Credit Repair

Quick FICO Boosts

Apex Credit Services

There are many occasions wherein a consumer may need a few FICO points here and there.  Various situations may give rise to such a situation, however, the following circumstances are common for such a need: 1) Mortgage rate 2) Mortgage approval 3) Auto loans 4) Mortgage or Auto re-fi and, 5) The need for a low balance transfer credit product. You may consider increasing your FICO score via asking the credit reporting agencies to provide you with the permissible purpose each entity had for pulling your credit history.  Such “pulls” are called inquiries and you need only concern yourself with those termed “hard” inquiries which denotes those seen by others.  Soft pulls are not computed into your score. Typically, Equifax deletes these as a matter of policy.  Depending on your reports and the amount of inquires, this can account for up to 10% of your overall score.  Therefore, getting these deleted can earn you somewhere in the neighborhood of 20 points or more, again, depending on your overall picture.  Trans Union has been more receptive to such requests as of late although Experian will generally not re-investigate inquiries.  Still, two out of three ain’t bad and may get you an approval or a better rate. You may also consider being added as an “authorized user” to some older, positive accounts.  You may ask a friend or relative to add you onto one of their cards with low utilization (under 30% of the total limit) and good history.  If this is not an option, there are some vendors for the aforesaid accounts such as Apex Credit Services.  We have some of the lowest rates on the market. As always, you can reach us at http://www.apexcreditservices.com or toll-free at 1-888-727-4818.

New Bankruptcy Provisions Fail . . .

Trustee Director Outlines Progress of Bankruptcy Reform

Clifford J. White III, director of the Executive Office for U.S. Trustees, addressed the Senate Committee on the Judiciary’s Subcommittee on Administrative Oversight and the Courts on Wednesday. 

Reform was long sought by various types of creditors, who believed there was substantial abuse of the system by debtors.  “[Bankruptcy]” filings are now trending upward and recently reached about 40% of pre-BAPCPA filing rates,” White told the subcommittee.  In the mix of Chapters 7, 11 and 13 filings, “fewer than 30% of all cases were filed under Chapter 13 before reform [and] now account for about 40% of all filings.  The number of Chapter 11 cases has dipped by more than 20%.”

Regarding means testing, which examines a filer’s financial situation, White said, “Of the individual debtors who filed from Oct. 17, 2005, through the end of September 2006, 94% were below the median income.”  He added that early data suggest that means testing “provides a promising approach to identifying abuse.”

As with means testing, “there are positive signs that the credit counseling and debtor education provisions are workable.”

Although the credit counseling industry “has been a troubled one” – due to cases in which debtors were defrauded – “we developed our approval and monitoring criteria with enormous assistance from the Internal Revenue Service and the Federal Trade Commission.”  White claimed the U.S. Trustees’ procedures “have been praised by those agencies and also by representatives of creditor and consumer groups.”

 There is adequate capacity to serve the debtor population, with 155 approved credit counseling agencies and 285 approved debtor education providers in the U.S., White said, “although the true test will come when filings reach higher levels, as expected.”

In fiscal 2007, the U.S. Trustees will use contractors to conduct up to 7,000 audits of cases filed by individual debtors.  Random audits will be conducted in at least one out of every 250 individual Chapter 7 and Chapter 13 cases. “We anticipate between 1,000 and 2,000 audits of cases in which debtors’ income or expenses vary greatly from the norm,” which invites scrutiny.

The U.S. Trustees “hope that most audits can be completed within 70 days after a debtor’s schedules are filed.” White’s office is conducting three ongoing studies. In one, “we have developed and will evaluate a model debtor education curriculum,” which is being tested in six districts. A report will be issued next September.  White concluded that the U.S. Trustee Program “has made substantial progress” under bankruptcy reform.

Credit Repair . . .

Lesson I

This is the first in a series of free primers driven at giving the unsophisticated consumer an idea of what effective “credit repair” entails.

