Better Credit...Better Interest Rates

I was thinking about a past post I did and wanted to repost it. It was about how better credit translates into better interest rates. Check out the details below…


If a person with a 620 score gets a mortgage the interest rate will be around 4.6% with a payment of $765 and pay $126,000 worth of interest over the life of the loan versus a person who has a 720 with an interest rate of around 3.1% which calculates to a monthly payment of $647 and total interest paid over the life of the loan of about $83,000. This calculates to about $43,000 saved during that time. Now imagine if you took that extra savings and placed it in a Money Market account or a high-yielding savings account.

NUMBERS NEVER LIE

What do numbers really mean? There are all kinds of numbers. License plate numbers, numbers when we visit our favorite fast food restaurants, #5 or # 1 please. Gas stations have numbers can I get $20 on pump 7 and of course we all know about social security numbers. I have been thinking about our numbers a lot lately and here is what I came up with. I thought I would share them with you. Perhaps they mean something, perhaps they don't. Nevertheless numbers are all around us, from our shoes to our scales, they are there to give us a measure of where we are, where we are going and where we want to be. Below we've compiled some numbers of our results over the last four months.

68 new clients since June 1, 2013

90% completed (we expect to have these 10% completed within next 30 days) these were very large scale clean up's all with more than 40 items per bureau to dispute!

43 clients with a 780 FICO score on at least 1 credit bureau.

62 clients with a 750 FICO score on at least 2 credit bureaus.

68 clients with a 700 FICO score on all 3 credit bureaus.

We work directly on your behalf to update your credit profile to read accurately. 

We provide FULL services on a FULL 1 YEAR TERM assisting YOU AS A CLIENT in removing negative and inaccurate items from your credit report. 

Once you enter our program you will start seeing exciting results in the first 30 days. 

Most of our clients will be completed within the first 30 days! 

The faster we can get you completed the better for us!!

We will continue to work with you for 12 months if necessary; for NO ADDITIONAL FEE until we have your file complete. 

In MOST cases we can remove all disputed items within 30 days.

Contact us TODAY!

Blessings to you all today...

Dangers of Foreclosures Pt 3

Yesterday we touched on this subject very briefly. That is when you position yourself to purchase a foreclosure it may not be all as it seems on face value. A lot of your more expensive homes may be effected by this more than the lesser priced homes. This is due to the high-end appliances, fixtures and amenities used to build these homes. More often than not previous homeowners are blamed for the vandalism to these homes, however opportunistic vagrants are usually to blame for the damage.

Conversely, when homeowners are to blame it is usually due to resentment and unsuccessful attempts to keep the property. The previous homeowners usually have some form of emotional attachment to the property. They usually have looked at several homes before deciding on this one, took in to account their own careers, children's future and neighborhood suitability. Then we bring into the fact that they have to give this all up in a moments notice. They have invested time, money and dreams into this property and now they have to move.

This can cause some serious separation anxiety and disgust towards the lender. Consequently since they can do no harm physically against the mortgage company then they decide to take it out on the property. Ultimately, this will hurt the home's value and somebody will have to pay to replace and repair the damage that has been inflicted. Nevertheless, your goal is to ensure that you are not stuck with the bill, if you are make sure to include this in your negotiations and mention it to your broker.

Dangers of Foreclosures Pt. 2

Three letters you should become familiar with if you are in the market to purchase foreclosures, R-E-O. REO stands for "real estate owned." REO properties are owned by the bank after going through the foreclosure process.

Typically in a REO sale, there aren't any disclosures. Basicslly the seller is not there to disclose the in's and out's about the property. This includes but is not limited to pre existing issues about the property that may need repairing and/or replacing all the way to particular neighborhood association restrictions.

Make sure with your agent to learn as much as you can about the home and the neighborhood. If the property sold in the past five years, your agent may be able to obtain past disclosures or obtain city records. Also make sure to always double-check your title work.

Dangers of Foreclosures

Times have changed, a lot of people are still facing financial shortfalls. There was a time when people were so concerned about their image they would do anything to keep that image up. Allowing your home to foreclose & walking away from a mortgage was something that was almost unheard. When people do have their property foreclose they sometimes decide to take out their anger & frustration against the mortgage company by inflicting physical damage on the property itself.

Many realtors are pushing their clients toward foreclosed properties. However there are some challenges to purchasing them and some red flags to look for before deciding to purchase one.

1. Don't expect to make friends.

When you are purchasing a foreclosure then you are dealing directly with the bank. It's strictly business for the bank, they don't care about how good a neighborhood it is to raise your kids or about the school PTA. Nevertheless that could be a good thing because the bank is not in the real estate business. They want to move the property as quick as possible but they want to maximize their profits in the process.

