CreditScoreAide.com Improve Credit Blog http://creditscoretry.us/ News and Information About Credit Repair, Credit Scores and Credit In General en CreditScoreAide.com Copyright CreditScoreAide.com 2009 2009-09-22T00:24:10+00:00 Do “Credit Builder” Features Work? http://creditscoretry.us/s/blog/do-credit-builder-features-work/ http://creditscoretry.us/s/blog/do-credit-builder-features-work/ Here’s one of the catch 22’s of credit repair.  Many people with really bad credit scores, or even no credit score (folks with “thin files” or “no files”) don’t have a chance to easily build or improve their credit score. So what can they do?  One option is to use a prepaid debit card with a “credit builder” feature.  Do these work?

Here’s one of the catch 22’s of credit repair.  Many people with really bad credit scores, or even no credit score (folks with “thin files” or “no files”) don’t have a chance to easily build or improve their credit score. So what can they do?  One option is to use a prepaid debit card with a “credit builder” feature.  Do these work?

Unfortunately, for a number of reasons, prepaid debit card companies no longer offer credit builder features.  Check out GetDebit.com to read more about these changes.

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Credit Repair Credit Scores Credit Reports Bad Credit 2009-09-21T23:24:10+00:00
Credit Repair Companies Fined in Louisiana http://creditscoretry.us/s/blog/credit-repair-companies-fined-in-louisiana/ http://creditscoretry.us/s/blog/credit-repair-companies-fined-in-louisiana/ Here’s some good news for those of us who use credit repair services—the Federal and State Regulators are looking out for us!  Here’s a story about a fine imposed by the State of Louisiana on some unscrupulous credit repair firms.

Here’s some good news for those of us who use credit repair services—the Federal and State Regulators are looking out for us!  Here’s a story about a fine imposed by the State of Louisiana on some unscrupulous credit repair firms.

Here’s a quote from an article reporting this story:

An Ascension Parish credit repair company must pay $13,500 in civil fines, attorney’s fees and court costs to settle an unfair trade practices suit brought last month by the Louisiana Attorney General’s Office.

Attorney general’s prosecutors had obtained a temporary court order July 2 to stop operations of Next Step Credit of LA LLC and a related corporation because the credit repair company did not have a required $100,000 surety bond filed, state District Court records say.

The office of Attorney General Buddy Caldwell brought suit against the firm July 1 in 23rd Judicial District Court because the business continued to operate after receiving a previous cease and desist order over the bond, Assistant Attorney General Charles Braud Jr. said Tuesday.

The Credit Repair Services Organizations Act put credit repair under Attorney General’s Office oversight in July 2008 and requires surety bonds be filed with the office.

The action was not as a result of complaints by Next Step Credit customers, state and Next Step attorneys said.

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Credit Repair Credit Scores Credit Reports Bad Credit 2009-08-13T23:50:06+00:00
A Quick Check To See How Credit Reform Is Going http://creditscoretry.us/s/blog/a-quick-check-to-see-how-credit-reform-is-going/ http://creditscoretry.us/s/blog/a-quick-check-to-see-how-credit-reform-is-going/ There’s a fascinating study by the Center For Responsible Lending (CRL) that was just published.  It takes a look at how credit card issuers have responded to the new Federal Reserve rule changes announced in late 2008.  The news ain’t too good….

There’s a fascinating study by the Center For Responsible Lending (CRL) that was just published.  It takes a look at how credit card issuers have responded to the new Federal Reserve rule changes announced in late 2008.  The news ain’t too good….

Here are a few quotes from the study (made by Joshua M. Frank, a senior researcher at CRL):

We took a quick sampling of credit card issuers’ recent activities to see how they have responded to the Federal Reserve rule changes that were announced in December 2008 but won’t take effect until July 2010. We found the top eight issuers, who account for 80 percent of credit card balances, are raising interest rates on a larger portion of customers than usual and increasing the number of fees they impose. The new Fed rule will ban some but not all of these activities.

