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Removing Erroneous Items on a Credit Report

marcus — Wed, 07 Jul 2010 16:40:31 +0000

On a recent credit profile review with a client, the client noticed a credit line entry for a credit card of which their balance was paid and the account closed. However, on the credit profile, the credit card showed a $93 balance and a perfect payment history leading up until the time in which they closed the account. We called the creditor together and representative insisted my client must pay the balance and suggested they accept the negative effects on their credit profile and move on with rebuilding their credit.

To correct this sort of error on the credit profile report, first gather and write up the history leading up to this event and collect evidence that supports your claims. Second, determine if your municipality has a consumer protection department. In some communities, exist government or non-profit sponsored groups that will act on its resident’s behalf in consumer affairs. If your area doesn’t have a consumer protection agency, then you will need to obtain an address of the creditor so that a formal dispute can be filed with the creditor. This dispute should also be copied to the credit bureau/s that are reporting the erroneous line entry. The Fair Credit Reporting Act allows consumers to dispute entries on their credit profiles, in writing. The law also states these disputes should be resolved within a reasonable amount of time, which is generally considered 30 days.

Credit card companies keep record of conversations and payment histories of each of its cardholders, if they do not then they will have a difficult time of countering your dispute claim. The bank may need to check their archive records to either backup their claims on credit reports or by law, they will need to remove the entry from your credit profile. Be patient and persevere as the credit company may not access their archives until after the 30 days and later have the negative credit mark re-entered on your credit report. So be sure to check your credit profile again over the next year, to ensure the entry doesn’t resurface.

Stopping the Collection Calls

marcus — Tue, 29 Jun 2010 12:00:32 +0000

Not responding to collection calls and letters will only make your life miserable. If your personal finances are in dire straits and you are unable to pay the full amount dues on your monthly financial obligations, then you need to bring your creditors and those in which you are indebted up to date on your financial abilities. However, if you are only able to make a partial payment to your creditors…prepare to make the payments. If your creditors are unaware of your financial circumstances and you do not answer their calls or letters, then this frustration of seemingly creditor harassment will never subside and the creditors have only to assume you have abandoned your responsibility and financial commitments with them. If you don’t respond to their calls you could face heavy collection fees, further declining credit, law suits and income or bank account garnishments. Call your creditors and have your account noted on your new financial situation. You may find your financial institutions offering payment extensions or plans that will better meet your new financial ability until you are able to more comfortably manage your debt. But most important …follow through with your promises to make those new reduced/partial payments and if something new comes up financially…for better or worse….do not hesitate to communicate clearly again your newer situation and a new feasible budget to repay your debt. Additionally, I would suggest if you make partial payments that you should include an explanation letter each time a partial payment is sent as well as make payment more frequently than once a month to show a greater effort to satisfy and meet your financial responsibility. Some creditors will not be empathetic to any financial turns your life has made, but in case you ever find yourself in court with these creditors, the fact that you tried to remedy your inability to make full payments with regular partial payments will speak volumes in your defense and may influence a lenient decision in your favor.

Secured Credit Cards vs Unsecured Credit Cards

marcus — Wed, 23 Jun 2010 14:31:48 +0000

Obtaining a credit card is a great way to work at improving and strengthening your credit profile as long as you have the discipline and ability to make payments on time each month. However, building the necessary credit profile to be approved for one of these cards may be more of a challenge than its seemingly worth. I recommend that new-to-credit consumers obtain a secured credit card initially. This will be a great aid to any credit enhancement plan while not financially extending one past their affordability. The secured credit card works just like a regular credit card and has no limitations other than the credit limit. However, some see the getting a secured credit card as less of an impact on the credit profile as an unsecured card? An unsecured and secured credit card both have the same weight on ones credit profile as far as its usage and payment activities bearing on the credit score. However, oftentimes a secured credit card will have a minimum balance starting at $150, while a secured card will generally start at $500. It’s not the difference in card type but the difference in balance that has the impact on the credit scores. By simply adding more to the initial deposit to the secured card or by adding to that deposit the secured card will just as high an impact in building a solid credit profile.

