Melissa

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Melissa last won the day on January 25 2016

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  1. Why Credit Repair Doesn’t Deserve its Bad Rap Bad credit can take hold of anyone’s financial life, whether due to financial missteps of the past or erroneous information reported by creditors. If you’ve had a late payment on a credit card, an account that found its way to a collection agency, or irresponsible use of credit accounts, your credit history shows a less-than-ideal picture of your financial character. Incorrect reporting of your accounts gives off the same negative vibe to entities that have access to your reports. Lenders, employers, and even insurance companies see these black marks on a credit report as a glaring red flag. While a spotted credit report isn’t a life sentence, it can seriously impede your ability to move ahead with what you want in life. A new mortgage, a financed car, or even your dream career can all be put on hold thanks to financial blunders or errors found in your credit history. Although there isn’t a magic button you can push to wipe the slate clean, there are tactics you can implement to get back on the path of financial well-being via your credit history. One of these strategies is professional credit repair. An Industry with a Reputation Credit repair completed by an individual or agency on your behalf is a perfectly legal practice that can yield powerful results for your current and future financial circumstances. Through a credit repair company, errors – inaccurate negative information – are disputed in an effort to have them removed permanently from your credit report. For those who have pesky, incorrect entries on their credit reports that never seem to go away, a credit repair company can be a financial lifesaver. Unfortunately, credit repair as an industry has gained a less-than-perfect reputation among the masses. The negative light shed on credit repair companies can be linked to two unfortunate issues: misunderstanding what credit repair companies are able to provide, and fraudsters representing themselves as credit repair companies just to make a quick buck. To avoid the bad actors in credit repair, it’s important to have realistic expectations of what credit repairs companies can offer. What Credit Repair Is Under the Fair Credit Reporting Act or FCRA, every consumer has a certain set of rights as it relates to their credit report. First, credit reports from the three major credit reporting agencies – Equifax, TransUnion, and Experian – must be made available at no cost no less than once per year. This provision was included in the FCRA to allow individuals the ability to request inaccurate information be removed from reports in a timely fashion. Also within the FCRA, consumers have the right to dispute any entry that is incorrect, incomplete, or untimely, and disputes must be investigated within 30 days for credit agencies to comply with the law. While you can dispute erroneous information found in your credit report on your own, several people opt to have a third party – a credit repair company – take on this challenge for them. It’s your right to request inaccurate data be removed, but it can be time-consuming and even a bit intimidating when you aren’t all that familiar with the FCRA or other pertinent laws. Credit repair companies manage the dispute process for you, after working with you to determine which information is inaccurate and gathering supporting documentation, if needed. A top-notch company also takes steps to scrub your credit report against other applicable laws, including the Fair Credit Billing Act, the Fair Debt Collection Practices Act, and any others that impact specific groups of consumers. Each of these credit repair tactics are completely legal, and ultimately, they work to your benefit. Credit repair companies do not, however, help you wipe the slate clean when the information dragging down your credit history and score is true and accurate, like a missed payment, a judgment against you, or a bankruptcy. What It Isn’t Thinking credit repair companies are your saving grace when it comes to cleaning up your credit will most likely lead you down a disappointing path. Only incorrect information listed on your credit report, or information that is well past its “expiration date” can be fixed with the help of a credit repair company. Fraudulent credit repair companies may claim to wipe your credit report clean, typically through a process known as segregating your credit file, but this is a farce. Similarly, some less than reputable credit repair companies may promise to fix your credit in a matter of days – this simply isn’t a reality when dealing with the dispute process through the credit reporting agencies. It takes both time and patience to repair your credit the right way. Any credit repair company that asks for a significant fee upfront, before doing any substantive work on your behalf, isn’t likely going to do much if any work for you. Unfortunately, the combination of these fraudulent or misleading aspects of some credit repair companies give the industry an unsavory reputation across the board. However, if you’ve determined that removing negative, inaccurate information from your credit report isn’t a challenge you are willing to go alone, employing the help of a professional, reputable company, or attorney, may be your best next step. Be sure to recognize what responsibilities you have in the process, and commit to working with your credit repair company to achieve optimal results regarding your credit report.
