Help is coming for people who are drowning in collections and debt. And for people working on fixing their credit.
The Consumer Financial Protection Bureau (CFPB) is going through certain proposals to overhaul the debt collection industry. The idea is to stop abuse and make sure collectors are following proper protocol. But in this overhaul, there is good news for folks who are suffering from charge offs or collections on their credit.
First, the CFPB is going to put a new limit on how often the collector can contact the person owing money. They want to stop the harassment that sometimes happens.
Second, they will be required to disclose more details, which will make it easier for people to dispute inaccuracies.
Third — and this is a big one — collectors will not be able to pursue collecting money during the dispute process without providing sufficient evidence.
Furthermore, these rules also apply if the account is sold or transferred to another collection company.
As I said, this is all being reviewed by the CFPB now. Stay tuned for more information as it becomes available by subscribing to this blog (on the right side). And please pass on this information to others who are struggling with debt, imperfect credit, or who are professionals in the mortgage or real estate industry.
Many thanks to photographer Ian Espinosa for the free use of his photo.
If you have a tax lien or civil judgment that does not contain the proper and correct identifiers, then Equifax, Experian, and TransUnion will remove it from your credit report this month, beginning July 10th. The identifiers are name, address, and either social security number or date of birth.
There is no need to send a letter requesting the deletions. If your lien or judgment does not include the identifiers, the account will be removed. It doesn’t matter if it is paid or has a balance. This is about proper identification, not about money owed. The expectation is that about 50% to 60% of tax liens will be deleted, and about 95% of civil judgments will be deleted.
If you are fortunate to have one of these derogatory accounts removed, you should see your credit score go up. This, in turn, could qualify you for a better interest rate or a better loan program when borrowing money or getting a mortgage.
How Much Will Your Credit Score Increase?
How many credit points you might gain depends on the rest of your credit report. If you have a clean report with one lien that gets removed, you could see an improvement of 40 to 50 points, which would make a significant difference. On the other hand, if your report is scattered with late payments and collections, your score will probably increase by only 10 points or so.
Getting the Credit Deletion Does Not Mean You Don’t Still Owe Money
Let’s say you hired a contractor to replace your roof, then due to hardship, you did not pay. The contractor then filed a civil judgment that went on your credit report. This judgment contains your name and address, but is missing your social security number and date of birth. This judgment will be removed from your credit report, but that doesn’t mean you don’t still owe the contractor for the work he performed. This is not a license to steal from the contractor. What’s more, the next time a title report is pulled, this lien is going to show up, so when you sell the home or refinance, this lien must be paid.
If you owe on back taxes, you can expect that to stick like glue to your social security number, even if it gets removed from your report for not having your address.
Checking On Your Credit
To find out if your lien or judgment was removed, order your free annual credit report by mail from http://www.annualcreditreport.com. Don’t be lazy and order online for the many, important reasons stated in Repair Your Credit Like the Pros. Or, you can call 877-322-8228.
Please share this information via social media, because it affects a lot of people. Thank you.
The credit bureaus (also called credit reporting agencies or CRAs) have adopted a new policy: tax liens and judgments will be removed from credit reports if they do not include the proper information identifying them to the individual.
It is estimated that 60% of tax lien information will be removed from credit reports and ALL civil judgment records will be removed!
A release from TransUnion gives some insight about what to expect:
- Based on feedback, most Bankruptcy information will meet the minimum reporting requirements, so don’t expect those to go away.
- The new standards will apply to both new and existing public record data.
- Minimum identifier data required: Name, Address, Social Security # and/or Date of Birth
- Minimum frequency courthouse visits to obtain newly filed data: 90 Days
When it will roll out: During the week of July 10, 2017, the CRAs will remove from their databases previously collected public record data that does not meet the enhanced standards.
Please pass on/share this news, because it will give a lot of folks new hope that they are not forever stuck in bad credit.
Many thanks to Credit Repair Resources, Inc. for this information. email@example.com
Does credit repair work? YES
Is credit repair a scam? NO, not when you do it legally like the certified, licensed, credit repair specialists.
One of my book readers recently sent me this, showing her success.
Previously, her credit report had a charge-off from Verizon that she did not agree with. She challenged it and won! This letter from Experian shows the results and outcome: “Deleted – This item was removed from your credit report. Please review your report for the details.”
She was so happy, because having this negative item removed from her credit will boost her score. I cannot predict how many points her score will go up, because it varies depending on the person’s overall credit report. That said, having a charge-off removed is a major success!
Congratulations, dear book reader, and thank you for giving me permission to post this as an encouragement to others that DIY credit repair works.
All the steps on how she did this are in Repair Your Credit Like the Pros: How credit attorneys and certified consultants legally delete bad credit and restore your good name. You can check it out here.
