White House adviser Elizabeth Warren is in charge of setting up the CFPB. Image: Leader Nancy Pelosi/Flickr/CC BY

The U.S. Consumer Financial Protection Bureau (CFPB) is set to open next month in spite of attempts by Republican Senators to stop it. The bureau, which is the result of last year’s Dodd-Frank Act, is seeking input as to which financial entities it needs to regulate in addition to banks.

Bureau to police the consumer financial industry

The 2010 Dodd-Frank Act, which created the bureau, states that it will regulate banks with more than $10 billion in assets as well as payday lenders and non-bank providers of home and student loans. The act does not define, however, what other “larger participants” of the financial markets it should cover.

Created by the Dodd-Frank Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act is a federal statute that President Obama signed into law July 21, 2010. The law seeks to regulate the financial services industry to an unprecedented degree. From it, the CFPB was born, under White House adviser Elizabeth Warren. The stated mission of the bureau is to “make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products.”

“Consumers deserve the peace of mind that financial companies — both banks and non-banks — are following the rules,” said Warren. The bureau has until July 2012 to determine which industries will be regulated and in what ways.

Non-bank industries to be targeted

In a statement released Thursday, the bureau stated several “larger participants” that could be targeted. Those include consumer credit and related activities, consumer reporting, check-cashing, money transmitting, debt-relief services and prepaid cards. However, the bureau is also asking for input into which industries it should oversee.

Republican resistance

The bureau has met resistance from the start by Capitol Hill conservatives. The bureau can’t begin its work until a permanent director has been appointed, and some Senate Republicans have vowed to block anyone the president may nominate for the job. The bureau, however, is continuing to lay its foundation for the scheduled opening on July 21.

Bureau opposed by banks

Bank lobbies have also opposed the creation of the bureau, arguing that it will lead to fewer loans and fewer financial choices for consumers. They say it will have a negative effect on economic growth.

Sources

Reuters
Advisor fyi
Fox

What kind of cake is your credit report? (Photo Credit: CC BY-SA/Alex Gorzen/Flickr)

If you’ve had a bankruptcy, foreclosure or lots of missed bill payments, you know that your credit score was diminished. But do you know about the smaller things that lead lenders to believe you’re a credit risk? A few FICO foibles can cause credit card issuers and lenders to view you with less favor and lead them to either deny you credit or charge higher interest rates.

Too much credit is a bad sign

While it may be a fact that people who max out their credit cards tend to apply for more credit cards, such behavior does not speak well to potential creditors. Too many credit applications in too short a time raise red flags. Norm Magnuson of Consumer Data Industry Association told Bankrate that banks have “shrunk the window” of frequency in which applications for credit audits are performed.

“It used to be months and months. Now you find companies doing account monitoring monthly or every other month,” he said. “That would raise some questions.”

A short sale isn’t magic

When you’re upside down on your mortgage, the specter of foreclosure may not be far away. Lenders will sometimes tell you that a short sale is the way to go. Even though you’re taking a loss, at least you’re avoiding foreclosure. Yet, how a lender reports a short sale to the credit bureaus can be just as damaging. Experian’s Vice President of Public Relations Maxine Sweet says even though the account is technically settled, the short sale ends up hurting your credit score as much as a foreclosure.

The best thing to do, advises SmartCredit.com President of Consumer Education John Ulzheimer, is to negotiate with your lender so that the difference between what’s left on the mortgage and the amount repaid isn’t reported as balanced owed.

Co-sign at your peril

Whether it’s an auto loan, student loan or any other large scale loan, if you’re a co-signer and the primary borrower defaults, you’re on the hook. Hopefully, you keep in touch with the person for whom you co-signed. Otherwise, you may not know the damage being done to your credit until it’s too late.

Minimum effort, maximum worry

It may seem easy to settle for the minimum payment on your credit cards each month, but there’s nothing easy about what that does to you in the eyes of prospective creditors.

“It suggests you’re under financial stress,” says Nessa Feddis of the American Bankers Association. “You may be defaulting.”

A busy report can indicate trouble

The more inquiries for credit that appear on a credit report, the more tiny nibbles that are taken out of your FICO score. If you know you’ll be applying for big loans – home, auto, education – try to do it all within a two-week window. This will minimize the inquiry impact, as they will be treated as a single unit. The same does not apply to credit card applications, however.

Disputing credit report mistakes

Sources

American Chronicle

Bankrate

MSN Money

Experian is being sued for fraud; customers say the company doesn't provide relevant information in the credit reports it provides to customers. Photo Credit: Swampyank/Wikimedia Commons/CC-BY-SA

A lawsuit has been brought against credit bureau Experian in California. Experian is one of the three main credit bureaus, along with TransUnion and Equifax, and credit ratings from those bureaus are used in creating a persons’ credit score. The plaintiffs in the suit, which may become class action, are alleging fraud.

Plaintiffs say free credit report sites give false info to consumers

Plaintiffs in the California lawsuit against credit bureau Experian are saying the bureau has defrauded. They say Experian provides misleading information on the websites where the company sells copies of credit reports, according to MSNBC. The suit claims that Experian provides the wrong score, purposefully, through FreeCreditScore.com and FreeCreditReport.com. The sites, which charge a $14.95 per month fee to users so they can monitor their credit report activity, provide the Experian PLUS score. The reason why the plaintiffs are seeking a class action status is because that isn’t the score lenders would look at if a person applied for a personal loan.

Lenders look at FICO scores

When lenders or other parties check a person’s credit score, they aren’t looking at a score that one credit bureau comes up with. Lenders look at the FICO score, or the number from the credit scoring system developed by Fair Isaac and Company. Fair Isaac scores are calculated by looking at certain data about a person and coming up with a numerical rating of that persons’ credit worthiness. Experian, Equifax and TransUnion all produce credit scores with the FICO formula, and those scores are reported to lenders. The lawsuit accuses Experian of fraud because the PLUS score is not reported to anyone and would not be considered if someone applied for a job or installment loan. The suit says Experian misled consumers by advertising worthless information for sale. Experian had to be compelled by threat of a Federal Trade Commission suit to advertise the link to the government site where consumers can request the one free report from each bureau that people are allowed by law.

