Bureaus make settlement, does it matter?

Hello Red Phoenix NATION!!! The New York State Attorney General just reached a settlement with Experian, Equifax and Transunion. This is good news for all of us concerned about credit, but does it really matter? The biggest win seems to be the the reporting of medical collections. The bureaus will wait 6 months / 180 days before reporting, mostly because of insurance companies slow paying or making claims difficult. This is great, but most medical collections I see - the consumer didn't even know they had. Good news, when you're buying a home they don't care about medical collections for the most part. They do factor in the credit score and until Fannie and FHA conform to the FICO 9 algorithm, medical collections will still count against you in regards to your score. That's right, Fannie and FHA dictate which algorithm is used by the mortgage lenders which is still FICO Classic and again means your medical collections count against your score. I have a bit of an edge to me in regards to this "news" and I admit that I have not read the full settlement agreement. HOWEVER!!! I do know the game the big 3 play (Experian, Equifax and Transunion) and what the FCRA does in fact say in regards to our rights within credit reporting. No I'm not an attorney, just a nerd! Let's move on to the dispute process and the translation of letters / documentation into 3 different codes stuff. What are the bureaus suppose to be doing already? When a consumer sends in documentation the bureaus typically send it to the creditor and verify that the documentation is real. If it is, then the bureaus usually make the correction or deletion of the information. The code translation does happen within E-Oscar but mostly in simple general disputes that are easily squashed because the consumer has no idea what they are really disputing. This will continue because most disputes by consumers are frivolous and uneducated disputes and that's even with documentation. I'm not picking on the consumer but when is the last time you had a discussion about the Fair Credit Reporting Act. For me its every day, for most its never. Other part of the settlement-the bureaus have to include a link to annualcreditreport.com - yay. Who CARES?!!? Anyone who knows anything could care less about that part of the settlement and its a waste of ink. I do think its great that the New York AG got a win, but like many, they don't understand the system or what will really help consumers in regards to credit reports. Instead of a link to pull your credit, how about a link to www.ftc.gov or something about the Fair Credit Reporting Act other than a blurb that is hard to find. Ya, the Fair Credit Reporting Act (FCRA), its that little law that was created in 1970 to protect our rights in regards to reporting. Or how about making bold disclaimers *** YOU ARE NOT BUYING A FICO SCORE!*** I can not tell you the amount of people I talk to on a daily basis that have no idea what FICO is or the fact that they just spent $30-40 for a three bureau report with scores that you can put in the garbage. In my opinion this settlement was a win for the bureaus, the more things change the more they stay the same. While the government officials are celebrating the bureaus are laughing at them. The dispute systems is a system of failure and one that was put in place to make the government feel they have protected the consumers. If government officials and politicians want to make a difference then get someone who knows something about the Fair Credit Reporting Act and FICO and educate our consumers! When I say someone who knows something about this topic, I mean someone other than themselves or some financial planner or realtor (no offense Agents and CFP's). They always ask the wrong people, you ever notice that? Doesn't matter what the topic, they seem to find an expert in something other than the topic itself to give input. While my little blog isn't intended to be super technical, I am considering it but at this time - I will save you from me and leave you be. Love me, hate me I still like to hear from you! If you need anything, I'm always around! john@redphoenixco.com www.redphoenixco.com

CREDIT SCORE WHAT?!?!

Greetings Red Phoenix Nation!!! FICO scores are what 90 of the top 100 lenders use. Yes I said 90 of the top 100 lenders use a FICO credit score. FICO is found two places, www.myfico.com or your lender. Every other web-site you pull credit from IS NOT USING THE FICO ALGORITHM. Furthermore, those scores are not close and can be quite different depending on the site being used. I've seen them 10-78 points higher than FICO, I've also seen them 20 points lower than FICO. Point is we can't trust them for score, if you really want to know what a lender is going use then you must go to www.myfico.com Reminder, all those web-sites with the exception of www.myfico.com are owned by one of the 3 major credit bureaus - Transunion, Experian and Equifax. What's a good set up and how should I monitor my credit??? The bureau owned sites have an upside - you can find a decent site for a relatively low monthly fee - $15 a month to check your credit each month. THE KEY - I want you to monitor all three bureaus. For example: Here in Minnesota, we have a lot of people on Credit Karma, which is only Transunion. In our great state of Minnesota medical collections typically only report to Equifax. If you're only going to watch Transunion on the Karma site how would you ever know if you had medical collections?!?! This happens so often - monitor on Karma then go to buy a car (car dealers use Equifax maybe 80% of the time) they pull your Equifax and its so different than your Transunion it makes your head spin - why DIFFERENT? Its not just medicals either, not every creditor has to report to all three bureaus - so if you're going to monitor THEN do all 3. Here is what I do - I pay about $5 a month to monitor a FICO score and then I pay about $15 a month at creditchecktotal.com which allows me to pull my full credit report 3 times a month. You may not want or need all that but just know this - FICO, FICO, FICO - for Mortgages, Credit Cards, Auto Loans, Student Loans, pretty much anytime you want money on credit 90% of the time they will be checking your FICO. I could go on and on, but its a blog and I hope it helps! If you need me, I'm always around... john@redphoenixco.com

