Credit reporting agency Teletrack has been fined nearly $2 million by the FTC for illegally selling credit reports. Photo Credit: TrinityCreditServices/Flickr/CC-BY

Credit reporting agency Teletrack, which specializes in subprime credit reports, has been fined by the FTC for selling credit reports illegally. The agency was found to have sold credit reports to payday loan lenders and has to pay $1.8 million in fines to the Federal Trade Commission.

Company cited for selling credit reports for marketing purposes

The Federal Trade Commission has slapped credit rating agency Teletrack with $1.8 million in fines for illegally selling credit reports to payday loan companies for marketing purposes, according to WalletPop. Teletrack has agreed to pay the fines, but insists that it acted entirely within the law. The FTC says the company violated the Fair Credit Reporting Act, which prohibits the selling of financial information such as credit histories or borrowing habits of customers or similar information for any reason other than a “permissible purpose,” according to Statesboro Business and Lifestyle Magazine. Marketing is not a permissible purpose.

Huge presence in subprime credit market

Teletrack is one of the largest subprime credit reporting agencies. It reports the credit history and activities of hundreds of thousands of people who use subprime credit products. Also known as alternative financial services, Teletrack compiles data on people who borrow payday loans, purchase furniture through rent-to-own companies, use car title loans or get an auto loan through non-prime lenders. The FCRA doesn’t prevents companies like Teletrack from providing information when asked for a credit check and paid by a second party, but selling information to third parties for non-approved purposes is grounds for an FTC lawsuit, according to Forbes.

New rules for credit scores

Until the past few years, it was fairly difficult for consumers to obtain much information about their credit history or learn about how that information is being shared with their creditors or third parties. Part of the financial reform laws of the past few years include new rules and regulations concerning credit reporting and credit scores, according to NASDAQ. The Dodd-Frank Act created the new rules last year, and the Federal Trade Commission and the Federal Reserve are implementing them this year. Now, any creditor that uses a credit score as a factor in creating the terms of a loan must tell consumers what their credit scores are.

Sources

WalletPop

Statesboro Business and Lifestyle Magazine

Forbes

Nasdaq

Right now, it's Landlords over Tenants. Image: umjanedoan/Flickr/CC BY

Renting a home is not as easy at it once was. As the economy degrades, more and more people are looking to rent, while the number of available rentals is down. Landlords have the upper hand and can afford to be much more selective about who they rent to. The renter has to be more savvy than ever to ensure a happy outcome.

Not so good for the renter

According to Christina Argon of Ebay, rents went up 2 percent in the first quarter of 2011 and are expected to rise 3 or 4 percent over the rest of the year. Vacancy rates, however, are dropping as renters are choosing to stay put. Vacancy rates are down 6.2 percent from this time last year. The trends point to an improvement in the housing market and may be an early sign of economic recovery. It is not, however, currently a great position for the renter to be in. Rents are rising, vacancies are more scarce, competition is tougher for properties, and landlords are less willing to make concessions or offer incentives.

Do your homework

But there are many things a prospective tenant can do to hedge bets in the rental game. The first is to begin early and do your research. Start a month or two before your current lease expires. Once you find a house or apartment you like, contact the County Clerk to search the public records for legal action or liens against the property. Remember, each rental you apply for will require a background search with accompanying application fee. It is best to narrow the field as much as possible ahead of time.

Background checks

Landlords today routinely check credit scores and criminal backgrounds. While some blotches on the credit report do not necessarily spell rejection from landlords, they will be turned off by consistent late payments on utilities and other bills. And, of course, the cleaner your criminal background the better. One or two minor marks will not disqualify a person, but any pattern of legal problems could be very difficult to overcome.

A third or less of income

Another factor to consider is what you can afford. You may have set ideas on this, depending on your own needs and spending patterns. But one needs to consider this from the landlord’s perspective. Generally speaking, a landlord will consider a prospective tenant who earns at least three times the rent. A person looking to rent an apartment for $1,000 a month will likely be rejected if they do not have an income of $3,000 a month, or roughly $39,000 annually.

