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The anatomy of a debt-relief scam

Ashlea Boyer • November 5th, 2015

First Posted in TheTelegram.com: http://www.telegram.com/article/20151017/NEWS/1510...

WASHINGTON — People are so desperate to get out of debt that they will believe anything and anyone promising relief. They often turn to debt-relief companies that promote plans that supposedly can solve their problems. But for many, not only does the relief not come, but the steep cost of the plans — sometimes thousands of dollars — can dig them in deeper.

Recently, the Federal Trade Commission announced a $7.9 million settlement with one debt-relief operation that the agency said scammed people with false promises. The company waived its rights to “challenge or contest” the charges, according to the settlement.

What the FTC found was troubling. And if the right knowledge is power, let’s look at the anatomy of how this one scam worked.

The promoter: DebtPro 123. Unfortunately, this company is not alone. Just look for company names intended to lure you into thinking that they feel your pain and want to help eliminate your debt in just a few short years.

The pitch: According to the FTC complaint, DebtPro 123 told folks that its “debt resolution program would completely resolve consumers’ credit card and other unsecured debts (including department store accounts, personal loans, medical bills, student loans, and accounts with collection agencies).”

It also told consumers: “DebtPro will reduce a client’s total debt by 70 to 80 percent on average including all fees” and “With settlements as low as 10 percent, this means when all is said and done, a client’s savings could be as much as 20 cents on the dollar including our fees.”

Now really, doesn’t that statement sound too good to be true?

And it was.

What would you say if you were told this? “With honest and informative advice, outstanding customer service, and a proven debt settlement process, we can ensure our clients become debt-free quickly and comfortably and get back on the path of financial freedom.”

I homed in on two words: “quickly” and “comfortably.”

Unless you come into some big bucks, the process of paying down your debts is long. It is painful. And if someone tells you different, don’t believe it.

Oh, and there was the debt calculator to help the unbelievers. It was designed to back up the ridiculous claims of a quick debt reduction.

The two phases of the program: In phase one, customers put money in a “Creditor Fund/Settlement Account.” They were told they needed this pot of money for negotiations with their creditors. In phase two, customers were assured that the company was working on their case to get all their debt terms changed.

During these phases, customers were advised to stop paying their bills and to stop all communications with their creditors. Bad move. Often in these cases, people find out later that nothing was being done on their behalf and that fees, interest and penalties had been piling on while they waited on relief.

The FTC complaint said DebtPro made reference to its “legal department.” And, in phrasing that’s mimicked by other such companies, DebtPro told its clients: “The attorneys will communicate directly with your creditors and debt collectors via the mail and telephone. They will audit your bills and the collection methods being used by the creditors to determine if your consumer rights have been violated.”

Other promises: Your credit will be better because the firm will work to remove negative information from your credit files. Except it failed to make clear that if the information was true — that you didn’t pay your bills as agreed — this information can’t be removed. By law, most negative credit information can stay on your reports for seven years.

The real plan: Make money off desperate people. “For many consumers, more than half of their monthly payment went towards defendants’ fees,” the FTC said. “For consumers who were in the program longer than 18 months, defendants also charged a $49 monthly ‘maintenance fee.'”

The failed promises: Debts weren’t reduced quickly. In fact, in many instances the debt-relief company didn’t start settlement negotiations until after the client had received letters from creditors warning of an impending lawsuit for failure to make debt payments.

Settlements weren’t significantly less than what was owed. Negative information was not removed. And there was “no legal department, ‘legal in-house counsels’ or any attorneys on staff,” the FTC found.

People ended up with more debt, some lost their homes, and others had their wages garnisheed or had to file for bankruptcy protection.

Now that you know the inside deal, don’t get suckered into this type of debt-relief scam.

Michelle Singletary is a columnist for The Washington Post Writers Group. Readers can write to her c/o The Washington Post, 1150 15th St., N.W., Washington, D.C. 20071. Her email address is michelle.singletary@washpost.com. Follow her on Twitter (@SingletaryM) or Facebook (www.facebook.com/MichelleSingletary). Comments and questions are welcome, but due to the volume of mail, personal responses may not be possible. Please also note comments or questions may be used in a future column, with the writer’s name, unless a specific request to do otherwise is indicated.

