No more Equifax, Experian, TransUnion?!

Are you fed up with the Big Three credit bureaus? Would you like someone to lock them up, shut them down, and throw away the key? It could happen.

In case you aren’t aware, President Biden has proposed closing these private credit bureaus and replacing them with ONE mammoth credit bureau run by the Consumer Finance Protection Bureau (CFPB).

Instead of having three credit scores, you would have only one score. (No more throwing out the lowest score and going by the middle score for a home loan.)

The CFPB’s president is appointed by the president of the United States. Each four years, the bias could change from Democrat to Republican and vice versa. How would this change the rules of scoring?

Would having one government-owned and government-run credit bureau promote fairness and equality, and prevent errors?

Would it make disputing errors more difficult? We all know how slow government agencies run compared to private enterprises.

Let’s keep our eyes on the news to see what happens. Meanwhile, I am interested in YOUR opinion. And since we’re still dealing with the Big Three, if you need help improving your credit, please see here.

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Beware of Mixed Credit Files

It’s a good thing King Louis XVIII didn’t have a credit file with Equifax, Experian, and TransUnion; because if he did, chances are good that one of the 17 other King Louis’s credit accounts would have been mixed in with his.

If your name is similar to someone else’s name, if you have a common name, if you are a Sr. or Jr. or have numerals after your name, you should check your credit report. Another individual’s unpaid bill, collection, or tax lien might be showing up on your report and dropping your credit score.

If you stroll happily through life without checking, you could be paying too much for auto insurance premiums, homeowner’s insurance, and credit card interest rates.

You should recognize each account as your own.

In addition, your name should be exactly correct.

To order your free annual credit report, send a one-sentence letter that says, “Please send me my free annual credit report.” One letter gets you all three credit bureaus’ reports. With your letter, include a copy of your photo ID (driver’s license or government-issued ID card) and one other piece of ID that confirms your correct name and mailing address.

Send your request by regular U.S. mail to:

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281

No need to send by certified mail. If you have a freeze on your credit, that does not affect your ability to get your annual report through the mail.

The law allows you one free report per year for a reason: errors on credit reports are all too common.

Do Homeowners Need Title Lock?

I am a homeowner with a lot of precious equity in my property. Here is why I am not buying title lock, even though I have experience with this type of situation.

I purchased title insurance when I bought my house. All lenders require it and all smart cash buyers also purchase title insurance. This protects your title from false liens, judgments, errors, omissions, false heirs, or a criminal who tries to file a false quit claim deed on your property.

That is my legal protection, and it is all I need.

The new “title lock” services are nothing more than monitoring services. They check public records (which you can also do for yourself), and then if they see that you were that extremely rare property owner in which a criminal filed a false quit claim, they alert you. But at that point, the filing is already done. (No, it doesn’t mean they now own your house!)

The title lock service is not clairvoyant to alert you ahead of time that a criminal is planning to file a false claim. Nor do they have any way of stopping it from happening. They can only tell you it happened.

What if it does happen? The title insurance you and I purchased when we bought our homes protects us. The title company is responsible to fix the error and pay whatever costs are involved in doing so. Just like fire insurance, the insurance company pays for damages — but with title insurance there is no deductible, so even better.

A couple of criminals posing as friends tried to steal my father’s house. He owned it free-and-clear. He had Alzheimer’s. They figured they could Quit Claim his property to a so-called charity, one they set up with themselves as the owners and trustees. One that no one ever heard of, because they just set it up for the purpose of stealing his half million dollar home. They filed the Quit Claim with the King County Court Recorder. Anyone can file anything; it doesn’t make it legal.

He had purchased title insurance decades ago with First American Title in Seattle. The title representative looked at the Quit Claim and said it was fraudulent. Which was obvious.

As my father’s legal guardian, I was able to stop that illegal nonsense. In this case, I also saw they stole other things from my father, so I hired a good attorney and we sued.

Back to the title lock services: As far as I can tell from Internet searches, it is unanimous among real estate attorneys and among real estate brokers who have been in business for 30+ years: title lock monitoring is a waste of money and does you no real good. You can always monitor your own public record if you’re nervous about being that rare (and usually it is the elderly who are targeted) victim.