First and foremost, it is often a good idea to first dispute inaccurate, incomplete, and/or obsolete personal information before any other item of information appearing on a credit report.  While this is not a groudbreaking revelation, it is sound advice nonetheless for the following reasons:

 1) Inaccurate, incomplete, and/or obsolete addresses enable furnishers of information; i.e., creditors, collection entities and third party public record reporters, to verify derogatory information more easily.  It is believed that a furnisher of information need only verify two data fields with the credit reporting agencies (Equifax, Experian, and Trans Union for the purposes of this discussion) as they are currently reporting them within the tradeline on a consumer report in order to verify the accuracy of the aforesaid tradeline.  If a consumer is able to delete old, inaccurate addresses, perhaps, that will be the only one the furnisher has on file and thus, they will not be able to match up that data field.  One down . . .

2) The above can be applied to inaccurate or obsolete names.  This is just another means geared to the end of taking away data fields by which a furnisher can lock a derogatory tradeline to you,

 3) Delete all phone numbers, marital status, and places of employment.  This is unnecesary information and it’s presence only makes it easier for collection agencies to contact you.

 With the above said, please be forwarned that only Equifax and Trans Union will allow freely the deletion of inaccurate, incomplete, and/or obsolete addresses and names.  Although it is a violation of the Fair Credit Reporting Act, Experian will refuse a request to re-investigate such items.  Absent some damage via this refusal (other than statutory), a claim for these violations would be dubious at best so you’re probably stuck with respect to Experian.

 More soon to come . . .

Bankruptcy Reform Your Fault

Consumers Can’t Manage Their Finances, Counselor Tells Congress

While the long-term implications of changes in federal bankruptcy law last year aren’t yet clear, the law’s requirement for pre-bankruptcy credit counseling is warranted because “one of the principal reasons for bankruptcy is that large numbers of Americans are simply not very good at managing money,” says Susan C. Keating, president of the National Foundation for Credit Counseling, in written testimony presented Wednesday to a subcommittee of the Senate Judiciary Committee.
Asked in an NFCC survey why they were in such bad financial shape, 66.7% of consumers who went for pre-bankruptcy counseling said, “poor money management/excessive spending,” Keating notes. Loss of income was the second most cited reason (29.3%) with medical expenses a distance third (2.2%).
The average unsecured debt load for those seeking counseling in NFCC’s latest consumer survey released in October is $38,472 compared with an average annual income of $26,873. American filings for bankruptcy over the past year had unsecured debt that average 1.43 times their average annual incomes, according to the survey.
While bankruptcy filings are down this year, “the overwhelming majority of those consumers who sought pre-filling counseling in contemplation of bankruptcy appeared to be in dire financial condition,” Keating tells the committee. “By the time most consumers walked into a credit counseling agency for their pre-filing counseling, their financial circumstances were so desperate that bankruptcy was often their only reasonable option.”

Mortgage Bubble Ready to Burst?

Mortgage Industry Starts To Roil Bond Markets

By GREGORY ZUCKERMAN and MICHAEL HUDSON
December 8, 2006; Page C3

Bond investors are showing signs of increasing nervousness about homeowners and their lenders amid indications of serious troubles in some corners of the residential-mortgage market.
Ownit Mortgage Solutions, a California company that described itself as one of the top 15 lenders to homeowners with weak or no credit histories, has shut down, citing “the current unfavorable conditions of the mortgage industry.” More broadly, in recent months more homeowners with scuffed credit records who took out mortgages in the past year missed their initial payments.
This is feeding through into bond markets. Yesterday, the most active index tracking the cost of insurance on subprime mortgage bonds — the 2006 ABX Series Two index, which tracks 20 BBB-rated mortgage bonds — showed that the cost of this insurance is rising significantly and rapidly. It rose to 3.83 percentage points above Treasury yields yesterday. That was up from 3.70 percentage points the day before and 2.50 percentage points a week ago.
Such costs rise when investors demand better returns to compensate them for the risk of holding these riskier mortgages. At one point yesterday, these spreads hit 4.50 percentage points.
Some investors and traders are scrambling to protect holdings of lower-rate mortgages by shorting this index, or betting against it, traders said. Some prices on mortgage-backed securities, which see less trading and don’t move as quickly, also fell yesterday.
“This has been a violent move in the last two days,” says James Melcher, who runs a $100 million hedge fund that is part of Balestra Capital Ltd., a New York investment-management firm that is betting that the default rate on lower-rated residential mortgages will rise in the coming months. “What you’re seeing in the widening of spreads is a strong indication of fear among those who hold” subprime mortgages, who are in selling short the index.
Meanwhile, shares of some mortgage lenders fell. Countrywide Financial Corp.’s shares fell 1.7% to $41.04. Impac Mortgage Holdings Inc. fell 1.7% to $9.37.
Michael Youngblood, a housing analyst with Friedman, Billings, Ramsey & Co., said the news that Ownit was closing shop sparked a “great deal of hand wringing and anxiety” yesterday among investors, but the problems in the subprime market go even deeper.
Mr. Youngblood said 2007 is potentially shaping up to be the worst year for the subprime mortgage sector since 2000. Despite the weakening housing sector, he said, subprime originators liberalized their underwriting practices this year, making loans based on weaker credit histories to borrowers with higher debt loans and less equity in their homes. “It doesn’t make any sense to me,” he said.
At the same time, Mr. Youngblood said, industry observers are nervous about what will happen when as much as $266 billion of adjustable-rate mortgages made last year begin to reset in 2007, possibly kicking homeowners into higher monthly payments they can’t afford.