  2. The growing trend of shopping and banking online or through mobile phones plays a significant role in the increasing number of identity theft victims each year. Combined with the advancing technology used by cyber criminals to steal consumer information, it is no surprise that nearly 17.6 million Americans suffered from identity theft in 2014, the latest year for which data is available from the Bureau of Justice Statistics. Identity theft continues to be a threat to consumers and their financial lives as it can lead to serious issues with an individual credit report that are a challenge to correct. For that reason, it is important to know the rights and protections you have under federal law as it relates to stolen information. The Fair and Accurate Credit Transactions Act, also known as FACTA, is an amendment to the Fair Credit and Reporting Act, or FCRA, designed to safeguard individuals from the threat of identity theft. Added in 2003, FACTA provides a number of protections to consumers relating to their specific credit information and how it is used. Here are the main provisions within FACTA aimed to reduce the ramifications of identity theft among consumers. Fraud Alerts In an effort to provide protection to consumers who have already experienced identity theft, FACTA imposes fraud alert guidelines for the credit reporting agencies. Under the law, consumers have the right to place an alert on their credit report that establishes an added level of security when seeking new credit. The fraud alert prompts potential new creditors to contact you directly in response to a credit application, and it remains on your credit report for 90 days. Only one credit reporting agency needs to be notified of a fraud alert requestion; the agency is required to report the alert to the remaining two agencies. Access to Credit Reports A measure to prevent the damaging effects of identity theft is also included in FACTA. This provision allows every consumer the opportunity to receive a copy of their credit report once per year at no cost. Each of three major credit bureaus – Equifax, Experian, and TransUnion – must make your credit report available once each year upon your request, or you may request your annual credit report here. The ability to review your credit report in full is an important aspect of staying ahead of identity theft concerns. Your credit report includes information on all credit accounts, current and previous, as well as inquiries made relating to new credit accounts. Should you see information that was not initiated by you or one of your creditors, you can dispute the data through each credit reporting agency in an attempt to correct the issue. Blocking Information In addition to providing access to credit reports and fraud alert systems, FACTA also gives consumers the power to request the removal of information related to identity theft. When adequate proof is provided, the credit reporting agencies have the power to prevent any data relating to identity theft from appearing on your credit report. This safeguards your credit report and score for new creditors down the line. FACTA was and remains an important addition to the FCRA. Identity theft has the potential to severely damage your credit report, score, and overall financial reputation, but the provisions and guidelines built into FACTA work to prevent these detrimental consequences. If you’ve been the victim of identity theft or want to stay ahead of cyber criminals, know your rights under federal law and take the recommended action to protect your information.
  3. In 1970, the law governing the activities of the three major credit reporting agencies, known as the Fair Credit Reporting Act or FCRA, was passed in an effort to provide a specific set of rights for consumers. The FCRA is focused on safeguarding the information gathered, maintained, and shared by the credit reporting agencies, namely Equifax, TransUnion, and Experian, but extends its reach to cover similar information used within other systems, such as employers, housing, and banking. Within the FCRA, specific guidelines are shared which spell out how information can be used for or against consumers, making it important to understand your rights under the law. Here’s what the FCRA provides to you as a consumer. Access to Your Credit Report The most prominent right you have as a consumer protected under the FCRA is your ability to access your credit report easily. Guidelines in the FCRA state that the credit reporting agencies must provide your credit file upon your request no less than once per year. This site allows you to access your credit report at no cost each year, but it is your responsibility to request it. Limited Access from Outside Parties Protections against unnecessary access to your credit are built into the FCRA, specifically limiting the availability of your personal credit history and information to those who have a valid, verifiable need to access it. A number of organizations may request information on your credit history, including banks or credit unions, insurance companies, property managers or landlords, or insurance companies, for the purpose of verifying your past financial activities. While these entities are often provided access to your credit information upon request, you have the right to know who, when, and for what purpose the information was accessed. Accuracy in Reporting A significant component of the FCRA is the requirement of the credit reporting agencies to analyze disputes of inaccurate information from consumers. If erroneous information has been discovered within your credit file, a credit reporting agency is mandated to examine the details of that entry within 30 days. When the data cannot be verified as correct or incorrect, it is the agency’s responsibility to remove it. If a disputed entry cannot be removed, you have the right to add a note to your file explaining your position. Removing Negative Information Negative information listed within your credit file can linger for a substantial period of time, making it difficult to move ahead in your financial life. Under the FCRA, you have the right to request negative information be removed from your credit report after seven years. It is important to note that major negative entries, like bankruptcy, may remain on your report for up to 10 years. Protection against Disclosing Personal Account Information Quite a bit of information is included in your credit report that extends well beyond current account information. Previous addresses, past employers, your date of birth, social security number and account numbers are all provided within a personal credit file. The FCRA protects this sensitive information from being shared in an unsafe manner. For instance, businesses are required to list only a portion of your credit card or bank account information on a printed receipt, and your full social security number is no longer included on your credit report. These safeguards help protect you against identity theft. Denial Information The FCRA also requires that you are made aware whenever your credit is used against you. For instance, if an application for a new credit card or loan is denied, you have the right to know the reason for the denial. Businesses that use your credit report to make a decision about offering new credit are required to provide you information about denials in writing, at your request. Seeking Damages Individuals also have the ability to seek compensation for damages under the FCRA. Credit reporting agencies, creditors, and any other organization that regularly uses credit reports may be liable if they misuse or otherwise violate the act. Your credit report is one of your most powerful assets. Strong credit paves the way for new credit accounts with affordable interest rates, not to mention provides a snapshot of your financial reputation. The FCRA was signed into law in an effort safeguard that assets by setting specific regulations against the unlawful use of your credit information. It’s important to understand the rights laid out in the FCRA and how you are protected as a consumer using credit.