Lock in a lease

When you find the place that you can afford and that meets your needs — and you garner the landlord’s approval — Argon suggests trying to lock that rate into a lease of 12 or 18 months. Experts say rents will only go up in the foreseeable future. Keep it as low as you can for as long as you can.

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Experian is the first major credit reporting agency to include rental payment data as a factor in a credit score. Image: CC TheTruthAbout/Flickr

If you’re looking for ways to boost your credit score, add paying your rent on time to the list. Experian, one of the major credit bureaus in the U.S., has started to factor in timely rent payment data in credit reports. Experian is the first credit bureau to use data about paying rent on time, instead of paying rent late, to affect credit scores.

Experian pioneers positive rental data

Until Experian started using positive data, only negative rental data would show up on credit reports. Such negative data often results from a landlord sending an renter’s account to collection. Now Experian is tracing rental information through its RentBureau division. RentBureau is a specialty credit bureau that collects rental payment data from a property management network renting to more than 8 million households in the U.S. In a statement announcing the service, Experian said there are nearly 96 million renters who always pay their rent on time that are not getting the credit terms they deserve.

Both renters and landlords benefit

The news from Experian cuts both ways. Whereas before only getting sent to collection would result in negative rental data, simply getting behind on rent payments could become an Experian criterion starting in 2012. But industry experts agree that adding rental payment data to credit reports is by and large a positive development for consumers. It removes a key obstacle for building good credit from young people in particular who have not yet obtained credit cards, auto loans or mortgages. There’s an upside for landlords as well. Landlords in the RentBureau network can access its database to determine if applicants will be good renters.

With the other credit bureaus jump on board?

An emerging credit bureau called VantageScore, which ranks consumers on a scale from A to F, has been already using rent payments in its credit score model. Experian’s arrival could increase demand from lenders and underwriters to include rental data in credit scores. FICO has said that it will evaluate and compare Experian credit reports that factor in rental payment data. Over time, rental data in credit scores could be a boost to the mortgage lending industry by helping more people qualify for credit they deserve.

Sources

Huffington Post

The Baltimore Sun

Wallet Pop

What are the minimum requirements?

If you have a valid social security number and a steady job, you may qualify for easy cash loans. Online payday lenders typically require that you:

• Have a valid social security number
• Be at least 18 years old
• Have a permanent street address
• Be currently employed
• Be employed at your current job for three to six months, depending on the lender
• Have a minimum income of about $1,000 a month, depending on the lender
• Have a valid bank account with direct payroll deposit

What about credit checks?

One of the main goals of payday lenders is to provide short-term credit to people who might not otherwise be able to meet lending standards because of credit problems. Credit reports are rarely required for easy cash loans, although many payday lenders do obtain consumer reports from Teletrack.

What is Teletrack?

Teletrack is a consumer reporting agency operating under the Fair Credit Reporting Act, the same federal law that governs the three major credit-reporting agencies. The consumer information provided by Teletrack is obtained from payday lenders, rent-to-own businesses, furniture stores that provide financing, cable and telecom companies, non-prime lenders and credit unions.

Will a Teletrack report show up on my credit history?

Unlike reports from Equifax or the other major credit-reporting agencies, a consumer report from Teletrack will not show up on your credit report and will not affect your credit score. Payday lenders use Teletrack to verify the information provided by borrowers and to avoid fraudulent applications, but they don’t use them to access credit histories or to determine credit scores.

Should I apply?

Yes! What is there to lose? Remember that payday lenders are in the business of making easy cash loans to people with credit challenges just like yours. Some lenders even offer installment loans for bad credit. When you apply at Personal Money Market, you’ll instantly be matched with the best payday lender for your needs, and you’ll find out right away whether your application is approved. If you meet the lender’s minimum requirements and your application is honest, chances are good you’ll soon have the extra cash you need.