Perhaps most notable is what these issuers—Citigroup, Bank of America, JP Morgan Chase, Capital One, HSBC, Discover, American Express, and Wells Fargo—have not done. All continue to apply a customer’s monthly payments to the least costly balance first, leaving the most expensive to continue to grow. None have changed their policy of imposing interest rate hikes for any reason, any time. Additionally, there is no evidence that any of these companies has expanded the period of time between when monthly bills are sent and when late fees apply.

So much for the voluntary adoption that legislators hoped for.  I guess we’ll have to wait until next summer to see any real reform.

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Credit Repair Credit Scores Credit Reports Bad Credit 2009-05-13T13:08:51+00:00
Credit Card Issuers Get Tighter—Advanta To Yank Future Use of Some Business Cards http://creditscoretry.us/s/blog/credit-card-issuers-get-tighter-advanta-to-yank-future-use-of-some-business/ http://creditscoretry.us/s/blog/credit-card-issuers-get-tighter-advanta-to-yank-future-use-of-some-business/ We’ve talked about the coming flood of credit card problems.  Looks like the flood is starting to hit.  Yesterday, Advanta announced they are going to shut down future use of their small business credit cards.

The move is a desperate move to weather the economic problems of 2009.  Here’s what Advanta Corp. is doing:  They are closing their small-business customers’ credit cards to new charges after June 10.  That’s right.  If you are a small business, and if your primary business credit card is one issued by Advanta…. you are screwed.  Better start shopping for a new card, because your cash flow management is about to take a major hit.

The move by Advanta will affect nearly one million accounts. 

Phil Browne, Advanta’s chief financial officer, said the goal was to “maximize capital and liquidity so we have the opportunity to pursue businesses, credit cards and others, in the future.”

Maybe Advanta should have been a bit more proactive in managing their risk.  The losers here are going to be the million small businesses who trusted Advanta with their business.

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Credit Repair Credit Scores Credit Reports Bad Credit 2009-05-12T13:02:42+00:00
Credit Card Rights: Disputing Credit Card Billing Errors http://creditscoretry.us/s/blog/credit-card-rights-disputing-credit-card-billing-errors/ http://creditscoretry.us/s/blog/credit-card-rights-disputing-credit-card-billing-errors/ Have you ever opened your credit card bill and been shocked to see an unexpectedly high balance due?  Maybe the balance is higher than you know it should be.  After going over the bill with a fine tooth comb you realize that there is either an unauthorized charge, or a billing error that led to the higher than expected balance. You feel a little better, but now this errant charge needs to be fixed. The law is on your side, its time to initiate a dispute with your credit card company.

Have you ever opened your credit card bill and been shocked to see an unexpectedly high balance due?  Maybe the balance is higher than you know it should be.  After going over the bill with a fine tooth comb you realize that there is either an unauthorized charge, or a billing error that led to the higher than expected balance. You feel a little better, but now this errant charge needs to be fixed. The law is on your side, its time to initiate a dispute with your credit card company.

You do not have to pay the disputed charge when you initiate a dispute, nor will you have to pay interest on the charge; this is to protect your credit history and pocketbook while the dispute is being settled. Don’t put off the dispute for later, do it now, you only have 60 days to initiate the dispute once you receive the billing statement with the error on it.

You must raise your dispute in writing; you will find the proper dispute address listed on your billing statement. Remember that the letter must include the Name and Account Number that appears on your bill, the dollar amount in dispute, and a statement of the reason for your dispute. You may have specific instructions provided by your credit card company on the billing statement, following their instructions may speed the process.

Once you have raised a dispute, the credit card company must investigate and report back to you in writing within two complete billing cycles or 90 days, whichever comes first. In many cases, the charge will be canceled. Often a business will back off rather than risk losing the opportunity of accepting commerce by credit card. Remember you are responsible for paying the undisputed portion of the credit card bill.