Because you're dealing with a bank, not an individual homeowner, be prepared to wait for a few days, if not weeks, for a response. For the most part, the bank's agent doesn't even show the contract, the pre-approval letter, or any of the offer pieces to the bank. Instead, the bank's agent inputs the data into a website or piece of software. Remember for the bank, they are like Jerry Maguire "Show Them The Money."

Additional Factors that may effect your Mortgage Payment

Monthly mortgage insurance affects your house payment. With a less than 20% down payment, the lender will more than likely require the borrower to pay monthly mortgage insurance to ensure against the possibility of defaulting on the mortgage.

By paying something down or walking into the house with some equity will give you more leverage when borrowing funds.
Make sure to check and see what is the minimum credit score required for financing. If you don’t meet the minimum, look into other options you may before you apply for a home loan.

Assets/reserves — In most cases, you’ll need at least two months of PITI saved in the bank to meet the reserve requirement. However make sure to check with your lender for complete details.

12 DAYS OF MASTERING CREDIT - DAY 12

EIGHT IS ENOUGH

Everyday we spend our time and money in various places and with various people but what are we really investing in. The majority of people think credit repair is TOO expensive, but these same people will spend thousands of dollars filing bankruptcy. Then they will lose time, money and credit worthiness all in thename of doing it the safe way. Then others will allow incorrect and negative items to remain on their credit, hoping it will magically disappear.

 I'm sorry to tell you that it won't.

Even those items that are supposed to be legally removed after the 7 or 10 year period will remain long after that. A study in 2004 showed that almost 80 % of all credit reports contained errors. I did not say 8 % or 50 % but I said 8 out of 10 people have some form of errors on their creditreports. I hate to beat a dead horse but that number is too high to ignore.That number is high enough for me to take action and at least investigate my personal credit report. These errors are costing consumers millions of dollars every year and the credit bureaus, creditors and collection agencies are racking up off of it. A lot of this extra money that is being made is off of higher interest rates.

Let’s take for example mortgage rates. Most people are not aware of the fact it is really not that difficult to get approved for a mortgage. The difficulty usually comes in the amount of the loan the consumer is seeking. The higher the loan amount then the higher the loan risk for the lender. That's why you as a consumer must do everything in your power to minimize this risk for the lender which creates a easier and smoother transaction. I myself personally know lenders that approve people with credit scores as low as 580. Furthermore if I tell an individual that they have been approved for a mortgage and that their interest rate is going to be below 5% most people would believe that that is a great deal. However that's not the case. If a person with a 620 score gets a mortgage the interest rate should be around 4.6% with a payment of $765 and pay $126,000 interest over the life of the loan versus a person who has a 720 w/a interest rate of 3.1% monthly payment of $647 total interest of about $83,000.

The scenario above paints the picture of a good deal versus a great deal or either a good deal versus a better deal. I mean if you get an interest rate below 5% that is not particularly a bad deal but there is a better deal available if that person is willing to make the proper investments in getting their credit score higher. When I go shopping, when I decide to use my hard earned money to do anything, then I want the best deal available.

So let’s look at the numbers again, not only will you save $118 per month, which is $1,416 a year but also you will save $43,000 over the life of the loan. If we calculate $1416 a year times 30 years which is the average life of a mortgage then that brings the total amount to $42,480. Now if we add the amount you have saved on your monthly payments over 30 years $42,480 plus the interestsaved which is $43,000 that amount equates to $85,480. When we look at that amount that is a pretty good amount that's saved, can you picture if that amount is saved or placed in an interest earning savings account. This is only what a person can save on the mortgage rate; imagine what you can save in autorates, credit card interest, etc.

Consider this if a man goes to the gym every day and plays basketball that doesn't make him a good basketball player and that certainly doesn't guarantee you will see him on the same team as LeBron James. There are a lot of people who say they repair credit but that doesn't make them a PROFESSIONAL. Just because a company says they repair credit doesn't make them good and an expert at what they do. We have been in the business for over 13 years.

Growing up I had a Boy Scout troop leader run off with my money but I still believe in teamwork. In high school I had a substitute teacher run off with our field trip money but that didn't stop me from believing in education. So what am I saying? There may have been those in your life who have disappointed you, even lied to you but know this there are bad apples in every bunch. Bad cops, bad presidents, bad doctors and bad restaurants. Does this mean that we stop living? Does this mean that we stop trusting? None of this changes the fact that in order to get where you want in life it's going to take TEAMWORK and some form of EDUCATION.