Please share this encouragement with others who either need to restore their credit and/or who want to know how the credit system works. I appreciate it so much, and they will too!
The Date of Last Activity (DLA) listed on your credit report is important to understand. This date is updated when one of three things happens on any active account:
- You make a payment,
- You miss a payment, or
- Your balance increases.
The Date of Last Activity used to include the “drop off” date, or the date the item will be removed from the report, but this is no longer the case. The “drop off date” is now a separate item and often not on the report at all.
Who sets the Date of Last Activity?
Creditors and debt collectors are responsible for reporting this information to the bureaus who then update the DLA accordingly.
Is a debt collector messing with your Date of Last Activity?
Some debt collectors sneakily make regular changes to consumers’ accounts, which triggers a balance increase to be sent to the bureaus and changes the DLA. This can hurt your credit score. Some unscrupulous creditors do this to intimidate people in hopes of pressuring them to pay.
What should you do about the Date of Last Activity?
When reviewing your credit report, pay special attention to the Date of Last Activity–especially on delinquent accounts. Make sure that the DLA reflects the actual date that a payment was made, missed, or the balance increased. If it is not, begin the basic dispute process to have the item changed or (better yet) deleted.
The Fair and Accurate Credit Reporting Act (FACTA) protects you from having erroneous or false derogatory information be posted on your credit report.
Does the DLA determine when an item will fall off your credit report?
No. The original delinquency date determines when the item will be deleted from your report. However, the DLA does influence your credit score. (This is crucial to know and a whole topic in itself. Don’t shoot down your score by updating an old derogatory DLA!)
Collection accounts are deleted seven years from the original delinquency date of the original account. Collections accounts are always associated with the original account so they must be deleted at the same time.
For more information on how credit scoring works and how to take control of your own credit, see Repair Your Credit Like the Pros here.
Book reader Paige Bellamy wrote: “This is the best credit repair book I have ever read. This book is filled with tons of useful information.”
Ashton Ammons, Senior Credit Consultant wrote: “Carolyn did a fantastic job writing this book, I’ve been in the credit repair industry for many years and through these chapters she’s provided our team with new insight, strategies and ideas to be able to produce even better results for our clients. I like a lot of the lingo and terminology she uses throughout the book. It’s true we use a lot of the same words and jargon around here at the office. She’s explains the content in very understandable step by step manner and I believe she truly wants to help the reader better understand how credit works. This book is one of the best investments I’ve made in a long time.”
I received this excellent information from Credit Repair Resources, and I know many of you will be interested in this news:
So another bombshell hit the credit reporting and lending world this week. This time it is potentially big news for millions of Americans and thousands of lenders. In the ongoing effort to provide accurate credit reporting to consumers, the three major credit reporting agencies, Equifax, Experian and TransUnion have announced that in July, 2017 many tax liens and judgments will be removed from consumer credit files.
I thought I would add insight into why this move was made by the CRA’s. The key reason is, wait for it…. identifiers.
You see as part of the ongoing overhaul of the credit reporting system, entities that report information to our credit report, otherwise know as furnishers must provide specific information that accurately ties the account to the consumers credit file.
Public records like tax liens and judgments often do not contain the required identifiers that permit those accounts to be reported. After July of this year, any lien or judgment that does not contain the proper information will be purged from consumer files.
Now in the near term this is excellent news, but it is not all puppy dogs and ice cream. There is always a caveat. We must consider that government agencies and lien holders are not going to take lightly to this. I hate to make assumptions, but I will make the assumption that there will be pressure applied to court houses and Lexis Nexis to improve their record keeping.
It is also important to know that this will not affect all Americans with these items. If the lien or judgment does contain the proper identifiers, it can remain on the consumer’s credit file.
It will be interesting to see how this impacts the mortgage world, but at first glance, Summer 2017 is looking to a very busy one for the mortgage industry!
~ Written by Chad Kusner, President, Credit Repair Resources (Posted here with permission.)
Please help share this information via social media, because a lot of good folks need this intel.
Repair Your Credit Like the Pros,
available now at Amazon.
96% of readers rated it 5 or 4 stars.
If you think you know what your credit card company charges for a late payment, take another look. You might be shocked!
Capital One posts their interest rate as 27.24%. But look at this statement. Because this consumer was late, Capital One is charging over 70%!
Top line shows the balance was $41.17.
Sixth line (underlined) shows the fee charged is $29.00.
$29 = 70.4% of $41.17
I think that is outrageous, and I hope this goes viral.
It means the consumer is paying $70.17 for an item that cost $41.17. That is a terrible deal, no matter how you look at it!
I suggested that the consumer call Capital One and ask not to be posted 30 days late to the credit bureaus, because she has never been late before and has a perfect credit history. Getting docked 100+ points on her FICO score would hurt more than $29.
