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Greg Cowart - Mortgage Broker or Lender at The Securus Group
Greg Cowart - Roseville Loan Guy

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Could the future of credit reporting be all new, different?

Part of three big settlements the big three credit bureaus have made over credit reporting mistakes recently (the other two were with the AG of New York and the AG of Mississippi), Equifax, Experian, and TransUnion have settled a 31 state class action suit; paying a fine and, more importantly, ensuring future errors are limited…

“Big 3” Credit Bureaus Settle With 31 States Over Credit Reporting Mistakes

The big story here isn’t the fine, $5 million is a lot of money but nothing to these guys, but how credit reporting is going to be affected going forward. The original settlement is now two year’s old but today the changes are starting to take effect…

Not the least important is the fact that they will now have to hold newly reported medical collection data before putting it on a credit report. This is very important because, more often than not, these kind of collections show up on someone’s credit report before they even find out someone is trying to collect the debt. It gives time for them to handle things, or dispute the debt, before it can ever hit someone’s credit report.
Speaking of disputing debts, the other big part of the settlement is about how these agencies investigate disputes. Up until now the onus was definitely on the consumer (you and me), and even when we are right about something if the creditor responded to the dispute request saying the debt is valid the credit bureau would often side with the creditor and nothing would change about the way the debt was reported.

Going further, and I think this is big, collection agencies now have to include in their reporting who the original creditor was. This might not sound like a big thing but as someone that has literally ready many thousands (probably tens of thousands) of credit reports over the years, helping hundreds of people correct errors on them, I can’t begin to tell you how frustrating it ts to try and help someone fix a collection on a credit report where the collection agency isn’t even saying who the original creditor was!

It remains to be seen how these changes will be implemented, but it is nice to know someone is finally doing something about this. For decades now there was little to no oversight over these companies, companies who’s product might determine whether you get that job or apartment. Not to mention a mortgage!

If you have any questions or would like any help with your credit, or anything else for that matter, please don’t hesitate to reach out…

Greg!

(916) 412-3313

Credit Bureaus fined for things they can’t stop doing

Last month two of the major American credit reporting agencies, Equifax and TransUnion, were heavily fined by the CFPB.

Equifax, TransUnion fined for selling consumers credit scores not used by most lenders

The fines came from consumer complaints about practices such as selling credit scores to people that lenders don’t use, as well as using deceptive practices to fool some consumers into signing up for costly monthly subscriptions via “free” credit report offers. They’ll be paying $5.5 million in fines as well as $17.6 million in restitution to the consumers that were harmed by their actions.

If you’ve known me for any time you know I am not a fan of the credit bureaus. They are not held accountable by anyone (until now anyways) and can, through negligence and apathy, ruin people’s lives. As much as one’s credit history and score can do that anyways.

As part of the settlement they agreed to admit no wrongdoing but are paying the fines and should not be continuing these practices.

Credit Corner: New legislation to help consumers

While not law just yet, the Stop Errors in Credit Use and Reporting (SECURE) Act of 2014 will be a huge help to many consumers. We have had conversations about how the archaic credit laws are in the country, both on this website and with some of you in person, and I don’t see it ever being perfect, but this is a good start.

Reading the text of the bill some of it sounds redundant with current protections (that have not quite worked as planned) but this should help in clarifying those protections and make sure both creditors and the credit reporting bureaus are transparent and put more effort into follow the rules, as well as adding some guidelines such as requiring the credit bureaus to provide a free credit score along with the already available free annual credit report

Political realities of today being the political realities of today this may not ever pass (seeing as its authors and sponsors are all from one party) but I can’t see any reason for this to be political at all. My assumption is we see one of the few bills that passes with bipartisan support.

We can only hope, it will be good for ALL of us. At any given time there are an estimated 10 million American adults with major errors on their credit report! It could be you… I’ve been in that group at one time. While I am well versed in credit monitoring and repair due to my profession and was able to quickly fix the issue, most of those 10 million people aren’t.