There are several companies that take advantage of consumers desperate for a higher credit rating. Perhaps this is the reason most people are skeptical of dealing with credit repair companies. Here is a quick section of the law to familiarize yourself with.

 

Section 404 ("Prohibited Practices") of the Credit Repair Organizations Act (CROA) reads, "No person may make any statement,or counsel or advise any consumer to make any statement, which is untrue or misleading with respect to any consumer's credit worthiness, credit standing,or credit capacity to... any [credit bureau]... or any [creditor]."

 

A well-strategized credit repair plan begins with these three essential foundations. Make sure to look for these strategies when deciding to deal with any company : a) simple requests, b) explanation of information, and c) legal demands.

I am sure many of you have encountered credit repair methods which are strictly illegal. These vary from certain e-books and individuals who will advise you to do any and everything under the sun. It can be as outlandish as requesting that you identify establish credit by simply making up a Social Security number in accordance with some geographically-based insider information regarding the numbering scheme, all the way to acquiring an IRS Taxpayer Information Number (TIN), which looks like a Social Security Number, and establishing credit with that. “Live by the sword, die by the sword” In other words there are grave consequences for being caught doing anything illegal.

  Identity theft is another reason to check your credit report for errors. The FBI has deemed “identity theft” as the FASTEST growing crime in America. This is due to several reasons, accessibility of personal information, the consumer’s lack of awareness of the consequences of not protecting their identity and last but certainly not least profitability. Once the government realizes that there are profits to be made then their antennas go up and the start to crack down, just like in the case of Napster. Therefore thus the crackdown on credit repair companies. The government is being pushed on both sides. On one side by the credit bureaus to stop credit repair companies because they are cutting into their profits by having negative items removed. Then on the other side by consumers who understand their rights to dispute the unfair practices of the credit bureaus, creditors and collection agencies. Below are a couple of true and false questions to bring clarity to some of the most common misconceptions.

Anyone with a credit score 720 or below MAY benefit from credit repair. TRUE

Credit bureaus and your creditors would like you to believe there is nothing you can do about your credit score. FALSE

There are some that believe credit repair is illegal. FALSE

It took TIME for you to mess up your credit & it is going take TIME to restore your GOOD credit. TRUE

FTC warns about using credit repair companies. TRUE

The greatest investment is one that you can make in yourself. Having a basic knowledge of the laws governing the credit repair industry is a good step towards avoiding a credit repair scam. Be sure to steer clear of any company that ignores these laws. Decide to make an investment in your future today. Contact us today 1-888-824-7622 or The Credit Genius.
             

12 DAYS OF MASTERING CREDIT - DAY 10

DAY 10

INTEREST RATES

Credit Cards

What’s considered a good APR?

Generally speaking, low-interest-rate cards drift around 10 %. There are some cards that offer low rates like the Simmons First Visa Platinum features an ultra-low 7.25% variable APR and Atlanta's Associated Credit Union offers its Visa Platinum Preferred with a 9.9% APR. However both of these cards are going to require credit scores over 680 with the Simmons requiring in some cases scores in the high 700’s.  

Bad APR?

There are cards that carry APRs well above the 22.99% mark, with First Premier Bank being the worst offender at 36% APR. As you might assume high-interest credit cards target those who have credit scores less than 650. Several industry experts recommend that once you go over the 23% range then you should consider getting a secured card.

Secured cards necessitate that consumers put down a sum of money that is usually equal to the available credit line that they will offer to you. Secured card APRs can range from 8.99% to 22.99%, which is more than reasonable considering the lack of consistent credit integrity displayed by its applicants. Remember the secured credit cards are stepping stones to get you back in the credit card game, if you uphold your end of the bargain then other credit card companies will begin trusting you by extending credit to you.

Mortgages

Remember to notate that your credit report is not the same as your credit score. In addition to viewing credit reports from the three major reporting bureaus, you also should obtain your FICO^® score.

FICO^® Scores range from 300 to 850, with the mean value score being right at 725. In all actuality, the most favorable credit rates are typically extended to those with scores of 720 or above but you can expect good mortgage interest rates at the 720 to 760 level and up.

Homebuyers who pursue an FHA Loan one of the most common loan types for first-time purchasers, can usually secure a loan if their credit is 630 or over.

If you are applying for a "stated income" loan, whereby you forego providing income verification to the lender, the lender will be looking for a minimum FICO^® score of 680 or higher. Banks don't like to assume all the risk, so your good credit history is key.

Seventy to 80 percent of mortgage lenders use FICO^® as their means of determining your interest rate and the types of loan you qualify for; as interest rates creep up, this difference can be significant.

Conversely 15 year rate will be lower than a 30 year fixed rate.

