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. 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!


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.

Your Retirement Checklist

Your Retirement ChecklistAs the baby boomers reach retirement age, many find themselves unprepared for the changes that lie ahead. Planning for the future doesn’t need to be overwhelming. If you are nearing retirement age (or want to start planning ahead), here are a few things to keep in mind as you prepare for and plan your retirement.

Make a Will

As you start to review your investments, retirement accounts and social security benefits, you should also make sure you have a will. If you don’t have one, now is the time to sit down with a lawyer and write one. If you already have a will, make sure that it stays up-to-date. Wills need to be updated due to a variety of reasons including a birth, marriage, divorce, move to another state, etc. Often an out-of-date will can cause more problems than not having a will at all, so make sure you stay on top of any changes that need to be made. Since you’ve worked so hard earning your wealth, make sure your family will be taken care of the way you intended.

Retirement Budget

To know whether you have enough saved, you need to compare your expected income to planned expenses and create a retirement budget. Keep track of your current spending and include any known future vacations to get a sense of what your expenses will be like during retirement. For your income, add the government benefits you will receive (such as Social Security) to what you have in your 401k, IRA and/or any other retirement accounts. To help estimate these amounts, try using a retirement calculator like the one on CNN Money. Once you know these values, you also must estimate how long your savings will last you. Most retirement experts say you should be able to safely use 4% of your savings each year so that your money will outlast you.

If you find that your expenses will be greater than your income, you have two options. The first is to see where you can cut back in your expenses. Maybe cut back on the amount of travel or consider retiring somewhere cheaper. The other option is to supplement your income. To do this, consider picking up a part-time job during retirement or try saving more money in your retirement funds. While you can usually only contribute a maximum of about $16,500 to your 401k before age 50, that maximum increases to $20,500 after age 50. If possible, you can also consider delaying retirement by a few years that will allow you to save even more in your fund.

Retirement Living

In planning for retirement, you need to consider where you want to live. Do you want to stay in the comfort of your own home, move to a smaller place or sip Mai Tais in the Caribbean? This living situation can be a large factor in estimating your expenses and can affect your other retirement plans. For example, if you want to visit your family in the Mid-West a lot, it’s going to be easier and cheaper to do so if you’re living in Indiana versus Bermuda.

If your home is fully paid off, many people opt for staying put. This way, they don’t need to consider paying a mortgage or rent during retirement. Often this can also be more comfortable as you already have established yourself in that location.

If you’re looking for a change of pace, try looking at a smaller home that won’t require as much maintenance. These will be cheaper and you will save on housekeeping and yard work. Keep in mind that metropolitan areas will be more expensive in general and adjust your expenses accordingly. For some ideas, check out Forbes’ list of the best places to retire.

While you’re looking at where to live, also consider looking into nursing homes for the future. Depending on the type of home, the prices can range dramatically and this can be a good way to make sure you have the funds saved now.

Retirement does not need to be complicated. For those who still have many years before retirement, continue saving so you will be able to have your dream retirement. For those who are soon to retire, make sure you have gone through this list so you can ensure a stress-free and enjoyable retirement.

The Fair Credit Reporting Act: Know Your Rights

Fair Credit Reporting Act (FCRA)The Fair Credit Reporting Act (FCRA) is designed to promote accuracy, fairness, and privacy of information in the files of every “consumer reporting agency” (CRA). Most CRAs are credit bureaus that gather and sell information about you – such as where you work and live, if you pay your bills on time, and whether you’ve been sued, arrested, or filed for bankruptcy — to creditors, employers, and other businesses. The FCRA gives you specific rights in dealing with CRAs, and requires them to provide you with a summary of these rights as listed below. You can find the complete text of the FCRA, 15 U.S.C, 1681 et seq. at the Federal Trade Commission’s website.

You must be told if information in your file has been used against you. Anyone who uses information from a CRA to take action against you — such as denying an application for credit, insurance, or employment must give you the name, address, and phone number of the CRA that provided the report.

You can find out what is in your file. A CRA must give you all the information in your file, and a list of everyone who has requested it recently. However, you are not entitled to a “risk score” or a “credit score” that is based on information in your file. There is no charge for the report if your application was denied because of information supplied by the CRA, and if you request the report within 60 days of receiving the denial notice. You are also entitled to one free report a year if you certify that (1) you are unemployed and plan to seek employment within 60 days, (2) you are on welfare, or (3) your report is inaccurate due to fraud. Otherwise, a CRA may charge you a fee of up to eight dollars.

