Helping Yourself in credit repair

People believe that they cannot get ahead due to poor credit. Yes, It can be a stumbling block but it isn't the end all be all. I'm going to outline a few steps to getting your credit score going in the right direction......Up

Step 1: Tell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (NOT originals) of any documents that support your position. In addition to providing your complete name and address, your letter should identify each item in your report you dispute; state the facts and the reasons you dispute the information, and ask that it be removed or corrected. You may want to enclose a copy of your report, and circle the items in question. Send your letter by certified mail, “return receipt requested,” so you can document that the consumer reporting company received it. Keep copies of your dispute letter and enclosures.









Consumer reporting companies must investigate the items you question 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 is required to investigate, review the relevant information, and report the results back to the consumer reporting company. If this investigation reveals that the disputed information is inaccurate, the information provider has to notify the nationwide consumer reporting companies so they can correct it in your file.

When the investigation is complete, the consumer reporting company must give you the results in writing, too, 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 is not permitted to 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 ask, the consumer reporting company must send notices of any correction to anyone who received your report in the past six months. You also can ask that a corrected copy of your report be 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 for this service.

Credit Trends are helping Credit Card Companies

The creditors are making money while we suffer.
Most major credit card companies say fewer customers defaulted on their accounts in July, but that doesn't necessarily mean they're financially better off.

A few credit card issuers say more families fell behind on payments, which could be another sign that household finances have yet to recover from the recession.

With more than 6 million people living on unemployment benefits and the recession continuing to pressure family budgets, many are forced to prioritize their bills. The reality is that credit cards often fall to the bottom.

Credit card companies have been trying to limit their risk over the course of the last year. Major credit card issuers reporting monthly results say the rate of losses from unpaid accounts improved from June to July.

American Express Co., Bank of America Corp., Capital One Financial Corp., Citigroup Inc., Discover Financial Services and JPMorgan Chase & Co. all say the number of account balances written off due to nonpayment fell.

American Express, for example, said its net loss rate fell to 8.92 percent in July from 10.18 percent the month before. Bank of America fell to 13.81 from 13.86 and Chase saw a drop to 7.92 percent from 8.04.

What's more, most of the major card issuers also reported more customers making payments on time.

The positive trends don't necessarily mean consumers are suddenly in much better financial shape.

Some of the uptick is more likely due to credit card companies culling the riskiest customers, which will in time lower default and delinquency rates, said bank industry analyst Richard Bove of Rochdale Securities.

He sees little to point to a significant improvement in the financial health of consumers.

Unemployment remains high and will remain elevated for months and the average household wealth is lower due to falling real estate values.

"It doesn't appear that the recovery in the economy, which seems to be in place at the moment, is going to do anything to change those metrics," he said. "Unemployment is going to stay high and it doesn't appear housing prices will soar anytime soon, either."

The slight increase in the monthly credit card data also could be attributed to the fact that consumers are striving to maintain a good relationship with their card companies, said Ezra Becker, a consultant for TransUnion LLC, a leading consumer credit rating company.

"They recognize that in a recession their credit cards are their primary cash equivalent resource," Becker said. "Credit cards really help a lot of people make it from paycheck to paycheck or tide them over in periods of unemployment."

Overall statistics show that credit card balances are declining as consumers work to pay off debt.

Revolving credit has fallen for nine consecutive months beginning last October and continuing through June. The Federal Reserve Board says that's the longest pullback in more than 40 years.

Still, of the major companies reporting monthly results, Capital One, Discover and CitiBank reported an increase in the number of customers falling behind on payments due more than 30 days. Customers delinquent from 30 to 59 days rose for Capital One and Citibank.

The mixed results may simply show that some credit card companies were able to manage credit problems more efficiently than others as the economy deteriorated.

"What this tells you is the issuers are in different stages of recovery," said John Ulzheimer, president of consumer education for Credit.com, an online financial services company. "Some issuers did a better job of jumping on the problem more aggressively early on and those are the guys coming out a little bit earlier smelling like a rose."

Some analysts expect losses from unpaid accounts to increase over the next few months before stabilizing at an elevated level. In part because more consumers typically fall behind on payments in the last half of the year as holiday spending increases and some overspend.

The factor most affecting credit currently, however, is unemployment.

"We believe that further increases in the unemployment rate could cause a second spike in credit losses in the second half of the year," wrote Credit Suisse analyst Moshe Orenbuch in a Monday note to investors.