Read more about the Stop Errors in Credit Use and Reporting Act of 2014 at my preferred credit repair provider’s blog here: BLUE WATER CREDIT BLOG.

Till next time please give me a call if there is anything I can help you with…

Sincerely,
Greg Cowart

(916) 412-3313
info@rosevilleloanexpert.com

Credit Corner: 10 Trends in Online Fraud

This month I am starting a new feature, Credit Corner with Jeff Sipes of local credit repair expert Blue Water Credit. Every month I will feature one of Blue Water’s most useful posts of the month on their website, with a link back to the story on their site so you can check out all they have to offer.

10 Shocking Trends in Online Fraud

10-shocking-trends-in-online-fraud-sacramento-credit-repairOnline fraud is one of the fastest growing forms of crime, reaching epidemic proportions in a nexus of technology and cruel anonymity that defies international borders. The highest instance of fraud attempts are now aimed at businesses, violating their often-weak or nonexistent firewalls to access customer financial data, and using it with impunity.

In a recent report by IDology, 66% of organizations polled reported suspected online fraud attempts in the past 12 months, and 35% reported an increase in those numbers. As more and more consumers conduct commerce over the internet, and businesses adjust to the digital age reality that an online presence is more important than a retail store, the sharing – and potential misuse – of consumer information online is at an all time high.

In fact, 78% of attempted fraud violations occur in website applications, as savvy criminals commandeer your financial information, and then cash in with a customer-not-present business, which operates via telephone or online transactions.

Here are 10 common online scams to be wary of:

1. ScareWare Scams.
An error message or warning pops up on your screen claiming the computer is infected with a virus and then the bad guys offer a program to fix it, for a price of course. This often happens when the user clicked on a scam advertising banner or allowed a download. If you don’t fix the ScareWare problem with a legitimate antivirus program, it could slow down your computer, or worse.

2. Hit man Email.
You open an email and read that it’s allegedly from an assassin, who will come after you unless you pay him money. Though it sounds unbelievable, people actually fall for it.

3. Fraudulent Links.
It’s so easy to get a malware program or virus uploaded to an unsuspecting consumer’s computer, just by posting fake links. The links claim to be for something common place and safe, but once clicked will start a malware delivery.

4. Inside Information Stock Scams.
Emails are sent to the masses claiming to know some inside information about a company’s upcoming windfall, attempting to inflate the price before the bad guys sell off their position.

5. Lottery Winner Scams.
Emails announce that the recipient has won a large sum of money, and needs to file registration fees or disclose financial information to facilitate the transfer.

6. Reshipping and Payment Processing Fraud.
A complex game of illegally laundering money for criminals and shady organizations, in which the unsuspecting recruit is becomes legally and financially responsible.

7. Shopper Needed Check Fraud Scam.
The consumer is “hired” as a professional shopper, and sent a check for a few hundred dollars. They are instructed to cash the check, taking their portion and then forwarding the rest on to their employer in the business. Of course the check bounces but the victim already sent money from their own account.

8. Greeting Cards Scam.
An email arrives with a greeting card from a family or friend, but once the user clicks on it, it instantly takes you to booby-trapped websites that start downloading Trojans and other malicious software into the computer.

9. Nigerian 419 Scam.
This older scam tried to collect advanced fees from the recipient for some future transaction, similar to the Lottery Winner scam. They may claim all sorts of hardships, love affairs, business opportunities, or even to be a Prince ready to reclaim their throne, as long as you can help them out in the interim!

10. Phishing Scam.
These are scary – and surprisingly effective. Clicking on a link or email brings you to a site that claims to belong to a well-known financial institution or e-commerce site (like a fake banking or eBay site.) But when the consumer enters their information (or login and password to the real site) they’ll find their accounts have been cleaned out.

SOURCE: BLUE WATER CREDIT

DON’T let anyone else pull your credit!!!