The Real First Step to Credit Enhancement

marcus — Thu, 06 May 2010 17:15:48 +0000

I have a friend that has counseled with me several times on improving his credit profile. He has obtained all three credit reports directly from the bureaus. He’s identified the erroneous entries on his credit report, typed letters disputing those incorrect credit line items and has even created a feasible repayment plan to bring all his accounts current. However, after to listening to his impressive and extensive plan to enhance his credit, I reminded him that he has missed probably the largest hurdle to improving the credit portion of his personal finances. He had never bought his wife to our meetings and had never mentioned speaking with his spouse when considering repayment plans or discovering erroneous credit entries. After asking if he had spoken with his wife about his plans for his credit repair, he admitted he hadn’t because they didn’t share any credit accounts. And although a husband and wife have separate credit profiles, taking on a journey to improve a credit profile will affect spending and savings habits as well as these changes can cause an uncomfortable ripple through the household finances. Additionally, if the spouse is not on board with the credit enhancement plan then a financial fork in the road will be met by the couple at some time and “the talk” of which I think should preamble the credit repair plan, will be had in the middle of the journey. …talk about uncomfortable. Imagine trying to cut credit card use and Automated Teller Machine (ATM) withdrawals while your partner does all the shopping and never carries cash. Talk over any new financial plans with your significant other. If both adults involved are in agreement and working to compliment one another’s effort then success is much more likely.

Calculating Your Personal Finances

marcus — Thu, 29 Apr 2010 12:27:46 +0000

You have a tri-merged credit report and gathered any collection letters in your hand. You are now on your way to the easiest part of regaining control of your personal finances. First, we need to understand what percentage of your income (take home pay after taxes and deductions) is owed out each month. Divide each debt by your take home pay and you will reveal the percentage of your money that is being used each month for the individual debt.

Example:
Monthly Income – $2,400
Monthly Housing Payment – $975 975/2400 = 41%
Monthly Auto Payment – $245 245/2400 = 10%
Monthly Credit Cards – $125 125/2400 = 5%

Idealistically, your entire monthly debts should not equal more than 50-70% of your monthly take home pay. If you are living outside of that percentage area…lower is great, but on the higher side…then you are running the risk of financial collapse should you or the economy ever stumble again….and it will stumble again If your numbers mirror the above example then its time to get the red pen out and contact your creditors to negotiate a new lower payment. Base your requesting the reduced payment on the percentages and record their exact responses and remember to get any offers they extend in writing. And lastly, do not make any decision to pay one group without reviewing the totality of your new financial recovery plan. Its a good idea to start allowing an overnight time period before making financial decisions.

Next time, we will further discuss the conversation and the follow up with your contact with creditors, so you can begin feeling the effects of a recovering personal finance plan.

Goldman Sachs Scandal Pushes Financial Literacy

marcus — Tue, 27 Apr 2010 17:18:30 +0000

If the Goldman Sachs mortgage securities scandal hasn’t increased your thirst to mentally arm yourself with financial literacy, then you really like throwing and giving money away ….so I will forward you my mailing address on a private email later. It can be dizzying to the average person to understand the extent to which the banks create investment vehicles to drive money/profits to themselves, but it is not hard to learn the basics to insure you are able to defend your financial security and therefore, your future. However, as I sit through the past and current years of various board meetings on budget cuts as well as financial counselor feedback meetings, I realize more and more that the lack of understanding of the “flow of money” or financial literacy is the cause for most of the general public’s economic hardships and the past, present and future of their personal finances. Remember that dealing with your finances without a financial education is like entering the boxing ring without any prior fighting skills.

To comprehend the extent of the Goldman Sachs scandal is simple. The investment bank created investment programs, at the request of an uber-wealthy investor and sold them to the public knowing the securities would perform poorly and did not advise the investment purchasers they had bet against the same investment vehicle they were selling. Goldman suggested and sold securities they speculated were poor grade and as a result they made millions in investment fees and profits. ..and the uber-wealthy investor that requested the investment vehicle earned over $1 billion.

Why should you care? Local and State governments as well as retirement management firms invested in those Goldman securities and lost big….those particular losses helped move the economy to its fall and our current tax dollars and financial future were used to rescue investment firms like Goldman Sachs.

The result of “not knowing better,” over 8 million jobs and 7 million homes in foreclosure…all lost to the recession. Knowing is half the battle.

Increasing Your Income

marcus — Sun, 07 Mar 2010 12:00:40 +0000

Many times when people are working at correcting their financial status they focus their efforts in locating more money to pour over their personal finance issues. The solution for most is to get a part-time job now. However, I have not always been a fan of getting a part time job with but having a sure entrance and exit plan on working that 2nd job, because that 2nd job can easily become a necessity instead of a financial life preserver. Instead of just finding a part-time job that will hand you a few dollars to assist in making ends meet, explore making money by mixing activities you enjoy. Although I am a professional banker, I am also a certified personal trainer and this allows me time to exercise, maintain a free gym membership, meet people with like interests and oh yeah, and make some “extra” money. Although I make money from this “side” interest, I still manage finances as if that “side” job does not exist. If you start relying on the extra money then the side/voluntary job will become a necessity and not a luxury. Allow the 2nd job to free your main salary to address your main financial responsibilities and the extra money should be used for extras…such as additional retirement, short/long term disability insurance, a college savings, emergency funds, et cetera. Remember to use the 2nd job, and not let the 2nd job own you.