  4. Your credit score is comprised of a number of factors, not the least of which is your history of on-time payments. If you made the unfortunate mistake of being late on a payment for a credit card, student loan, mortgage, or personal loan in the past, it may seem like all is lost. However, there are ways to remove a late payment from your credit history without having to wait the standard seven years it takes the credit reporting agencies to remove that negative information. Here are three tips for getting your credit back on track by removing late payment information from your credit report. The Goodwill Adjustment The majority of lenders are aware that late payments often occur due to unavoidable financial circumstances. If this is the case for a late payment rearing its ugly head on your credit report, you can work to get it removed by requesting a goodwill adjustment through the creditor in question. A goodwill adjustment is simply a creditor agreeing to remove a late payment notice sent to the credit reporting agencies upon your specific request. To request a goodwill adjustment, it is necessary to first have a strong relationship with your creditor. If you have recently missed a payment or are behind on paying minimum balances, your request is likely to fall on deaf ears. However, if you have shown your creditors a strong tendency to make payments on time and pay balances due, you have a good chance to get a late payment notice removed. You want to make a goodwill adjustment request in writing, including an explanation as to why your payment was late. Simply ask for forgiveness by requesting your creditor adjust the late payment entry with the credit bureaus. A number of sample letters are available online that provide guidance on what information should be included in your goodwill request. Dispute the Information If you see a late payment entry on your credit report and know or otherwise feel that information is inaccurate, your best bet is to dispute the entry through the three credit bureaus. Part of the dispute process is a verification of the late payment information, including details like the amount, the date payment was received, and the actual due date. If creditors are unable to provide this verification for a late payment entry, they have no choice but to remove the information from your credit history. The dispute process is most easily done through the online dispute form found on each of the three credit bureau websites. You will need to provide some details as to why the information is inaccurate, and then have a heavy dose of patience. If the item being disputed is inaccurate it will get removed from your credit report. If the item is indeed accurate, but the creditors fail to respond in a timely manner, you will notice the late payment entry removed completely from your credit report as well. Negotiate with the Creditor While a less viable method, negotiating with your creditor has the potential to help in removing late payment entries on your credit report. For some individuals, speaking directly with a creditor and coming up with a mutually beneficial solution has resulted in seeing late payment fall off a credit report. Typically, negotiations include you as the borrower agreeing to certain terms, such as creating automatic payments to ensure timely repayment, in exchange for the removal of a late payment entry. This relationship benefits the creditor since they are now guaranteed to receive what’s owed to them on time and in the right amount; it also benefits you as the borrower as late payments are removed from your credit history and you can worry less about missing a payment due in the future. Removing late payments is one method to improve your credit history and ultimately, your credit score. On average, individuals see their credit score increased by 15 to 40 points as late payments fall off their reports. To take charge of your credit history, first, simply ask creditors to remove late payment entries with a goodwill adjustment request. Follow up with disputes for inaccurate or unverifiable information, and then work directly with your creditor to come up with a solution. One of these methods should lend a necessary hand in getting late payments removed from your credit. It really does happen, but don’t count on it if the disputed item is legitimate.