You may have heard this before; “DONT let anyone else pull your credit or it will bring down your credit score.” While that was true MANY years ago, it hasn’t been in a long time and separate inquiries from multiple mortgage lenders in a short period of time no longer has the same negative effect. Don’t believe the hype. A recent change allows you even more time to comparison-shop for a mortgage, auto, or student loan without hurting their credit score.

Years ago the policy changed so virtually any number of credit inquiries within a 30-day time frame for a combination of a mortgage, auto or student loan would have no effect on an applicant’s score. To make that even better a new revision to this rule allows anyone who applies solely for one specific type of those loans (mortgage, student, or auto loan) now has an even longer period of time before another inquiry will count against their score. 45 days!

Some things to remember… This doesn’t mean that none of the inquiries count against the score,  just that only the first one will. Also, these rules don’t apply to credit cards, personal loans, or other secured/non-secured debt that isn’t a mortgage, auto, or student loan. Outside of these kind of inquiries each inquiry will indeed count against one’s score. Usually to the tune of 1 – 4 points in the month the inquiry was made.

Sincerely,
Greg

Credit Makeover In Five Steps

My friends at local credit repair agency, Blue Water Credit Repair, gave me this GREAT five step path to a credit makeover. While I know all of this myself I can’t take credit for putting it into words (and Blue Water taught me a bit of this stuff anyways). Here you go, a free five step outline to a complete credit makeover!

CREDIT MAKEOVER IN FIVE STEPS

A lot of homeowners have the mind set that making payments on time automatically equates to good credit and credit scores.

Unfortunately, this couldn’t be further from the truth.
While paying your bills on time accounts for a large portion of your credit score, there’s still a lot more to it. In fact, paying your bills on time only drives 1/3rd of the points in your credit score, which means that 2/3rds of your score has nothing to do with making on time payments.
Five main categories go into making up your overall credit score calculation. Let’s briefly review each category and how much they count:

1. Payment History – The Most Important Category

This category is pretty self-explanatory. It doesn’t take a rocket scientist to figure out that if you pay your bills on time, you’ll do well in this category. Likewise, if you have a history of late payments, collections, chargeoffs, public records, etc. – you’re not going to do so well in this category.

In addition, the number of negative items on your credit reports is important. The more incidents of credit transgressions, the more your score will suffer. And if you have recent negative information that will punish your scores more than if they are several years old.

2. Debt – A Very Close Second

The most important non-payment category in your credit score is, by far, the amount of debt that you carry. And while your installment debt (auto loans and mortgages) are factored into your scores, it’s really your credit card debt that’s most important.

This includes anything from Visa, MasterCard, Discover, American Express, gas cards and/or retail credit cards like Macy’s or Target. The balances that you carry on your credit cards can affect your scores almost as much as whether or not you make your payments on time.

This category calculates the proportion of balances to credit limits on your revolving credit card accounts – also referred to as ˜revolving utilization’. Simply put, the higher your revolving utilization percentage, the fewer points you will earn in this category.

So what is revolving utilization and how is it calculated?

To determine your revolving utilization, you’ll need to add up all of your current balances and all of your current credit limits on your open revolving credit accounts (except for Home Equity Lines of Credit). This will give you a total balance and a total credit limit. Divide the total balances by the total credit limit and then multiply that number by 100. This will give you your total revolving utilization percentage.

See the example provided below:

Remember, the lower your utilization percentage, the more points you’ll earn and the higher your credit score will be. To earn the most possible points in this category, you should try to keep your revolving utilization at 10% or less. If you can’t reach 10%, just remember that the lower the better. While 50% is better than 60%, 40% is better than 50% and so on.

How you pay your bills and your revolving utilization are by far the most important factors used to determine your credit scores. They account for 2/3rd of the points in your score. That’s a hefty chunk! Needless to say, if you don’t do well in both of these categories, your scores aren’t going to be very good regardless of how you do in the remaining categories.