Understanding the Numbers

marcus — Fri, 05 Mar 2010 12:00:57 +0000

Okay, remember those numbers. Don’t know which numbers? Then go read, Getting Back on Track. The numbers of which I’m speaking represent your total monthly expenses / bills and your total monthly take home pay. Divide the monthly expense amount by the total income. That quotient (answer) will represent the percentage of your monthly income is committed to expenses each month and is called the debt to income. Example: $1500 monthly expenses divided by $2000 monthly income = 75% debt- to-income ratio. The debt to income should be in the area of 50%, however, many families live with that number closer to 75% and many times over 100%.

Review your expenses and make determinations if any of those monthly expenses can be reduced to allow for more monthly disposable income. Disposable income is money received that is not committed to paying a debt. We want to increase the disposable income, so that we can create a pool of “non-obligated” funds to be use to offset debts that weigh heavy on the monthly expenses because of high interest rates or maybe even drawn-out repayment plans. ..either way, the objective is to create some temporary financial breathing room. Once you have reduced your monthly payments to the lowest allowable level, you will be able to start aggressively paying debts you will later label as priority. Next we will talk about categorizing debts by priority and developing a strategy to eliminate more debt.

Getting Back on Track

marcus — Wed, 03 Mar 2010 20:00:04 +0000

Well, it beginning of the 3rd month of the year and droves of people that promised to hit the gym and start a savings plan have decided to revert back to their old habits and abandon their New year’s resolutions until… next year. However, if you are reading this then you are still in the gym and serious about getting your personal finances in order. Well, the first thing to consider is where you stand right now. How much do you earn and to whom do you owe a portion of those earnings.add all those balances and monthly payments and write those figures down (we’ll come back to those numbers). But if you are like most, you cannot begin to imagine just how much you really owe and to whom you it. So the best two places to start is your mailbox and by requesting a credit report from each of the three major credit reporting bureaus (Equifax, Trans Union, Experian)
Don’t jump on the first free credit report offers you find. Many companies offer free credit reports, but then sign you to a monthly subscription commitment. And if you default on the monthly agreement or forget to cancel, they continue collection and ding your credit profile if you fail to satisfy your contract. Depending on the state in which you live, you may be entitled to one free report per year from each bureau. Go to the bureaus websites and explore the sites before signing up for anything….you may have to request the credit report by mail, but there’s more to do while you are waiting for your report in the mail (remember those numbers…we’ll get to them)
Be sure to review and compare the information from each of the 3 reports…yes, they do report different information. Discrepancies on your credit report should be disputed and documented with the reporting creditor. Make sure to maintain copious notes and meticulous records of any correspondence with creditors on all concerns and disputes…and request all resolutions “offered’ and/or ‘agreed upon’ in writing.

These credit reports will provide you access to your entire consumer debt history with an exception to living expenses…i.e. housing, utilities, food, clothing, et cetera. However, the credit report provides information you will use to gain a better idea of where you financially stand and which direction/s you should move first.

Tune in next time for “what to do with those numbers”

Opening a Childrens Savings Account

marcus — Mon, 22 Feb 2010 12:00:49 +0000

The list of items to which your kids wants to buy is beyond anything that you could ever have imagined, but now is the time to give them a dose of reality in the form of perspective and priority. Everything they want is not necessary and some items may have priority over others. This is not different than teaching your kids to stay clear of fire not just because its hot but because its dangerous to them and everyone around it. However, as your kids are chomping at the bit to hit the candy store, head to the bank and open a savings account. A savings account is a great tool to help them properly manage funds and is key to starting a good financial education. Always incentivize their bank visit efforts with a treat each to encourage increased visits to the bank. I offer an extra dollar or two if they schedule bank visits with me and even more if they walk to the bank to make ATM deposits. If the day is nice, bank visits for deposits are rewarded with ice cream…okay that’s for me, but you get the picture. I want them to associate dealing with their finances as a privilege and not a task or act of labor. Make a small, if not big, production of their opening this bank account by making conversation on the subject leading up to the day and moment and afterwards. Take pictures during their opening transaction and present them with a wallet or record book in which to record their transactions and later to illustrate account reconciliation with account statements and their personal records. Opening a bank account is great but using the account is a larg3e component to a good financial education. Make sure to call relatives (grandparents ) to inform them of the account, not to request money, but to develop healthy conversation with adults the kids like, so that there is a positive re-enforcement of the act of saving. Remember that placing the money in an intangible account may lead to a slight disappointment to a kid. They relate the bank to the last moment they had money in their hand…and now its gone with nothing to show for it, so some pictures, phone conversations with loved ones that use a bank and an account statement with a balance in their name can go a long way for a kid that’s nervous about where their money goes when they leave the bank.