FYI's of the credit sites on the web!

Greetings everyone in credit world!! It has been so long since I've blogged, feels good to be back. I took a break from it all because my content was being stolen and re-published other places. I've been told this is a compliment of some sort, and I'm over it. I owe my people information and content that you can use, so let's get on with it already! You pulled your credit from an online service - credit karma seems to be a popular choice right now so I will use this as an example of what its good for and what its not good for. FIRST SOME EDUCATION AND REMINDERS - All sites that you pull credit from with the exception of FICO are owned by one of the 3 major bureaus - Experian, Transunion and Equifax. Karma is owned by Transunion, just an FYI. IT IS important to know you do have 3 credit reports you need to be looking at. Not all creditors report to all 3 bureaus. For example - did you know in Minnesota most medical collections will only report to Equifax. That means if you're only looking at credit Karma, you won't see those items on your credit. Creditors pay a membership fee to the bureaus to report to them, it is voluntary for them to report to any of them much less all three of them. THE SCORE YOU SEE - More complete confusion for people*** The score you see from a random site is a credit score but its not one that really matters in regards to lending. When I speak of lending that means for a mortgage, car / trucks and recreational, credit cards and personal loans. I don't want to call the scores from those random web sites junk because those sites do serve a purpose but those scores are not relevant at all in regards to lending. More on that purpose later. CREDIT EDUCATION - so these sites usually have a section on how to improve your credit score. That education is how to improve the score they are providing you - it can sometimes work with FICO but to explain all that would cause more confusion. From the many sites I've seen, THEY ARE WAY OFF FROM WHAT FICO CALCULATES. If you ever notice and pay attention they will often tell you the way to "improve your credit" is to add a credit card. Oh and they have a list right there for you, how handy of them to give you a list of cards that they know you will probably qualify for. Or they might say to refinance your car - oh wait, another hand list of creditors you can use to refinance your car. Are you seeing a theme to this madness? They're in cahoots! So what's the point of them and what should I be using if any??? If you feel like you need to monitor a score or want to know what's going on with your credit and be truly engaged then you need to monitor all three bureaus and pay for it. You pay your doctor, you pay the mechanic, you pay a gym membership, pay for this. Find a site you can see all three on one site creditchecktotal.com is one that I personally use to see what is on my credit -IT IS FOR INFORMATION USE ONLY NOT SCORES. I also monitor with www.myfico.com quarterly for about $5 a month. That way I get an idea of my scores and I can use the other site to pull my credit 3 times a month and see what's going on with it. For both, its about $20 a month and that's getting creditchecktotal to give me a discount which anyone can do by calling and threating to cancel, they will discount to keep you. Its worth $15 a month but not want they really want to charge you which is about $30. You can just use one or the other, www.myfico.com has other products but this mix works well for me and has for many of my clients. Be aware of where you are pulling from and what the purpose is. Don't let banks or info on the web confuse you - FICO is what 90 of the top 100 lenders use in regards to lending. Well, The end If you need me, I'm always around john@redphoenixco.com www.redphoenixco.com @deletebadcredit

Collections - To pay or not to pay, FICO score and lending oh my!

