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Alliance One: When the FDCPA Doesn’t Apply

Alliance OneGovernment debts do not fall under consumer protection laws – unpaid parking tickets, traffic fines, student loans, and other debts can crop up from time to time. However, if you are late paying the debt and it is turned over to Alliance One, you will likely have little recourse other than to deal with the collection agency.

This is because Alliance One often operates directly within the courthouse itself – meaning that you won’t be able to clear your record and get your driver’s license reinstated unless you deal with the collection agency. Partial payments are almost never accepted in this instance, so you could end up having to pay hundreds of dollars to get your driving privileges reinstated.

To be clear, Alliance One does not own the debt in these instances. More often than not, the local courts contract with Alliance One to have them handle all debt collection for the city. So what often happens is that the debt collection agency will oper
ate right inside the courthouse, and you will be directed there by all court personnel when you have past due payments.

Because government debt does not fall under the Fair Debt Collection Practices Act, it is perfectly legal for Alliance One to hold your driver’s license “hostage” until the total amount of the fines has been paid in full. Additionally, there are often penalty fees for late payment that increase the amount you are required to pay in order to have your license reinstated.

What to Do about Alliance One Debts

The best course of action when dealing with government debts is to work with the system – most states have payment plans for fines, or allow you to work off the debt in some other way if you just can’t afford to pay.

Once Alliance One is handling the debt, often the only recourse is to pay in full – however, you might still try speaking to someone at the DMV or courts about your particular situation to see if they can help.

What if the Debt Isn’t Mine?

If you are being held responsible for a parking ticket or traffic fine that does not belong to you, you don’t have to pay – even if the debt has gone to Alliance One or another collection agency. What you do need to do is get in touch with someone in the court system who can verify your claims.
Once you have been cleared of the debt, make sure it’s removed from your credit reports. File a dispute with the credit bureaus and supply a copy of any paperwork you have that clears your name. This should ensure that the Alliance Once collection account does not remain on your credit reports.


Alliance One is NOT Above the Law

Alliance One does handle some consumer debts – and we should be very clear, it is the type of debt you have, and not Alliance One, that determines whether or not the Fair Debt Collection Practices Act applies. If you have consumer debt of any kind that has been turned over to Alliance One, you are still afforded the same protections under the FDCPA, regardless of the collection agency that owns the debt.

In the case of consumer debt, don’t let Alliance One bully you into paying on a debt that you don’t owe. Take full advantage of the protections afforded under the law and dispute any unfair debt collection practices.



AFNI Inc. How to Avoid Unfair Debt Collection Practices

AFNI Inc.AFNI Inc. is one of the most well-known debt collection agencies in the United States and their debt collection practices have been anything but ethical in the past. If you’ve received a collection letter or telephone call from AFNI, you should be prepared to exercise your rights as a consumer to make sure that the debt in question is legitimate.

AFNI Inc. and Unfair Debt Collection Practices


In the past, AFNI Inc. has been convicted of many types of unscrupulous debt collection practices. They have attempted to collect debts that consumers did not owe, and they have attempted to collect debts with excessive (and illegal) fees added on to the original balance.

Because these debts are often many years old, unsuspecting consumers paid just to make the debt “go away” instead of standing up for their rights. Unfortunately, when people pay for debts that they don’t owe, it only encourages collection agencies like AFNI to continue their scamming efforts.

If possible, you should contact the original creditor directly in order to confirm or validate a debt. You should do this before admitting to owing any debt to AFNI or any other debt collector or collection agency. If the original creditor can’t validate the debt, chances are good that AFNI will not be able to do so either – and this means that you do not have to pay.

If you can’t get in touch with the original creditor, your first step in protecting your rights when contacted by AFNI Inc. is to request debt validation. Specifically, you want to send them a debt validation letter requesting that they validate the debt by providing specific information such as the account number, the amount owed, and any contracts that you signed with the original creditor.

Additionally, you should ask for proof that AFNI is authorized to collect the debt on the original creditor’s behalf – this is a good practice when dealing with any collection agency, but it is especially important when dealing companies like AFNI, who have already been found guilty of violating consumer rights and the Fair Debt Collection Practices Act (FDCPA).

AFNI Inc. – Protecting Yourself from Unscrupulous Debt Collection Agencies


If AFNI can’t provide proof that you owe the debt within 30 days and if they aren’t authorized to collect that debt, then legally they cannot place any derogatory information on your credit report. So your next step is to check all three of your credit reports (read more here) and dispute any negative information that AFNI has placed in your credit file.

You want to be certain that these negative items are removed as soon as possible – if AFNI confirms that the information is correct without providing you with any validation information, they are in violation of federal law and you should contact the FTC.

In general, if there is no debt validation, then the matter will end there. But what if AFNI does confirm that you owe the debt and they are authorized to collect? Well, the next step in that instance is to see whether or not they can legally collect the debt based on the age of the account.

Each state varies on the statute of limitations for collecting on a debt – anywhere from 4 to 7 years is typical. Once you know the statute of limitations on the debt, you will know if AFNI has any recourse to collecting the debt – if the statute of limitations is past, they cannot sue you, and if you request in writing that they stop contacting you about the debt, they must comply.

Additionally, debts past the reporting limit – typically 7 years for most debts – cannot legally be reported on your credit report. So be certain to watch any debts that may be past the statute of limitations for collecting the debt, but not past the reporting limit. You want to be sure those negative items are handled properly and removed after the required time has passed.