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5 dead giveaways you’re talking to a scammer

Ashlea Boyer • October 5th, 2015

Taken from an article found at:

http://www.thedenverchannel.com/financial-fitness/...

It happens all the time — you check your email inbox or your phone rings, and on the other end, someone trying to steal your money. Maybe you ignore it. Perhaps you hang up or delete the message. Then again, you might not.

You may think you know someone is trying to trick you, but keep in mind scammers succeed often enough to be successful, otherwise these things wouldn’t happen. For the most part, thieves employ one of a few tactics that may convince you you’re dealing with a legitimate person or company, and by knowing these strategies, you’re more likely to spot a scam before you become a victim of it. Here are a few signs you’re probably dealing with a scammer.

1. They Ask You to Pay on a Prepaid Card

Sometimes, it’s not clear you’re dealing with a scammer until it comes time to pay for something. This often happens with Craigslist scams: You find something for a great deal, you go back and forth with the seller to ask questions about the item or service, and when it’s time to finalize the transaction, the seller requests a money order or a prepaid card.

It happens with loan or sweepstakes scams, too, in which you should be receiving money, but the person you’re in contact with requests you to send a deposit of sorts by putting money on prepaid cards and providing the person the card info.

Prepaid cards are a common tool in scams because it’s easy to receive the money and move it quickly, without being traced.

2. They’re Emailing You From an Unofficial Email Domain

Companies have custom email domains, so there’s no reason someone from your bank would be sending you an email from a Yahoo or Gmail account. Cross-reference the email address with the email information posted to a company’s website, and look closely for misspellings. Here are some other tips for keeping your email inbox scam-free.

3. They Say You’re About to Be Arrested

Scammers rely on targets’ emotional responses to get what they’re after, so they’ll do their best to scare you into giving money. If someone calls you saying your arrest is imminent, unless you pay $X (via a prepaid card, probably), stay calm and be realistic: If you really did something that warranted your arrest, do you really think someone would call and say it could all go away for a couple hundred or thousand dollars? It wouldn’t. Hang up.

4. They Threaten Immediate Legal Action

While a creditor can sue you for an unpaid debt, it’s not a swift process. You have debt collection rights the creditor and collector must respect, and you should verify the legitimacy of a debt before paying any money. If you suspect something illegal is occurring, a consumer law attorney may review your case for free. Make sure you’re familiar with these rights if you’re ever dealing with a debt collector.

5. They Request Sensitive Information

If you call your bank and they request identity verification, that makes sense. If someone calls you and wants to verify your identity, that’s a sign of a scam. Don’t share any personal information with someone who reaches out to you, and if you’re concerned the request is legitimate, independently verify the contact information for whatever company has contacted you and reach out yourself.

Additionally, don’t provide any sensitive information by email. First of all, any company claiming to keep your information secure wouldn’t do that, and even if you trust the entity on the other end of the message, you don’t have control over their email or computer security. That makes sending electronic records of your personal information a bad idea.

Americans lose billions of dollars to scams every year so don’t underestimate the importance of protecting yourself from financial loss or identity theft. Victims of financial fraud or identity theft may also see a negative impact on their credit standing, which can be time-consuming to correct. On top of exercising caution when engaging with others, regularly monitor your financial accounts and credit scores (you can get two free credit scores every month on Credit.com) for signs of suspicious activity. Any large, unexpected changes in your scores could signal identity theft and you should pull your full credit reports to confirm. You can get your free annual credit reports from AnnualCreditReport.com.

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5 Reasons to Outsource Account Recovery

Ashlea Boyer • March 19th, 2015

As previously reported here: http://www.cutimes.com/2015/02/05/5-reasons-to-out...

Credit unions have long been an excellent alternative for members who do not desire to use traditional banking services for their banking needs. With a more localized focus and different structure, credit unions have thrived as part of the financial system in the United States for some time.

However, credit unions have also taken a different model for recovering defaulted assets. If any recovery method is used, it is typically in-house or through legal means, not through collection agencies or debt sales. Fear of bad press and that potential members will negatively view the credit union has prevented credit unions from higher recoveries of defaulted assets.

From the perspective of account recovery professionals, there may be several ideas that credit union board members should consider in both viewing and recovering defaulted assets.