Greetings RPC Nation! So I haven't blogged for a bit, its been busy saving the world one credit report at a time! Today we need to chat it up about collections and what do with them. How do they affect score and how do they affect your ability to obtain financing for a mortgage. First, I need to start with a statement: YOU SHOULD ALWAYS REPAY YOUR DEBTS - - -HOWEVER! First we have to talk collection and give a couple examples. Collection in regards to your FICO score, (remember FICO is the score that matters when its comes to lending, 90 of the top 100 lenders use a FICO score, www.myfico.com) if you have balances on your collections they are going to bring down your FICO score. If they are under $100 and are older than a year they are still a factor just not as much and each credit profile is different as to how much. The next thing we have to consider is getting a home loan / mortgage. Since the BURST OF THE BUBBLE we have seen underwriting guidelines go through some changes. In most situations and with a majority of lenders they want to see collection paid off with the exception of SOME medical collections. Total balances and age of collection accounts are a factor and vary from lender to lender. For example: you have a collection account from 2 years ago with a balance of $70. An underwriter may not care about it, or just wants proof its paid - meaning its not a score factor they just want you to pay it. Example 2 - you have a collection for $1,000 and its 4 years old. Unless you can prove its over 6 years old from dating with the original creditor you may have to pay that one. If its not aged correctly its going to factor into your FICO score and an underwriter and LO (loan officer) wants to see that paid. BUT JOHN, I'VE HEARD BY PAYING COLLECTIONS IT WILL BRING DOWN MY FICO SCORE!!! WHAT DO I DO? WHAT'S THE CORRECT INFORMATION? It's true and false and here is the FACTS! In the world of the FCRA (Fair Credit Reporting Act, www.ftc.gov) Dating is the key behind this and how it affects your score. This can get confusing so hang with me - In regards to your credit report - the aging of a collection is 7 years and six months from the date of first derogatory with the original creditor **** NOT DATE OF LAST ACTIVITY **** What can happen if you're not careful is when you pay a collection, it gets re-aged by the method the collection agency uses to report to the bureaus. Be clear with the collection agency when paying and also check your credit report 30-60 days after paying the collection, also be sure to always get a receipt and keep it. ****EXAMPLE**** you defaulted in March of 2008 with Wells Fargo, Midland Funding purchased that debt in May of 2011. What is the aging of that collection account in regards to when it will come off your credit? (remember above) It should come off 7.5 years from March of 2008 when you defaulted with Wells. Its getting the bureaus to recognize this dating that can get tricky, but it can be done and I do it everyday. Meaning, even though the collection is 2011 it is aged the same as Wells and will come off the same time if you get the bureaus to recognize it. So then the question comes, well if 2008 is the dating, do I need to pay that? Well, in our great state of Minnesota that I love we have a 6 year statute of limitations. If you're not in Minnie, check your state and how it works. After six years you don't have to pay, however that doesn't mean the creditor and collection agency has to stop collecting. It is their right to do so and still can try to obtain a judgment against you. I alway refer to my top consumer rights, FCRA / FDCPA (Fair Debt Collection Practices Act) attorneys for legal advice or send my clients to them when I'm unsure of a debt status. I suggest you do the same if you are handling this on your own. In trying to keep this short, check your credit at least twice a year. Save voicemails from collection agencies, open your mail and deal with it. If its something you can't do, then ask for help. I don't care if its mom and dad, a friend, me, whoever. Rates or still low, its a great time to buy and make your OWN economy better. If you have questions, or need help reach out to me. I'll look at your credit for free and tell you what I think. My mission is to help those that have gone through similar things to me and are ready to take action. Last but not least, if you do have a lot of collections, don't be afraid to consult with a bankruptcy attorney. My BK attorneys are so nice and very good at what they do, there is no shame if you have to file. These laws (FCRA, FDCPA, FCBA, FACTA, US Bankruptcy Laws) are in place to protect and help us. www.redphoenixco.com john@redphoenixco.com

Bankruptcy and CREDIT!