Auto Loans

The higher the credit scores the lower the interest rate. Jack Gillis, public affairs director for the Consumer Federation of America, estimates that only 15 percent of car buyers qualify for zero percent offers from automakers.

Banks, Credit Unions and dealers are the primary sources that perspective car buyers obtain their loans from. The dealer often serves as a intermediary and can still offer loans from all of the sources mentioned above.

Car dealers borrow money at wholesale interest rates, which they then mark up and pass on to you. Because the dealer's rate is lower, the rate you get may be no higher than one you arranged yourself.

Credit Unions make up the smallest percentage of auto loans nevertheless they still offer the best rates for consumers. Typically credit unions are one to two whole points lower than the bank rates. The rates are generally higher on both ends if you finance a used car versus a new car.  For a further comparison of bank and credit union rates, check websites like E-Loan or Lending Tree.

If at first you don't succeed, please don't try again until you have properly researched why you were declined or rejected. Many loan applications automatically trigger a credit check, each of which can knock a few more points off your credit score, making what might have been a bad situation even worse.

Credit unions are a great option usually because they're more likely to examine a subprime applicant's circumstances and make exceptions if problematic credit history results from one-time medical expenses, unemployment or divorce.

Check Cashing Services

Check cashing services or payday loans are new sources of money lenders that have recently entered the market. Hopefully none of us will ever have to use these modern day loan sharks but I understand life happens and there may be no more plausible options available. This is why I included the below information, so that you make a more informed decision before deciding to deal with these companies.

There are several advertisments that make payday lenders seem friendly and easy to deal with. However we've compiled six reasons to debunk this myth.

 

1.      The astronomically high interest rate. The interest rates are between 264% and 1,000%.  

 

2.      High payments due within days of signing the loan. If you cannot make these payments no matter how fair you deem that they are, you may soon find yourself in a never ending cycle.

 

3.      Extra, illegal fees and costs are often charged. Need I say more?

 

4.      Compounding interest. This translates to renewal fees and other illegal fees that you will owe and will be forced to pay by any means necessary. This compounding interest makes it almost impossible to pay off a pay day loan, because this causes rates to swirl way above 1,000%.  

 

5.       The dreadful second payday loan. Most people will be forced to take out a second payday loan because of varying extenuating circumstances. This can include lawsuits, predatory collection efforts and those payments that seem to come all too early for anyone to get back on their feet. A lot of consumers find themselves with payday loans all over the city. Now you are robbing Peter to pay Paul, James and John.

 

6.      Lenders put clauses in their loan documents which keep you from suing them if they do something illegal. This means the pay day lenders can almost do everything they want to make you pay the money without concern they will be sued for illegal practices.

 

Make sure to check your credit score for accuracy before applying for any loan. If you have any more questions or concerns contact us at your earliest convenience at 1-888-824-7622 or The Credit Genius.

12 DAYS OF MASTERING CREDIT - DAY 9

DAY 9

GOOD COP, BAD COP (GOOD DEBT, BAD DEBT)

Some debt is good. Some debt is bad. Seems simple enough, right?

Good cop, bad cop refers to a law enforcement investigatory technique, which may or may not lead to a confession from a suspected criminal. Basically one cop presents themselves as the bad cop, belligerent, unrelenting to any of the suspect’s requests. Then the bad cop is relieved by the apparently good cop who usually goes over and beyond to be nice to the suspect. This is all done in hopes of getting a confession. The good cop or the bad cop has any true regard for the well-being of the suspect beyond the cooperation with law enforcement to further their cause. Good cop, bad cop scenarios are frequently represented in crime shows like Law and Order and most recently CSI.

In wake of the financial fallout of 2007 and on the horizon of a seemingly looming fiscal cliff it seems as though all creditors are out to get us. One company offers us a credit card then the next company comes right back and offers to consolidate all our debt and magically fix our debt issues. In this day and age many people are living by the financial rules that were handed down from generations ago. Facing such uncertainty, people are saving money, sitting on piles of cash hoping things will settle down. The problem with this strategy is that savers are often losers because as the Fed prints record amounts of money savings lose value, especially as inflation kicks in and grows faster than the interest paid on savings.

Others, the financially intelligent, are making a lot of money and borrowing more of it. Why? Interest rates are at the lowest in history and many assets are priced at bargain bin prices.

Those who have a high financial IQ are borrowing money to offset their existing debt then taking the money they are borrowing and using it to capitalize on various investment vehicles.

Making good debt work for you

Good debt, if there is such a thing, is defined as this, money that is working for you rather than working against you.