AFNI Inc. – Play it Safe


If you are easily intimidated by debt collection agencies, you may have better luck dealing with a professional credit repair agency that will speak with them on your behalf. In this way, you have a professional that knows every facet of consumer law working for you, and you no longer have to deal with harassing phone calls and letters.

Whichever approach works best for you, be sure to follow up consistently – collection agencies such as AFNI Inc. count on most consumers to be uneducated when it comes to their rights. By staying informed and working to be sure that the appropriate laws are upheld, you’ll never have to pay money for a debt that you don’t owe.

Are Credit Repair Lawyers Necessary?

Credit Repair AttorneyFor most consumers, choosing between credit repair lawyers and a credit repair service seems like too much work, especially when working with a reputable credit repair company is usually enough to help improve their credit scores. However, lawyers provide essential services to consumers who have had their rights violated by creditors and credit reporting companies.

For this week’s Fact Check, we look at what credit repair attorneys have to offer in comparison to credit repair companies, and what you should look for in choosing your own specialist lawyer to represent your case.

Credit Repair Lawyers: Do I Need One?


Myth: Credit repair companies and credit repair lawyers are interchangeable. Both offer the same services and benefits.

Fact: The biggest benefit to expert lawyers is that they can help you to recover money that you are owed as a result of violations in consumer law.

For example, if a debt collector threatens to sue you or garnish your wages as a scare tactic (or threatens to garnish wages in a state where that isn’t allowed) you could be owed monetary damages, if you sue the debt collector.

Lawyers help you to understand your rights in these instances, and can help you to build your case against unscrupulous debt collectors. Furthermore, they will often represent you in court “on contingency” – meaning that they don’t get paid unless they are able to recover money on your behalf.

Do They Really Make a Difference?


Myth: You don’t need a lawyer to recover damages for violations to your consumer rights. It’s easy to sue and win.

Fact:  Lawyers are experts in consumer law and in the inner workings of the court system. Unless you’ve spent a lot of time in litigation before, it’s best to have a lawyer to represent you.

Consumer laws are there for your protection, and there are consequences to debt collectors and credit reporting agencies if they don’t abide by those laws. However, most consumers aren’t aware of the nuances of those laws or what is required to provide proof of a violation.

Lawyers can help to clear up any misconceptions you might have. They’ll also be able to tell you exactly what you need to do in order to be able to prove your case in a court of law. Unscrupulous debt collectors will likely have no problem lying in court – and without proof it will just be your word against theirs.

However, most debt collection agencies don’t want to go up against professional credit repair lawyer and may decide to settle. Even if they don’t, if your case is solid, you can expect to recover damages as well as attorney’s fees, so you don’t need to worry about payment.

How Do I Choose?


Myth: Any lawyer can handle a case involving consumer credit law violations. There are only a few laws on the books about consumer protection, so I don’t really need a specialist.

Fact: No matter what kind of legal issue you face, it’s always better to have someone who specializes in that area, and consumer law is no exception.

Having a lawyer means not only having a specialist that understands consumer law as well as the precedent for how the laws have been applied in the past is essential. Even if only one or two laws apply to your case, lawyers will be able to tell you how courts have ruled in the past, what types of evidence are most likely to be accepted, and what you can expect in the court itself.

Choosing the right credit repair lawyer means finding one who:

  • Specializes in consumer law only
  • Is licensed to practice in your state
  • Has a reputation for successful case outcomes
  • Can offer to represent you on contingency
  • Keeps abreast of the latest changes in consumer credit laws

By putting together the right combination of skill, affordability and experience, you will have a better opportunity to recover monetary damages when debt collectors don’t abide by the rules. Credit repair lawyers, like Lexington Law Firm, may offer similar services to credit repair companies in some ways, but when it comes to litigation and recovering money you are owed, the difference is clear – lawyers are necessary and needed for your own protection.

Four Practical Debt Free Solutions

Four Practical Debt Free SolutionsIf you are in debt for many years,you should know that there is no easy way to reach debt free in a short time. It may take some time for you to become debt free and get your finances under control again. No one can tell the exactly time, maybe several months,or it may take several years, however, the good part is that if you keep reducing your debt step by step, you can clear off your debt.
Today I show you four effective ways to debt free: 

Getting yourself credit counseling

Once you decide to get your debt cleared off, finding credit counseling is an important step you should take.
In fact, you can find many credit counseling companies out there, like Sky Blue Credit, which are much willing to help you out. However,the service quality is different from company to company, before sign up with one company,you’d better look up them carefully.
So you need to compare both their debt free plan for you and the charge fees.You should follow those who offer you detailed debt free plans and those who charges your reasonable fees.Reports show that these companies are reliable.
If you know some professional credit counselors,it is also a good idea to ask them for suggestions. They may be able to offer you a good debt free plan at no or very little cost. So far as I know,some of nonprofit organizations and government agencies do provide credit counseling, which you should check out before an official purchase.

Taking a Debt Consolidation Loan

I am not sure that how much you know about the debt consolidation loan,actually,we have several post in this blog about this section early before. Debt consolidation loan can help your reduce debt cost by remove high interest rate credit cards to a lower interest rate credit cards. There are many companies on the street which can offer you debt consolidation loans, however, you need to pay for some fees for an application, such an application does not require a credit card. Make sure to avoid any scams too as there are unfortunately many operating. 