1. Consider debtors who default on loans as non-members. Defaulted loans are broken contracts, and considering debtors as rejecting membership via their default removes them from the benefits and protections of the credit union.

2. Consider it a service to members to employ the most effective means possible to recover defaulted loans, rather than poor customer relations. The damaged parties are the members, not the debtors.

3. Consider selling or outsourcing non-performing notes to highly reputable external agencies. Many groups are able to take a customer-service approach to recovering delinquent assets. The debt purchasing and collection business appears to get a lot of bad press, but much of that comes from a minimal number of individuals and companies which have been pushed from the industry. Proper due diligence on a company, including references, time in business, license and bonding, and many other factors can be used to insure that a buyer or collector is reputable. Banks, federal agencies, and professional groups have high standards when they use collection groups in recoveries, and there is no reason credit unions could not do the same.

4. Understand the reduced value of defaulted loans. A reason exists why charged-off debts sell at a significant discount – the value, particularly over time, is severely reduced and recoveries are generally low.

5. Reject the “big banks do it, so we won’t” mentality as a blanket policy – though it may work as a good rule in general, it limits some of the out-of-the-box thinking that serves credit unions well. In the realm of charge-offs, big banks have a variety of solutions for charged-off debt.

Rather than bad debt sitting on the books hurting ratios, debt sales provide instant cash, which can be put to use. Usually, charged-off loans at smaller financial institutions become an afterthought and can sit for far too long, and become completely uncollectible. If they are sold, space and time are gained as well as a burst in cash flow. Credit unions are far more customer-based than the large banks, and have a closer responsibility to their members to maintain good business practices. Selling delinquent receivables allows a credit union to take an active role in handling all aspects of member services.

What about relief for employees? Often at smaller financial institutions, loan officers perform several different duties, but their primary duty is making loans and managing customers, not collecting charged-off receivables. Selling the receivables allows loan officers to continue to provide members with the service they need, rather than distracting loan officers from the more productive activities. If open to exploring their options, credit unions have an excellent opportunity in the current market, as prices of delinquent debt are relatively high.

Good accounts recovery specialists exist and are eager to do business with credit unions. Many are licensed and bonded, with few incidents of violations (if any) and can work with credit unions to establish good business practices that both protect credit union members from defaulted assets, uphold customer service standards, and preserve credit union reputation within the community.

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When to call a Collections Agency

Ashlea Boyer • March 9th, 2015

Previously published at: http://www.citizen-times.com/story/money/business/2014/12/27/score-column-call-collections-agency/20937601/

You’ve done everything you can to get that customer to pay: phone calls, letters, offers to accept partial payment. And still nothing. It may well be time to turn this problem account over to a collection agency.

Good collectors don’t use the brash, strong-arm methods often portrayed in movies. They are professionals who use their vast knowledge of collection techniques and compliance issues to help clients resolve payment issues.

Collectors must comply with the Fair Debt Collections Practices Act (FDCPA), which sets boundaries for tactics and methods. And because they’re experts, collectors have a better chance of success, saving you time and effort in the process.

Collection Agency Research (CollectionAgencyResearch.com), a leading resource on debt collection companies, can connect you with qualified collection agencies in your area. To determine which one to hire, consider these factors:

Overall success rate. This is actually more important than the amount of money an agency collects. If a collection agencyretrieves a greater percentage of total past-due accounts, it will mean more money for your business. That may require a higher fee, of course, but you will receive more money over time versus a less successful agency with lower fees.

Industry focus. You want an agent that specializes in businesses like yours. Because they understand how to work with that industry, they may have a higher success rate pursuing those types of debts.

Two-way communication. The exchange of key information is important before, during and after the collection process. Find out how detailed their reporting is for the collections results, how you receive payment upon collection, and other information you have to make their job easier.

Trial and error. When you meet with several collection agencies, give each of them a few delinquent accounts and see how they perform. Judge them based on how they work with clients, the amount collected, and how quickly they remit payment. You can then select the best service.

Observation. See how they conduct business. Ask to view a sample collection letter to see what they send to clients. If the agency’s offices are nearby, arrange to visit them in person and sit in on a few collection calls to learn firsthand how they do business.