For instance, if I’m using debt for a business deal, I won’t do the deal unless the cash flow from the deal pays for my debt payment and expenses while providing a good return.

This assures that cash comes into my pocket each month, providing a continual income that allows me to enjoy liabilities. The great thing about debt is it allows me to leverage my existing cash into many assets.

For example, in real estate, I can buy investment properties with debt. I can then go down to my bank and secure a loan for 80 percent (I must put down the 20 percent) of the purchase price of the investment property. In order for this to become classified as good debt I must make sure this investment deal covers my payment that is due every month on the loan from the bank.

I can use the income from my properties to either invest in more assets or I can buy something nice for myself or for my family knowing that more cash will come next month from my investments.

Borrowing for a home or college usually makes good sense. Just make sure you don't borrow more than you can afford to pay back, and shop around for the best rates. This can be an excellent investment strategy when you have great credit.

Some debt is bad

Don't use a credit card to pay for things you consume quickly, such as meals and vacations, if you can't afford to pay off your monthly bill in full in a month or two. There's no faster way to fall into debt. Instead, put aside some cash each month for these items so you can pay the bill in full. If there's something you really want, but it's expensive, save for it over a period of weeks or months before charging it so that you can pay the balance when it's due and avoid interest charges.

Pay off your highest-rate debts first

The key to getting out of debt efficiently is first to pay down the balances of loans or credit cards that charge the most interest while paying at least the minimum due on all your other debt. Once the high-interest debt is paid down, tackle the next highest, and so on.

Don't be so quick to pay down your mortgage

Don't pour all your cash into paying off a mortgage if you have other debt. Mortgages tend to have lower interest rates than other debt, and you may deduct the interest you pay on the first $1 million of a mortgage loan. (If your mortgage has a high rate and you want to lower your monthly payments, consider refinancing.)

If you have any additional questions then contact us today at 1-888-824-7622 or The Credit Genius.

12 DAYS OF MASTERING CREDIT - DAY 7

DAY 7

MORTGAGES

Find the types of mortgage loans that fit your lifestyle

Whether you’re buying your first house or your fifth, there are many different types of mortgages to choose from. When it comes to financing your new home, it’s important to understand the differences between each type of mortgage so that you can choose the right offering for your budget, but also feel confident in your decision. Most banks offers several types of mortgage loans to fit your needs, whatever they may be, and help you pay less on what you borrow. Find below the most common types of loans offered to consumers.

Fixed-rate mortgage

Considered a traditional type of mortgage, a fixed mortgage offers borrowers a fixed interest rate over the term of the loan, whether it is 10, 15, 20 or 30 years, with monthly payments that remain the same. In the beginning of the loan period, the majority of monthly payments will serve the purpose of paying off the loan’s interest. During the latter part, you will be paying more toward the loan’s principal.

 Why a fixed mortgage may be right for you:

Why a fixed mortgage may be the right choice:

You are planning to stay in the house for several years

You want the security of knowing your interest rate will not change

You like having a predictable monthly payment so you can better budget for other expenses

Why a fixed mortgage may not be the right choice:

You are locked into the same interest rate for the term of your loan and cannot take advantage of lower rates unless you refinance, in which case you could have to pay additional closing costs, appraisal and title fees

Interest rates are usually higher for this type of mortgage

Adjustable-rate (ARM) or variable-rate mortgage

An adjustable rate mortgage (ARM) is a type of mortgage with set adjustment periods in which the interest rate may increase or decrease, depending on current market conditions. Rate caps are put in place so that the interest rate can never increase or decrease by more than the determined percentage over a predisclosed period of time

Why an adjustable rate mortgage may be right for you:

You expect to live in a home for a short time period, respective to the term of your ARM

Interest rates are usually lower than other types of mortgages for the first few months to first few years, depending on the terms

Why an adjustable rate mortgage may not be the right choice:

Your payments may increase once the loan’s introductory period ends

Monthly payments will be harder to predict, making it more difficult to budget for other expenses

FHA (Federal Housing Administration) loan

Why a FHA loan may be right for you:

Allows buyers who may not qualify for a home loan to obtain one Low down payment.

Why a FHA loan may not be right for you:

The size of your loan may be limited.

VA (Veterans Administration) loan

Why a VA loan may be right for you:

Guaranteed loans for eligible veterans, active duty personnel and surviving spouses Offers competitive rates, low or no down payments.

Why a VA loan may not be right for you:

The size of your loan may be limited.

Balloon mortgage

Why a Balloon mortgage loan may be right for you:

Usually a fixed rate loan with relatively low payments for a fixed period.

Why a Balloon mortgage loan may not be right for you:

After an initial period, the entire balance of the loan is due immediately This type of loan may be risky for some borrowers.