Refinancing your home

If you find that your mortgage interest rates is rising,you should consider refinance your home, which can help you save several hundreds of dollars in your monthly mortgage repayment. From the new mortgage plan you can save some excess money which can help you to lower your debt.

Cashing Out

Instead of the refinance home,you can choose cash out if you have enough equity with your home. Then you can use the money to pay off your debt.In that case, you can reduce your tax obligation and debt.
What I have showed above are four useful strategies for debt,you can use them and they can help you to reach debt free.

How To Fix Your Credit Score

How To Fix Your Credit ScoreYou maybe asking yourself the question "how do I fix my credit score?". There are several answers to this a question and if one can apply the best practices you will find the that it doesn't take too much effort to fix your bad credit rating. 

After how many times, you check your credit report?

Credit reviews are your good points and bad points since they are given by the people who are/was your lenders.

There are cases, in which lenders knowingly submitted wrong feedback about the history of payment of a person. In that case, Person had to face a lot of problems. It is that is why very essential for a person to do a regular check on his credit account reports and see if there is any other information that is inaccurate.

In other words, repairing a bad credit score is very similar to losing weight. It takes time but eventually it happens. These scores are the most important factors that play a pivotal role in deciding what amount you can handle easily and how much interest rate is good for you to pay back the lend amount.

The better the score, the big the loan you can achieve with low-interest rate and that surely can save your lot of money, in some cases thousands of dollars. Trust is very important for a creditor and a lender. And credit scores are the only tests which results allows the lender to check your knowledge. One can purchase shops, apartments, heavy machinery and other large buying with the help of good credit score while the person with low credit score can only wish these things.

It is kind of disappointing that your financial acceptance of loans depends upon these numbers. At the end of the day, it’s just a number that can eventually make a big difference in the amount you will pay later on.

There may be a problem, owing to which consumer wasn’t able to pay the amount on time, once in a lifetime. But those bad credits will add into all his other credit points and affect his loan bearings.

It is important to note that this showcases your creditworthiness and ability to always keep an eye on the scores you get from your lenders. Because even 10, 20 points can make a huge difference. For instance, A person with a score of 560 can get a loan at 5.3% interest for 30 years of the mortgage, but at the same time, a person with credit points 580 can get a loan on 4.7% of interest rate and the duration will be same.

But 4.7% interest rate means that he’ll pay $1000 less than the other person every year and will save $30,000 with the difference of just those 20 points. Now, this is something really worth mentioning.

The best advice one can provide you is to re-establish your credit score if that has weakened. 

Here are the few tips that can help you in fixing your credit.


Ask for Your Credit Report

You can repair when you know the extent of problem you’re in.
One must need to ask for the report from the institution that is responsible for providing you with that under the act of Fair and Accurate Transactions. You don’t need to pay for that when you can actually get a free report from your company for your assistance.

Your report will contain all that essential data which is required to assess your credit score, and it may contain several errors as well. You need to see if there is any entry that is wrong mentioned or needs correction, especially on late payments.

If everything is okay there, then you can judge yourself well, but if there’s any problem, then you must report to the bureau that is responsible for the judgment of your credit.


Check Your Reports Closely

There needs to be a consideration on the thing that your credit reports are backed by the organizations; you have an account with them. The motive here is not to remove the errors but to find the error if they exist, and then do a kind of debugging on them.

A correct report will definitely provide a right perspective of you to others while a report with malfunctions will create an adverse image of you on the viewers. Reviewing reports such can help you indeed in discovering those threats against you. Although credit reports differ in the formal presentation of the information, here’s a list of points that are most common in all.
  1. Personal Identity: It consists of the address, employment history, name and social security number.
  2. Types of Account: Whether you have revolving, installment, joint or other accounts. It also includes credit limit.
  3. Collections: It makes sure if any of the accounts went to collections.
  4. Public Records: It saves all the data that describes your public obligations regarding finance.
  5. Consumer Statement: Is there any statement by you in which you have disagreed with your lender’s opinion on you.
  6. Heavy credit inquiries: It consumes the information about the credit or service you applied.
  7. Light credit inquiries: It shares the requests by the lender or by the person itself for the acquisition of credit report.

Set Reminder for your Payments

One must be aware of the fact that payments should be submitted on time because they are the biggest contributing factors to your credit scores. Some banks will text you and send you reminders timely to make you aware of the obligations you’re supposed to fulfill. They also provide you with the facility of automatically paying your loan payments from your account or credit card.


Don’t Burden Yourself with A Lot of Loans

The easiest way to get out from the trap is to never fall in the trap. Try your best to keep your credit score as good as possible. This is one achievement you can achieve. Check the amount to see how much you owe to whom.

Your credit report can help you in this regard. Come up with a plan that includes the payments you own to people and try to cover those who are of high interest.


See If There’s Any Missed Payment

Your payments history makes up most of your payments so make sure to check if there is any payment that you missed.

Pay that amount first. Because late payments are obviously going to damage your credit score. Talk to your lender if your record doesn’t show your payment. It can help to clear the inaccuracy before letting them impact on your credit rating.

There may be a situation when a lender fails to mention the payment in your record. A person can also forget sometimes due to the other atrocities of the world.

Life is busy now a day, and one cannot remember everything. From lender to the customer, you should expect the mistakes. 


Discussion on Incorrect Data

The errors on your credit report can be very costly, but you can argue on correct information in several ways. Your lender can give a hand to you If you call him and get him aware of the problem that you’re facing.