Here is the Conversation with Capital One
Cap One Rep: Sorry, we have to report it as late to the credit bureaus.
Consumer: I have a perfect credit history with you. Could I have this one grace?
Cap One Rep: No, we can’t do that.
Consumer: I would like to talk with a Supervisor (following the script in Repair Your Credit Like the Pros).
Cap One Rep: It won’t do you any good. She’ll just tell you the same thing.
Consumer: Nevertheless, I want to talk with a Supervisor.
Supervisor comes to the phone and Consumer asks again.
Cap One Supervisor: We won’t report you late to the credit bureaus. I apologize for what our customer service representative told you.
As a bonus, she waived the late fee. It seems the Supervisor was more interested in good customer service than the representative. It is a good thing she asked! Doing so saved her money and grief.
Scripts for how to negotiate with creditors are in the book. They are based on my own experience in negotiating for my mortgage clients in the past. I do not negotiate for consumers now, but there’s no reason why you cannot D.I.Y.
Setting up automatic payment to pay off your balance in full each month is a good practice. Don’t waste your hard-earned money on outrageous credit card interest. It’s not even tax deductible.
Don’t worry about the credit card companies making a profit. Even if you don’t pay them a single cent, they make money by charging the merchant or seller.
Please help get this education out to good folks: If you don’t pay your balance in full each month, you are paying too much! And if you accidentally go late one month, call immediately and get it resolved before it gets reported to the credit bureaus.
Tired of being hounded by collectors? Fed up with being harassed for payment on an account that’s already been paid or is unverified? There is good news on the horizon!
The CFPB (Consumer Finance Protection Bureau) is proposing rule changes to the debt collection industry as follows:
- Debt collectors will be required to disclose debt details so the consumer can easily verify accuracy right up front. Currently, consumers receive a bill demanding payment without ever proving whether or not the collector has the right to receive payment, whether or not the amount owed is correct, and other vital information. This will provide transparency and, hopefully, increase accuracy and fairness.
- Debt collectors will be prohibited from pursuing a debt while it is in dispute. Fantastic!
- Debt collectors will be limited in their communication with the consumer. The intent is to stop undue harassment.
In the meantime, know your rights and demand to be treated fairly and accurately. If you don’t want to be contacted by telephone, tell the collector to contact you by mail only. Current law states they must comply.
You also have the right to negotiate a settlement. And so you know, a settlement (as opposed to paying in full) will in no way harm your credit score or jeopardize your ability to get a home loan. Even if you have to pay taxes on the amount “forgiven,” you still come out financially ahead by taking a settlement.
However, if the collection is old, paying it off now will likely lower your credit score, so better to let it age off your report (or handle it like the pros do).
What I mean by that is, if you negotiate a settlement the way the professional credit repair specialists do, you can also have the negative account removed from your credit report–a very smart strategy!
Thank you for reading my post, and if you know anyone who is struggling with collections, please pass on this good and vital information to them.
Today, Janet Yellen, Chair of the Board of Governors of the Federal Reserve System, signaled that an interest rate increase in March is likely. The Feds expect the economy to continue to improve; and accordingly, for interest rates to continue upward on a gradual incline.
30-year fixed rates:
Last summer – 3.75%
Now – 4.375% to 4.5%.
How long will it take to get to 5%?
I think that is the appropriate question: how long until rates are at 5%?
Not “if” but “when”?
If you have been procrastinating in buying a home, waiting for flowers or sunshine, that is a mistake. Not only will rates be higher, but sellers price their homes higher when their yards are gorgeous. Statistically, bidding wars are at their fiercest in March when both sellers and buyers come out of hibernation. Be smart and beat the rush if you can.
Have you been procrastinating with getting your credit repaired? Maybe you don’t have the money to hire a professional service. STOP procrastinating and get busy now. All the instructions are available for you in my newly released expanded edition of Repair Your Credit Like the Pros.
Does credit repair work? Yes, it does!
TJ wrote me to say, “I read your book…I increased my score by 70 points!”
The time is now to reach your dream of home ownership. The chart on the left is from a professional service (EZ Credit). The book on the right teaches you how to do it yourself to get the same results.
Thank you, Kristina Mastrocola, writer, for the interview.
In case you can’t read the article here, it is on page 26, the August 22 issue, which is on newsstands now.
I hope these tips will help people understand that they can take control of their credit and create the score they desire. There is no need to be a victim when it comes to your credit profile.
What’s more, you are not required to have perfect credit in order to get a home loan. Recently, I helped a first-time home owner who had six open collection accounts close on a charming three-bedroom, ranch style home–and she did not have to pay off the petty collections (total under $2,000) in order to do so.
As always, thank you for subscribing to my blog. If you have a topic on mortgage, home buying, or credit that you’d like to see, please email me here.