Interest-only

Why an Interest-only loan may be right for you:

Borrower pays only the interest on the loan, in monthly payments, for a fixed term.

Why an Interest-only loan may not be right for you:

After an initial period, the balance of the loan is due. This could mean much higher payments, paying a lump sum or refinancing.

Reverse mortgage

Why a Reverse mortgage loan may be right for you:

Allows seniors to convert equity in their homes to cash; you don't have to pay back the loan and interest as long as you live in the house.

Why a Reverse mortgage loan may not be right for you:

Subject to aggressive lending practices and false advertising promises, particularly by lenders that prey on seniors. Check to make sure the loan is federally insured.

Remember there are different loans for different people for different circumstances. The best thing to do is to find a qualified mortgage broker, research your options and then make the best decision for you. Coming up on Day 10 we will go into more details of interest rates associated with various loans and the credit scores required to qualify for them. Feel free to contact us at 1-888-824-7622 or The Credit Genius.

12 DAYS OF MASTERING CREDIT - DAY 6

DAY 6

CONSUMER RIGHTS

Depending on your goals repairing your credit can be beneficial to almost anyone. Additionally you also have certain rights under federal law that the credit bureaus & your creditors MUST abide by. Credit repair is NOT illegal; as a matter of fact most high-profile positions use various forms of credit repair, including most newly elected government officials, corporate executives & professional athletes. The Federal Trade Commission (FTC) warns against using credit repair because unscrupulous companies are only interested in taking your money & not helping you achieve your goals.

We’ve listed below four of the main laws that govern and protect your credit as a consumer.

 

Fair Credit Reporting Act compels credit bureaus. The Fair Credit Reporting Act (FCRA), which in a nutshell informs the credit reporting agencies what they can and can't do. The FCRA guarantees access to credit reports. Regulates who has "permissible purpose" to acquire a consumer's report. Places statutory limits on how long information can be reported. Details how a CRA must handle disputes, including but not limited to those posed by consumers.

Fair Credit Billing Act compels original creditors. The Fair Credit Billing Act (FCBA), which undergirds the more detailed and exhaustive Truth in Lending Act, which was for all intents and purposes was created to “police” the original creditors. The FCBA requires creditors to bill correctly and completely, and it's the FTC's job to make sure that the statute is equally applied and complied to. The FTC condenses the statute's exclusions as follows: "unauthorized charges; charges that list the wrong date or amount; charges for goods and services you didn't accept or weren't delivered as agreed; math errors; failure to post payments and other credits, such as returns; failure to send bills to your current address provided the creditor receives your change of address, in writing, at least 20 days before the billing period ends; and charges for which you ask for an explanation or written proof of purchase along with a claimed error or request for clarification."
 
Fair Debt Collection Practices Act compels third party collectors. The Fair Debt Collections Practices Act (FDCPA), which regulates debt collectors. Provides behavioral standards for acceptable third-party collections behavior and specifies that Collection Agencies must always include several legal stipulations in their dealings with debtors. Allows the debtor to formally request that the CA "cease and desist" from communicating with the debtor further. Specifically details a consumer's right to request further information regarding an alleged debt. 

Quick Summary of FDCPA:

Collectors can't call after 9 pm or before 8 a.m. local time Section FDCPA 805 (a)(1)

Collectors can't telephone you at work if you tell them not to Section FDCPA 805 (a)(3)

Collectors should NOT give information about you to third-parties (friends, family, and coworkers)

HIPAA

Health Insurance Portability and Accountability Act of 1996 (HIPAA), which regulates health providers. Title 2.1 of The Privacy Rule took effect on April 14, 2003, with a one-year extension for certain "small plans". The HIPAA Privacy Rule regulates the use and disclosure of certain information held by "covered entities" (generally, health care clearinghouses, employer sponsored health plans, health insurers, and medical service providers that engage in certain transactions.) It establishes regulations for the use and disclosure of Protected Health Information (PHI). PHI is any information held by a covered entity which concerns health status, provision of health care, or payment for health care that can be linked to an individual. This is interpreted rather broadly and includes any part of an individual's medical record or payment history.

 

Remember these laws are in place to protect consumers against unfair credit practices like billing statement errors, debt collection, credit repair, and credit reporting. These laws do not guarantee that an individual will be granted credit by a potential creditor nor does it ensure that a consumer will have good credit. Finally these laws are in place to guarantee that the credit bureaus, creditors and debt collectors do not run amuck with your credit and your credit reports.

 

If you want to get started on your new future by rehabilitating your credit then contact us today at 1-888-824-7622 or The Credit Genius.