If you’d like to read more about why it’s a waste of money, here is a good article with video by Fox5 Atlanta.

The penalty for filing a false Quit Claim or false lien ranges from one to 20 years in prison.

How Do Politics Affect Interest Rates?

Where are mortgage interest rates headed in 2021, and how do politics affect rates?

Historically, who is elected President does not change interest rates; however, investors are influenced by major historic events, such as political unrest, war, and a pandemic.

An easy-to-understand rule is this:
GOOD economic news = higher interest rates
BAD economic news = lower interest rates

Also: The perception and expectation of investors = what’s good and bad.

Earlier last week and this week, when president-elect Joe Biden was declared the winner and when the Senate and House of Representatives gained Democratic seats to match the party of the incoming president, that was perceived as good economic news, because unity means work can get done. Interest rates took a sudden spike upward. The suddenness and severity of the increase was a bit of an over-reaction and rates inched downward on Thursday.

This morning, Friday 15th, the stock market took a hit, which is bad economic news, and rates went down, but only very slightly. It looks like rates are on the way to recovering from the sudden spike — but probably not 100 percent.

Another rule to know: Rates go up faster than they come down.

The vaccine rolling out is perceived as good economic news, because when more people can get back to work, that helps the national economy.

Where are Mortgage Rates Headed in 2021?

The expectation is that interest rates will remain low, but not as low as they were at the end of 2020. The bottom is behind us. By spring, we expect rates to be higher, but still good. How much higher? Perhaps an increase of .25% higher.

That said, no one knows for sure what will happen. No one predicted the pandemic and further lowering of mortgage rates in 2020. The expectation was for rates to gradually increase, but instead they decreased.

My personal expectation and prayer is for 2021 to be a better year (because the pandemic will lessen), for small business to open again, for people to get closer back to their normal lives, and for more Americans to realize the dream of homeownership.

A New “Hot Topic” Scam

Scam artists look for hot topics and then create scams out of them. For example, here’s a new one I don’t want anyone to fall prey to.

The liar tells you that you can get your name on a “fast track” or “priority list” for the vaccine. They tend to target older people but might contact anyone via online or a phone call.

Sometimes they ask for a fee to get the vaccine sooner. Sometimes they are just collecting your personal information. Either way, THERE IS NO FAST LIST. It’s all a big lie.

Here’s a two-minute video that explains it HERE

Please make sure your family and friends are aware there is no such thing as a pay-for-priority list.

Let’s shut out the scammers and keep our money and information safe.

Three Steps to a Happier New Year

A restaurant owner saw his business dwindle after state guidelines shut down indoor dining. The takeout orders weren’t enough to cover expenses, and he was forced to close. He loved his work, so the loss was devastating.

“I’ve lost my happiness,” he confessed to a friend.

One of his loyal customers, a man who owned a small mortgage brokerage, was booming in business. Due to the economy, interest rates dropped to historic lows, and he was bombarded with people asking to refinance. In order to keep up with demand, he worked 12 hours a day, seven days a week. He missed family events and gained weight because he didn’t have time to exercise or prepare healthy meals. At the end of the year, he was exhausted and burned out.

“I’ve lost my happiness,” he confessed to a friend. The end of this story is below, but first…

Maybe you, too, lost some happiness this year — all due to circumstances beyond your control. Or maybe it’s not you, but someone you know.

Maybe finances and credit are down. Maybe lack of activity is down. Maybe social interaction and love is down. Who among us doesn’t know someone in this situation?

Are there any of us who wouldn’t like to be better, happier in this next year? It’s time to kick 2020 to the curb and take control of what we can to make 2021 better!

How can you make 2021 a happier year?

Practice #1: Focus on what you can control.

Do you need to change some habits to be healthier? To improve your finances? To connect with people more? Regardless of where you’re at now, you do have choices. Break out of a rut and put yourself on a path for improvement. You can take one step! Then one more step. A series of mini steps can lead you to great success! (I like the book, Mini Habits: Smaller Habits, Bigger Results by Stephen Guise here.)

Practice #2: Write it down.