The lender is the one, who should then contact the credit bureaus for the rejuvenation in the payments score which can help improve your credit rating. In most cases, you are asked to contact only one loan bureau to dispute an account with your help.

They will inquire from your lender about the response that can give and will guide you accordingly.

But what if your dispute does not get resolved?

Well in that regard you have the authority to write a separate note which is known as a statement of dispute.

This consists of the reasons why according to your information is incorrect. The statement will remain with your reports for two years, and people who are granted permission can see that anytime.



Wait Until Your Dispute Gets the Solution

When you feel like you need to get an incorrect information correct. Contacting credit bureau will allow you to interact with the lender. Now say lender fails to answer within 30-45 days, the bureau will remove that incorrect information and will notify you as well of the result of that removal. This will save your credit scores and help in improving them.

To put all in a nutshell, closing an account won’t minimize your troubles because it is going to show up on your credit report and may also consist of a score. Rebuilding your credit score is mostly dependable on the errors in your account rather than your credit history.

All you need to accomplish is follow the guidelines that are discussed above and remain consistent and responsible in maintaining your good credit history.

It will take time and patience if you’re willing to raise your credit score. Also, no one has magic stick through which you can turn all your bad points into good ones.
To keep yourself in the race of a good creditor, you need to follow the tips with patiently, and rest will take care of it.

How To Rebuild Your Credit Rating

Rebuilding Your Credit RatingIf you're struggling with debt because of a bankruptcy, collection account, judgment, liens, foreclosure, or legal action there are steps you can take to rebuild your bad credit. The first step is to make sure you credit reports are accurate. Then, rebuild credit by adding positive information to your credit report. Creditors like to see evidence of stability, so if any of the following information is not in your credit report, send it to the bureaus and ask that it be added: your current employment, your previous employment especially your current residence, your telephone number especially if it's unlisted and your date of birth, The credit bureaus doesn't have to add these, but often will. A vital part of rebuilding credit is formulating a strategy to open and pay off different kinds of accounts, this is better than adding more debt to an existing account.


Pay off your debts

Repair credit by removing as many bad credit remarks as possible. Start with the public records section of your credit report and works towards removing and paying off any bankruptcy, lien or judgments against you. Next, you should pay off any outstanding credit card balances.


Open a savings account

The best way to manage your money and start to improve credit is to save as much as you possible. Open a savings account. This can be used as collateral for a bad credit loan if needed.


Get a credit card

When you are trying to rebuild credit from previous problems you will need some sort of credit card with a good payment record, to give you a good credit rating. Try and get a credit card from a reputable company like MasterCard or Visa. It is better to have an account with a low credit line than to not have a credit card at all. If payments are made as agreed, you usually can increase your credit line.


Get a secured credit card

With bad credit there is still a chance you will be approved for a traditional credit card. There are some credit card companies that cater specifically to people with bad credit. If your credit is extremely poor you might find it near impossible to get one of these cards. If you find yourself in this situation, a secured credit card will be a great option to help rebuild your bad credit.

With a secured credit card, you don't actually receive a line of credit. Instead, you send money to the credit card company ahead of time. This money functions as cash collateral against you defaulting on your payments. It is important to keep in mind that a secured card is a credit card, not a debit card. If full payments are not made each month, then interest is charged on the outstanding balance. Many secured cards also offer guaranteed approval, regardless of poor credit history, credit score, or other negative marks. It's a good idea to make sure your credit information is going to be reported to the three credit reporting agencies, which include TransUnion, Experian, and Equifax. If the information is not reported to at least one of the credit reporting agencies it does not help you to rebuild your bad credit file.

A secured credit card is a great vehicle for someone with bad credit but it must be used responsibly. Always pay your bill on time and do not charge purchases you can't afford. Using it a few times a month for small purchases is a good way to rebuild your credit payment history.


Apply for gas cards or a department store credit card

Gas cards and department store credit cards are relatively easy to get because they usually offer low credit limits but have high interest rates. Remember to pay your bill in full every month to show that you can pay your bills responsibly. This will help to rebuild your bad credit.


Get a co-signer

Ask a relative or friend who has good credit to co-sign a loan. Having a co-signer can allow you to qualify for loans you might not otherwise get. The loan will show up on your credit report and, if you pay it off responsibly, will help rebuild your credit. If you default, you won't be the only one who suffers. The co-signer has basically promised to make good on this account, so any delinquencies will show up on their credit report.

It is important to be aware of how you handle your credit cards so you do not wind up with bad credit again. You need to manage your credit responsibly so you credit score will improve. You should continually monitor your payment history on your credit report. With punctual payments and a little patience you should be able to rebuild your credit.

If you are suffering from bad credit and need a loan you should consider getting a bad credit loan. These are loans that are made for people with a bad credit history. Not every lender offers these loans. So you might need to search for lenders who are willing to offer these loans.

Going Through a Divorce? What You Need to Know to Protect Your Credit History

Protecting Your Credit History During a Divorce We all know the statistics; half of all marriages end in divorce. Whether the circumstances that brought your marriage to an end are tragic, dramatic or even amicable – it can be a critical time financially.  At a time of deep emotional heartbreak and devastation the easiest thing that can happen is that you neglect or avoid protecting your finances directly, and ultimately harm your credit score, not to mention your future financial well-being.