12 DAYS OF MASTERING CREDIT DAY 3

DAY 3

THE CREDIT BUREAUS

There are three major consumer reporting agencies or credit bureaus, Equifax, Experian, and TransUnion. These companies collect information from various sources, i.e. past or current employers, and provide consumer credit information on individual consumers for a variety of uses. FICO, the company who developed and maintained the FICO Score is not a credit bureau. While they compile your credit score based on data from the major credit bureaus, they do not collect credit report data on their own.

 Equifax is headquartered in Atlanta, Georgia. Experian is headquartered in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil. TransUnion is headquartered in New York, New York.

These are the organizations that provide information on individuals borrowing and bill paying habits. This assists those who extend credit to consumers to properly gauge the consumer’s credit worthiness; in addition it can help determine the ability to pay back a loan and can affect the interest rate and other terms of a loan concerning mortgages. It is the credit bureaus LEGAL responsibility to maintain accurate records, and it's your right as a consumer to ensure that they do just that, remember this phrase “for the people, by the people”.

These bureaus are all publicly-traded, for-profit companies who are not owned by the government. I inform my customers all the time that the credit bureaus do not have some special power over you. They are like McDonald’s, McDonald’s business is selling hamburgers, the credit bureaus business is selling your credit report. Yes they sell your information. This is the main reason that they do not want to easily remove inaccurate items that appear on your report. Imagine that they have thousands of records from each company, like a nationwide furniture company for instance. The credit bureau sends Macy’s their bill for keeping the record of all the customers. The furniture company does not deem it necessary to go through all the thousands of records to find out which ones are no longer account holders. Then the credit bureaus are not going to take the time to do it themselves. The more accounts the higher the bill which equals more money for the credit bureaus. Also they this means they have more names and addresses to sell to telemarketers and credit card companies.  To keep the credit bureaus from selling your information, you can opt out. You can also opt for a two-year period, renewing your request at any time in the future. Call 1-888-5-OPTOUT or 1-888-567-8688. You can also fill out the form online www.optoutprescreen.com to opt out of all credit offers sent to you in the mail.

When you engage in a credit transaction (loan, mortgage, credit card etc.) with a bank or any other creditor the information for each of these accounts will be reported to one or more of these CRAs (credit bureaus) by each creditor and each month each “credit item” will be reported in your “credit file” which is indexed under your social security number, physical address and full name.

Trimerger

If you are in the market for a new home you may come across the phrase trimerger or a tri-merge credit report. The name is exactly as it says three credit reports in one. This type of report is accessed in the majority of the instances by a mortgage broker, which uses the three credit reports to evaluate a borrower’s credit potential. A credit report is obtained from each of the three credit bureaus (Equifax, Experian, and TransUnion).

Middle score

The lender then takes your scores and uses the middle or median score to calculate things such as rates, interest, etc. For instance if you have a 720 on Equifax, 710 on Experian and a 699 on TransUnion, then the lender will use your Experian score of 710 to make the above-mentioned determinations. However they can access your credit report at a different date and your TransUnion can be a 760, your Equifax can still be a 720 and your Experian a 710. This means that now your middle score is now 720 on Equifax. Your middle score can change at any time, it is not set to a particular bureau but rather is based on what the scores are at the time that they are accessed by the lender.

If you want more information on how to improve your credit score contact us at 1-888-824-7622 or at our website The Credit Genius.

12 DAYS OF MASTERING CREDIT DAY 2

DAY 2

YOUR CREDIT SCORE

The credit score is probably the second most important number in your life, right behind your social security number. It’s ironic that they are intrinsically tied together for the majority of our lives. Whatever you are planning on doing in life then you probably are going to need to know your credit score. If you plan on owning a home, then you will need to know your credit score, purchase a vehicle, also you will need your credit score, insurance, student loans, even getting a job, your credit score will come into play one way or another.

There is some confusion over your FICO^® Score and your credit score. The FICO^® Score is a number that summarizes your credit risk. Lenders use it to make credit decisions, such as the interest rate you get when you apply for a loan. This number is provided exclusively through the Fair Isaac Corporation. This number is used by approximately 90% of the lenders in the United States. FICO^® Scores range from 300 to 850, with the mean value score being right at 725. In all actuality, the most favorable credit rates are typically extended to those with scores of 720 or above.