A goal that is not written down isn’t a goal: it’s a wish. I learned that in sales training a long time ago. You must write it down if you want it to be a goal that turns into reality. Some people like to create a vision board, which is a collage of pictures and large words showcasing their goals for the year. They post it in a prominent place where they’ll see it and be inspired every day.

Part of writing it down is breaking it down. If your goal is to get a better job, then break that down into mini steps, such as (1) update your resume, (2) tell all associates you’re looking for work in case they know of an opening, (3) list your search spots, (4) name how many emails and phone calls you will place per day, etc.

Practice #3: Ask for help

We are not meant to live life alone. Reach out to family and friends for help in making the changes you desire. Who can help keep you accountable? Is there an online Meetup group you can join? (Go to meetup.com and search your zip code and topic.)

First and foremost, ask God for help. Our Creator is more powerful than circumstances. He is a miracle-working God. He doesn’t share with us all the reasons for what happens on Earth, but He does hear when we call out to Him. He is Counselor, Way-Maker, and Mighty God.

The End of the Story: the restaurant owner and the mortgage broker

In our story above, the restaurant owner got to talking with his acquaintance, the mortgage broker. After some conversation, it came to light that the restauranteur most enjoyed interaction with the customers and that he had excellent organization skills. His happiness wasn’t really about the food, but about the people. “I could use someone with your skills,” said the broker. And just like that, the restaurant owner was set on a new career path while the broker freed up his time to enjoy life more.

What are Credit Brackets?

This is an advanced topic, not one I see often discussed.

The FICO scoring system has multiple credit score brackets. Each bracket is scored on a “grading curve,” meaning all the credit profiles in that same bracket are scored against each other.

Image by Experian

Think of it like classrooms. The first graders are scored together; the second graders are scored together, and so on. The student who earns an “A” in first grade would not earn an “A” in third grade for the same work. Third graders are scored more strictly than first graders.

If you have a judgment on your credit report, you are in a bracket with other people who also have judgments. If you have zero public records and zero late payments, you are scored against other people who also have zero public records and late payments. Thus, the people with perfect credit are scored against one another.

This explains why a person with perfect credit who gets one 30-day late payment on a credit card can lose 80 points off their score; whereas a person with multiple scattered late payments throughout the years might lose only 30 points with a new 30-day late payment. They are in different brackets for scoring.

“Why Did My Score Go Down When My Judgment Came Off?”

Let’s look at two scenarios:

#1 Person has multiple late payments and a judgment

#2 Person has zero late payments but one judgment

Scenario #1: If this person removes the judgment off their credit report, their score will improve — possibly significantly. This is as you would expect.

Scenario 2: If this person removes the only derogatory item on their report, the judgment, now they are no longer in the bracket with others having a judgment (and probably multiple other derogatory accounts). They get to “graduate” up to the bracket with people who have no bad credit. Now, in this “higher grade bracket,” their score could actually go down, because all the other people with pristine credit might have even better credit than this person for the following reasons:

  • They might have lower balance-to-limit ratios. (A major factor)
  • They might pay their balances in full each month rather than carry balances.
  • They might have a better mix of credit.

Don’t Despair!

If you are like scenario #2 and saw a drop in your score when your derogatory item was removed, don’t despair. Now by paying attention to the three bullet points above, you can raise your score even higher. But more importantly, it is also possible that your true mortgage score (as compared to the consumer scores you get from your credit card company, and the phony scores provided by those free score sites) may have gone up, not down. Don’t micro-manage your score while you are doing credit repair; that’s like jumping on the scale every hour while you’re on a weight loss program. You want to look at the big picture.

For more information on how to achieve top tier credit in the shortest possible time, take a look at Build and Protect Your Credit here.

Handling Calls From Collectors: Part 2 Amendment

I was happy to hear from two respected credit repair specialists regarding my post on handling calls from collectors. I am amending my previous blog post to say this:

  1. If you can get a collection removed from your credit report, you definitely want to pursue that. When a collection is deleted, it benefits your credit profile and improves your credit score.

