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  • Credit Repairs after Bankruptcy

    October 6th, 2011 by Ruth Racey

    Becoming credit worthy does not stop in bankruptcy; it is a common misunderstanding that a good credit report can never be attained by those who filed for bankruptcy. Just like other dilemmas, bankruptcy is simply a set back that individuals must overcome to insure a better and healthier financial venture. Account holders is inevitably in a bad position after declaring bankruptcy, but in a way it is also an effective strategy in wiping the account holder’s slate clean enough to start over. Even if there is a greater burden of proving one’s worthiness after bankruptcy, it is still possible and doable.

    Account holder’s who suffered major setbacks due to bankruptcy must immediately consolidate his or her resources to re- establish his or her worthiness. There are four major steps that they can undertake to insure a stable financial life even after the declaration of bankruptcy. The immediate advisable actions to be taken in this situation revolve on timeliness and details. These steps are:

    • Verify reported and recorded details
    • Establish a starting point for possible repairs
    • Monitor progress through FICO scores and reports
    • Avoid more setbacks like fraud and identity theft

    Account and finance information can be too many to be effectively handled by account holders. But no matter how hard it can be, account holders should exert all efforts to find possible discrepancies with the reported and actual account information. Liquidated accounts can still be reported as active accounts sometimes which put account holders in a worse position because these liquidated accounts will be interpreted as delinquent accounts.

    Bankruptcy will surely decrease the account holder’s score and report. While doing so, it can even increase the chance for managing and getting rid of the most unmanageable debts. Even if a bankruptcy record will appear on the account holder’s credit history for ten years, it is still a fair trade- off as compared to a lifetime of being unable to pay debts and financial ends.

    There is no immediate and instant legal way of repairing credit history, legitimate and legal repair schemes would require patience and discipline from the account holder’s end. The best way of measuring one’s progress in his or her repair attempt is through credit reports and scores. Fully utilizing the availability of these worthiness evaluations will put any account holder in a more precise position to assess whether he or she is making progress.

    Lastly, those who have already suffered from bankruptcy should avoid compounding the damages that he or she already incurred by preventing possible involvements in other setbacks. Account holders should avoid becoming victims of the most common credit related crimes such as identity theft and fraud; simple because it will put more negative record in their already bad record.

  • Identity theft: what you can do and what you need to know

    October 5th, 2011 by Ruth Racey

    Technology has helped most of us for research, recipes, diy stuff, business and entertainment and social-networking too. Well, these are the good things that technology has given us. Unfortunately, there are people who use their intelligence to steal confidential information of customers which include details such as their bank transactions or social security information and this is termed as identity theft. Identity theft is a serious crime.

    Unlike presumed by many naïve consumers, identity theft does not imply another personating you. It refers to stealing confidential information and abusing it.

    So, what exactly is identity theft? This is when a person steals information about you and commits fraud or crime. Your information is as good as gold because the information they steal can be used to conduct fraudulent transactions without your knowledge.

    There are different ways in which your identity can be stolen and misused. Let us take a look at a couple of ways.

    Old fashioned stealing.

    The thief steals your handbag and looks for your credit cards. These credit cards will then be used by the thief to purchase various items at various outlets. You will realize this only when you receive your next credit card statement and by then, unfortunately, you would be poorer by a few hundreds or thousands of dollars.

    How do you stop a thief from using your credit card? As soon as you realize you have been robbed, call up the customer service department of your credit card lender and inform them about the theft. Place a block on your credit card so the thief cannot misuse it.

    Phishing is another way of stealing confidential information. The fraudster sends emails to unwitting consumers requesting for personal information. As an innocent victim, you would readily give them vital information. The next thing, by the time you realize your folly, someone is already using your credit card to purchase some expensive items on the internet. So, what do you do when you receive an email asking you for your vital information? Firstly, you should call your bank and ask them if they have sent such an email. If they say yes, you still have to ask who sent it and when was it sent. If they say no, warning bells should set off in your mind and you should delete the email immediately without revealing any information.

  • The Implications of FCRA in Credit Reports

    October 4th, 2011 by Ruth Racey

    Recipients of credit reports and FICO scores are always confronted with the dilemmas of the technicalities and difficulties in fully understanding their rights regarding credit worthiness evaluations. Many account holders are unaware of the benefits that they can summon from legal mandates passed by the legislation to support account holders. One of these laws is Fair Credit Reporting Act or FCRA. This law is the pioneer of the series of laws that helps account holders to keep up with the growing demands of the financial market.

    The benefits of this act can be fully accessed at no charge in the website of the Federal Trade Commissions. Some of the rights that are notably for the benefit of the account holders are permissible purpose, right to dispute and the right for free reports. Exercising these rights will put account holders in a better position to negotiate, repair and maintain their financial standing. FCRA is also one of the best justifications that account holders can use to counteract possible dilemmas regarding their standing, like inaccuracies and wrong use of the account holder’s personal information.