States trying to get employers to mind their own business

Labor rights advocates have never been enthralled with the idea of employers checking the credit scores of potential new hires. At least half of the United States isn’t either; 49 bills in 25 states are currently before state legislatures to legally bar employers from checking credit scores of a potential new hires. Though credit bureaus that sell the reports to businesses and some businesses contend that it can catch a potential problem employee, civil rights and labor advocates insist that it is prying into an area that no employer has a right to.

Sources

MSNBC

USA Today

Are old charge-offs still giving you the blues? (Photo Credit: CC BY/Caitlin Doe/Flickr)

Maintaining good credit can be challenging, particularly after a life-altering event like job loss. Understand that if a creditor throws in the towel and charges off one of your debts, that doesn’t mean that you’re in the clear. It’s quite possible that you will still be liable for that bad debt – even after it disappears from your credit report.

Charge-offs: The light side

Imagine this scenario involving a charge-off on your credit report. While the credit item may say it’s going to drop off your credit report at a certain time, that debt may still have legs because the rules for collecting a debt and the rules for reporting a debt aren’t the same, reports Bankrate. The Fair Debt Collection Practices Act (FDCPA) provides the guidelines for debt collection, while the Fair Credit Reporting Act (FCRA) holds jurisdiction over how a charge-off is reported.

On the plus side, the FCRA mandates that a charge-off must be removed from your credit report after 7 years. That includes whatever debt collection agency owned the debt. Check your credit report about a month after the charge-off is supposed to occur. If the bad debt is still there, dispute it with the three credit reporting agencies: Equifax, Experian and TransUnion.

Student loans, tax liens and Chapter 7 bankruptcies cannot be charged off.

Charge-offs: The dark side

Thanks to the FCRA, bad debt will disappear from your credit report. Unfortunately, the FDCPA makes it possible for debt collectors to pursue your debt almost in perpetuity. As there is a lucrative secondary market that purchases bad debt, there is still cause for concern on the part of the consumer who needs debt repair. Each collection agency will likely try to collect at least once before selling your charge-off.

Can a consumer escape from that bad credit card debt amassed during a span of unemployment? Because there is typically a statute of limitations, the answer is yes. The amount of time in which a debt is subject to collection via the court system varies by state, although it is usually 4 to 6 years for credit cards and 6 to 10 years for installment loans, payday loans or auto loans. Contact your state’s attorney general for more specific information.

Know your debt collection rights

If a charged off debt is past your state’s statute of limitations for collection, it cannot be legally pursued and you can ask not to be contacted against regarding that debt. If a debt collector continues to chase, you may have the option to levy a counter-suit.

Legal action will require time, money and the advice of a lawyer, however. The best way to get out from under a debt collector that is pursuing your debt in a legal fashion is to either pay what you owe in full or come to a settlement.

Sources

Bankrate.com
Equifax dispute form
Experian dispute form
TransUnion dispute form

How to deal with collections

Renters, Experian wants to help you with credit repair. (Photo Credit: CC BY-ND/Christopher/Stumble Forward)

Renters interested in rebuilding their credit scores now have another tool at their disposal, reports The Detroit News. The credit bureau Experian, which acquired the property management database company RentBureau last summer, will begin factoring rental history into credit scores. This move will help scores of consumers, but it may also hurt, experts say.

Millions affected by Experian’s decision at launch

Experian RentBureau, which collects rental history data from property management companies across the U.S. on a daily basis, makes renter data available almost instantaneously through a powerful database delivery system. Before the acquisition, RentBureau had collected up-to-date payment history data on about 8 million renters, a number that is expected to expand exponentially thanks to the new connection with Experian’s database of more than 215 million U.S. consumers. A few million consumers will appear in the Experian RentBureau database at roll-out.

Not only will Experian RentBureau make it easier for consumers interested in credit repair, but it will make the tenant screening process much simpler for resident screeners and property managers, enabling them to better protect their investment. Debt collector recovery rates have also increased through the use of the RentBureau system.

Getting credit for being on time

Experian RentBureau Managing Director Brannan Johnston said the service could help one-third of Americans who rent rather than own.

“It’s a huge thing for those individuals who don’t have a credit history, whether they are a recent college grad, an immigrant or maybe even a divorcee,” said Johnston.

Experian began adding positive rental history data in December, reports The Detroit News. By 2012, the company will also begin uploading negative information regarding evictions and skipped rent. Experian currently has no plans to add late payment data, which is not easily reflected in the company’s credit reporting system, but that doesn’t mean that renters can slack off and expect their credit to get off Scot free.

“If you skip out on your apartment, chances are that the manager is going to turn it over to collection and the collection agency will report to a major bureau,” said Johnston.

The credit reporting industry hasn’t caught on – yet

Credit bureaus Equifax and TransUnion, as well as credit-scoring company FICO, do not have plans to incorporate RentBureau information at this time. FICO spokesman Craig Watts said that once FICO has analyzed RentBureau data internally, the company will make a decision as to whether it should factor in to a consumer’s overall credit score.

Tips for renting without a credit check

In some cases, it is possible for a consumer to rent an apartment without undergoing a credit check. Much like consumers with bad credit who are able to take out short term loans, other methods of evaluating a tenant’s worthiness are available. Ask around. About.com suggests using Craigslist and Sunday newspaper classifieds to find landlords who do not use traditional credit checks. In general, a no credit check rental agreement will need a co-signer and should expect to pay more each month.

Sources

About.com

The Detroit News

Experian

How RentBureau works

Photo Credit: MoneyBlogNewz/Flickr/CC-BY-SA

Safeguard your credit cards so your experience with them will be a dream come true instead of a nightmare. Many consumers crave expensive fashions or toys purchased the credit card company’s money. This practice is great if you are the lender, but it’s dangerous for customers. However, if you learn to use them to your advantage, credit cards can be beneficial to you and your credit report.