License and bonding. Make sure every business collection agency under consideration is officially licensed and bonded by the state they work in, and carry Errors and Omissions Liability insurance.

Factoring as an alternative

A factor is a financial intermediary that purchases your receivables. It is an expensive form of financing that focuses more on the invoiced party’s creditworthiness than on yours. The factor agrees to pay you most of the invoiced amount within 24 to 48 hours, and the balance less commission and fees upon receipt of the amount due from the invoiced party.

The factoring company’s fees are based on the creditworthiness of the invoiced parties, the value of the invoices being factored, and the number of invoices processed.

Although factoring is a relatively expensive form of financing, factors provide a valuable service to companies that operate in industries where it takes a long time to convert receivables to cash, and to companies that are growing rapidly and need cash to take advantage of business opportunities.

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How Do Credit Report Errors Happen?

Ashlea Boyer • September 9th, 2014

Originally reported at: http://abcnews.go.com/Business/credit-report-errors-happen/story?id=25293174#

If you have seen wrong information on your credit report – and plenty of people have – you’ve probably wondered how it got there. After all, if the statements you get from your lenders are accurate, shouldn’t your credit reports be? Credit reporting agencies manage billions of pieces of information about our credit histories, though, and there are several ways mistakes can happen.

1. Consumer Errors

Although many of us apply for loans and credit cards online these days, there will still be times when you fill out an application by hand. If your handwriting is unclear, or if you make a mistake filling it out, that error will be entered into the creditor’s system and may make its way to a credit reporting agency as a result. One thing you can do to help reduce these types of errors is to fill out credit applications accurately and carefully, and to use your best handwriting. Another suggestion: If you are a Jr. or Sr. or have a family member with a similar name, be consistent in using your full name.

2. Furnisher Errors

“Furnishers” refers to companies that supply information to credit reporting agencies, such as credit card companies, mortgage and auto lenders, collection agencies, and the companies that supply public record information such as bankruptcies, tax liens and repossessions.

“The furnishers are the banks, lenders and debt collectors that have subscriptions to the credit bureaus. It is not uncommon that they mis-enter information which they send to the credit bureaus, which results in errors,” says Robert F. Brennan, Los Angeles-area consumer credit protection attorney at SoCalCreditDamage.com. “Also, an even greater problem arises when furnishers are tasked with correcting these problems, which sometimes are hard to detect or track down in a maze of electronic information,” he says. And there is always the possibility that a dispute can hurt your credit. Refuse to pay that last cellphone or medical bill because you don’t think it is correct? Watch out – it could wind up on your credit report.

Some furnishers of information may just be sloppy or not have good records to back up the data their reporting. The Consumer Financial Protection Bureau recently took action against a Texas-based auto lender that allegedly provided wrong data to credit bureaus through “systemic inaccuracies,” ordering the firm to pay a $2.75 million fine.

Or look at the mortgage meltdown where numerous mistakes were made by banks and mortgage loan servicers. If those agencies don’t have the proper records required to foreclose, it’s hard to imagine that all the information they are reporting is correct.

3. Credit Reporting Agency Errors

“As sophisticated as the bureau’s databases are, they are still subject to computer errors, as with all automated systems,” Brennan warns. “Mis-reporting credit information or ‘mixing files’ continues to happen at the bureau level as well.”

It’s important to understand that information ends up on a credit report because it gets “matched” with other information about a consumer, and that process isn’t failsafe. Mismatching of consumer’s information can lead to mistakes on credit reports, sometimes serious ones. “If a consumer has even a false address or a false middle initial in his or her credit report, over time this can result in his or her file getting mixed with someone else’s. This problem is even bigger if he or she happens to have a similar Social Security (number) to another consumer with a similar name,” Brennan says.

Credit reporting agencies rely on information from furnishers, and if the information they get is wrong the credit report will be wrong. As the saying goes, “garbage in, garbage out.”

“Mistakes by public record contractors: the bureaus contract out their collection of public records information (foreclosures, judgments, bankruptcies, etc.), and these independent contractors can often make mistakes in providing the information to the bureaus,” Brennan warns. “As with the other furnishers, these contractors sometimes make mistakes in trying to correct their own mistakes. This is another frequent source of credit report errors.”

