credit.

Hang up when anyone says they can guarantee you a loan if you pay in advance. It’s against the law.

Protect Yourself.

Most legitimate lenders do not “guarantee” you a loan or credit card before you apply. This is especially true if you have bad credit, or a bankruptcy.

For reputable lenders, it is accepted and common practice to require you to pay for a credit report or appraisal. This includes paying a processing or application fee.

When on the telephone, never give credit card account numbers, bank account information, or your Social Security number. The only exception is if you know the company and why the information is needed.

Credit Repair Scams.

Be cautious of anyone offering credit repair services. They all say the same things:

“Credit problems? No problem!”

“We can erase your bad credit. It is 100% guaranteed.”

“Create a new credit identity and legally.”

“We remove your bankruptcies, judgments, liens, and bad loans from your credit report forever!”

Save yourself the aggravation. Don’t believe the claims. They are all false. It takes time, a determined effort, and a plan to repay debt to improve your credit report.

The Warning Signs.

If you respond to an offer to repair credit, think again. Don’t do business with them when they…

want you to buy credit repair services before any are provided;
they do not tell you what your legal rights are and what you can do yourself — for free;
recommend you avoid a consumer reporting agency;
suggest you invent a “new” credit report by getting an Employer Identification Number instead of using your Social Security number;
advise disputing everything in your credit report; or,
take suspicious actions (it looks illegal), such as creating a new credit identity.

If you do something illegal, based on bad advice or commit fraud, you may be subject to prosecution. This includes charges and prosecution for mail or wire fraud. Do not use the mail or telephone to provide false information when you apply for credit.

It is a federal crime when you

• make false statements on a loan or credit application,
• misrepresent your Social Security number, and
• obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.

Credit Repair Organizations Act.

This law states credit repair companies must provide a copy of the “Consumer Credit File Rights Under State and Federal Law” before you enter a contract with them. They must provide a written contract showing your rights and obligations. Read these documents CAREFULLY before signing a contract. The law provides specific consumer protections.

Credit repair companies cannot:

• make false claims about their services,
• charge until they have completed promised services,
• perform services until you sign a written contract and complete a 3-day waiting period.

During the 3-day waiting period, you can cancel your contract without paying any fees.

Your contract must show:

• the total cost of the services,
• a detailed description of services to be performed,
• how long it takes to achieve results,
• any “guarantees” offered,
• the company name and business address.

Make A Complaint.

If you have a problem with any scam, contact your local consumer protection agency, state Attorney General, or Better Business Bureau. Many attorney generals have toll-free numbers. Check your local directory assistance for them.

Look at where I started. There were 6 credit cards. The balances were Providian at $1925, 3 Capital One cards at $300 each, one from First Premier Bank for $300, and one with Household Bank for $500.

Capital One is terrible. But, as bad as they are, First Premier Bank is worse! Don’t just walk away from First Premier, RUN!

How Bad Can It Be?

You wouldn’t believe how bad my credit was. But, let me give you some details.

I had an American General Loan account. It was closed for being 120 days late. This was reported to all 3 credit reporting agencies.

My first Capital One credit card had a $700 limit. It was closed after being 150 days late! Here, I closed it, rather than the credit card company.

Capitol One closed my second credit card, which had a $500 limit. It was 30 days late… 6 times!

The third Capital one credit card was just like the first. It had a $700 limit. They closed it for being 150 days late.

I had a First Hawaiian Bank Yes Check account, with overdraft protection. It was closed for being 30 days late.

The First Premier Bank credit card had a $300 limit. It is still open with 2, 30 day late negative reports.

The second First Premier Bank credit card had a $450 limit. It was closed for being 60 days late

The third First Premier Bank credit card had a $600 limit. It was closed for being 30 days late. Only TransUnion shows this one. I have no idea how this account is on my report.

There is a Military Star Card. It is a department store card. They did a charge-off of the $3125 balance. This account is still open.

There is a NEX Card. This is a Navy Department store card. The account had a CHARGE OFF of the $3816 balance. On Equifax and TransUnion, they list the account as open. It was closed on Experian.