As Mr. Tony Peters wrote:

“Why aren’t people disputing these debts, even if valid, right off the report since the collection agency isn’t the data furnisher? They also list amounts that they didn’t pay so not only do we not owe the false furnisher, but we don’t owe them said amount.”

With so much erroneous information, including missing information, on credit reports, you have the right to challenge anything that is not correct and validated. Your credit report is supposed to be 100% accurate; not 99% accurate. However, even if a collection is removed from your report, the collector can still pursue calling you for money. Therefore, be professionally polite and vigilant about protecting your privacy.

2. Don’t say anything that is not in your own benefit. As Mr. K.T. Embry pointed out:

“The suggestions to admit to owing the debt puts the consumer in a very bad position…The Collector will be recording the call also and when the Consumer has admitted to owing the debt that is all the ammunition that the collector needs in order to go to court and win… The Collector no longer has to prove anything because the Consumer has admitted to owing the debt…”

Very true! They don’t care if you are financially strapped; they assume that is the case or you wouldn’t have a collection account. They care about one thing: collecting money. Even if you tell them you don’t have money, will they believe you? How do they know you aren’t lying? How do they know you don’t have a stash of hundred dollar bills in your home safe?

I respect credit professionals who are actively working in credit repair. I am a licensed mortgage broker and do not do credit repair. I come across all kinds of credit situations when people apply for a home loan, as you might imagine. Please feel free to weight in, post comments, and correct anything I might say that is in error. Thank you.

Handling Calls From Collectors

True story, happened this week.

A woman applies for a home loan to buy a house. Her credit isn’t perfect, which is all right. Collections that add up to less than $2,000 can be ignored by the mortgage lender. Medical collections can be ignored. If the credit score and income qualifies, all is well.

The loan officer calls the woman back to discuss her loan application. “Hello, Mrs. (Name)?”

“Hello, hello, hello?” the woman replies, then she launches into the most foul language imaginable and hangs up. Apparently, she assumed the nice loan officer was one of her collectors calling for money.

Guess who’s not getting a Letter of Approval for a Home loan?

Even if you aren’t applying for a mortgage and you are correct in assuming the caller is a collector, you must never, ever use rude or foul language. Doing so only shoots yourself in the pocketbook.

How to Handle Collector Calls If You Don’t Owe Money

If the collector is wrong or if the account is past the Statute of Limitations for collecting money in your state, then say this:

“I am going to record this phone call. I want it on record that the reason I don’t owe money on this account is because…” Explain your reason and end the conversation by saying, “Please correct the account with the credit bureaus to show this is paid-as-agreed. I will be sending a letter to the bureaus as well.”

If you need to look up the Statute of Limitations for your state, see here.

How to Handle Collector Calls If You DO Owe Money

“Thank you for calling me to discuss this account.” (That will put them off guard! No one ever thanks them.) “My credit is important to me, but I don’t have funds to pay the entire balance. Since your company purchased the debt for pennies on the dollar, let’s discuss a settlement arrangement that would work.”

Be prepared to tell them how much you can pay.
Do NOT tell them what your income is!
Do NOT tell them where you work — or even say you are employed!
Do NOT tell them where you bank!
Do NOT agree to automatic payments or auto-debit!

If they ask any of those questions, reply with, “I am not divulging that information. Let’s discuss the settlement.”

You must never give them information they could use to garnish your wages, recalculate how much they think you should be able to afford, or get their long fingers into your bank account!!!

Keep the conversation professional. Record it if possible. Get your settlement agreed upon, and then get it in writing.

You must get your settlement agreement in writing. You cannot trust a verbal agreement.

Don’t Tell Them to Cease and Desist Contacting You

If you truly owe money, don’t tell them to stop contacting you. Why? Because if you cut off all communication, their next move might be to file lawsuit.

Better to work out an agreement than to get slapped with a lawsuit!

What If You Can’t Pay?

If you can’t afford to pay even $5 per month, then tell them why. “I’m sorry, but at this time, I am unemployed and have no money to live on. I am literally going to the food bank to feed my family. As soon as I am back to work, I will set up a pay plan.”

Always be professional and polite. Maintain your personal dignity. Be smart. Swearing and foul language only reflects poorly on yourself and sets you up for the collector to take negative action against you.