Typically, filing for divorce itself, does not affect your credit score the way a small claims or civil court judgment or bankruptcy can; rather, it’s the handling of the shared debt and joint accounts that can make a dramatic difference in your credit score and your credit history, if handled poorly.

According to the FTC, it’s important to pay special attention to your joint accounts and make sure they’re paid on time every time during the divorce process. The law states that a creditor does not immediately have to close or convert accounts because of a change of marital status; however, a request from either account holder can accomplish this easily. 

Some lenders may even have you make your request in writing. In some instances, creditors can have you reapply for an individual credit account and based on the application information extend or deny you credit.  With home equity loans or mortgages, lenders may require you to refinance to remove a spouse from the responsibility of paying the loan.

The bottom line is that creditors and lenders don’t care about the specifics of your divorce settlement. It falls on both parties to fulfill their financial responsibility if the account is in both your names, which means if one partner defaults on payments; the other partner is legally liable for the debt.

Bankrate.com recommends you do the following to protect your credit history and maintain an unblemished credit score:
  1. Check your credit score with all three major credit bureaus (read more).  Basically reviewing your credit report with all three credit bureaus will alert you to any joint accounts or debt that may have been neglected. You’ll also have a better idea of which shared accounts and loans need to be closed.
  2. Open credit accounts in your name only. Obtain individual credit accounts especially if you have not had sufficient time to build your own credit.  If done before the divorce is legally decreed, it will not only help you avoid accruing shared debt, but make it easier for you to get credit cards,  and bank accounts in your name while married and still sharing joint assets, such as credit cards and car loans. That being said, it’s also important to keep those payments to shared accounts you don’t close current.
  3. Call creditors to close joint accounts or accounts where your spouse is an authorized user. Closing joint accounts can protect your assets in the future, not to mention your credit score.
  4. Be mindful that the loan or credit account will still need to be paid off even if it’s in a closed status. This is where keeping a close eye on debts by using credit reports can be useful. Some financial advisors may recommend that you enlist the help of a credit monitoring service.  All three credit bureaus; Experian, Equifax and TransUnion, have a fee-based service that can automatically notify you in the event of changes to your credit.
  5. Close joint memberships including gym memberships or video rentals. These accounts can be reported to any of the three credit bureaus if you or your ex-spouse should fall behind in your payments. Learn how to avoid the small factors that can hurt your credit score.
  6. Document all letters to creditors asking for joint or shared accounts to be closed.  Also document any credit accounts or loans you open in your name.
  7. Assess your financial picture by requesting all three credit reports after the divorce is final to review any possible overlooked accounts.

Four Tips for Avoiding Credit Repair Scams

Four Tips for Avoiding Credit Repair ScamsYou have likely heard several times in your life the adage, “If it sounds to good to be true, it probably is.” You can be assured those words of wisdom apply to avoiding credit repair scams. Unfortunately, however, some unscrupulous persons seek to take advantage of people who are vulnerable because they are faced with the need to rebuild their creditworthiness, which can be emotionally taxing.

After all, the information in one’s credit report can affect the ability to get a loan or insurance, and how much you have to pay for them, as well as the ability to be hired for some jobs. While someone with a less-than-desirable credit rating certainly can be hopeful that repairs can be made, the process does takes time and discipline.


Steer Clear of Outrageous Claims

Do not use the services of any company that tells you restoring your creditworthiness is “no problem,” that your bad credit can be “erased,” or other similar claims that simply do not reflect reality, the Federal Trade Commission (FTC) states. If the negative information on your credit report is accurate and current, no one can remove it; it must stay there for a required amount of time.


Remember that Reputable Firms Educate Prospective Clients


The first action a legitimate, well-meaning credit-repair firm will take is to inform you that credit repair is something you can do on your own, if you have the time, dedication, and discipline; and that credit reports are available to inform you of the data in your credit history that new potential creditors, insurance companies, or employers can see if you seek to do business with, or work for, them.

If a company denies you such things as credit or a loan, insurance, or employment because of your credit history, you are also entitled to receive a free credit report within 60 days of the denial, if you request the report.

You are also legally entitled to receive a free copy of your credit report once every 12 months from the three national credit reporting companies, if you request it. The requirement for providing that information is from the Fair Credit Reporting Act.
If a credit-repair company attempts to persuade you not to contact the major credit reporting companies directly to discuss a concern you have, do not do business with them, because they do not intend to serve your best interests.

The exception to that advice is when making your request for your free annual credit report. You have to be careful to go through the proper communication channel to receive the report at no cost, and contacting any of the three national consumer credit reporting companies individually or at another address other than the following could result in your being charged for your credit report:

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281


Do not Pay for Credit-repair Services up Front

A legitimate credit repair firm will not ask you to pay for their services before the work they have promised to do for you is complete, notes the FTC. In fact, the Credit Repair Organizations Act provides the legal support for you to take that position relative to paying.


Do not be Influenced to Attempt to Change Your Credit Identity

The FTC warns that a tactic of some illegitimate credit-repair companies is to suggest to clients that they invent a “new” credit identity and then a new credit report by applying for an Employer Identification Number to use instead of their Social Security Number. This is terribly bad advice because such action constitutes fraud and is a federal crime for which any clients following the advice will be liable.


So What can You Do if You Need Help?

First, as has already been conveyed, familiarize yourself with your rights and avail yourself of your credit reports so you know exactly the state of your creditworthiness. If you think certain adverse information in a report is inaccurate, compose a dispute letter and send it to the consumer reporting company. The FTC provides a template or example letter on its website to guide you.