Dangers of doing business with big banks

Financial institutions make a living on the high interest customers pay. Debt can accumulate so fast that the minimum payment will be all that the consumer can afford. The minimum payment may be low, but it’s not to benefit the card holder. Many payment plans are designed to take the buyer more than 30 years to pay it off. Some credit card companies offer the option to skip a payment, but interest still accrues. When a special promotion offers “same as cash” within a certain number of months, all the interest will be added to the bill if a balance is still owed past the due date. These companies are not in business to run a non-profit agency to assist those who have financial needs. Instead, they aim to benefit their investors with huge profits. Don’t become a victim of lawful conduct that borders on unethical and benefits huge financial conglomerates.

Credit traps to avoid

Avoid making large expenses whenever possible on  credit cards. Many doctors offer a credit card to pay for their services. Owing for medical treatment can get you caught in a web of high interest and unnecessary stress. Automobile loans should be purchased through a bank that offers the lowest interest; don’t just automatically accept the dealership’s funding offer. Usually, credit unions offer the best rates and lower monthly payments. Some consumers have purchased homes with a cash advance taken out on several credit cards at one time. This practice does not make financial sense because interest rates on cash advances can be astronomical.

Pay attention to credit card terms

How does one budget and monitor the use of credit cards? Always know when the payment cycle starts and ends. If a payment is made too early, you could end up with a late fee added to the next billing cycle for non-payment. The fee could be enough to take a family of four out to dinner. Pay the bill off each month within each cycle. Note the billing cycle is less than 30 days in some cases.

Avoid bad purchasing habits

Avoid treating  credit cards as a second income. Use them as a convenience and for easy record keeping. Credit cards can offer protection that cash doesn’t. Items purchased with a card can be disputed more easily, and retailers know this. Get one credit card through your bank instead of several department store cards. Shop for the lowest interest rate, and read the fine print on every application. Whenever you get a junk mail credit card offer, call and ask the company to take your name from the list. Protect your personal information. It’s one of your major assets.

Less is more

One to three credit cards with a low limit can be beneficial because it shows stability on your credit history. Keep in mind that whenever a credit card is closed, it shows up on your credit report. You can use credit cards to your advantage. Good credit management practices can build a portfolio that financial institutions will use to approve loans when you want to buy your next car or home.

Credit card companies aren't out to hurt your credit score, but they can. Image from Wikimedia Commons.

One of the rationales behind using credit cards, or at least using them on a semi-regular basis, is that if you use them occasionally and pay the balance immediately, it boosts your credit score. That may be partially true, but it may not actually be that simple. There are ways, in fact, that credit cards hurt your credit score. The credit card companies don’t always report things exactly the way they happened. Since the CARD Act passed, credit card companies have some new rules, but they may not always play by them.

Credit card reporting can hurt your score

It isn’t that having a credit card or using it will hurt your score. However, what the credit card company reports to the credit bureaus is what can hurt your credit score. Say you get a cash advance from your credit card of $300, about the size of the average payday loan. Let’s assume that you didn’t have a balance on it, and your limit is $3,000. Now, the credit card company should report that you used about 10 percent of your available credit, or the credit utilization ratio.

Reporting is not always accurate

Let’s say the biggest balance you ever carried before that was $600. In the above hypothetical situation, credit card companies can report that you used 50 percent of your available credit, as $300 is half of $600. In other words, they can calculate your credit utilization ratio as current balance to largest balance, not current balance to credit limit. According to US News and World Report, it isn’t that uncommon. You may have been better off getting a short term loan rather than using the credit card. You should regularly check your credit report and dispute anything that doesn’t add up.

They do not always play fair

Credit card companies have been accused of not being upfront with their customers. According to CNN Money, some credit card issuers have been notifying customers of the existence of penalty rate increases, but not how much the rate increase is. There are also plenty of stories out there of payments going missing, and a ding showing up for that. It isn’t that credit card companies aren’t honest, but like any form of credit, they carry risks.

Further Reading

US News and World Report

CNN Money

The basics of no credit check installment loans

A no credit check installment loan is a personal loan that is deposited directly into your bank account. The application process is quick and often requires no faxing. Unlike a loan from a bank, these lenders typically do not run a credit check. Once your loan is approved and accepted, the money will be deposited straight to your bank account, often within two hours. When the time comes to repay your loan, the money is directly debited from your bank account.

How no credit check installment loans are different

Unlike payday loans or other short-term loans, no credit check installment loans give you flexibility. You can repay the loan in several small chunks over time, as you have the money to do so. You and the lender both agree on the amount and interval of the payments, meaning you will be able to budget. There are no surprises, and the fees are much less than bounced checks or the payday loans offered through some banks.

Protecting your credit rating

No credit check installment loans can also help you protect and rebuild your credit rating. Every time you apply for a credit card or loan that requires a credit check, that is shown on your credit report. Too many of these “hits” on your credit report lowers the score. Missing payments on bills or loans that report to credit agencies can also lower your score. This combination means that it is easy to get stuck between a rock and a hard place. No credit check installment loans, though, circumvent the problem. No credit check means no hit on your credit report, and extra money when you need it can help you make sure your bills get paid on time.

No credit check installment loans | Start HERE!

Credit Karma is one of many sites emerging on the web supported by advertising that allows users to access credit score information for free. Vramak/Flickr photo.

Credit Karma is one of many websites that have emerged offering free credit scores. Learning your credit score is easier now, thanks to the financial reform bill signed into law this month. Financial reform legislation, otherwise known as the Dodd-Frank Wall Street Reform and Consumer Protection Act, requires lenders to show you the credit reports they used to turn you down. But you can keep that from happening by knowing your credit score beforehand and taking steps toward credit repair. Websites like Credit Karma offer to make your credit score available for free anytime, as often as you want to check on it.

Credit Karma service supported by advertising

Credit Karma is a free service supported by advertising. That makes it different from most websites that offer free credit information and then try to lure you into paying for your credit score. Consumer Commentary reports that Credit.com offers a similar free service. Among their differences, Credit Karma evaluates more categories than credit.com when assigning users their credit grade. However, credit.com offers a range for several different types of credit scores. Credit Karma only offers one score directly from one of the reporting bureaus that isn’t a FICO Score.