RPC Nation!!! Seems to be a lot of confusion about how long or what happens to your credit when you file for bankruptcy. There is a lot of information out there that scares people and I have found articles that are misleading. I'm going to lay out some things that will be rule of thumb and again most of what I talk about relates to FICO. Remember FICO is the worlds largest and most trusted when it comes to credit score. Here we GO! You filed chapter 7 bankruptcy or maybe your thinking of filing bankruptcy, either way you want to know what's going to happen and what does it all mean. When you file for bankruptcy it doesn't mean you can't get credit for 7 years, I say 7 years because that seems to be the myth number I hear every week. Let's get rid of that "7" years number for now and forget it. DID YOU KNOW? ***You can usually qualify to buy a car right after your bankruptcy is discharged, that can be a key in helping you re-establish credit. DID YOU KNOW? ***You can usually get an unsecured credit card after your bankruptcy is discharged, however if you included Citibank in your BK I don't suggest trying to get a card with them again. I have one more did you know: You can buy a new home 2 years after your chapter 7 bankruptcy is discharged! If you included a home in your bankruptcy then you'll have to wait 3 years. FHA will allow you to do this, which is exciting and a lot of people think you have to wait "7" years. However, I am not a lender and you need to check with your lender for specific guidelines. I can tell you that I help many clients that have a bankruptcy and they become homeowners within 2-3 years after their discharge date. You have to make sure you have re-established credit, make sure your items inside your bankruptcy are reporting to your credit correctly and don't have any more negatives after your bankruptcy = behave with your debts! My last statement is the sometimes the most difficult part of the scare and what keeps people from filing or makes them give up after they file. ****CREDIT ITEMS AND HOW THEY REPORT IN YOUR BANKRUPTCY**** what does that mean? What I've found is when someone files bankruptcy they will still have credit items report negatively on their credit. ***EXAMPLE: You file and Wells Fargo is included in your bankruptcy- however for some reason they have reported you as a charge off, profit and loss, maybe you still show a past due or a balance. The dating of this negative activity is after your bankruptcy date. This negative reporting after a bankruptcy is what keeps your score in the 500's for years after you file. Negative reporting after a BK, think of it like this: You just had a mild heart attack (BK not life ending) you've recovered from the heart attack, going back to work things seem okay and you break your leg! You can still work and function but it sucks, takes longer to get better and people can't really depend on you because something always happens with your health. That's negative reporting after a bankruptcy (bk) and it can be corrected. ***RE-ESTABLISH YOUR CREDIT*** You just filed, so you don't want to get a whole bunch of debt. Well my friends, cash is KING and credit is QUEEN! If you don't have one, you better have the other and you just filed BK so you don't really have either. Time to get some credit! If you absolutely have to, get a pre-paid credit card at your bank, they don't really work that well anymore so its a last resort. There are credit cards for you, maybe buy a car if you need one. Talk to a credit union, they are usually a good option for people and are more willing to work with you. It might take a little time as well, maybe you add one credit item and then a few months later you add a second. You need to get minimum of two lines of credit and I always suggest three. That will help you the most and the fastest, just don't make all three lines credit cards. Your bankruptcy will remain on your credit for 10 years, the items inside your bankruptcy will remain for 7 years. (dating is 6 months from the date of first derogatory plus 7 years) So if you went delinquent 2 years prior to BK, that's your dating for that item. *****PLEASE, PLEASE, PLEASE CHECK YOUR CREDIT!!! When you check your credit, look at dating, dating, dating. Look at late payment dates, charge off dates, look at balances, its how these items report in relation to your bankruptcy that can make all the difference. If something is reporting wrong, its not the fault of your attorney. They have no control over that, and often times don't know how to correct it. Not always, but in most cases they don't have the time. Fix it yourself or call me, the FCRA allows you to do either. If you're considering bankruptcy reach out to my friends at Lamey Law, Anderson and Associates and Drewes Law. If you're wondering if you file and what that means when buying a home, ask a lender. I work with some of the best, so if you need someone, let me know. If you've filed and need help please reach out to me, I'm always around.... www.redphoenixco.com john@redphoenixco.com