Don’t Fall For The CRA Propaganda

Credit Repair: Self Help May Be Best

You see the advertisements in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail. You may even get calls from telemarketers offering credit repair services. They all make the same claims:

• “Credit problems? No problem!”
• “We can erase your bad credit — 100% guaranteed.”
• “Create a new credit identity — legally.”
• “We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”

Do yourself a favor and save some money, too. Don’t believe these statements. Only time, a conscious effort, and a personal debt repayment plan will improve your credit report.
This brochure explains how you can improve your creditworthiness and gives legitimate resources for low or no-cost help.

The Scam

Everyday, companies nationwide appeal to consumers with poor credit histories. They promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance, or even a job. The truth is, they can’t deliver. After you pay them hundreds or thousands of dollars in fees, these companies do nothing to improve your credit report; most simply vanish with your money.

The Warning Signs

If you decide to respond to a credit repair offer, look for these tell-tale signs of a scam:

• companies that want you to pay for credit repair services before they provide any services.
• companies that do not tell you your legal rights and what you can do for yourself for free.
• companies that recommend that you not contact a credit reporting company directly.
• companies that suggest that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
• companies that advise you to dispute all information in your credit report or take any action that seems illegal, like creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution.

You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.
Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.

The Truth

No one can legally remove accurate and timely negative information from a credit report. The law allows you to ask for an investigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for this. Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act (FCRA):

• You’re entitled to a free report if a company takes adverse action against you, like denying your application for credit, insurance, or employment, and you ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft.
• Each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report, at your request, once every 12 months.
  The three companies have set up a central website, a toll-free telephone number, and a mailing address through which you can order your free annual report. To order, click on annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can print the form from ftc.gov/credit. Do not contact the three nationwide consumer reporting companies individually. They are providing free annual credit reports only through annualcreditreport.com, 1-877-322-8228, and Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You may order your reports from each of the three nationwide consumer reporting companies at the same time, or you can order your report from each of the companies one at a time. For more information, see Your Access to Free Credit Reports at ftc.gov/credit.
  Otherwise, a consumer reporting company may charge you up to $9.50 for another copy of your report within a 12-month period.
• You can dispute mistakes or outdated items for free. Under the FCRA, both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the consumer reporting company and the information provider.

STEP ONE
Tell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request that it be removed or corrected. You may want to enclose a copy of your report with the items in question circled. Your letter may look something like the one on page 6. Send your letter by certified mail, “return receipt requested,” so you can document what the consumer reporting company received. Keep copies of your dispute letter and enclosures.

Consumer reporting companies must investigate the items in question — usually within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it must investigate, review the relevant information, and report the results back to the consumer reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file.

When the investigation is complete, the consumer reporting company must give you the results in writing and a free copy of your report if the dispute results in a change. If an item is changed or deleted, the consumer reporting company cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider.

If you request, the consumer reporting company must send notices of any correction to anyone who received your report in the past six months. You can have a corrected copy of your report sent to anyone who received a copy during the past two years for employment purposes.