Is Credit Karma enough for credit repair?

When it comes to credit repair, the usefulness of the credit score available from Credit Karma is questioned by some. At mymoneyblog.com, there’s a catch: it’s not a real FICO score. Your credit score from Credit Karma is a “FICO clone” with a range from 300 to 900. FICO scores range from 300 to 850. Credit Karma, which says it pulls data from Experian, Equifax and Transunion, doesn’t say which bureau supplied the data your credit score is based upon. Plus, you only get your credit score, not who’s pulling your credit, how often they are doing it or information about your existing credit lines.

Are free credit scores really free?

Objections aside, Credit Karma and credit.com appear to be extremely helpful for building, maintaining and repairing credit. Giving up some personal information in exchange for useful credit data is much better for most people than paying $89.95 a year for FICO’s Score Watch. Free credit information is also available at the government-sponsored credit site AnnualCreditReport.com. The site will not give you a numeric credit score, but it will deliver a detailed rundown of factors that affect your credit score. Stay away from sites like creditreport.com and freecreditreport.com. They say you can sign up for free, but after seven days they start billing your credit card $14.95 per month until you make them stop.

Get professional credit repair help

Speak to a professional today and take proactive steps to repair your credit. For a FREE credit consultation, call 1-877-563-2076.

How you handle these could affect your car and house insurance rates. Image from Flickr.

In a Michigan Supreme Court ruling yesterday, insurance companies were given the green light to use one’s credit score as a determining factor for insurance rates. The ruling does not change current insurance company practices. What the ruling does change, though, is the legality of the company pulling a credit report to determine rates.

The credit report insurance rate argument

The argument many insurance companies present to justify using a customer’s financial history to determine rates is simple. Insurance companies say that customers that can get the best personal loan rates also file fewer claims and cost the company less. By giving a good credit break on insurance rates, companies claim to be rewarding customers that cost them less.

The state regulator argument

In 2005, Michigan state regulators tried to ban the credit counseling approach to pricing insurance. The argument is that the practice is discriminatory, especially to customers in lower income brackets. The intent of the law was to create affordable insurance and equal opportunities for all customers.

Supreme Court ruling on credit reports

The Michigan Supreme Court, in the third ruling on this case, declared that the ban exceeded state authority. Michigan law, according to the Supreme Court’s 4-3 ruling, allows the practice of determining insurance rates on credit score. Writing for the majority, Justice Maura Corrigan wrote that “It is difficult to see how offering discounts to some insureds on the basis of good insurance scores is inconsistent with the general purpose of availability and affordability of insurance for all consumers.”

What this means for consumers

What this ruling means for Michigan insurance customers is higher rates for some people. These higher insurance rates are based on a credit score, which may give one more push for customers to explore credit repair. Though credit has not necessarily been shown to be a good indicator of behavior beyond the financial, credit reports are used practically everywhere. Job applications, insurance rates, cell phone plans, even prices on large purchases may be set by someone’s report.

Get professional credit repair help

Speak to a professional today and take proactive steps to repair your credit. For a FREE credit consultation, call 1-877-563-2076.

Knowing your credit score is the most basic fundamental of credit repair. But it’s even more important to know what affects  your credit score. And even more important than that is knowing what you can do to improve your credit score.

Your credit score is free

Thanks to financial reform, doing something about your credit score is easier than ever. Free credit report services are advertised all over the Internet. Until now, those free credit reports didn’t include your credit score. You had to pay extra for that. But part of the recently passed financial reform bill ensures that you can get a free credit report that includes your credit score once per year.

Why is your credit score so low?

When it comes to credit repair, most people don’t know how they affect their credit score. For instance, Wallet Pop reports that many people assume if they pay their bills on time, their credit score is good. The truth is, even if you always pay on time, when your credit cards are maxed out, your score is lower than it should be. When credit bureaus see borrowing to the limit, they see risky behavior. To improve your credit score, tackling excess credit card debt is your first priority.

Credit repair: pay off credit cards first

To raise your credit score, pay off credit card debt first. There are two basic types of debt. Installment debt is secured by collateral, like a car loan. Revolving debt is your credit card balances. For some people, credit card debt revolves forever, which is not good for the credit score. Since credit card balances are unsecured, credit report companies like FICO say they’re more risky than installment loans. So paying off your credit cards will do more to raise your credit score than paying off your car.

Pay off collection agencies last

Unfortunately, if you’ve been taken to collections, your credit score is already hurt. Paying the collection agency won’t change the numbers. Bankrate.com reports that by the time your debt goes to collection, your creditor has already written you off. Although paying the collection agency will end the harassment, the payment won’t erase the delinquency from your credit report. Bear in mind that a surprise call from the collection agency can result from missed payments on everything from utility bills to library fines. The key to protecting your credit score is to avoid collection in the first place.

No thanks to charge cards

To keep your credit score from dropping, keep refusing that charge card every department store tries to sell you. This is because opening and closing credit accounts can lower your credit score. Wallet Pop said FICO credit bureau research has found that opening any type of credit account is automatically seen as more credit risk. If you do get that charge card and pay it off in full, your credit score will rebound in a few months, but it won’t rise above the level it was before you bought that new outfit.

Don’t cancel your credit cards

Sometimes when it comes to credit repair, it looks like the deck is stacked against you. Especially when canceling credit cards can lower your credit score. When you cancel a card, the line of credit it carries goes away. With less credit available, your credit score goes down. Instead of canceling, just zero the credit card out and throw it in your dresser drawer. New credit card rules prohibit credit card companies from canceling cards you don’t use–which used to hurt your credit score–so you don’t  have to worry about that anymore.

Use installment loans wisely

Taking out an installment loan for credit repair is risky, but it can work to pay off credit card debt with personal discipline. If you have a bunch of maxed out credit cards, the new installment loan won’t negatively impact your credit score as much as those debts. For this strategy to lower your credit score, you have to make yourself pay off the credit card debt with the installment loan, and throw the credit cards in the drawer until the installment loan is paid off.