During the time that the charge is in dispute the credit card company may not take collection action or report you as delinquent to a credit bureau with respect to the disputed amount. If the credit card company does not resolve the dispute in your favor, it must send you a written explanation and give you any supporting documentation upon your request.

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Credit Repair Credit Scores Credit Reports Bad Credit 2009-05-11T23:30:04+00:00
Credit Card Reform—Obama Rolls Up His Sleeves http://creditscoretry.us/s/blog/credit-card-reform-obama-rolls-up-his-sleeves/ http://creditscoretry.us/s/blog/credit-card-reform-obama-rolls-up-his-sleeves/ On Thursday (April 23, 2009), President Obama and his staff met with credit card industry executives.  President Obama’s objective was to spur some changes in the industry.  Following the meeting, the White House issued a press release regarding Obama’s objectives.

Here’s the text of the press release: “President Obama met with representatives from the credit card industry this afternoon to discuss the impact of the current economic crisis on consumers. He has been a strong proponent of cleaning up the practices of the credit card industry since he was a Senator and he called for measures to strengthen consumer protection in the credit card market during the campaign.”

Credit cards have been made unnecessarily complicated for consumers, often leading them to pay more than they reasonably expect. The Federal Reserve has taken a strong first step towards improving disclosures and ending unfair practices. Leaders in the House, including Chairman Frank and Representatives Maloney and Gutierrez, and in the Senate, including Chairman Dodd and Senator Levin, have drafted bills that will codify and strengthen these new regulations.

Following the meeting, the President highlighted the following principles that he would like to see as part of the final legislation:

      * Strong and reliable protections for consumers – protections that ban unfair rate increases and forbid abusive fees and penalties.
      * All the forms and statements that credit card companies send out have to have plain language that is in plain sight. No more fine print, no more confusing terms and conditions.
      * Requirement that all firms make their contract terms easily accessible and provide consumers with the information they need to go online and do some comparison shopping. It also means requiring firms to offer at least one simple, straightforward credit card that offers the strongest protections along with the simplest terms and prices.
      * Increased accountability in the system, so that we can hold those responsible who do engage in deceptive practices that hurt families and consumers. This will require beefing up monitoring and enforcement, and also penalties for any violations of the law.

Below is some background on the impact of credit cards on American families:

Prevalence of credit card debt

      * Credit Card Debt has increased significantly in the past decade. Credit card debt has increased by 25 percent in the past 10 years, and reached $963B in January 2009. (Federal Reserve 2009)
      * More than three-quarters of families have credit cards and close to half carry a balance. Seventy-eight percent of U.S. families have a credit card, and 44 percent of families carried a balance on their credit card. (Nielsen 2008, Federal Reserve 2008)
      * Families carry significant credit card debt. The average amount of credit card debt among families with a balance was $7,300 in 2007 (the median was $3,000). (Federal Reserve, 2008)

  Credit card fees and interest rates are extremely high

      * Issuers collect $15B annually in penalty fees. Penalty fees on credit cards are around $15 billion annually, an estimated 10 percent of total credit card industry revenues. (Calculation based on GAO 2006 and Federal Reserve 2009)
      * One-fifth of those carrying credit card debt pay an interest rate above 20 percent. Ninety-percent of issuers assessed variable rate cards and an estimated one-fifth were charged interest rates above 20 percent (GAO 2006).

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Credit Repair Credit Scores Credit Reports Bad Credit 2009-04-24T11:59:09+00:00
New Credit Card Reform On The Horizon http://creditscoretry.us/s/blog/new-credit-card-reform-on-the-horizon/ http://creditscoretry.us/s/blog/new-credit-card-reform-on-the-horizon/ Senator Chris Dodd (D-CT), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, announced today (3/31/09) that the Committee passed comprehensive legislation he authored to protect consumers from confusing, misleading and predatory practices by credit card companies. “I commend the Banking Committee for passing this legislation, and am determined to see this bill pass the United States Senate and become law.”