If an investigation doesn’t resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay a fee for this service.
STEP TWO
Tell the creditor or other information provider, in writing, that you dispute an item. Be sure to include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct – that is, if the information is found to be inaccurate – the information provider may not report it again.

For more information, see How to Dispute Credit Report Errors at ftc.gov/credit.

Reporting Accurate Negative Information

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. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. There is no time limit on reporting: information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you’ve applied for more than $150,000 worth of credit or life insurance. There is a standard method for calculating the seven-year reporting period. Generally, the period runs from the date that the event took place.

For more information, see Building a Better Credit Report at ftc.gov/credit.

The Credit Repair Organizations Act

By law, credit repair organizations must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before you sign anything. The law contains specific protections for you. For example, a credit repair company cannot:

• make false claims about their services
• charge you until they have completed the promised services
• perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees

Your contract must specify:

• the payment terms for services, including their total cost
• a detailed description of the services to be performed
• how long it will take to achieve the results
• any guarantees they offer
• the company’s name and business address

Have You Been Victimized?

Many states have laws regulating credit repair companies. State law enforcement officials may be helpful if you’ve lost money to credit repair scams.

If you’ve had a problem with a credit repair company, don’t be embarrassed to report it. While you may fear that contacting the government will only make your problems worse, remember that laws are in place to protect you. Contact your local consumer affairs office or your state Attorney General (AGs). Many AGs have toll-free consumer hotlines. Check the Blue Pages of your telephone directory for the phone number or check www.naag.org for a list of state Attorneys General.

Need Help? Don’t Despair

Just because you have a poor credit report doesn’t mean you won’t be able to get credit. Creditors set their own credit-granting standards and not all of them look at your credit history the same way. Some may look only at more recent years to evaluate you for credit, and they may grant credit if your bill-paying history has improved. It may be worthwhile to contact creditors informally to discuss their credit standards.

If you’re not disciplined enough to create a workable budget and stick to it, work out a repayment plan with your creditors, or keep track of mounting bills, consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But not all are reputable. For example, just because an organization says it’s “nonprofit,” there’s no guarantee that its services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees, or hide their fees by pressuring consumers to make “voluntary” contributions that only cause more debt.

Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.

If you are considering filing for bankruptcy, you should know about one major change to the bankruptcy laws: As of October 17, 2005, you must get credit counseling from a government-approved organization within six months before you file for bankruptcy relief. You can find a state-by-state list of government-approved organizations at www.usdoj.gov/ust. That is the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees.

Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.

For more information, see Knee Deep in Debt and Fiscal Fitness: Choosing a Credit Counselor at ftc.gov/credit.

Do-It-Yourself Check-Up Even if you don’t have a poor credit history, some financial advisors and consumer advocates suggest you review your credit report periodically

• because the information it contains affects whether you can get a loan or insurance — and how much you will have to pay for it.
• to make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.
• to help guard against identity theft. That’s when someone uses your personal information — like your name, your Social Security number, or your credit card number — to commit fraud. Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.

DON’T BELIEVE THE ABOVE HYPE!  APEX CREDIT SERVICES DOES WHAT THIS ARTICLE SAYS CANNOT BE DONE EVERYDAY!

More Credit Card Defaults . . .

Fed: Credit Card Charge-Offs Rise Again

The charge-off rates on credit cards issued by U.S. commercial banks rose to 3.94 during the third quarter ended Sept. 30, up 11.6% from a rate of 3.53 during the second quarter, but down 10.7% from the 4.41 rate in the third quarter last year, the Federal Reserve reports.
The September quarter was the second consecutive quarter showing an increase in charge-off rates.  First quarter 2006 charge-offs dipped to 2.96 from the 2005 fourth quarter’s 5.68; the higher rate
reflected bankruptcy reforms enacted in October 2005.
The delinquency rate on credit cards from commercial banks remained virtually level, from 4.13 in the second quarter to 4.11 in the third, but exceeded the 3.90 rate seen in the third quarter of 2005 by about 5.4%.
Delinquencies and charge-offs are typically affected by bankruptcy filings, unemployment, consumer prices and interest rates, among other economic measures, but most closely track with bankruptcies. Third-quarter filings grew 12.2% from the previous quarter and were up 55.6% since the end of March.