Get professional credit repair help

Speak to a professional today and take proactive steps to repair your credit. For a FREE credit consultation, call 1-877-563-2076.

No credit check payday loans critical as credit dries up

In the world of credit and lending, remarks by Federal Reserve Governor Elizabeth Duke have made a lot of headlines. Duke said that bank lending that shriveled during the recession continues to decline. She said it will take years for bank lending to recover from the financial crisis — even though banks, bailed out by the government, are raking in profits once again.

Banks rake in profits while consumers struggle

The ability to get easy instant cash for an emergency has never been more important. Lending by banks contracts further as the financial crisis slowly recovers. ABC News reports that Duke, a former banker, said that in April and May, total loans held by commercial banks shrank at an estimated 7.75 percent rate. She said bankers tell her that anxiety about financial reform and stricter government oversight is holding back lending. Shrinking availability of credit is also due to a weaker demand for credit as consumers, left broke by the recession, don’t spend, and small businesses that can’t get bank loans get hit the hardest.

Banks try, but can’t compete against direct payday lenders

Banks remain coldblooded in their pursuit of profits. As they pull back lending, they try to grab business away from short term lenders. The FDIC started a program called the Small Dollar Loan Pilot Program to do that. But as it turns out, Tom Brown at seekingalpha.com reports that the FDIC’s product fails as a replacement for payday loans. Approval usually takes 24 hours, for instance — sometimes too late to serve the very pressing needs of most payday borrowers. And the lender is required to pull a credit report.

Instant cash when you need it most

All that payday lenders online usually require, by contrast, are ID, checking account info and employment verification. And most important, payday lenders put the money in your bank account immediately. So the payday loan alternative the FDIC has dreamed up misrepresents itself.

The responsible, sensible payday loan solution

Payday lenders are getting targeted by politicians, with encouragement from banks, for providing a valuable financial service, economically. Brown cites this example:

Suppose I’m a cash-strapped consumer and my $100 utility bill is due tomorrow. I can either a) pay the bill late and incur a late fee of, say, $20, b) intentionally write a bad check and be hit with NSF charge of $29 (and break the law, to boot), or c) visit a payday lender and borrow the $100 with a promise to repay $115 next pay period.

What will you do?

The Loan Quality Initiative is a measure by Fannie Mae to reduce mortgage foreclosures. The measure could derail many real estate closings. Flickr photo.

The Loan Quality Initiative is a mortgage loan quality control measure enacted  June 1 to cut down on Fannie Mae foreclosures. In most cases the Fannie Mae Loan Quality Initiative requires lenders to pull a borrower’s credit report a second time at closing. If the borrower has applied for credit since the mortgage loan was approved, the resulting change in the debt-to-income ratio could squash the deal.

The Fannie Mae Loan Quality Initiative

Fannie Mae’s Loan Quality Initiative means lenders will be checking up on mortgage borrowers until the day they close. People who extend their credit to purchase a new washer-dryer or furniture for their new home could be in for a rude surprise.

Lou Barnes, a mortgage banker in Boulder, Colo., told smartmoney.com that the initiative will probably “blow up an unknown number of closings because of mistaken or ambiguous findings in new credit reports.”

Debt-to-income ratio is the key

Smartmoney.com reports that applying for credit of any type between the date of the loan approval and closing could snag the deal.The new lines of credit could affect the borrower’s debt-to-income ratio — the percentage of monthly gross income used to pay monthly debts is a primary tool lenders use to determine loan eligibility. Additional debt could push the borrower over Fannie Mae’s debt-to-income ratio threshold of 45 percent.

Mortgage loan quality control

Boston.com reports that many lenders already pull second credit reports right before the closing, but the Fannie Mae Loan Quality Initiative makes this mandatory for all mortgage lenders who sell their loans to Fannie Mae. New loan quality control measures require lenders not only to pull two credit reports for each mortgage transaction but to perform additional verifications of a borrower’s plans for the property, plus Social Security numbers and Individual Taxpayer Identification Numbers, among other changes. These last minute credit checks could result in a closing delay, pricing adjustment or, at worst, loan approval cancellation.

How a second credit report hurts

The Loan Quality Initiative gives lenders the freedom to verify however they choose. But mortgage blogger Bob Phillips reports that most will pull another credit report just prior to closing. Even after the loan has been approved, underwriters will be looking for three things:.

1. The updated credit report will show current credit card bills and minimum monthly payments.  Those numbers will replace the original numbers made at the time of application.  If the debts exceed Fannie Mae’s threshold, the loan will be denied.
2. The updated credit score. If the FICO has dropped below minimum lending standards, the loan will be denied, or be subject to a new loan-level pricing adjustment. Loan level pricing adjustments are mandatory loan fee based on the credit score.
3. The credit report’s Credit Inquiry section. The goal is to see if the borrower has been applying for credit elsewhere. Underwriters can use this information at their discretion.

Fannie Mae foreclosures overwhelming

The Loan Quality Initiative is an attempt by Fannie Mae to stem the tide of foreclosures overwhelming the nation’s  largest mortgage buyer. Fannie Mae reported an $11.5 billion loss in the first quarter of 2010. In May, Fannie Mae asked the U.S. Treasury for an infusion of $8.4 billion to stay afloat. Fannie Mae and its government-controlled sibling Freddie Mac own or guarantee more than 50 percent of mortgages in the United States. Mortgage foreclosure statistics reached an all-time high in the first quarter of 2010. The combined share of foreclosures and mortgage delinquencies was 14 percent, or about one in every seven U.S. mortgages. Mortgage foreclosure statistics are expected to peak this year with more than 2 million borrowers losing their homes.

Getting a payday loan and paying it back on time can help build a good credit score and preserve good credit in a financial emergency. Flickr photo.