4. ID Thieves

If an identity thief opens accounts in your name, the credit reporting agency probably won’t know there’s a problem and neither will the creditor involved until you report it. That’s one reason why identity theft can go undetected. Unless you are checking your credit or trying to get credit, you may not know something’s wrong. Credit report mistakes can be a sign of identity theft. If you check your credit reports (which you can do for free once a year) and see an account you don’t recognize, it’s important to dispute the account immediately.

It Adds Up

With all the possible ways mistakes can creep onto credit reports, you will want to check yours for accuracy. If you check your credit reports once a year through AnnualCreditReport.com (or stagger your requests so you are getting one report from each major agency every four months), you also want to make sure you have a system in place to monitor your credit throughout the year. You can get a free credit score plus an action plan for your credit updated monthly at Credit.com. If you do find mistakes on your credit reports here’s how to dispute them.

Any opinions expressed in this column are solely those of the author.
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7 Steps to Clean Up Your Credit Report

Ashlea Boyer • September 3, 2014

Previously posted at: http://www.bankrate.com/finance/credit-cards/7-ste...

When you’re thinking of tidying and reorganizing your linen closet or your garage, don’t forget about your credit report. Your credit history is the foundation to financial stability. The information in your credit report is what scoring companies such as FICO use to generate your credit score, which governs everything from how much you pay for a loan — or if you can get a loan at all — to your insurance rates.

Paying attention to your credit report only when you’re about to make a big purchase such as a house or a car can backfire. According to a 2004 U.S. Public Interest Research Group study, nearly 80 percent of surveyed reports had inaccuracies. If there is any issue that takes some time to sort out, that can create a headache if you’re racing the clock to secure a loan. Get a head start by going over your credit report now, and check up on it periodically so you can catch and fix any issues right away.

If it’s been years since you’ve given your credit report a good once-over, or if you never have, even figuring out where to start can be daunting. Luckily, federal law entitles you to a free copy of your credit report once every 12 months from the three major credit-reporting agencies: Equifax, Experian and TransUnion. You can get a free copy of all three bureaus’ versions of your credit report at AnnualCreditReport.com.

To check your credit report every few months, order one at a time and space them out over the course of the year. If you’re getting acquainted with your credit history for the first time, order all three at once. If you live in Colorado, Maine, Maryland, Massachusetts, New Jersey or Vermont, you’re entitled to a second copy of each report annually, says Steve Bucci, Bankrate’s Debt Adviser and author of the forthcoming book “Credit Management Kit for Dummies.” Georgia residents can get three a year from each bureau.

If you’re turned down for a job or credit, or you don’t get the best rate available, you also have a legal right to see your credit report at no charge. The paperwork you get notifying you of the decision will include a number for you to call.

It’s easy for people to forget the most important part of their credit report: checking their identifying information, including name, current address and Social Security number, says Natalie Lohrenz, director of counseling at the Consumer Credit Counseling Service of Orange County.

“People obsess over tiny fluctuations in their credit score, but what they should focus on is the question, ‘Is it accurate?'” she says.

Small discrepancies, such as an account that has your nickname listed instead of your given name, don’t impact your score, but if there’s a more serious discrepancy such as an incorrect Social Security number, you’ll want to get it straightened out, says Maxine Sweet, vice president of public education at Experian.

After checking all of the identifying information, look at the accounts and make sure they’re all yours. Keep in mind that some lenders, such as the financing companies that issue many store-brand credit cards and companies that handle medical billing, might have a different name than the one on the storefront or hospital.

“If you see an account you don’t recognize, you definitely want to call that to a credit bureau’s attention,” says Craig Watts, public affairs manager for FICO. “Definitely find out what’s going on. If you see any negative information like a collection account that you don’t think belongs there, it could be somebody else’s account that got into your report by mistake, or something you forgot about,” he says.

Watts says another red flag can be an account with a much higher balance than you carry. Since any of these items could indicate a case of mistaken identity or identity theft, these are issues to address right away.

Jessica Cecere, a regional president at credit counseling organization CredAbility, says one common — and more benign — credit report error she encounters is the inclusion of old negative information that should have come off the person’s record. Most negative information stays on for seven years, and Chapter 7 bankruptcies remain for 10. “A lot of times the information on your report doesn’t automatically fall off at that seven-year mark,” she says.