Senator Chris Dodd (D-CT), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, announced today (3/31/09) that the Committee passed comprehensive legislation he authored to protect consumers from confusing, misleading and predatory practices by credit card companies. “I commend the Banking Committee for passing this legislation, and am determined to see this bill pass the United States Senate and become law.”

Credit cards can be a valuable financial tool for millions of Americans.  When used wisely, and on fair terms, credit cards can help families better position themselves to pursue financial goals such as owning a home or financing higher education for their children.  Unfortunately, however, credit cards too often pose a potential to harm consumers rather than help them.  Confusing, misleading, and in some cases predatory practices have become standard operating procedure for those in the credit card industry.

This is particularly troubling in today’s economic environment, where consumers are increasingly unable to pay their credit card bills due to rising gas and food prices, skyrocketing health care costs, unemployment, and a mortgage crisis that has robbed many families of another financial resource – their home equity or, worse yet, their homes.

Americans do not deserve to be pushed down the economic ladder by credit card companies. The CARD Act will protect Americans by bringing an end to wrongful credit card practices and helping to provide consumers with a fair chance to secure economic security in their futures.”

The Credit Card Accountability, Responsibility and Disclosure Act (the C.A.R.D. Act) is designed to stop credit card practices that drag consumers into staggering amounts of debt, and too often harm, rather than help, the ability of American families to move up the economic ladder. While some companies heeded Dodd’s call, too few changed their policies and behaviors. The CARD Act will strengthen the credit card industry’s regulation and oversight, and forbid unfair and deceptive practices such as universal default and double-cycle billing.
Among other provisions, the legislation will:

  • Strengthen Credit Card Industry Regulation and Supervision
  • Prohibits Exorbitant and Unnecessary Rates and Fees
  • Protect the Rights of Financially Responsible Credit Card Users
  • Prohibit issuers from using a consumer’s card history with another creditor to raise interest rates (“universal default” ban)
  • Prevent “any-time, any reason” Increases in Interest Rate and Terms
  • Require Fairness in Application of Card Payments
  • Adequately Ensures Safeguards for Young People
  • Provides Enhanced Disclosures of Card Terms and Conditions

The Credit CARD Act will help protect American consumers by bringing an end to wrongful credit card practices.

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Credit Repair Credit Scores Credit Reports Bad Credit 2009-04-20T00:14:21+00:00
Getting a Free Credit Score With Your Free Report May Get Easier http://creditscoretry.us/s/blog/getting-a-free-credit-score-with-your-free-report-may-get-easier/ http://creditscoretry.us/s/blog/getting-a-free-credit-score-with-your-free-report-may-get-easier/ Have you ever ordered a copy of your free annual credit report?  (If you haven’t—you should).

When you order a copy, you’ll be shocked to find out that the free credit report doesn’t include your credit score in it.  Instead, you’ll be asked to pay an additional fee to get to see your credit score.  How frustrating is that!?

Well, things are starting to change.  Some people can now actually get free credit scores with their reports.

This good news is reported in today’s Wall Street Journal:

Consumers may soon be able to get free credit scores through their bank or credit union.

Fair Isaac Corp., maker of the FICO credit score, is announcing an agreement Thursday to make its score available free to an estimated 200,000 members at the Pennsylvania State Employees Credit Union, and is working on inking other deals.

The deal is an expansion of Fair Isaac’s “Scores on Statements” program, offered mainly to credit-card customers at Washington Mutual, which is being acquired by J.P. Morgan Chase & Co. Card holders who hold the Sears Solution MasterCard issued by HSBC also can get their FICO score free.

“We’re in talks with a lot of our major customers now,” said Michael Campbell, chief operating officer at Fair Isaac. Typically, customers will see the same FICO score that the bank is using to make its own lending decisions. Consumers will get their FICO scores and the top reasons for why their score is what it is, how their actions have affected their scores and ways to improve them.

Hopefully FICO extends this great program to more Americans.  It’s our credit score—why should we be paying to see it?