A good credit score is a major quality of life issue for everyone. Building good credit or fixing bad credit isn’t complicated. It’s a simple two-step process. First, always pay all bills on time. Second, borrow money and pay it back. Sometimes a payday loan can help build, preserve or rebuild a decent credit score. With good credit preserved through smart payday loan use, a person can get better deals, it’s easier for them to lease apartments and most importantly, its easier to get hired for a better job when the employer sees a good credit score.

Credit repair starts with a credit report

To build good credit or start credit repair, people have to know their credit score. AnnualCreditReport.com is the official government site to help consumers to obtain their free credit report. Sometimes credit scores contain mistakes that are no fault of the individual. These errors can damage credit and quality of life for a long time if left undetected. Everyone should check their credit reports at least once a year to be sure all the information is correct. Correcting errors in credit reports can take some time, so it should be a top priority for a person trying to build good credit.

Money loans build credit

Money loans factor most in a good credit score. In the current economic climate, banks are very reluctant to make money loans and can’t be considered a reliable source of borrowing for most people. A good alternative is responsible credit card use. Apply for one and use it frequently. But check the fine print on any credit card offer and only choose one with no annual fee and a low interest rate. Don’t ever keep a balance on the card. Paying off the entire balance every month avoids interest charges and shows good personal financial management.

I need money now

Building a good credit score by paying rent, utility bills and credit card balances on time always works perfectly on paper. But sometimes real life throws a monkey wrench into the most carefully made plans. The car dies. A child gets injured and needs emergency care. A toothache turns into a root canal. So now what? A late credit card payment can cost a fortune in penalties and interest. If the check written to make that credit card payment on time bounces, the bank pounces with an outrageous NSF (non-sufficient funds) fee.

Same day pay day loans

To protect a good credit score in an emergency, a payday loan can a practical option. Payday lenders provide a valuable service and are reasonable when compared to default fees of mainstream lenders. For example a $100 payday advance commonly comes with a $15 fee. Compare that with a $100 bounced check with $48 NSF fee. A payday loan can avoid that bounced check fee and the credit report damage that comes with it. Plus, borrowing the money, and paying it back on time maintains the progress being made on building a good credit score.

Short term loans no credit check

The quickest, easiest way to protect a good credit score in an emergency is an instant online loan. Hundreds of direct payday lenders competing to make payday loans can be found online. A quick ten minute payday loan application leads to cash in the bank account the very same day. Payday cash advance firms don’t conduct a credit check. But the borrower must always stay on budget and pay in full at the end of the term, usually 14 days. The peace of mind restored with a payday loan can quickly become another set of problems if it’s not paid back on time.

Get professional credit repair help

Speak to a professional today and take proactive steps to repair your credit. For a FREE credit consultation, call 1-877-563-2076.

Luckily, Personal Installment Loans Today are here for you

Luckily, if you need cash right now, even if you have bad credit or bankruptcy, there really are personal loans you can get in as little as two hours in most cases. Luckier still, these short term loans are easy to get today and are easy to pay back later. There are typically no credit checks and everything is done online, making them fast. You don’t have to make a phone call or fax documents. Your loan funds are deposited directly into your bank account quickly.

It’s okay:

• It’s okay if you are in the military
• It’s okay if you have bad credit
• It’s okay if you have no credit
• It’s okay if you have a bankruptcy
• It’s okay because it’s secure
• It’s okay because it’s hassle-free
• It’s okay to stay at home because it’s an online application
• It’s okay to have the funds available in as little as two hours
• It’s okay not to fax
• It’s okay not to have a credit check

Installment loans today can keep your finances from getting worse tomorrow

You need money to fix your credit. You need to bring your accounts current and pay your debts down to fix your credit. These are the most important things you can do when your credit score has been compromised in the past by excessive debt or late payments. It took time to damage your credit score; it takes time to repair that credit score. While you’re working toward your goal of improving your credit, it’s essential that you not get further behind. These loans can help you to fix your credit, and help you to have a better tomorrow.

Installment loans have a workable pay back solution

Most payday loans are paid in full on your next payday with a single automatic deduction from your checking account. But when you get an installment loan, instead of deducting the full amount on your next payday, you make several smaller payments over a longer period of time. These loans are a much better workable solution than payday loans.

For Personal Installment Loans Today, apply HERE!

What is bad credit and how does it affect our lives

With the recession looming clear in all our lives, problems related to bad credit have been more evident of late. Dreams of buying a home or any property for that matter seems close to impossible with banks going super strict on approval for loans. Bad credit is a sure shot way of determining your name on the list of unapproved loan applicants. Even on the rare occasion of your loan being approved, you will be asked to pay a higher rate of interest, thanks to your debt. Landlords renting out their apartments also look into your credit history before they choose you as a tenant. So what can keep you away from becoming homeless? Credit history repair is the only solution to this problem but comes with its set of hassles. As tiring as it can be, credit repair is possible, and here’s how.

What is the solution to the above problems faced?

By logic, if you are facing problems due to bad credit, the sensible thing would be to try and clean up your credit report and gather good credit. Easier said than done, this process often leads to more trouble than solving the issue of bad credit. The best way to go about it would be to take it one step at a time as given below:

What to do:

• First things, first. Get hold of that credit report as the first step towards your goal of good credit. Know exactly where you stand and evaluate what you can do to repair the damage. A credit report can be obtained for free, as per the recent rule implied by the federal government. There are a few credit repair agencies that claim to provide you with a free credit report, but tread with caution here as some agencies take you for a ride. They promise you a free credit report, but only after you sign up for months of their service.

• Once you have a credit report in hand, evaluate it with care to eliminate any errors that may have been included. Calculate how much you owe. Keep all relevant documents with you so that you can cross check. Next step is to calculate your monthly income and monthly expenditure. Check on how much of this amount goes towards paying off your debts. Make a conscious effort to clear your debts while also making sure that you earn enough.

• Reducing your overall debt is essential in building good credit, and to increase credit score. At the same time, take note not to reduce it to zero, as it indicates no activity and will affect your credit report. Please note that it is advisable to use your credit card within 80% of the allowed limit. Using your credit card more than 100% of the limit can cost you around 100 points. In the same way, availing a new credit card or more within a short span of time can also be a bad mark on your credit history.