Lohrenz says consumers with a history of collections in their past can have their outstanding balances appear larger than they actually are because of the booming secondary market for collections. Here’s how it happens: If a consumer has a credit card balance that becomes delinquent, the issuer will attempt to collect for a while, then give up and sell the account to a collection agency.

The card balance should then drop to zero, and a new account, this time with the collection agency, will appear on the report. Sometimes, though, the issuer won’t strike that balance from their records, so it will appear as if the consumer has two outstanding debts. If the debt is bought and sold numerous times, which is common, the problem can multiply.

Another instance of “phantom money” can occur when a consumer has a closed bank account that has an overdraft protection line of credit tied to it. In some instances, that line of credit will remain on a person’s report even after the account is shuttered, says Bucci.

If you do find a major mistake, order your credit report from all three bureaus. Doing so can help you figure out if the problem is limited to just one report. The next thing to determine is if you need to take your dispute up with the credit-reporting bureau or the lender.

If there’s a case of mistaken identity, such as someone else’s information on your report, or accounts listed that aren’t familiar to you, contact the bureau. All three bureaus have online dispute forms, which Sweet says is a faster method of resolution than snail mail.

“Taking things up with the bureau is easier because they have one set process,” points out Bucci. “There’s a dispute process in place so you can dispute any account with the same process, whereas when you contact the creditor, every one’s a little different. It’s not as neat and simple.”

In the case of negative information more than seven years old or a report of an outstanding balance that has actually been paid off, try contacting the lender directly.

It would be great if you could just file a dispute and forget about it, but you may have to follow up. Especially if an item is very old, the creditor in question may have been bought, merged or gone out of business entirely, which makes documenting everything important.

Keep notes of the people you speak with at the bureau or lender, when you contacted them and the date by which any corrective action will be taken. Check your credit report again after that date to make sure they followed through. The three credit bureaus “talk” to each other electronically, so a correction made on one report should be reflected on the other versions, too.

There are a couple of items pertaining to your credit report that might seem alarming but really aren’t a big deal. Closed accounts in good standing don’t need to be taken off your report, contrary to what many think. In fact, leaving them on your report can help.

Credit inquiries also aren’t as damaging as many people believe, says Sweet. “Honestly, a hard inquiry is very small impact on your credit score, and it’s short term. It stays on for two years but it has the most impact only within six months.” A “hard” inquiry will appear if you applied for a loan or credit card. It can also crop up if you enter into a service contract such as a cellphone or cable TV plan.

Lohrenz says not to stress about the actual credit score itself, the three-digit number lenders use as a baseline to gauge your level of risk. It’s what the report contains that dictates your score, so concentrate on making sure it’s accurate and up to date.

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7 Stubborn Credit Score Myths and Misconceptions Debunked

Ashlea Boyer • August 21, 2014

Originally Posted at http://www.experian.com/blogs/news/2012/09/17/cred...

A credit report is like a report card that provides lenders insight into how you use credit.

If you’re paying debts on time and keeping debts low on credit accounts, you’re building a great credit history that will help you earn lower interest rates on loans and will help you in a variety of other ways, too.

There are many myths going around about what hurts or improves your credit scores. Here is a list of seven popular myths about credit scores and credit reports you should know about:

Myth #1: Checking your personal credit report will hurt your credit score.


Fact:
Reviewing your own credit report results in what is called a “soft pull,” or “soft inquiry,” meaning it will only be seen on a personal credit report. And this has no impact on your scores. Everyone should check their reports at least annually. It’s part of good credit management and completely free from AnnualCreditReport.com.

However, when you apply for credit, a lender will pull and review your credit report, and a “hard inquiry” will be added to your report. Hard inquiries are shown to other lenders because they may represent new debt that doesn’t yet show on a credit report as an account. Hard inquiries can affect credit scores.

Myth #2: There is only one credit score that all lenders use.


FACT:
There are many different credit scoring models used by lenders in the marketplace today. And different models have different score ranges. Generic scores may be used by many types of lenders and businesses to determine general credit risk. The three national credit reporting agencies — Experian, Equifax and TransUnion — worked together to develop VantageScore®, a new generic credit score that uses the same formula for credit information from all three bureaus.