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We’re in the middle of a credit crunch, and getting an installment loan – whether it’s an auto loan, a home loan, or a personal loan – requires better credit than ever before. Creditors have their guards up and lending standards are becoming increasingly strict.

The most common credit-scoring model used by lenders is the FICO score. The FICO model (originally Fair Isaac) was established in 1956 by an engineer named Bill Fair and a mathematician named Earl Isaac. A FICO score can range from a very risky 200 to a perfect 900.

In a recent CNNMoney.com report, John Ulzheimer, president of consumer education at Credit.com, stated that FICO requirements are on the rise: “You need a 750 or better today to have the same treatment you got with a 700 two years ago,” he says. John D’Onofrio, CEO of Autoloandaily.com, concurred: “Two years ago a 680 was enough to get a great car loan rate. Today it’s often the minimum to qualify at all.”

How to maximize your FICO score

If you’re thinking of borrowing money (other than hard money loans like small payday loans or emergency cash loans that don’t require credit checks) you need to do everything you can to boost your FICO score before you apply. Here are some things you can do to maximize your credit score:

Find your score

You can get free estimates of your credit score at any number of websites (like Creditkarma.com). But if you’re serious about getting an installment loan on the best available terms, you need to see what your lender will see. Lenders will be looking at your actual FICO score, based on credit reports from three credit bureaus: Experian, Equifax, and TransUnion. To get a better sense of what lenders will actually see, for a small fee you can get one representative FICO score at myfico.com.

Look for mistakes

According to a Zogby International poll, one-third of people who pull their credit reports find errors, so check yours closely. When you get your FICO score at myfico.com, you’ll get a copy of the report it was based on. You’re entitled to one free report from each of the three credit bureaus every 12 months. So once you have your score and the report it was based on, you can get the other two reports for free at annualcreditreport.com

If you find errors, request corrections, following the instructions on each credit bureau’s website. Inaccurate delinquent marks are common. Fixing just one of those can improve your FICO score dramatically.

Never be late on payments

Your payment history is the most important part of your credit score. Lenders can’t report late payments to the bureaus until they’re 30 days past due. But keep track of your payment due dates and take precautions not to be late at all.

If you know you can’t pay a bill on time, think about getting a quick payday loan to pay the bill. If you will be able to get by on your next paycheck after paying the loan back, a cash advance can save your credit score, but don’t let payday loans become a habit. If you make a late payment, getting right back on track will eventually improve your score, but if you fall more than 30 days behind, the damage to your FICO score can haunt you for years.

Don’t use more than 20% of your total available credit

Another important factor in calculating your score is how much you owe compared to how much credit is available to you. According to Ulzheimer, 10% is ideal, but a ratio as high as 20% is acceptable. Unfortunately, banks are scurrying right now to raise interest rates before new regulations go into effect (read Credit Card Company Comeuppance), and they’re also rushing to lower credit limits and cancel unused accounts, all of which make it more difficult to maintain an ideal ratio.

Be aware of the limits on your credit accounts, watch closely for changes on your monthly statements, and don’t use more than 20% of your available credit on any card or in total. If you’re thinking about getting a home or auto loan, try to reduce your account balances even farther before you apply.  If you’re working to pay down your debts before applying for new credit, remember that it may take a couple of months before reduced balances will appear on your credit report.

Preserve old accounts

A long credit history without late payments is the most important part of your FICO score. Closing old accounts not only increases your credit utilization ratio, it shortens your credit history.  So don’t cancel your oldest cards. You can avoid having lenders close old accounts by transferring recurring charges to them from the accounts you use more regularly.

Don’t try to out-smart the credit bureaus

Other, less important factors are involved in calculating your FICO score, but they are more difficult to manipulate. For example, part of your score is based on your mix of credit types, such as mortgages, car loans, and credit cards. But don’t buy a car or apply for new credit cards just to boost your score. The effects of new credit on a FICO score are complicated, and it is much easier to improve your score by carefully tending a few long-standing credit accounts and making your payments on time.

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