  5. For borrowers, it can be a difficult task to keep up with monthly debt payment obligations, especially when the number of credit accounts increases over time. Although it may be challenging to remember due dates or amounts due, it is important for individuals to keep a close eye on when accounts need to be paid. A late payment on a mortgage, credit card account, personal or auto loan can have a detrimental effect on your overall creditworthiness, regardless of how late the payment actually is. The effect of a late or missed payment can stay with you – and your credit report – for as little as a few months up to years into the future. What Constitutes a Late Payment? According to MyFICO.com, a payment is deemed late when a creditor or lender does not receive the minimum amount due by the stated due date. In some instances, creditors provide a grace period to borrowers that allows payments after the due date to be submitted. A grace period is typically no more than 15 days past the original due date, but each creditor differs in their policies surrounding payment timelines. It is important to know where your creditors stand when it comes to late payments so that you can effectively manage expectations if a payment is going to be late or remitted past the grace period. Late Payment Effects Each creditor imposes different penalties for payments entered or received after the initial due date, which may include the following: Late fee charge: A payment that is not received on time may incur a late fee from the creditor, either as a flat fee, such as $10 or $25, or as a percentage of the payment due, such as 1% or 5%. Failing to make payment after the grace period may also result in a late fee, often higher than what is imposed after missing the initial due date. Interest rate increase: While not a practice of all lenders, some creditors include a stipulation in a credit or loan agreement that gives them the right to increase your interest rate as soon as a payment due date is missed. This is most often stated as the default APR in your credit card or loan agreement. An increased interest rate may prolong the repayment of an outstanding balance, as well as increase your monthly payment due. Credit Report/Score Changes: Missing a payment due date has a direct impact on your credit report and score. Most creditors are quick to submit missed payment information to the three major credit bureaus, especially after a due date has gone past 30 days without payment. If a creditor reports your late payment, it has the potential to stay on your report for up to seven years. Additionally, because payment history represents 35% of your total credit score, a missed payment may keep your score low for an extended period of time. These changes to your creditworthiness can dampen your ability to receive affordable credit in the future, as other lenders may perceive you as a high default risk borrower. How to Resolve a Late Payment If you have missed a payment or due date in the recent past, there are remedies to get back on track with your creditors. First, it is important to make the payment that was missed as soon as possible. The longer a delinquency remains outstanding, the more detrimental it is to your credit profile. Once the payment is made with your creditor, it is beneficial to request a removal of the late payment fee. Typically, lenders can remove a late payment fee if you do not have a history of missed or late payments, and are in good standing with them. After you have addressed the late payment fee, it may be worth asking about the penalty APR that was imposed. Because a higher interest rate can have a substantial impact on the future monthly payments due, it is beneficial to get the APR reduced back down to your original rate. Lenders have the capacity to revert an APR, but may only be willing to do so with a promise from you to pay by the due date for a certain period of time. Finally, it is necessary to create a system to assist you with paying on time for all future bills. Whether that involves utilizing an online budget tracker or a homemade spreadsheet to input all credit accounts and due dates, developing a plan to pay your accounts is the best action you can take to ensure timely payment into the future.
  6. With the influx of personal and business lenders in the financial market over the past few decades, it has become increasingly necessary to have a system in place that provides relevant information on borrower risk. The credit bureau system was designed to achieve that end, as it acts as the organization responsible for compiling information from lenders regarding the credit behavior of borrowers. A credit bureau is an independent entity that allows subscribers, or lenders, the ability to easily access credit application history, repayment history, default history and total debt obligations of borrowers to determine overall creditworthiness. Who Utilizes Credit Bureau Information? Subscribers to credit bureaus are mostly lenders, such as credit card issuers, financial institutions that offer lending products, private loan companies such as auto finance organizations, and the federal government. These subscribers not only use information stored with credit bureau organizations, but also provide information on current loan or credit account balances, minimum payments due and missed payment histories. In addition to conventional lenders, other businesses that have a need or desire to access information on potential or current customers can subscribe to credit bureau systems. These additional companies may include cable or Internet providers, mobile phone providers, and commercial or residential real estate leasing offices. Each subscriber pays a fee to the credit bureau it utilizes in order to access borrower information for the purpose of evaluating default risk. Consumer Use of Credit Bureaus Consumers also use credit bureau information to manage total indebtedness. Individuals have the opportunity to access credit bureau data by requesting a credit report, or by visiting one of the three major credit bureaus online. Information located in one’s credit report includes total credit, loan accounts currently open, closed credit or loan accounts, minimum payments due on outstanding balances, total account balances, default on repayment history of late payments, credit inquiries made by subscribers, addresses, telephone numbers, employment data, public record items such as civil judgments, tax liens and bankruptcy. This information is useful to consumers not only for understanding total debts owed, but also in having the ability to review information for accuracy. Detection of fraud, misinformation or gross errors can be reported directly to the credit bureaus for review, research and correction when necessary. The Three Major Credit Bureaus Although each organization within the credit bureau system provides similar information to its subscribers and consumers, three distinct credit bureaus exist within the United States. Experian, Equifax and TransUnion are the national consumer credit bureaus that compile and subsequently provide borrower information. In some instances, one credit bureau may retrieve or display different information than the other two, making a review of all three bureau reports an important step in validating borrower information, for both subscribers and consumers. To fully understand the default risk of a specific borrower, credit bureau information is the starting point. While each credit bureau operates in a similar manner, various information is captured and disseminated at different times, creating a need for each of the national credit bureaus to exist. Both subscribers and consumers can utilize the information provided by credit bureaus as a safeguard against over indebtedness and fraud when accessed on a regular basis. By law, every consumer has the right to a copy of his or her credit report each year. However, you have to ask for it. The quickest way to request a copy of your credit report from each of the big three reporting agencies is by visiting AnnualCreditReport.com.