To make it easier for people to understand, a letter grade is associated with the number ranges for the VantageScore. A grade of “C” is considered good, but, of course, an “A” should be your goal. Custom credit scores are developed by many different companies to predict risk for specific types of lending or for individual businesses, such as auto loans or retail debt.

Myth #3: Paying cash for everything can help your credit score.


FACT:
Using credit accounts is the only way to help you establish and build credit.

Using cash or debit cards, which are like electronic checks, for everything isn’t better than using credit because you aren’t building your credit references.

In order to qualify for the best rates when you want to buy a car, or house, or apply for a student loan, you need to have demonstrated that you can manage credit responsibly.

The best way to build a positive history is to use credit cards for purchases that you can pay in full each month and be sure that you make all loan and rent payments as agreed. Over time that positive history will produce the best scores and ensure that you are offered the best terms when you apply for new services, including cell phones and utilities.

Myth #4: The best way to improve credit scores is to pay off all accounts and close them.


FACT:
Paying off all debts can be one of the fastest ways to improve credit scores. Closing accounts, though, can hurt credit scores. One of the most important elements in credit scores is the proportion of total balances to the total credit limits. Paying off debts lowers that proportion, improving credit scores.

However, closing accounts eliminates some of the available credit limits, making the balances appear to be higher compared to the overall limits. For example, a person who has $15,000 of credit available on multiple credit cards but only has a balance of $5,000 is only using 30 percent of available credit, which is good. However, if the person closes a $5,000 credit account because the credit card is not being used, the available credit amount drops to $10,000 and results in 50 percent of available credit being used — a level that can knock points off of that person’s credit score.

Myth #5: Great credit is tied to how much money and assets a person has.


FACT:
Credit reports don’t list bank account balances or assets, so those numbers don’t impact credit scores.

Information about income, investments or assets such as stocks or bonds will also not be in a credit report. Likewise, there is no information about savings accounts, certificates of deposit or other non-debt banking relationships.

A bank account does, however, may affect credit scores if a consumer bounces checks and does not pay the money back.

If the balance owed to the bank gets turned over to a collection agency, then that information will show up on a credit report.

Most importantly, having savings and investments can be a critical factor in protecting your good credit if you have a financial emergency and can’t make all of your payments from your monthly income.

Myth #6: Academic background and degree level can affect your credit score.


FACT:
Education level is not part of a credit report, so it has no bearing on credit scores. Information in credit reports pertains only to debt-related information. Therefore, loans, credit cards and payment history will be reported, as well as bankruptcy, tax liens (debt owed to the government) and civil judgments (debt owed through the courts).

Information about income, investments or assets such as stocks or bonds will also not be in a credit report. Likewise, there is no information about savings accounts, checking accounts, certificates of deposit or other non-debt banking relationships. Additionally, under the Equal Credit Opportunity Act, a creditor’s scoring system may not use race, gender, marital status, national origin or religion as factors.

Myth #7: Poor credit can’t prevent you from getting hired.


FACT:
Federal law allows potential and current employers to view a modified version of a candidate’s credit report for employment purposes, such as hiring and promoting, but the decision to include a credit check is left up to the individual employer.

In certain industries, knowing that a candidate has a sound credit history is a very important part of the hiring and screening process and can help in preventing application fraud. Credit reports used for employment purposes are reviewed manually and never scored. There is also a requirement to obtain written permission before accessing a credit report for this purpose. So, you will never be surprised and will have the opportunity to explain any issues reflected in your credit references.

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Guesswork? Forget it.

Ashlea Boyer • June 21, 2014

Predict Impact: Guide applicants with complete confidence

Understanding how diverse actions can impact a credit profile is the only reliable way to explore options for improving an applicant’s credit. CreditXpert provides you with the most sophisticated tool in the industry.

The CreditXpert What-if Simulator allows you to easily explore how various actions may impact credit scores. You can experiment with actions individually or simultaneously – including making payments, opening or closing accounts, transferring balances, and more. It also helps you to know when to rapid rescore, saving you time and money by improving your success rate while managing expectations.

As today’s most comprehensive credit management tool, it’s designed to offer you a competitive edge, as well as help convert declines into approvals – so you close more loans.