    Permissible purposes are the primary concern catered by FCRA to answer the mounting dilemmas on the part of account holders that are related to the use of their personal information. There are only eight grounds that qualify for the permissible purposes.

    Among these eight permissible purposes, consumer disclosure and legitimate business transaction are the most common reasons. Consumer disclosure is when the account holder personally asks for his or her report for no other reason beyond personal inquiring. Being part of a legitimate business transaction is also one of the eight permissible purposes. This occurs when the account holder allows the other end of the business agreement to access his or her credit worthiness standing as a requirement of the transaction.

    Due to the passing of the FCRA account holders are also granted the most important right in the field of credit reporting. It is inevitable that inaccuracies may occur in the accounting of the payment history. When faced by these discrepancies, account holders as mandated by the FCRA can dispute the wrongly accounted parts of their report.

    Lastly, account holders are now entitled to three annual credit reports from the three major CRAs. Equifax, Trans Union and Experian allow account holders to easily access their scores and reports through different media such as post mail and internet. Account holders can now check and update their reports, allowing them to easily establish a good credit worthiness standing for future uses.

  • Closing an Account is bad for Credit Reports

    October 1st, 2011 by Ruth Racey

    Credit account holders and other members of the financial market usually get the wrong impression that by closing credit card accounts they are increasing their FICO score for the better. This can be true if the individual is looking at short terms solutions for his or her problems. However, in the long run it is undeniable that closing card accounts would cause more negative points in the general computation of the individual’s FICO score and writing of his or her credit reports. There are a lot of reasons that would justify avoiding an action such as closing an existing debt account.

    Closing this type of accounts can easily and instantly increase the FICO scores of those who opted to do this. Unfortunately, closing accounts of this type will cause long term negative effects to the total credit worthiness evaluations of an individual. This repair tactic and action is only applicable to those who would want to avail loan agreements and other financial agreements, but having problems with their current worthiness standing. Closing debt accounts have two major effects on those who used this repair tactic- it will eventually fall- off and it decreases utilization measurements.

    An account in a credit report is only good for seven consecutive years. There are those that would stay for ten years, but they are the ones which are negative in nature. The Date of Last Activity or DLA is the time keeping and updating scheme used to record accounts in reports and payment history. Closing an account will start the time ticking down for the account holder, no matter how good his or her payment history was in the recently closed account it will be lost after seven short years.

    The DLA factor in this credit worthiness evaluation scheme makes closing debit card accounts unadvisable because it will permanently omit a record which can be potentially good for the account holder. Account holders with existing account holders should also avoid being proactively closed by their service company by simply using their existing accounts every once in a while.

    The other reason to avoid closing existing accounts is that it will hurt the account holder’s FICO score and therefore will worsen the account holder’s report through decreasing utilization allowance. Revolving utilization is the measurement is the ratio between available balance and the availed balance. Closing an existing account will decrease the denominator in the utilization ratio. The standard utilization measure is between .25 and at most at.3 of the total balance ratio. Failing to consider these two negative implications of closing existing accounts will compromise account holders in drastic ways.

  • Cautioning Low-Income Individuals against Predatory Lending

    September 25th, 2011 by Ruth Racey

    The long and agonizing debate over high-risk lending is a continuing process of arguing—and only God knows when it will stop. High-risk lending does give people with bad credit another chance, same with people with limited income.

    Supporters of this kind of lending practice place laurels on the head of lenders who are brave enough to take the risk of giving poor people the loan they need when nobody else in the trade would have done the same. But critics of the practice say that this is a ploy to rake in more money from the financially disadvantaged sector, particularly because of the predatory lending practices of these high-risk lenders. Nevertheless, both can’t claim a universal truth.

    Predatory lending may be in the form of HELOCs, home or car mortgages, payday loans, credit card loans, loan sharking, or secured loan services. Almost all loan choices can become a field of predatory lending, especially is individuals approach disreputable loan companies who offer low interest rates at face value—but indeed has hidden charges that make the monthly payment higher than conventional loans.

    One way of tracking down these predatory lenders is to monitor the working class and low-income earners. They are the ones typically victimized by these lenders because they have fewer options to choose from considering that their monthly income is barely enough to tide them over until the next pay comes. But of course, not all low-income individuals get victimized by predatory lending. They will surely weed out those who do not have valuable properties which they hope to get access to through sealing a mortgage deal and hoping to foreclose on it someday, after the borrower defaults.

    One common characteristic of predatory lending is the high interest rate that they add up to the value borrowed. Because of the limited financial resources, people who apply for payday loans will find it hard to repay the original debt plus the additional surcharge and interest rates. Once the paycheck is received, the debt is repaid to avoid surcharges. But then again, nothing else is left to the person, so he decides to apply for another loan, which will then be paid the next month. It will follow a cyclic pattern which makes it impossible for the person to get rid of indebtedness without divine intervention.

    The debt cycle is a ploy done by many lenders who abuse the susceptibility of the poor to high-interest offers. Apparently, these people have very limited choices and can do nothing more than to agree to the lender’s conditions.

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