While the remaining categories are worth fewer points, they are still very important for consumers who want to earn the highest scores possible, certainly a requirement in today’s difficult credit environment:

3. The Age of Your Credit History – Secondary Category

Don’t confuse this with your age. It’s the age of your credit reports. Basically, the score is looking to see if you have a lengthy history of managing your credit obligations. The age of your credit history is determined
by the “date opened” on the oldest account listed on your credit report. The older your credit report, the more points you will earn in this category.

There’s really not much you can do in this category except wait it out. As your reports get older, you will gradually earn more points. This means that you should never try and get old, good accounts removed from your credit reports.

You want the history!

4. New Credit/Inquiries – Secondary Category

When you apply for credit you are giving the lender permission to pull your credit reports and credit scores. Each time this happens, your credit report will reflect what’s called an “inquiry.” To perform well in this
category, you should really only apply for credit when you need it.

5. Credit Mix – Secondary Category

What types of accounts do you have? You will do well in this category if you have a nice diverse list of different types of accounts in your credit report. This includes mortgages, auto loans, installment loans, credit cards, etc.

If your credit report is dominated by one type of account (or lack of others), this could negatively affect the number of points that you earn from this category.

That pretty much covers the factors that are used in determining your credit scores. Let’s do a quick recap:

1. How you pay your bills – on time is good, late is bad

2. How much you owe your creditors – keep your credit card debt low (10% utilization is optimal)

3. How long you’ve had credit – the longer the better

4. How often you apply for credit – apply only when you really need it

5. Account mix – diversity is good
If you can stick by these five key principles, you should be well on your way to healthy credit and credit scores.

Credit Scoring: Reason Codes

A FICO® credit score is a performance objective score. The performance objective of the credit score is the “likelihood of a consumer to have a 90 day late on their credit report in a 24 month period”.

Here are the 20 Reason Codes (or Score Factor) that can show up on a mortgage credit report.

1. Amount owed on accounts is too high
2. Amount owed on delinquent accounts
3. Amount owed on revolving accounts is too high
4. Amount past due on accounts
5. Derogatory public record or collection filed
6. Lack of recent revolving account information
7. Length of time accounts have been established
8. Length of time revolving accounts have been established
9. Level of delinquency on accounts
10. Number of accounts with delinquency
11. Proportion of balances to credit limits on bank/national revolving or other revolving accounts is too high
12. Serious delinquency
13. Serious delinquency, and public record or collection filed
14. Time since delinquency is too recent or unknown
15. Time since derogatory public record or collection is too short
16. Time since recent account opening is too short
17. Too few accounts currently paid as agreed
18. Too many accounts recently opened
19. Too many accounts with balances
20. Too many inquires in the last 12 months

65% of the score is controlled by 2 categories that make up a score. So if the consumer is looking for a few extra points the reason codes can lead you to areas where you may find inaccurate or unverifiable information that could be affecting the scores.

Call me and let’s review the “reason codes” that show up on your credit report, line-by-line.

~ Greg

Little-Known Facts About Your Credit Report & Credit Reporting And What “They” Don’t Tell You

Home ownership is one of the keys to building wealth!  But, almost 98% of home buyers need a mortgage loan in order to buy a home for their family—or purchase rental property.  

The first thing and I mean the VERY FIRST THING, that lenders look at is your credit report.  Believe me when I say there is A LOT of bad information on the topic of credit scoring—or it could simply be that the person advising you doesn’t really know how complex the credit scoring issues can be.  

You need to know your options.  

This White Paper is just the tip of the iceberg.  

But I wrote this white paper to give you some little-known facts to help you understand your credit report and credit scores.  

So here it goes: 

What is a Credit Report? 

FACT:  The Federal Reserve Board (FRB) shares that Your Identity, Your Existing Credit, Your Public Records and Inquiries are all parts of a consumer credit report.  

Little-Known Fact: What they fail to mention is some things that are NOT reported that many people think ARE reported or affect their scores.  

ü   Your Household Income or Personal Income is NOT reported or used for scoring.  