Consumer reporting companies must investigate within 30 days any items you question. As the FTC states, “When negative information in your report is accurate, only the passage of time can assure its removal. A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years.”

If you have poor credit, you may still be able to get credit; standards vary among creditors. But, regardless, you will want to educate yourself and develop a plan of action to set yourself on a course that will ultimately lead to your having greater creditworthiness.
Be of good cheer in the process and consider whether you have the discipline to develop a budget and negotiate repayment plans with creditors. If not, look for a free or affordable, legitimate credit counseling organization to assist you. An organization that offers in-person credit counseling programs is ideal.

Rebuilding Your Credit Score After the Repair Work is Over

Rebuilding Your Credit ScoreIf the last two years have shown consumers anything, is that it’s wiser to hold onto those credit cards than to let them gather dust, or else you’ll find yourself with lowered credit lines or closed accounts. Neither is very good to your credit score. As credit card rates reached record highs early this year, some as high as 79.9%,  consumers are taking a second look at other methods when rebuilding their credit. While paying off your debt does increase your credit score, you may find receiving better interest rates or getting a loan approved requires an even higher rate than the one you currently hold.  Here are ways to rebuild your credit, with and without plastic, after the hard work of repair is finished.


Credit Unions


Often ridiculed for lack-luster, online banking applications and a lack of convenience when it comes to the number of available branches, credit unions have seen a resurgence of customers.  It could be because of their lower interest rates on loans and credit cards, no annual fees and in some instances, no fees for cash advances within certain ATM networks. I opened my first checking account with a Credit Union.

To build your credit, ask about a secured loan. Of course, these loans are secured with a deposit from you into a CD or savings account, but if you’re looking to start from ground zero it may prove to be beneficial.  Credit Unions look at more than just your credit scores, they look at how you manage your accounts, how you plan for retirement or your child’s education as well as your employment history. Credit unions also report to all of the three major credit bureaus: Experian, TransUnion and Equifax (learn more here).


Federal Student Loans


To use this option, you must be a college student with at least a half-time status.  This type of loan has one disadvantage: your payment history is not reported until you begin repaying the loan. But if you’re in a career transition, due to a layoff or just changing careers, this is one way to rebuild that credit history on a solid foundation with no credit checks, low rates and great terms. As long as you haven’t defaulted on a previous student loan, or borrowed the maximum loan amount, this loan is obtainable. There are many types of student loans available. As with all loans, do your research and read the fine print.  To get the basics on student loans, check out the American Student Assistance.


Secured Credit Card


Secured cards require you to make a cash deposit up front. That deposit is then the credit line for the secured card account.  There are many plans out there, but do your research first.  Some banks allow depositors to add money to the account which adds to the credit line, while others reward consistent payment history with lower rates. 


Obtain a Gas Card or Department Store Credit Card


Go back to the beginning. How? My first credit card was a department store credit card, and with a good payment history, it allowed me to acquire a Visa card through my local bank.  Gas cards also work.  Everyone, or nearly everyone I know, commutes to work.  But you need to use these cards properly. Since these cards carry a high interest rate, it’s to your advantage to pay the bill in full every month.  When rebuilding your credit, remember higher balances can lower your credit score, so never carry more than 30% of the limit allowed on the gas card. For example, a $500 limit allows you to carry $150 balance on a gas card.

The 411 on FICO Scores

The 411 on FICO ScoresA FICO score is at the root of whether or not you are accepted or denied credit or a loan and whether you will receive higher or lower home and auto insurance rates. Short for Fair Isaac Corporation, the company that invented the credit risk score, the three-digit number defines your creditworthiness or the likelihood that you will pay your debts. Your FICO score is calculated from information contained in your credit reports. That’s why it’s so important that all information listed in your credit reports is correct and complete.


The Makings of a FICO Score

A FICO score ranges between 300 and 850, with scores on the higher range of the scale the best for obtaining credit and low interest rates. Because each of the three credit rating agencies – Experian, Equifax and TransUnion – operate separately and collect data about your credit independently from each other, you actually have three FICO scores. The scores may be different because information in your credit report may vary between credit reporting agencies.

According to FICO, a FICO score is a calculation comprised of various elements and formulas, including the following:

Payment History – 35% (how often you pay your bills on time);

Credit Utilization – 30% (the amount of debt in use versus the total amount of credit available);

Credit History – 15% (the length of time from when you first established credit, such as a loan or credit card);

Credit Types – 10% (the different types of credit you have, such as a mortgage, revolving credit, installment loans, etc.);

Credit Inquiries – 10% (the number of credit searches conducted by lenders).


The Highs and Lows of FICO Scores

FICO scores can increase and decrease according to various activities that fall under the elements listed above. For example, if you made one or more late payments, your FICO score could go down. On the other hand, if you pay your bills on time, over the years your FICO score will go up. When you request your FICO score, it includes an explanation about the positive and negative areas that affected your score. Keep these reports from year to year to compare these factors.

Some other factors that impact your FICO score are:

  • Closing credit card accounts;
  • Reduced credit limits;
  • Increased credit card balances;
  • Collections, tax liens, or debt-related judgments made against you;
  • Repossessions or foreclosures;
  • Opened new credit accounts.