• Payments made on time can help in credit history repair. A late payment penalty is detrimental to good credit. Paying off all your debts will not suffice in giving you a better credit score or report. You might have to notify the payment collectors that your debt has been paid off and that they should remove any negative mark on your credit report.

What to look out for:

• A major concern in your struggle with obtaining a clean credit report will be to decide if you require professional help of credit repair agencies or if you can solve your credit issues on your own. The do-it-yourself plan will require a considerable amount of time spent on doing your base work on understanding the situation. Do your homework well with the help of books, the internet or by asking around for good remedies based on what experienced people have to say. On the other hand, if you are considering professional help, it is necessary to watch out for the good ones and the bad ones. Distinguishing the genuine agencies from the frauds is essential and there are steps to do the same. The Better Business Bureau is one such place that can help you decide on which agency to opt for. Ask ample amount of questions and make sure you get the answers.

• Be prepared to invest your time on this procedure of credit history repair as it can get tedious. Credit repair does not happen overnight and although is possible, will take its own time to fall into place. Any agency that promises a miracle with credit repair within a few days is sure to be a scam, as tried and tested cases of credit repair has proved that it is a time consuming process to say the least.

• Once you set out on the path of credit repair, do not give up. As we mentioned earlier, bad credit is easy to ignore but can prove disastrous the longer it is pushed away. Work towards meeting your goal of good credit and stay alert for any indications that will not allow you to increase credit score, like a negative remark by a payment collector whose debt is already paid or an unaccounted debt on your credit report.

The vital need to repair credit

All in all, as mammoth a task it seems to be, credit repair is absolutely necessary in today’s times. Keeping yourself equipped with all necessary documents and credit report is a wise thing to do while on the mission of availing good credit. Keep your goals clear and work on it step by step till bad credit is a thing of the past in your life. Say hello to good credit and watch all those unfinished dreams come true!

Get professional credit repair help

Speak to a professional today and take proactive steps to repair your credit. For a FREE credit consultation, call 1-877-563-2076.

You have the power to find the road to financial freedom

Everyone has financial power. Those who realize this know how to harness their power and use it for something great. Those who are unaware of their power end up misusing it to create excessive debt, bad credit, and a life of financial struggle. The following five keys can help you take control of your financial future and proceed toward prosperity.

Key 1: Resolve to make a change

Sure, many people daydream about having financial control over their lives, but without a dogged determination to change, they remain in debt. Instead, those who prosper are those who make a firm decision to do so. The first key to unlocking your financial power is to place your focus on making strong, positive changes in the right direction. Mark this date on the calendar, because it is the day that you are taking your first step towards prosperity.

Key 2: Let go of fear

Most people don’t want to stay in debt, but most people are afraid to take the steps necessary to get out of it. Some people have a genuine fear of handling money. Sure, they can spend it, but when it comes to actually balancing a checkbook, creating a budget or even speaking to bill collectors about debts owed, they prefer to bury their heads in the sand. This produces overwhelming feelings of financial inadequacy and does nothing but make a bad situation worse. The second key to unlocking your financial power is to face your fears head on. Whatever you personally avoid in handling your finances, make this the day that you simply stop and face reality with bold confidence.

Key 3: Build your confidence

It’s one thing to say you’re going to face your financial fears, but it’s another to find the confidence to do so. Financial confidence comes from financial education. Take a seminar on financial planning, read consumer-friendly books on personal finance, talk to friends and family members who have credit ratings and strong saving habits, and ask them for advice. Accept where you are, start right there, and take baby steps to educate and empower yourself for a better, more confident financial future.

Key 4: Face up to your credit report

If you’re determined to change and willing to face your fears, take the next step and order a credit report. People with bad credit often don’t want to face up to seeing their credit reports, but there’s no way to improve a disaster zone if you’re not even willing to look at it. Each year the three major credit bureaus allow every consumer one free credit report. If you don’t know your current FICO score or if you have no idea about what’s actually on your credit report, then it’s time to find out.

Key 5: Ask for help

Armed with concrete information about your financial situation and a new resolve to change, your final step to unlocking your financial power is to ask for help. Whether you need a personal loan or whether you need to consolidate debts, this is the time to seek help from professionals and people whose advice you trust. It can be tough to admit that you’re in over your head and need help, but it is better to speak now and reach for a helping hand than to continue to struggle with overwhelming debt. Financial counselors, credit counselors, and financial planners are easy to find in your local yellow pages or online. This may be a good time to shop around for one who can help you with your budgeting and financial concerns, so that you can begin your trek toward financial prosperity.

It’s never too late to improve your future

It’s never too late to make a change for the better. In unlocking your financial power, you will discover that you are fully capable of making the changes necessary to improve your future. If you’ve put this decision off for years, make today the day you stop making excuses. Commitment, persistence and confidence in who you know can be, will enable you to pull yourself up out of debt and live the life of your dreams.

Before a person decides to cosign a loan, it is important to consider the risks involved. Many who haven’t done so have come to regret it. Often, their decisions have resulted in bad credit ratings and the need for emergency cash to bail themselves out of someone else’s debt. Simply put, when a cosigner is required for a loan, it is because the person attempting the purchase is a poor credit risk. Therefore, if the lender, after studying a person’s income and spending habits, isn’t willing to take a chance on lending money, why should anyone else? This may sound harsh and cruel, but it is a reality that mustn’t be overlooked if a person hopes to maintain their own good credit rating.

Emotions and money

Unfortunately, most people make the decision to cosign a loan based upon emotions. After all, the person asking is usually a relative, or a very close friend, who approaches during a time of need. This person has the money for a down payment and the only thing stopping them from finalizing their purchase is their own shaky credit or lack of adequate income. They are told that they can seal the deal, so to speak, if they can find someone else with good credit to sign on the dotted line and claim responsibility for the loan if they default. Most people find it hard to resist a loved one who approaches them to cosign a loan. This isn’t because they want to obligate themselves to someone else’s debt, but because they feel an emotional need to help.