You can dispute inaccurate information with the CRA. If you tell a CRA that your file contains inaccurate information, the CRA must re-investigate the items (usually within 30 days) unless your dispute is frivolous. The CRA must pass along to its source all relevant information you provided. The CRA also must supply you with written results of the investigation and a copy of your report, if it has changed. If an item is altered or deleted because you dispute it, the CRA cannot place it back in your file unless the source of the information verifies its accuracy and completeness, and the CRA provides you a written notice that includes the name, address and phone number of the source.
Inaccurate information must be deleted. A CRA must remove inaccurate information from its files, usually within 30 days after you dispute its accuracy. The largest credit bureaus must notify other national CRAs if items are altered or deleted, however, the CRA is not required to remove data from your file that is accurate unless it is outdated or cannot be verified.
You can dispute inaccurate items with the source of the information. If you tell anyone — such as a creditor who reports to a CRA — that you dispute an item, they may not then report the information to a CRA without including a notice of your dispute. In addition, once you’ve notified the source of the error in writing, they may not continue to report it if it is in fact an error. Outdated information may not be reported. In most cases, a CRA may not report negative information that is more than seven years old; ten years for bankruptcies.

Access to your file is limited. A CRA may provide information about you only to those who have a need recognized by the FCRA — usually to consider an application you have submitted to a creditor, insurer, employer, landlord, or other business. ? Your consent is required for reports that are provided to employers or that contain medical information. A CRA may not report to your employer, or prospective employer, about you without your written consent. A CRA may not divulge medical information about you without your permission.
You can stop a CRA from including you on lists for unsolicited credit and insurance offers. Creditors and insurers may use file information as the basis for sending you unsolicited offers of credit or insurance. Such offers must include a toll-free number for you to call and tell the CRA if you want your name and address excluded from future lists or offers… If you notify the CRA through the toll-free number, it must keep you off the lists for two years. If you request and complete the CRA form provided for this purpose, you can have your name and address removed indefinitely.
You may seek damages from violators. You may sue a CRA or other party in state or federal court for violations of the FCRA- If you win, the defendant may have to pay damages and reimburse you for attorney fees. If you lose and the court specifically finds you sued in bad faith, you or your attorney may have to pay the defendant’s fees.
You may have additional rights under state law… You may wish to contact a state or local consumer protection agency or a State attorney general to learn those rights. 

How You Can Fight Back

Helping consumers take advantage of their rights to a fair and accurate credit report is what Credit Zeal is about. Credit repair companies provide everyday people with simple, effective, and affordable credit repair services designed to help improve their overall credit picture. Working together with you, they companies I've reviewed will challenge inaccurate, outdated, and unverifiable information contained in your credit reports on your behalf, with each of the three major credit bureaus directly. Through the use of proprietary methodologies and proactive interventions, they bring together a whole range of approaches tailored to your specific needs in an effort to help remove or improve questionable, inaccurate, and outdated information appearing in your credit reports.

Raising Your Credit Score

Over the years reputable companies have developed various systems and methods that they have experienced great success with, and have encountered almost every credit issue there is. Negative information such as late payment histories, bankruptcies, charge off’s, judgments, foreclosures, repossessions, collections, liens, settlements, etc, all have to meet the same criteria under the Fair Credit Reporting Act to be continuously reported on your credit report. To date our methods have helped to remove thousands of inaccurate, outdated and unverifiable items from credit reports all over the country. Providing expertise and compassion in a time of need, their services enable people to move forward with their life, by helping them clean up the past.

Understanding The Risks Of New Age Mortgages

It has become difficult in these times for many people to even think about owning a home. This economy and the damages it has brought about has scared a number of people away from home ownership. However, to combat this fear many banks and lenders have produced new age mortgages that are far more tempting for consumers, but come with a number of hidden drawbacks that people are unaware of. Many people are able to qualify for these new mortgages but at the beginning the pitfalls are often unseen. 

The economic downturn left many people unable 
to purchase a home that is in their price range. Banks have seen this and come up with options for people looking for a home that are downright risky for many people to have. This has led many people to take out mortgages that have high risk and low initial payments. Many people haven’t realized that this can put their new home in jeopardy along with their financial well-being. We are going to look at these new age mortgages and when they could be right for you. Let’s look at some of the examples of new age mortgages that you might be tempted into taking.