Sometimes, your FICO score will drop through no fault of your own. That’s when you need to check your credit reports to see if they contain any errors. You can do this on your own or by using a credit repair service. Whichever avenue you choose, it’s important to act fast and repair your credit before your FICO scores are severely impacted.

Simply Refusing Credit Is Not Enough To Get a Good Credit Score

As a fairly young professional, I often come across peers who seem to be going through a rough financial patch. It’s doesn’t require a large stretch of the imagination to see why young people have it so hard – they’re fresh in the workforce (aka not earning that much), they are riddled with student loans, and their credit might be non-existent or even poor!

For some, a natural solution might be to simply swear off using credit completely. I can see the logic behind this- credit is a scary beast that can get out of control. All it takes is for you to be behind on one payment, and if you’re living paycheck to paycheck, then you’re going to be playing catch up forever.

People who refuse to use credit might hope that their frugality would help their credit improve over time. Indeed, black marks on your credit report will fall off eventually. But there are even better ways to improve your credit.

Of course, it will require sacrifice. But as we will see later in this article, that initial sacrifice will put in place a virtuous cycle for your financial situation.


You want Good Credit, instead of No Credit or Fair Credit

As a society we’re growing smarter every day. Gone are the days when debt was viewed with flippant disregard. Our parents would have warned us of the dangers of having debt. However, that might have instilled almost too much fear of credit.

It’s gotten to a point where people are refusing to use credit cards, or pay for a house with as much cash as possible.

To me, it’s the “easy” thing to do. Put your head in the sand and your credit should naturally become not bad. But hey, not bad doesn’t mean good. And it’s Good Credit that gives you financial advantages in life like getting lower rates on your loans, having options in terms of renting an apartment, or even successfully applying for mortgages etc.


Often, you can improve your credit with easy wins

Earlier, I spoke of sacrifice in order to improve your credit. Yes, you probably know what’s required – cut back on a bunch of stuff – even (or especially) your morning latte.  Yes, I do believe that you should hold off on credit for a while, saving where you can and paying off what debt you already have.

IN ADDITION, however, you should also take steps to rectify issues that are marring your credit report. For example, it’s not very difficult to correct delinquent payments, as I show in my guide to getting late payments removed from your credit report.

Firstly, you’d be shocked by how often credit reporting companies actually make errors on your report. Secondly, sometimes it just takes a letter to convince your creditors to remove the delinquent payments from your report.


Having Good Credit is a Virtuous Cycle

Imagine how sweet life would be if you’re on top of all your debt repayments, bills etc. Sure, you have peace of mind. But more importantly, you get options in life. Let me show you what I mean:

Having good credit means that you’re more likely to get lower interest rates or more favourable terms on your new loans ->  you get to save more and build up an emergency reserve fund -> you won’t be caught back footed when you need to shell out in an emergency -> you won’t have to take out loans in an emergency and rack up more debt -> you don’t have huge loan repayments to make and can keep on top of your current payments -> credit improves further -> without all that debt weighing you down you can do more with your money.

See how it’s a virtuous cycle? That’s why it’s so important that you begin the cycle by making some sacrifices today!


Conclusion

Not taking on new credit is a sensible way to improve your credit. But it must be accompanied with other steps in order to really accelerate your credit repair. Steps like spending less, building a reserve fund and paying down your existing debt can really put you in good stead with prospective creditors.

Eventually, you’ll want to take on credit. Simply not using credit will not give you good credit. You build good credit by taking on loans that you can manage, and by staying on top of the repayments. Then you’ll start opening doors in life.

Here’s to wishing you all the best in your credit improvement journey!

Women and Credit

Women and CreditEvery woman, whether married or single, should have credit in her own name. Should anything ever happen to her spouse and the family credit is in the husband’s name, she may not be able to then establish credit for her self. This is especially true if she is a homemaker who is suddenly widowed or divorced with no job or income.

The Equal Credit Opportunity Act was designed to stop discrimination against women. She may not be denied credit just because she is a woman or because she is married, single, widowed, divorced, or separated. As long as she shows that she is creditworthy and falls into the guidelines of the credit application, she can’t be discriminated against.

When she applies for credit, she does not have to use Miss, Mrs., or Ms. with her name. She can choose to use her married name, maiden name, or a combination of both surnames (for example, Mary Williams Smith).

If she has recently married, she should contact each of her creditors and give them her new married name and other pertinent information. Have her creditors update their credit files and notify the credit reporting agencies of the changes.

If she divorces and decides to use her maiden name, she should ask each of her creditors to change her name on their accounts. Once the creditors’ records are updated, it is important that they notify the credit reporting agencies. Obviously, if she had some negative accounts in her husband’s name, I would strongly advise not to have them changed into her name; her credit report would be ruined. The idea is to try and build a credit report without any derogatory information.


Jenny’s Story: A Controlling Husband

On an Internet talk show, “For Women Only,” we (the hosts) opened up the telephone lines for questions; a woman named Jennifer called in. She whispered, “I can’t talk very loud because my husband is in the other room and I don’t want him to hear me. We have been married for eight years. Before I got married, my husband had me sign a prenuptial agreement. He has credit cards and a checking and savings account that he uses in his name only. He has never set up a joint account with my name on it for either a credit card or bank account. I have to ask him for any money that I need to run the household. I feel very insecure with our finances. My husband never tells me how much money we have or the status of our financial situation. We are having marital problems. Is there anything I can do to protect myself and establish credit in my own name?”

