Articles Posted in Credit -Repairing & Rebuilding

Before you accept a new credit card, there are a few things you need to know and to consider:

  1. Don’t accept too many – Be selective about the cards you choose and don’t have too many at one time. There is rarely a good reason to have more than one or two.
  2. Beware the Subprime – Sometimes lenders will offer you subprime cards instead of turning you down for bad credit. Generally these subprime cards have high interest rates, expensive fees, and low limits. Avoid those that “help” bad credit (take for instance the cards offered on Bad Credit Offers site) because these can often make your credit worse than it was to start with.   Use a trusted source like Consumer Reports to compare credit card offers.  There are also lenders that offer you a new card, but add the old debt to the new account.  If you have filed bankruptcy and wiped out credit card debt, this action would be a violation of your discharge and you should notify your bankruptcy attorney right away.

As part of the Federal Fair and Accurate Credit Transactions (FACT) Act, every Mississippi Resident is eligible to receive one free Personal Credit Report every 12 months from each of the nationwide credit reporting companies. To learn more, please visit the FACT Act Central Site located at:  annualcreditreport.com.  Any other web site offering you free credit reports is a scam.  There are no free credit reports available other than on this site.

To order your free credit reports chose one of the following methods, Internet, Mail or Telephone:
1.    Go to the internet site at annualcreditreport.com and order or print online.
2.    Print out the Annual Credit Report Request Form and mail it to:
Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
3.    Call 1-877-322-8228 and order by phone.

Be very careful that you DO NOT agree to arbitration if you order the reports online.

Do not contact the three nationwide consumer reporting companies individually for your free annual reports. They provide free annual credit reports only through the above web site, the above telephone number, or by mail.

Note- if you have been turned down for credit in the past 60 days, then you are entitled to get a free report directly from each of the three nationwide credit bureaus each time you are denied credit.  In addition, you may also order a report  from them at anytime and if you pay their credit report fee, usually around thirty dollars. Continue reading

fix credit reportMost of us know about the 3 main credit report bureaus – Experian, Transunion, and Equifax …but have you seen ALL your credit reports? Did you know that more exist and are referred to as specialty credit reports? There are many other credit reporting agencies that report nationwide in specialty areas of credit. They are all required to make it easy for you to obtain a copy of any file they have compiled on you – or at a minimum provide a toll-free number that you can call and request your copy.   Not all of them, however, are required to provide a free report.

What is a nationwide specialty credit reporting company?   They collect information on consumers’ medical records or payments, rental or residential history, checking account history, claims made on insurance policies, and/or regarding your employment history.  They are just like the 3 main credit bureaus I listed above except that they gather information about you for potential landlords, certain creditors, companies reviewing your information for potential employment, insurance agencies, etc.

The CFPB (Consumer Financial Protection Bureau) has created a document available here that provides the information to you on all of these agencies and has broken them down into the following groups:

  • National Credit Reporting Companies
  • Check Screening/Check History
  • Payday Lending
  • Auto & Property Insurance History
  • Alternative or Supplementary Credit Reports
  • Utilities
  • Gaming
  • Rental
  • Medical
  • Employment History

Continue reading

How does consumer credit counseling work? And more importantly, is there “a catch”? Consumer credit counseling can work great for someone who is just a little over extended in debt.  Consumer credit counseling agencies are the true non-profit agencies you hear about that work with your credit card companies to reduce your payments or interest rates so you can pay the debt off and be done with it.  However, this is limited to credit card debt.

How does it work?  The agency contacts the credit card companies, which will cooperate  to possibly reduce the interest rate.  The agency will then tell you the monthly payment that you must send in to pay the debt in full.  Your household budget and your ability to pay have nothing to do with the monthly payment amount.  You pay that monthly payment to the credit counseling agency and then the agency sends payments to each of your credit card creditors each month. The credit counseling agency will usually receive a fee for this service from the credit card company.

What is the catch?  Well, by the time you realize that you are in a financial bind, you are beyond the help a consumer credit counseling agency can offer.  The monthly payment you will make to the agency is not much different than the minimum payments you were making to pay the credit cards.  If your main issue stems from the lack of cash flow, which is extremely common, then consumer credit counseling doesn’t work.

How does bankruptcy affect my credit? Bankruptcy has a negative impact on your credit, but it’s the road to credit recovery, not a death sentence to your credit.  Think for a moment – if you are already behind on payments and debts – your credit couldn’t get much worse than it is now.  Bankruptcy improves your credit by getting rid of all the debt that is keeping you down.  Your debt to income ratio is hurting you as much as the late payments and no payments.  Most people will find their credit will recover within 1 year of filing a Chapter 7 bankruptcy.  Believe it or not, you’ll get credit card offers flooding your mailbox right after you file bankruptcy.  You could also go out and buy a car right after you file bankruptcy, but you wouldn’t be happy with the interest rate they put on the loan.