Although some economists are predicting the recession has ended or is near the end, the credit health of most families will lag behind the broader economic uptick.

"We're not really out of the woods yet from a credit perspective. The consumer is still facing difficult times for the next several months," TransUnion's Becker said. "I think we can temper that with some cautious optimism that it does look like there's a light at the end of the tunnel."

Andrew Housser of Bills.com (My old company) speaks on how forclosure impacts your credit score

Foreclosed on? Just because you may have lost one home doesn’t mean you’ll never be able to buy another. But first, you need to engage in some credit score Rx.

“A foreclosure will cause a credit score to drop sharply, typically by 200 to 300 points,” says Andrew Housser, co-CEO of Bills.com, a free consumer portal of personal finance information. “That would drop a score of 700 – considered a ‘good’ score – to as low as 400 – considered pretty terrible.” The minimum FICO score is 340. This drop can affect your ability to not only purchase a home, but also to secure a car loan and even gain employment. “Lower credit scores can result in being denied credit, such as credit cards and car loans, and facing much higher rates for loans and even other items, such as insurance, that rely on credit scores,” notes Housser.

Don’t lose hope, though. While a foreclosure can remain on your credit report for seven years, it won’t ruin your credit score for life, adds Housser. “If you keep all of your other credit obligations in good standing, your FICO score can begin to rebound in as little as two years. The important thing to keep in mind is that a foreclosure is a single negative item. If you keep it isolated, it will be much less damaging to your FICO score than if you had a foreclosure in addition to defaulting on other credit obligations.”

In fact, The Federal Housing Administration will allow a new mortgage to be approved if a past foreclosure was more than five years old,” explains Alan M. White, assistant professor at Valparaiso University School of Law in Indiana. “The impact of foreclosure on your score diminishes over time, depending on whether you have other active, on-time accounts,” he explains.

Of course, it’s preferable to avoid foreclosure altogether. Here are some ways to accomplish that goal. (Keep in mind, however, that many of these options require you to resume normal mortgage payments at some point. If you can’t afford to resume payments, it may not be worth the effort required to stop or reverse the foreclosure process.)

• Lender negotiation: If there is a reasonable expectation that you will be able to resume making regular mortgage payments within a relatively short time frame, the lender may be willing to work with you to establish a payment plan to bring the loan current. “Especially in today’s market, this is a greater possibility,” says Housser. “Many individuals are having trouble due to an unexpected job loss, medical expenses, divorce or other personal trauma. If the situation has some resolution so that the regular payments may be able to be met again, it is worth it to call the lender.”

• Forbearance agreement: For a temporary hardship, the lender might grant you a forbearance agreement to lower – or eliminate – payments for a limited time.

• Loan modification: This entails a permanent change to the loan, such as lowering the payment and extending the loan’s term or incorporating any delinquencies into future payments. “Lenders are more willing to discuss this now than they were before,” adds Housser.

• Deed-in-lieu of foreclosure: In this case, the lender takes ownership of the home, but that will not eliminate the negative impact of a payment delinquency or foreclosure that has already begun. “Bankruptcy remains on a credit report for 10 years, but it can offer a way to become current in payments, which will improve the credit score,” White notes.

• Refinancing: It may be possible to refinance a mortgage for a lower interest rate and/or lower monthly payment. But if you have already had late payments on a mortgage, the interest rate offered may be too high to lower your monthly payment. Housser recommends using online rate comparison sites and calculators to determine the “real costs of refinancing.”

• Short sale: In a short sale, the lender accepts less than the mortgage debt when the property value has declined. “A short sale will prevent foreclosure,” says White. “However, if it takes place after foreclosure was initiated, the foreclosure and the related delinquency in payments will be reflected on the credit report.” The only way to protect the credit score fully is to maintain monthly payments until the house is sold.



• Chapter 13 bankruptcy: If the loan default is past the point of being resolved with the lender, you may file for chapter 13 bankruptcy protection. This protection requires you to resume making regular mortgage payments but allows the arrearage (being overdue in payment) to be repaid over the course of the chapter 13 plan.

All things considered, a foreclosure won’t ruin your credit rating forever. It will lower your credit score and remain on your credit report until you’re able to re-establish good credit — which takes time and careful planning. Consider your home purchase wisely.