Jennifer’s husband was trying to control her by not allowing her to spend money without his consent. Her marriage was in trouble. The first thing we recommended to Jennifer was to open up a checking account in her name. Any extra money she could save and put aside needed to be put into her checking account.

The second thing we instructed Jennifer to do was get a copy of her credit report from all three credit reporting agencies. It was important for Jennifer to see if there was any payment history on her credit report. Perhaps her mortgage was being reported on her credit report without her knowledge. Any positive item that appeared on her credit report could be used to help Jennifer establish new credit in her own name.

Once Jennifer received all three credit reports, we advised her to apply for two different credit cards. We instructed her to apply with a local merchant or department store for a credit card. Once she received the credit card from a merchant in her own name and made payments for at least six months, she needed to apply for a VISA or MasterCard. Where the application asks if the account is for individual use, or joint, Jennifer checked “individual.” An individual account holds the applicant solely responsible for payments on the account and authorizes her as the sole person to make purchases with the credit card.

When she was approved and received the credit cards, we suggested that periodically she make small purchases that she could pay off when the bill came due. This would reflect a good payment pattern on her credit report.

If Jennifer and her husband were to get divorced, Jennifer would be in a much better position than she currently was by planning ahead and getting her credit established, rather than trying to do it later.


Q. The credit cards that I use are in my husband’s name. Because I am using his cards, do I need to get any credit cards in my name?

Yes! Every married woman should have at least one or two credit cards in her name. This is to protect yourself should your husband die or you get divorced. If something happened to your husband and all the credit was in his name, you could have a difficult time establishing new credit for your self. Your credit report could show “no record found;’ which can be interpreted as having bad credit.

Because the credit cards are in your husband’s name, you are only a user on the card. Sometimes the credit card company will reflect this on your credit report, however don’t count on it. Check your credit report from all three of the credit reporting agencies to see if any of the accounts you are using are listed on your credit report.

If you apply for a credit card while you are married, you do not have to have your husband as a cosigner or be listed jointly if your income is high enough to meet the stated requirements.


Q. My husband and I went through a major financial crisis. The credit cards that my husband was using became delinquent and are now being reported on his credit report. I have two credit cards that are in my name only and in good standing. Can I put my husband on my account? Would this help him rebuild his credit?

Yes! Many times a wife is able to help rebuild her spouse’s credit re port by adding him to her credit card account. You can add your spouse as a joint applicant. The credit card company would then request his Social Security number and income information. Because you are the primary applicant, you are responsible for all the payments.

If all the payments have been made on time, this will be picked up by the credit reporting agency and reflect as a positive entry. The more positive entries on your husband’s credit report, the easier it will be for him to reestablish his credit.

It still is advisable for you to have a credit card solely in your name. You never know when you may need it for an emergency.


Q. My husband died several years ago. All the credit cards were in his name. I applied for a new credit card and was denied. I made all the payments on these cards but my credit report says “no record found.” What can I do to get new credit?

Check to see if any of the credit cards that your husband had were joint accounts. If they were, contact the credit card company and instruct it to report this to the credit reporting agencies. If none of the accounts were held jointly, you will have to start all over in reestablishing your credit.

Go to your local bank and see if it offers a secured credit card program. A secured credit card is a VISA or MasterCard that you get from a bank after you make a security deposit. I would recommend that you get two secured credit cards and charge small amounts each month. Pay the full balance off every month. Your good payment history will be reported on your credit report. Make your payments on time. Within six months to one year, request that the bank issue you an unsecured credit card in place of the secured credit card.

This is not an overnight process. If you continue to make your payments as agreed, however, you eventually will be able to get new credit.


Q. When I apply for credit, can I report my child support and alimony payments as income to qualify?

Absolutely! When reviewing your application, the credit grantor must consider any income—whether it be full-time or part-time employment, child support, and alimony.

I have a friend who is divorced with three children. She is working full time and receives child support and alimony. The child support and alimony payments are higher than her income.

Several years ago she applied for a mortgage for a new home. Her wages were not sufficient; however, with the child support and alimony, she was able to qualify for the home and complete the purchase. Always include child support and alimony when applying for credit or a loan.


Q. When you get married and have a new last name but have the same Social Security number, can you get new credit?

Whether you are married or single, the credit reporting agencies use your Social Security number as an identification source. If you apply for new credit under your married name, the Social Security number would be cross-referenced and reported with your maiden name. This could cause your credit report to be merged together with your married and maiden names. All of your accounts would appear on one report.

It is important that you notify the creditors of your name change so that creditors can update their records, which would be reflected on your credit report. Once creditors are notified of the name change and their files are updated, they will report your active accounts and any activity on your ac counts to the credit reporting agencies using your new name.


Q. My husband died and we had some joint credit card accounts. Will I lose the credit cards?

A joint account is the only type of account that protects you against being closed because of the death of a spouse. The Equal Credit Opportunity Act states that a creditor cannot automatically close or change the terms of a joint account solely because of the death of a spouse. The creditor may ask you to update your credit application or reapply if the initial acceptance of the application was based on all or part of your spouse’s in come and the creditor has reason to suspect your income is inadequate to support the line of credit.

If a creditor requires you to reapply, it must give you a written response to your application within 30 days. While the application is being processed, you may use your line of credit with no interruption. If, for some reason, your application is turned down, you must be given the reason in writing.

The chances of the creditor closing your account are very slight, as long as you continue to make your payments on time and do not exceed your credit limit.