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Credit Repair Credit Scores Credit Reports Bad Credit 2009-01-15T17:20:24+00:00
GMAC Eases Credit Score Requirements For New Car Buyers http://creditscoretry.us/s/blog/gmac-eases-credit-score-requirements-for-new-car-buyers/ http://creditscoretry.us/s/blog/gmac-eases-credit-score-requirements-for-new-car-buyers/ Several weeks ago, we reported about an announcement from GMAC that they would require FICO scores of 700 or better to buy a new car with GMAC financing.  Apparently, they’ve changed their minds (thanks to an infusion of cash from the Federal Reserve).

Several weeks ago, we reported about an announcement from GMAC that they would require FICO scores of 700 or better to buy a new car with GMAC financing.  Apparently, they’ve changed their minds (thanks to an infusion of cash from the Federal Reserve).

The day after it received a chunk of money from the Federal Reserve (they received $6 billion under the “TARP” program), GMAC took steps to aggressively get buyers back into dealerships. 

GMAC said it would begin making loans immediately to borrowers with credit scores of 621 or higher.  This is a big change from GMAC’s policy (announced in October) that it would only lend to consumers having FICO scores of 700 or higher.  GMAC also announced a new round of low-rate financing, including zero percent interest on some models.

Credit, at least on GM car lots, is starting to ease up. 

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Credit Repair Credit Scores Credit Reports Bad Credit 2009-01-09T17:34:55+00:00
Yikes - Can We Have Some Good Credit News Already? http://creditscoretry.us/s/blog/yikes-can-we-have-some-good-credit-news-already/ http://creditscoretry.us/s/blog/yikes-can-we-have-some-good-credit-news-already/ They say “its always darkest before the dawn”. 

With the recent news about consumer credit that came out this week, the dawn better be right around the corner.

Three major consumer credit reports came out in the last few days.  All are pretty gloomy.

Two of the reports confirm what everyone already suspects—people are spending less.

This is confirmed by the Discover U.S. Spending Monitor that consumer spending fell for the fourth consecutive month in December, declining more than three points to a brand new low of 76.6 (based out of 100). Both components of the monthly spending index - consumer confidence in the U.S. economy and consumer spending intent - reached new lows during the month, as concerns about the economy may be weighing on post-holiday spending plans.

The fact that consumers are spending less was also confirmed by the Federal Reserve.  The Fed just issued their monthly G.19 report on consumer credit.  Credit card balances shrank in November, as concern over banks’ strict lending standards caused consumers to rein in their spending.

According to the Federal Reserve, the revolving credit category (which is made up almost entirely of credit card debt) dropped by 3.4 percent in November. That’s the largest single-month decrease since April 2004. Previously, the Fed had reported that revolving credit declined in October at an annualized rate of 0.2 percent. However, that number was revised in the current report to be a flat 0 percent. Overall, revolving debt fell to $973.5 billion. It had been $976.3 billion in October’s report on consumer credit.

The third news piece that came out this week is from Fitch Ratings, with their scheduled report on consumer credit.

In some ways, their findings are even darker. 

Fitch reports that US consumer credit deteriorated in December as credit card defaults rose and cardholder payment rates suffered the largest one month
drop on records hurt by a deepening recession.

Fitch said the charge-off index, a measure of default, of prime credit cards rose 31 per cent last month against a year ago to a four-year high of 6.84 per cent. The agency expects it to reach 8 per cent in 2009.

In addition, monthly payment rates, the rate at which cardholders repay outstanding balances, fell 246 basis points month-over-month to 15.96 per cent, the lowest level since 2004.

“Consumers continue to struggle amid a rapidly deteriorating employment situation and from declining property values and other measures of wealth,” said Mike Dean, managing director at the rating agency.

So ... we are spending less but also defaulting on what we owe. 

Come on sunrise!

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Credit Repair Credit Scores Credit Reports Bad Credit 2009-01-08T22:15:31+00:00