Learning to say ‘No’

It can be difficult to say no to a loved one in need, but it is sometimes necessary to do exactly that. A good credit rating takes time and discipline to build. Having good credit destroyed by someone else’s misfortune or lack of discipline is not something that people look forward to. Therefore, it is important that people learn to say no when appropriate.

Saying ‘Yes’

Of course, there are some who will believe in a person’s ability to pay off a loan despite professional calculations to the contrary. Sometimes this works out for all parties involved and sometimes it doesn’t. Therefore, when one has agreed to cosign a loan on another’s behalf, there are a few things that they should be prepared for.

With car loans and home mortgages, especially, if payments are missed, lenders do not typically contact a cosigner until the car or home has been repossessed. By this time, the damage is done and the repossession has been added to the cosigner’s credit report. A cosigner also may be contacted again to pay any remaining difference between the original loan amount and the below market price that repossessed cars and homes are sometimes sold for.

So, before agreeing to cosign a loan, people with good credit should weigh their decisions very carefully. They must be clear on whether they are feeling led to cosign by their emotions and whether they can afford the risk involved. Being firm and honest about one’s decision to not cosign a loan can be tough, but the result of not doing so can be even harder to bear.

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Why Monitor Your Credit Report?

You’ve probably seen the TV commercials for FreeCreditReport.com that feature a young man singing about the misfortune he’s encountered due to negative information on his credit report. If you’ve ever tried to apply for a mortgage, auto loan or credit card and run into some of the same stigma that goes along with a bad credit history and a low credit score, you know how frustrating it can be – especially if you weren’t previously aware of the negative information on your report.

While errors on your credit report can exist, many of these uncomfortable situations occur because people simply aren’t aware of what’s on their credit reports. Of course, this is only one of the reasons for monitoring your credit report. Let’s look at this and a few others in more detail:

1. To Know Where You Stand

In these economic conditions, you’ll typically need a credit score of at least 620 to qualify for new credit and a score over 720 to get the best terms. Does your credit score fall in this range? If not, you can take action to improve it before applying for credit by paying down your debt and loan balances and building a good payment history. Since too many inquiries can lower your score, going in knowing that you’ll be approved will prevent these black marks from building up on your credit report.

2. To Protect Against Identity Theft

Identity theft is a major concern for most Americans, and it should be – repairing the damage caused by an identity thief can take years and can cost you thousands of dollars. Generally, the worst situations occur when people aren’t aware that a thief has gotten a hold of their personal information – the sneakiest criminals can open several accounts in your name and run up mountains of debt without you ever knowing it. By monitoring your credit report consistently, you’ll be able to catch any fraudulent behavior and repair the damage before it’s too great.

3. To Catch Errors Early On

According to some experts, up to 80% of Americans may have errors on their credit reports. These errors can be relatively minor – like a misspelled last name or an incorrect address – or they can be much more serious. For example, if one of your creditors mistakenly reports that your debt is in default, your credit score could take a major nosedive.

Fortunately, there is a process for correcting these errors, which involves notifying the credit bureaus in writing with supporting documentation to back up your claim. The downside is that this process can take time. If you’re planning to apply for a line of credit in the near future, taking the time to check your credit report for mistakes and fix those that you find now will prevent you from being incorrectly declined due to errors.

Obtaining Your Credit Report

The US government allows you to get a free copy of your credit report from each of the three major credit bureaus – Experian, Equifax and Transunion – once a year through the website AnnualCreditReport.com. Most financial experts recommend pulling one report every four months, which gives you ample time to correct any errors you find on each report. Staying on top of the information contained in each of these reports is an important part of protecting your financial future.

Your credit score – those three, little, seemingly insignificant numbers – has a major impact on your life. Not only does it determine the interest rates you pay on loans or credit cards, more and more companies are using your credit score to grant or deny other amenities, like cell phone contracts or life insurance policies.

If you’ve never checked your credit report, now is a good time to do so. Errors that you’re unaware of could be preventing you from getting the best rates on a wide range of services.

In fact, this situation is more common than you might expect: It’s estimated that as many as 80% of credit reports contain errors. These errors range from being relatively minor in nature (for example, a misspelled name or a former address) to being much more serious, (as in the case of accounts mistakenly reported as past due or in default). Fortunately, you can correct these errors, but it does require some paperwork on your part.

Step One: Identify the Errors

As you might expect, the first step in correcting errors on your credit report involves finding them. Legally, you’re entitled to a free copy of your credit report from each of the three credit bureaus – Equifax, Experian and TransUnion – once every twelve months. To request these, visit www.AnnualCreditReport.com. This is the only site that offers legitimate free copies of your report. Other sites, including those run by the bureaus themselves, will charge you either by the report or for ongoing credit-monitoring services.

Step Two: Notify the Credit Bureau

If you find a mistake any of your credit reports, the next step is to notify the bureau in writing. When submitting your dispute, be sure to include any background materials that support your claim, in addition to your written explanation of the situation. The agency must investigate your dispute within 30 days of receiving it and notify you in writing of its decision. If the agency decides in your favor, it is also required to correct the report and send you a copy of your revised credit history.

Step Three: Add a Consumer Note to Your Credit Report

Depending on the nature of your dispute, the credit agency may decide against your claim. This can occur if the agency doesn’t have sufficient evidence to support your claim, or if there was a genuine mis-communication between you and the lender. Whatever the reason, you aren’t entirely out of luck. Consumers are allowed to add brief statements to their credit histories to explain their versions of disputes. For example, if a late payment was due to a job loss or an unforeseen medical bill, a note explaining the situation may be enough to convince a lender of your creditworthiness.

To submit a consumer note to one of the credit bureaus, follow the same procedure described above for disputing items on your report. Draft your statement (be sure to keep it short – most of the bureaus will print a maximum of 100 words) and send it in writing to the bureau. The bureau is required to send you an updated copy of your credit report with your consumer note added. Review the updated version to ensure that everything on your credit report is accurate and up-to-date.