One of the first examples of mortgages banks have come up with is the piggy back mortgage. This is one of the least risky options. What is entailed here is taking out two different mortgages. The first will be a line of equity of the home up to twenty percent of the value. This becomes the amount you use to make your down payment. You then take a second mortgage to cover the rest of the home. The risk involved with this is that you have zero equity in the home. This becomes very critical when the house depreciates in value.
In terms of the most dangerous mortgages that have come out, we have to discuss option-payment mortgages. What is entailed here that you have options of payments each month. These options include principle and interest, interest only, or a minimum payment required by the bank. The minimum payment can be lower than your interest each month. The risk involved with this is that anything you don’t pay gets put on top of the mortgage. If you get too far behind with payments you can be turned upside down financially rather quickly and get yourself in a lot of trouble. 

Another risky option is an interest only mortgage. This process goes on by paying only the interest each month for three to ten years. When that time is up your payments will jump so you can start paying the principal. When this happens you need to be ready for that jump in payment each month. People often time get into these payments when they are looking to resell the house, but if you are unprepared for the quick increase in monthly payments then you could easily miss a payment or two and fall into an uncomfortable financial situation. 
The safest mortgage one can take out is a 40 year fixed mortgage. This gives you ten extra years over a 30 year mortgage and essentially gives yourself lower payments. The risk involved is that you are going to take much longer to build equity in the home. 

One more option that is very hard to find anymore are low-doc mortgages. This is when a lender will allow you to take a loan without needing to provide a proof of income. This can be very risky because many people get into loans that they cannot afford. You should only look at this if you are sure you can make your payment each month, and are not intrigued by any of the normal mortgages that are offered. 

So how do you make sure that you are protected from the bank when searching out the mortgage that fits your life and budget

If you are a high risk home buyer, often time’s banks will only require you to look at some of the riskier options. The first thing to do when protecting yourself is to make sure that you get a fixed rate mortgage. Rates at the time are low and you will be protected from increases in rates.

If an adjustable rate mortgage is what you qualify for make sure not to walk into the situation blindly. Look at what can happen when the rate increases as you need to make sure that you will be able to make the payment if the interest rate goes up.
When searching for the right loan, do not be afraid to shop around. You are not only limited to your bank or banks in your area. Often times you can find a better rate from a lender online. 

In all, just make sure you don’t get yourself a loan that is larger than you can afford. Waiting another year to save up enough money might be the most beneficial thing in the long run, rather than jumping into a situation that you are not prepared for financially.

Avoid Quick Fix Debt Elimination Scams

Debt Elimination ScamsConsumers that are looking to improve their credit and credit score often look for ways to get their existing debt under control. Managing and reducing existing consumer debt is certainly one way to help manage debt payments, credit reports and credit scores. Unfortunately, too many consumers in need of debt relief fall victim to debt elimination scams.

Debt elimination will help with an individual’s credit score over time. With lower monthly payments, a consumer can now better manage their payments and improve their payment history as well as reduce the amount of debt displayed in their credit report. These changes in debt payments and debt load will help improve a credit score. But, quick debt elimination programs are not the solution are usually just scams.

The Office of the Comptroller of the Currency has recently produced a press release informing consumers that the number of fraudulent schemes supposedly designed to “eliminate” debt is increasing. As the credit crisis continues and consumers remain overwhelmed with credit card debt, collection agency calls and even foreclosures it is no surprise that debt elimination marketing has increased as well. These fraudulent debt elimination schemes are being marketed to ordinary consumers, not just those in foreclosures or with poor credit histories. The new targets of the debt elimination scams include borrowers who are current on their payments.

There are number of potential significant consequences to using these fraudulent services. The scams are generally designed to defraud the consumer with fraudulent fees that can ranges from a few hundred dollars to a few thousand dollars. Since the debt elimination plan is established as a scam and will not eliminate or reduce the consumer’s debt the end result often includes a worse credit report and lower credit score. Furthermore, the creditors that may be contacted under a fraudulent pretense by debt elimination company may take additional legal action against the consumer to resolve the fraudulent attempt to eliminate the debt.

Some of the debt elimination scams do more harm to an individual’s credit report and credit score because the intention of the scam artist to steal the consumers identity. A potential result of participating in the illegal scheme is that the fraudsters acquire personal information and the engage in theft of a victim’s identity. Once the personal data and identification is obtained, they may be able to run up substantial new debts before the victim is aware of the theft and further damage the individual credit score.

The deceptive processes are pitched and revealed to the consumer or borrower to con the consumer into paying money to eliminate the debt. Some of the scams used by the fraudulent debt elimination companies may include the following processes and notices:

A phony arbitration award from an arbitrator not authorized under the debt agreement.

The use of a nonexistent “trust account” supposedly held in a person’s name at the United States Department of the Treasury or some other part of the federal government.