60 Minutes, The Bureaus and "DISPUTES"

Red Phoenix Nation!!! I was alerted to a recent news story that was aired by 60 Minutes about credit. This story exposed a lot of what I often chat about. "DISPUTES" It also created a lot of fear in consumers, mission accomplished from the huge response that was sent to me with questions. First, I want to tackle disputes and what that really means to us, the bureaus and our creditors. "Disputes" when you think of that word what does it mean to you? To me it means I don't agree with someone or something and I want to argue it. If you don't understand the FCRA, FCBA, FDCPA, FACTA, CROA, or SSCRA the main one being the FCRA (Fair Credit Reporting Act) the argument can be difficult. www.ftc.gov has all of them for you should you want to review. Even with an understanding the road is not always easy. When you dispute items and you don't understand what it is you can actually dispute, odds are you won't win. For example; "I paid that collection two years ago, that shouldn't be on there!" In fact, it should still be on there. Negative items, paid or not paid can remain on your credit for up to 7 years. Your 7 years starts 6 months after the date of your first delinquency. Second example, "I didn't agree with that charge, so I didn't pay it. I shouldn't be late!" In fact, if you don't dispute directly with the creditor in writing then don't pay, well then you're late. Simply put, under Fair Credit Billing, if you write in for your dispute that creditor can't report to the bureaus for 90 days or until the investigation is complete. So in short, if you're disputing a charge, pay it and fight for a refund. That is an easier task then getting them to delete the late payment. Let's say you have a documented argument and the bureaus are not moving on it. You are so right and they are not doing a thing and you can't get any resolve. Don't beat your head against a wall, get help sooner rather than later. Talk to a consumer rights attorney or find me. The bureaus right checks everyday over things like this, and I have clients who I've referred to my attorney, sued and won. ****DISCLIAMER**** THAT DOESN'T MEAN EVERY LITTLE WRONG THING IS A POTENTIAL LAW SUIT!!!! On to the next deal and what I call a HUGE MISCONCEPTION AND FEAR THAT WAS STRUCK INTO THE HEARTS OF MILLIONS!!!! You can get items deleted (prior to 7 years) and or corrected. You can't dispute information and hope to have much resolve. The FCRA is a powerful tool if used like it should be, which is to protect us the consumers. There are ways inside the FRCRA to hold the bureaus accountable for how they are reporting information. You have to know what those are, what your asking and have a working knowledge of how the bureaus work and an understanding of the FCRA. Did you notice the 60 Minutes didn't ask specifically how information was disputed? They brushed a broad stroke over that using a guided line of questions all without having some sort of prior knowledge. Google E-Oscar for me, not even sure what that will bring up. I've never looked, but you should find out that its an electronic format in which the bureaus communicate with creditors. Here is another little tid bit that you should be aware of as much as I hate to say it. The bureaus take quite a bit of blame, HOWEVER!!! The bureaus have instructed creditors how to report and how to repsond to investigation or dispute requests. The bureaus can't police how the person on the other end (meaning the creditor) performs those tasks. They have to have some level of trust that the creditor is doing the work and abiding by the FCRA on their end as well. In short, "disputes" rarely work, even though they are encouraged, it is wrong to dispute. There are other methods that are effective and work. Persitance, patience and knowledge are the key. I really could go on and on and on, however this is just a short little blog to give some answers about the story on 60 Minutes. This is my everyday fight for my clients, I live it, breath it and I'll never stop fighting. You've heard the term money never sleeps? Neither does credit, and I rarely do. If you need me, I'm always around... www.redphoenixco.com john@redphoenixco.com ps. spell check is not working, sorry for any errors....

Credit Score prediction / pulling sites

Greetings Red Phoenix Nation! Hope the battle in the world of credit treats you well! I chat it up a lot about those web-sites where you can pull your credit and see your "scores." They have now added another dimension to their sales techniques of getting you to sign up or at NOT cancel your subscription after you pull your credit. I see them advertise you can log onto your account and actually see what will improve your score. OH THE FUN I COULD HAVE RIPPING THEM!!! However, I am a professional so I'm going to give you some education and a few reminders to go along with what they are telling you. The first thing we need to be reminded of is when you go to these web sites to get your "score" your are pulling a Vantage Credit Score. Vantage is a credit scoring algorythem used by the bureaus to sell the consumers on a monthly service. Vantage is not used by lenders and is quite different from your FICO credit score. With that being said I have a question. If the scores are that different then would using one of there credit score analyzers be much different? Yes! They are telling you how to improve your Vantage Score (AGAIN, CALCUALTED DIFFERENT THAN FICO) I've actually logged on to one just to see for myself. I was told that to improve my score I would need to open another credit card. Hmmmmm? That's weird becuase I have three of them with low balances. Not that this would be the case for everyone but I'm assuming it may not be much different. I think its another way for them to cross sell and pre-qualify credit products with their partners. They cross sell all the time, Wells Fargo's "credit monitoring" system is actually Experian and same with Discover. I think HSBC was using Equifax but since Cap One bought HSBC I'm not sure anymore. Point being, they do a lot of business together so by selling credit products to "improve" your score is a natural progression. Be aware of what's going on out there, you can improve your credit different ways. Paying debts and paying on time of course is the best but you can get negative items deleted off your credit. As always if you want to know your score that lenders use www.myfico.com Have questions, need help? I am always around... www.redphoenixco.com john@redphoenixco.com