Credit score is the number assigned to person that indicates to lenders their capacity to repay a loan. This number can be provided by a variety of sources and can fluctuate in number and calculation methods. Perhaps you may have checked your credit scores, then went to a car dealership or a mortgage loan officer and found these numbers to be vastly different. The reason being is that not everyone is using FICO^® Scores to calculate your scores in the products that they offer. The true way to get your FICO^® Score is to go to myfico.com. If you have a great FICO^® Score then you will have a good score no matter accesses your credit file. Although many new score calculations have come out, the FICO^® Score remains the most established and well-respected among lenders. Below we have broken down how FICO^® Scores are calculated to the nearest percentile.

35% of your score is influenced by account history (how timely you've paid)

30% to current account usage which is that which you have actually used (how much of your credit is being used, with greater amounts causing calculations to reflect negative).

15% to length of credit history (the longer an account has been established, the better)

10% to new credit inquiries and accounts

10% to the "credit mix" or variety of credit types present. (mortgage, auto, installment, etc.)

Remember to increase your score from 550 to 630 your strategy will be DIFFERENT from someone who is going from a 680 to a 720. Why? It is like a relay team race each guy will have to have a different strategy, because they each have a different starting point. Also depending on what you are trying to qualify for it will also take a different strategy. If you are going to try to get a mortgage or a vehicle they will have to completed different strategies to get the desired goal.

For more information feel free to contact us at 888-824-7622 or visit us at thecreditgenius.net.

Make sure to check back tomorrow for Day 3 where we will break down the different Credit Bureaus.

 

12 DAYS OF MASTERING CREDIT DAY 1

12 DAYS OF MASTERING CREDIT

Every Christmas each child anxiously counts down the days to when Santa Claus brings them joy, good cheer and every item at Toys R Us (right?). The same anticipation should be felt by us adults who decide to grab the bull by the horn and tackle the uncertainty of correcting their credit. A lack of credit knowledge can cause you to pay more than you have too, both in the future and now. Fortunately there is hope, over the next 12 days be on the lookout for a tip a day on general credit knowledge that will assist you in taking that first step to a new life, a new you for the new year.

DAY 1

WHAT IS CREDIT?

We all know that we need good credit, or at least want to have it, but what exactly is credit? The majority of us does not find out what credit is, until we get to college or decide to make a major purchase sometime in our adult life. There are several ways to augment your credit but before you do that, you need to know what credit is, how it functions and how it can hopefully help you, instead of harm you. Let’s take a deeper look at what exactly credit is.

Credit is your reputation as a borrower. I often tell customers that it is equivalent to your interview at a job. A potential creditor has no idea who you are. They don’t know how much time you volunteer in the community, how you make sure the office is never without coffee or if you read to your child every night before they go to bed. They know none of this and quite frankly could care less. They want to know how much financial integrity you have. Your credit informs them what is likelihood and the chance that you are going to pay your bills on time, month after month. They want to get personal with you and check all into your financial past.

There are many misconceptions around the information that makes up your credit and all things that pertain to it. However, the best thing you can do initially is to make sure that the information you provide on all your applications are accurate.

In the beginning credit was primarily used for making lending decisions. However in recent times, especially since the financial fallout that started in 2007, they use credit scores and reports for other areas of your life. Most importantly of all the people that access your credit are potential employers.  Also they use your credit reports in determining insurance rates and premiums.

THREE COMMON MISCONCEPTIONS ABOUT CREDIT

1: Credit bureaus are officially recognized entities.

WRONG: Credit bureaus are companies which are in the business of making money at your expense. They gather together stories told by their “friends” and tell them to their other “friends”, without consulting you whether or not these things are true. That’s one of the main jobs of the Fair Credit Reporting Act that is to make sure not what they CAN do but what they CAN NOT do especially to your detriment. A credit report is not even an official legal document; I mean your driver’s license carries more weight with the government than your credit report, at least that’s the way it was meant to be. It at the beckoning of the “machine” which is corporate America it has caused many much grief, anguish and has even pushed some to suicide. It has more influence but not as much substance as a two-dollar bill.

2: Items on your credit report are required to remain for 7 years.

WRONG: This has been misconstrued due to the relation with Chapter 7 & Chapter 13 bankruptcy filings, nothing, I mean absolutely NOTHING is REQUIRED or should I say mandated to stay, other than that which can be ACCURATELY verified.

3: I have good credit because I pay my bills on time each month

WRONG: You have to understand there are a lot of factors that go into determining your credit score and one of them is your debt to credit ratio. You have to have this under control and understand what it is. Your debt to credit ratio is your debt that you have versus the total available credit that you have. Let’s say you have a credit card with a $10,000 limit & you owe $2500 then your debt to credit ratio is 25%.

In the days to come we will explore more of these topics in detail and others such as how your credit score is determined, your rights as a consumer and good debt versus bad debt. For more information on how to start your credit makeover visit our website. The Credit Genius