The substitution of a fictitious U.S. government debt instrument, which claims to be payable or authorized by the United States Department of the Treasury or a related person or entity, for the obligor’s original note or account at the creditor.

A notice to the creditor that the contract or note is illegal and, therefore, the borrower does not have to pay the debt and may even be entitled to a compensatory award.

A notice to the creditor that the creditor does not have authority to “lend its credit” to the obligor and has violated the law, and therefore, the borrower does not have to pay the debt and may even be entitled to a compensatory award.

The sample fraudulent processes listed were listed by the Office of the Comptroller of the Currency Special Supervision Division.

There may be a number of variations on the elimination debt scams. Consumers should always be careful of quick fixed to eliminate debt or fix a credit score or repair credit. If it sounds to be good to be true, it probably is. Investigate unsolicited offers carefully before going any further.

Family Budgeting Made Easy

Family Budgeting Made EasyDue to the current financial situation in the world, the fact that people are working fewer hours and the rising cost of inflation, a lot of people will find themselves needing help with budgeting. If you just lost your job the last thing you want to do is cut into any sort of savings you had, even though a lot of people think they are forced to do just that. 

To help you out, lets get right into how you can create a family budget without all of the hassle. Go ahead and pull out your monthly financial records. This would be your bank statement and checkbook or you can look online if you do online banking. Get a sheet of paper and write down a spot for your utilities, rent or mortgage, groceries, entertainment or whatever expenditures you happen to have. Now you will tally up your monthly expense total. Compare this to the amount of money that you bring in and see how much you have extra or how much you need to cut back. If you have extra then you are already doing a good job, but we could all still use some help tightening things up once in awhile.

Now you will go through each of the items listed in your monthly budget. Those are the expense categories that you just wrote down. As you go through each item on the list make a note on your paper of what you can do to save some money in this category. For your energy cost you could make sure you set your thermostat lower in the winter and higher in the summertime. You can keep the lights off if you aren’t in certain rooms and you can also buy certain light bulbs that do not use that much power and also last quite a bit longer. Do you eat out a lot? Could you make more food in the home? If you go through your expense list and examine each of them you can make some crucial decisions that will make sure you don’t have to eat up your savings. 

In fact, you could start adding extra to your savings. If you do not live by yourself then the only way to make this budget work is to get your family involved. If you have kids and they get to spend money by themselves then one thing you can do is to give them prepaid debit cards that you fill up once a month with an exact amount. This will help them learn how to spend their money the right way and it will save you from giving too much away in this area. You want to make sure that you have really got the point across that a family budget is only possible if you are working together as a team. This means that everyone has responsibilities such as turning their lights off as they leave the room and not leaving their cell phone chargers plugged in or even not being wasteful at the dinner table. You can even give everyone an area on your budget to keep up with and monitor. It is little steps like this that will help you save big when it is all added together. 

If your expenses exceed the amount of money you currently have to work with then you will want to make sure you start doing these things immediately. Also, you may want to look into other ways to make money such as online blogging, having that yard sale you’ve been putting off, or you might even have a hobby you could turn into a business. If you take these actions, really make a clear plan, and follow through each day you will have total control and success in this area of life. If you are a parent this is a great chance to work with your children for skills that are very much needed later on in life. Kids like helping find answers to problems so if you are working as a family you can try and make this a group effort from everyone. When everyone is invested in it then it will work out even better. Also, make sure you reward yourself and everyone involved when they do a good job. It isn’t any fun if you don’t ever get to celebrate your hard work and efforts.

Where Are You In Your Financial Lifecycle?

A financial lifecycle is a term that financial professionals use to describe where we are in our life and how it affects our financial situation. It’s a way of measuring where we are and where we should be in the next few years. Many of us tend to lag behind in the financial lifecycle, having the good habits that served us well in the previous stage of our financial lifecycle, but not having suitable skills for the stage we are at present and barely planning for the next stage. If you know where you are in the financial lifecycle you can then judge where you fall short and which skills you can learn.

1. The Early Years

The first part of your financial lifecycle is your childhood and early adult years. In these years you are mainly studying and the jobs that you can pick up tend to be part time, unskilled and poorly paid. They are more useful in teaching you what work is like rather than the spending money that they bring in. It is OK to be financially dependent on your parents; they don’t want you to drop out of education in order to get some quick money now. It is also OK to build up (some) long term debt as your education should in the end pay for this several times over.