© 2006 CreditandCollectionsWorld.com and SourceMedia, Inc. All rights reserved.

Junk Debt Purchaser Rakes It In

Asta Funding’s Net Income Shoots Up 50%

Debt buyer Asta Funding announced its fourth quarter net income rose 50.7% compared to the same quarter last year, and its fiscal year net income rose 47.7% compared to last year.  The results set a record for the New Jersey-based company, said President and CEO Gary Stern.
Net income for the quarter ending Sept. 30, 2006 rose 50.7% to $13.6 million from $9 million for the fourth quarter, 2005. Net income for the year ended Sept. 30, 2006 rose to $45.8 million from $31.0 million for the same period last year, the company said.
Asta bought a record-setting $5.2 billion in face value receivables for the year, at a purchase price of $200.2 million. Revenue for the fourth quarter was up to $29.8 million compared to $19.9 million in the same quarter, 2005.  Revenue for the year was up to $101 million from $69.4 million for fiscal year 2005.
The company is holding a conference call for investors at 11 a.m. ET this morning.

ACA Expects Large Volume of Complaints

INDUSTRY LEADERS SPEAK – ACA Expects Complaints Report in March

Preliminary results from a major analysis of complaints filed about collectors with the Federal Trade Commission could be available in mid-March, says Gary Rippentrop, chief executive office of ACA International, the major collection industry trade association.
ACA last year hired PriceWaterhouseCoopers to analyze complaint information.   It has been obtaining data under a Freedom of Information Act request to see exactly what consumers have been saying about collection agencies.
Once the analysis is done, “we can do more to educate and train” collectors in areas that may stand out as eliciting large numbers of complaints or consumer misunderstanding, Rippentrop says.
Looking to other issues facing the collection business in 2007, Rippentrop says “the number one concern or issue is the new leadership in Congress.”

As Democrats take control of both houses of Congress and key committee chairmanships they likely will become more vocal on such issues as consumer privacy and may raise the possibility of limiting access to Social Security numbers.   “That just won’t work for us,” Rippentrop says of a restriction on usage of Social Security numbers.
The Social Security number issue could surface as Congress discusses such other topics as restrictions on predatory lending, he notes.   While predatory lending may not seem like a collection issue, it could quickly become one if Congress, or state legislatures, extend consideration of the topic to include restrictions on collecting on various types of delinquent loans, Rippentrop warns.
Editor’s Note: This is the first in a series of Web interviews with key industry leaders that CCRmag.net will be featuring throughout December. The January issue of Collections & Credit Risk magazine also will examine key issues ahead in 2007.
© 2006 CreditandCollectionsWorld.com and SourceMedia, Inc. All rights reserved.

Monitoring Services Fail to Prevent Identity Theft

Melody Millett was shocked when her car loan company asked her if she was the wife of Abundio Perez, who had applied for 26 credit cards, financed several cars and taken out a home mortgage using a Social Security number belonging to her actual husband.

Beyond her shock, Melody Millett was angry. Five months earlier, the Milletts had subscribed to a $79.99-a-year service from Equifax, a big financial data warehouse, that promised to monitor any access to her credit records. But it never reported the credit activity that might have signaled that they were victims of identity theft.

“I feel like the whole thing is a sham,” said Melody Millett, a 37-year-old information-technology manager from Overland Park, Kansas. “You feel completely violated because here are the people who know the industry. They hold all the data.” The services, she contends, are oversold.

Full story here: http://news.com.com/Protectors%2C+to…l?tag=nefd.top

“For example, a fraud artist may use someone else’s personal identification information–like a Social Security number–but take out a loan in his or her own name. The data mismatch can cause the bureau’s computer systems to route the loan request to a separate file so that a credit-monitoring service never picks it up. “

“Donald Girard, an Experian spokesman, acknowledged that his company’s credit-monitoring products could not detect cases in which a credit applicant used someone else’s Social Security number but his or her own name because those records were stored separately. He added, however, that in such cases consumers are “not harmed” financially.”