ü   If you are married, your credit files are NOT merged together. (Only joint accounts  will show on both spouse’s credit reports.)  

ü   Even though your birthday is reported, your age cannot affect your score or chances of  approval. (One exception is the reverse mortgage which has an age requirement.) 

Continue reading Little-Known Facts About Your Credit Report & Credit Reporting And What “They” Don’t Tell You

Trans Union Announces Average Household Credit Card Debt by State

A recent report has just announced that Iowa residents have the lowest average credit card debt in the United States. This fascinating finding leaves many individuals and families around the nation struggling with credit card debt and bad credit asking “How do they do it?”

According to the report, Chicago-based firm Trans Union conducted its regularly quarterly analysis of trends in the credit card industry. Their findings show that Iowans had average credit card debt of $3,807 in the third quarter, up slightly from $3,792 in the second quarter of 2010 but still the lowest in the nation. Iowa is closely followed by North Dakota and South Dakota who rank second and third in the nation for the lowest average credit card debt per household.

Other interesting findings in the Trans Union third quarter analysis include the fact that Alaskans rank the highest in the nation when it comes to average household credit card debt, with a whopping average per household of $7,159. Hawaii and North Carolina were found to have the second and third highest average household credit card debt by state with averages of $5,716 and $5,640 respectively.

Despite the fact the average American has a few thousand dollars in credit card debt and a mediocre credit score, Trans Union found that more than 8 million consumers stopped actively using bank issued, general purpose credit cards over the past year, a finding that many analysts are taking as a sign of overall more conservative spending habits of consumers as a result of the recent trying economic times.

Ezra Becker, Vice President of research and consulting in Trans Union’s financial services business unit, noted that “The vast majority of the consumers who do not possess or have stopped using credit cards continue to have and use other forms of revolving and installment credit, and of course still need to pay for necessities.”

Credit Industry Professionals and financial analysts await future quarterly credit card industry trend reports in order to track whether or not consumer behavior, consumer credit, and consumer debt will be changed for the long term as a result of the recession. Currently, Americans in each of the fifty states continue to seek the assistance credit repair specialists to help repair damage done to their credit through debt, default, and other uncontrollable circumstances.

Top 10 rules for handling collection agencies

1. Realize that Credit collection agents are usually working on commissions. This is a JOB to them and the more they get you to pay, the larger their paycheck. They will be persistent and more often than not MEAN, be prepared.

2. Don’t argue with the agent, because you will lose. This is what the do all day, every day and they have heard every excuse in the book. They are prepared with an answer to everything. State your case but don’t argue.

3. It usually doesn’t help to ask to speak to someone’s boss. In this case, talking to the supervisor normally won’t help (in fact it could be worse). Remember, he ended up with his job because he was good at what he did and was able to squeeze every dime out of past consumers who had disputes.

4. Never give information out over the telephone to a collection agency. This includes your driver’s license number, social security number, debit card numbers, check numbers, credit card numbers, or bank account numbers. For the most part they should already have this information.

5. Use a money order or certified funds to make all payments. Make a copy of it and staple it to the bill.

6. Keep records of everything (including dates of phone calls and what was said), and make sure that anything sent through the mail has a return receipt.

7. Make sure you get written confirmation of any deals or negotiated payoffs. Make sure you have something that says the collection has been satisfied.

8. Never take their first offer when negotiating a lower payment as they will always call back with a better offer.

9. Use powerful sentences like, “This is all I can afford to pay,” rather than “this is all I am going to pay.” This is a much better negotiation tactic when you are trying to lower the payoff with the collection agent.

10. When repairing your credit, it is a good rule to keep copies of all your credit reports. That way you can track the process of what has been repaired and make sure that what you negotiated is coming to pass.

While it would be impossible to include everything there is to know about dealing with collection agents, these 10 tips will almost always result in more money in your pocket and less in theirs. I help all of my clients through this process as needed, don’t hessitate to call or e-mail if you have any questions…

~Greg