2. The First Jobs

You then have the period of early earning. This is the period of the first few jobs, when although the pay is lower than it will be later in the career, costs are so much less as there are no spouses, children or homes to pay for. Salaries also rise rapidly. During this period a large chunk of student debt can be paid off, it is also a period when a new career can be tried out with little being lost. Starting a pension and getting on the housing ladder may not be the most fashionable things at this age but doing these things now will pay dividends later.

This period is also a time to start dabbling in investments as money lost now can easily be replaced, and so high risk investments can be considered. A big win now could be worth an enormous amount later while lost money can easily be replaced. All the time lessons, from both winning and losing investments will be learned that will pay off later.

Many people don’t fully use this exciting period. For a start they may put this period off by getting more and more college degrees with no idea of where they will be in the future. They may also still spend more than they earn, remaining dependent on their parents into their thirties or building up greater debt. More importantly there is not much desire to learn about saving or investing at this age, missing out on the best time to start a pension. 

This early stage continues on into the early stages of marriage. It is a period of relative affluence that should be enjoyed, but it is also a period where a good deal should be learned about investing and saving, as you will need those savings later.

3. The Young Family

Most people remember the early years of having a family as one where there never seemed to be any money. At this time one of the spouses often stops work for a few years, or sharply cut down their hours. The other spouse would see their pay rising slower than it had been previously, and there are sudden expenses. Children are never cheap.

In these times there needs to be a new frugality. Investment needs to be maintained, if for no other reason to keep in the habit. Debt will seem to get larger, but it should be a different type of debt from student debt, being for a larger house. Purchases will also be more practical and less glamorous. The sports car is replaced by a station wagon, and the flat in the fashionable area of town is replaced by a house in the suburbs. There is also a need to start (or continue) saving for college funds.

There is a desire to retain the old lifestyle which can mean that debts build up more easily. This is made possible by greater access to credit as the house is now a substantial asset and while the pay is not rising at the fast rate that it was, the pay rises have still compounded and so the money that is being earned is more than ever before. 

Debt to fund a lifestyle is the biggest problem at this stage. Unfortunately the lifestyle does take a hit when children come along. This is not easy when friends from school and colleagues at work are still enjoying exotic holidays and constant nights out.

4. A Growing Family

The next stage is when the children are growing up. The expenses start to seem less. The pay is still rising, and in fact many people are at the peak of their earning power at least in real terms (the pay may still keep on rising after this but for most people inflation starts eating away at the pay rises). The spouse who may not have been working can now restart a full time job.

The temptation here is to keep the savings at the same rate as before. The idea here is not to maintain the savings and investments that were made when you were, to all intents and purposes, quite poor but to expand them. Debts should no longer be treated in maintenance mode; this is no longer something that is excusable as it was when the children were very young. Credit card debts should be paid down quickly, and then the mortgage needs to be attacked and preferably paid off. The mortgage in particular will be more manageable as inflation will make the amount of the mortgage seem far lower. At the same time there should be a step up in payments to the investments that were being maintained over the early years of family building.

5. The Empty Nest

After the family has left, there is an empty nest period. The children are out of college and earning a living and even if they are at home they are paying their own way. It is OK to enjoy yourself at this time, as the disposable income will rocket. However this is not a long time. 

One of the things that should be done is to start de-risking investments. Losing a bundle at this stage is going to have far more long term effect than it will at any of the earlier stages as you will not have the time to make this money back. A cold hard look at investment accounts should be made and your investment portfolio should become far more boring. Also debts should finally be paid off (if they have not been already). This will be fairly easy, but just because it’s easy doesn’t mean it should be shunned. 

One of the shocks at this time, particularly if you put retirement off for a while to continue working, is that wages can often start falling. This is not just the case for lifestyle reasons, as part time working or a job close to home suddenly makes more sense, but for the very fact that employers want younger people who aren’t about to retire. 

6. Retirement

Finally there are the pension years when you are living off past earnings. This is a time to live off your past good habits. The disposable income will start to drop off, and inflation can be bitter during this time (even if the pension is index linked). However if you have saved up enough these are likely to be golden years.

This is a period where people tend to hold on to things that they don’t need to. The main example is the large family house. It is a good idea to downsize and to live off the money. At a later stage a reverse mortgage may be a good idea so that you can benefit from the equity in the house. Your children may not be ecstatic about the choice, but they have got a career and a home and should be in a saving habit. It is also time to put the investment portfolio into income generating assets; high risk fast growth companies aren’t much use now.

Everyone will hit different stages of the financial lifecycle at different ages. However your investment and spending needs do change throughout your life, and if you are not consciously recognizing you will be playing catch up as you use the good habits that you obtained in the last stage of your financial lifecycle but learning the habits that you need in the current stage only by your mistakes.