I had a run-in with NCO Financial. They have a collection Account for $1286 for Verizon wireless.

Providian reported me as 30 days late. Experian has me 30 days late 6 times!!

Vericheck reports a returned check that only shows on Equifax.

Another Vericheck report. They claimed another returned Check, that only shows on Equifax.

Verizon Wireless account was a CHARGE-OFF for the $1286 balance from NCO Financial.

My VW Credit was a car loan. It is closed, but is listed as open on TransUnion, with 2 30 day late payments.

That is a lot of stuff and should give you some idea of my starting point.

How It Started.

My credit history was not good, to say the least. It took a lot of work to fix. So, here is my story.

Divorce.

I had a divorce 10 years ago. Being in the military, I told my ex-wife she could have everything. The only things I wanted were the car, the computer, and the entertainment center with everything in it.

The rest was hers. The problem was I still had to pay for some of that stuff. As a single military guy, I made less $$ than married guys. But, the bills were still the same. That made me get a second job, while on active duty. It was a security guard job that made a little extra while working like a dog.

Being Young.

Being newly single and young, I wasted a lot of paychecks on wants but not on needs. Partying and spending with the other single guys did not help.

Bill payments started getting missed. I didn’t care about paying a bill late. I would just “double up” the next month! Soon after that, I applied for more credit. You know what HAVING good credit means. Yet, you don’t really appreciate the importance of KEEPING good credit. After one-too-many denial letters, I realized my credit was in really bad shape.

So It Begins.

When I first researched how to repair my credit, it seemed a lot of people were using Equifax Credit Watch Gold 3-in-1. So, I followed the successful and joined too!

It lets me do daily monitoring of my credit report. Next was getting a copy of my credit report from each credit reporting agency. Talk about being floored by what I saw on it!

Finally, I got my FICO score, to track my success/failures. All this took one day. The next week was spent developing my plan of attack while doing more research.

Steps To Success.

The first step was easy and that was to OPT OUT. Next, dispute all names and addresses. It looked trivial, at first. I WANTED THOSE BADDIES REMOVED! It is one of THE most important things you need to do. With bad addresses and misspelled names gone from your credit report, it’s one less thing the CRA can use to list negative items.

The Correct Address.

I called to have the address and names removed. Normally, this is a no-no. But, it worked most of the time. My focus was clear when I called and spoke to the customer service representative at the 3 credit reporting agencies. Remove it!

The call would simply say that while looking at my credit report online, I noticed some names were misspelled, or my home address was not correct. It was all true. If there was a misspelling, or anything different from my real address, it was NOT MINE!

Here’s an example. Let’s say you live at 1450 Huron lane. The credit report says 145 Huron Lane or 1450 Hurun Lane. I don’t get mail at those addresses, therefore they are NOT MINE.

During this time, I was in Iraq. So, phone calls worked best for me. I got all names corrected, an erroneous SSN removed, and about 12 addresses (give or take 1 or 2) removed from each credit report.

Using the Mail.

After the phone calls, I prepared a Certified Return Receipt letter. This is done as a followup, to remove the remaining addresses. It took only 2 weeks to get most of the information removed and corrected. Experian was a pain. They only removed a few addresses, that are there to this day. Equifax and TransUnion deleted everything except my current home addresses (home and military).

Disputing the TRADELINES.

With my initial success, I had the confidence to attack the actual negative credit items. I sent a letter to each reporting agency that disputed every negative item on each credit report.

Plus, I sent a letter to…

NCO;
Vericheck;
Verizon Wireless (it was a pay for deletion, goodwill letter); and,
NEX (a goodwill letter for a pay for deletion).

3 weeks later…

NCO went bankrupt, so it was removed from all 3 credit reports.
Vericheck me a letter asking for $35. It was paid and the item was deleted.
First Hawaiian Bank is current with no late payments.
NEX sent a pay for deletion contract.
Verizon Wireless sent a letter to make arrangements. It was paid and deleted.

The Big Payoff.

My total credit when I started was $3625.
After all the credit repair work, it is now $38,425.

Not bad for writing some letters, making some phone calls, and being persistent.