Stop guessing. Use the CreditXpert What-If Simulator today.

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The Benefits of Using a Commercial Collection Agency

Kim Turner • June 3rd, 2014

Initially published by: Jack Merrifield

Every business, at one time or another, finds themselves in a situation where they need to collect unpaid debts from customers. This can be uncomfortable, especially for the small business owner who may have a more personal relationship with their clients. To avoid and unpleasant confrontation and get paid as soon as possible, consider using a commercial collection agency.

Many business owners do not think they need a collection agency to get their money for them. They believe that sending numerous letters and making phone calls will eventually get them results. This can become a big waste of time for someone who is already busy running a company. Handing the debt over to a collection agency to be recovered takes it out of their hands and frees them up to get their work done.

In most cases, a company has limited access to information about their clients. A collection agency has advanced technology that allows them to research a consumer before attempting to collect their debt. This way, they are fully informed when making suggestions or demands for those owing money. The extra information makes the entire collection process more efficient.

There are many other services available to clients of collection agencies, beyond simply contacting debtors and getting money. Many agencies will communicate with clients daily via fax or e-mail to provide updates on their situation. This includes alerts when a payment has been made or when a company has gone out of business.

A final demand letter is another service provided by collection agencies that let debtors know a business is serious about collecting the debt. A letter demanding repayment on the agencies letterhead lets a consumer know their situation is so serious, the company no longer wished to handle it. This can usually yield quick results and help avoid legal action.

If every other option has been explored and the debt has still not been recovered, legal action may be necessary. In this case, there are many collection agencies that will also handle the debt in the litigation stage. They have connections to several reputable collection lawyers and can find the best one for the situation. They will also act as the middle man so that a company needs only contact one person for all of their cases.

Nobody wants to end up in a situation where they have to chase their customers around just to be paid what they are owed. However, sometimes these situations are unavoidable and it can be a major inconvenience for a business owner to handle it alone. A commercial collection agency is the best way to get fast results with as little trouble as possible

Consider hiring a commercial collection agency to get your accounts back under control.

Article Source: http://EzineArticles.com/?expert=Jack_Merrifield

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Using a Debt Collection Agency

Kim Turner • May 30th, 2014

Initially published by: Kevin R. Wright

It could be argued that an internal credit control department provides the same service as a debt collection agency. However, a debt collection agency can often provide better results whilst being more cost effective. The effect of a third party debt recovery agency becoming involved should also not be underestimated. Often, a simple demand for payment from a third party agency can be the prompt a debtor requires to settle an unpaid account.

A debt collection agency can also provide additional services to the core business of debt recovery. For instance, a collection agency may also provide legal services, enquiry agents, process serving, company searches, credit reports & company formations in addition to debt collection services. An agency providing all of these services can therefore be a “one stop shop” for all your credit control requirements.

A debt recovery agency may also have its own in house legal department employing solicitors & legal clerks. Such firms provide a real alternative to the traditional option of employing a solicitor & often at a fraction of the cost. A debt recovery agency with an in house legal department often provides a much more professional service than a firm of solicitors, who may not be specialists in the debt recovery arena.

Debt collection agents often have a less than desirable image. However, in recent years much has been done to regulate the industry to ensure that an efficient & ethical service is provided at a reasonable price. Ensure that any debt recovery agency you consider engaging is regulated by the relevant governing bodies & holds the appropriate licences & accreditations.

When considering engaging a third party agency also make sure that you understand the fees & pricing structure. Avoid any collection agency that requires payment upfront or requires you to purchase credits or join any form of membership scheme. A reputable collection agency will have a clear & concise fee structure which will usually be a set commission on any monies recovered.

In the UK the Credit Services Association (CSA) provides a list of member agencies which have agreed to abide by the CSA code of practice, which is the benchmark for best practice in the debt collection industry. You would therefore be well advised to seek advice from the CSA when considering engaging a debt collection agency to act on your behalf.

Choosing the right debt collection agency will assist to reduce your credit control costs, will reduce your debtor days & therefore make your business more profitable whilst at the same time leaving you with more time to run your business.

Article Source: http://EzineArticles.com/?expert=Kevin_R._Wright

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