Bankruptcy doesn’t affect your ability to get credit as much as it affects the cost of your credit.  I have a credit instruction package I give to my clients that gives step by step directions for getting your credit score where it should be, where you can qualify for the better interest rates. So if you’re wondering “Will I ever get credit again?”, YES, you can have good credit again and a lot sooner than you think.

Whether you are doing a debt consolidation, debt management, debt settlement, credit counseling, or bankruptcy, all negatively affect your credit.  The secret they don’t want you to know: your credit will suffer if you are not paying creditors exactly like you agreed or exactly like they want.  Debt consolidation, debt management, debt settlement, and credit counseling companies want you to pay them a fee in addition to what you pay on your debts.  These payments are NOT improving your credit and in many cases the payment won’t cover the interest on the debt.

Bankruptcy can get you back on track to good credit faster and cheaper than any of the other options.  Don’t sacrifice your financial future by using your savings or cashing out 401k’s and retirement accounts in an effort to stay afloat.  Right now, you need to do what is best for you and your family.  Things aren’t like they used to be.  Your credit will recover after bankruptcy.

credit bureausThe bankruptcy code does not require that you reaffirm, or sign an agreement to continue to be personally responsible for the payments on your mortgage. As long as you continue to pay the house notes they cannot foreclose.  However, most mortgage companies will not report your payments to the credit bureaus if you did not sign a reaffirmation agreement. So it is important to know that it is still possible to get your payments included on your credit reports.

  1. Request a payment history from your mortgage company. (The mortgage company is required by law to provide one every year free of charge.)
  2. Send a letter to the three credit bureaus – TransUnion, Equifax, and Experian,  and dispute the fact that your mortgage payments do not show up or that you have not paid your mortgage payments and attach a copy of the payment history you obtained from the mortgage company.

credit score rangeCan you get credit after filing bankruptcy? Absolutely.  Will you have to wait for ten years to get a house or a car?  Absolutely not.

Credit card companies will pack your mailbox with offers of credit.  They want you back in the system using credit cards and carrying a large balance. It’s a temptation that few can resist. These cards and offers will be from lenders that will charge high interest rates.  The same goes for cars and trucks.  There are numerous companies that will be glad to give you credit.  For a while, the question will be about how much interest they will charge you for that credit, which will be high until you’ve regained your footing.

Now, you shouldn’t run out and start charging up credit bills again, but if you need a vehicle or furniture and appliances you will be able to get credit. National creditors see people who file bankruptcy as a good credit risk since all their debts were wiped out, they can’t file Chapter 7 again for eight years and they have money to spend.  Many Mississippi bankruptcy filers are able to reestablish their credit within one year of their bankruptcy discharge.

wedding ringsMississippi is not a community property state and in most cases, a husband and wife are not responsible for each other’s debts. There are some exceptions, but they usually would only come up in a divorce or action between the husband and wife, not in a situation between the husband or wife and a creditor. A bankruptcy filed by one spouse should not affect the credit of the other spouse because that spouse did not file bankruptcy. The spouse’s name and Social Security number would not be listed on the bankruptcy papers of the other.

If there are joint credit cards or other joint debts then the spouse that did not file would still owe the debts. Otherwise, if the debt is just in the name of the spouse filing for bankruptcy, creditors would not even know the other spouse exists.

Bankruptcy law allows a married couple to file together, but they are not required to do so. Either husband or wife can file by themselves, or not file, or even file two different types of bankruptcy at the same time. Your spouse may not need to file bankruptcy at all or one spouse may need to file a chapter 7 and the other may need to file a chapter 13. You are allowed to file a bankruptcy by yourself and wipe out the debts you can discharge. You have several options!

The end of the year is a time when we start thinking about how the past year has gone, what went wrong, what went right, and what changes we need to make to ensure things are better in the new year.  When you are looking at your financial situation, it’s good to pull a credit report to double check what’s being reported to ensure it is accurate information.  As a part of the Federal Fair and Accurate Credit Transactions (FACT) Act, every US resident is eligible to receive one FREE credit report every 12 months from each of the nationwide credit reporting companies.

To learn more about this visit the FACT Act Central Site located at annualcreditreport.com.  Any other site offering you a free credit report is a scam or a selling tool to get you hooked into monthly fees.  Do not contact the three nationwide credit reporting agencies for your free reports. They are only providing them through the following three methods:

  1. Order online at annualcreditreport.com