How Can I Fix My Credit? » Credit Mistakes

Must-know advice about payday loans and cash advances

admin — Fri, 14 Aug 2009 12:59:23 +0000

A payday loan can help someone through a one-time rough patch. But the amount that must be paid back can multiple fast, with interest rates so high it is impossible to keep up. With the current economy, more and more people are considering using these types of loans, but is it the right choice?

“If you are considering a payday loan or credit loan, do some research,” says Daniel Wesley at creditloan.com, a comprehensive Web site on personal finance. “When used wisely, these types of loans can be a valuable resource.”

How do payday loans work? Wesley explains the application process is very simple and you usually only need proof of employment and a checking account. You then determine the amount you need and write a post-dated check plus lender fees. The lender then gives you that amount and withdraws the amount from your bank account on the next day you get paid.

Sounds simple, but too often these types of loans become an ongoing problem for the borrower. Here is what you need to know to make the right decision about getting a payday loan:

1. Never borrow more than you need
These loans require no collateral, which means that the risk to the lender is very high. This often leads to high interest rates that increase the profit made by the lender. The bottom line is, don’t borrow more than you are able to pay back or you’ll be hit with huge fees. You don’t want to pay double or triple the amount you originally borrowed.

2. Do your research and find a reputable company
Just as you would when you take out an auto or home loan, check around to find the best interest rate for payday loans. Different companies offer different rates and terms. Be aware of hidden fees and penalties and always work with an established, reliable company. When borrowing over the Internet, be especially aware of scam artists.

3. Make a budget for the future
Sometimes emergencies come up and resources like payday loans can help families survive until the next paycheck. But if you find you repeatedly need a cash advance to get through the month, it’s time to set a budget for yourself and stick to it. Compare your spending to your monthly income and cut any unnecessary items to help ensure you don’t get caught owing more money than you make.

4. Deal with debt in the long term
If you continue to have problems with debt, it’s best to develop a plan for paying back what you owe. Contact a credit counseling service to see what options are available. Some will have a cost, so look for a service that is reasonable and will work with you to create a manageable plan.

“Payday loans are great life savers, if you use them sparingly,” comments Wesley. “Be smart about how much money you request so you know you can pay it back. If you continue to have problems, get financial advice from a professional.”

How to avoid fake check scams

admin — Thu, 13 Aug 2009 12:53:54 +0000

You open your mail and to your surprise there is a check for $4,000 claiming you won a sweepstakes. Boy that money sure will come in handy right now. But wait, there’s a catch.

You’ve been instructed to wire a portion of the check to cover the taxes. You deposit the check and, after a couple of days, the bank gives you access to the money. A few weeks after wiring the money to supposedly cover the taxes, you learn that the check was counterfeit. Not only are you responsible for paying the money back to the bank, you may never be able to recover it from the criminal.

“This is just one of many ways that fake check scams work and savvy criminals are pursuing these types of crimes more frequently,” says Denise Jaworski of Western Union, a leader in money transfer services. “There is a misconception that when you deposit a check or money order, the bank confirms that it is good before allowing you to withdraw the money. This is an incorrect assumption and one that clever scammers are taking advantage of.”

According to the National Consumer’s League’s (NCL) Fraud Center, Fake check scams are the No. 1 type of reported fraud. These scams account for more than 40 percent of the complaints received by the NCL in 2008. According to Jaworski, these scams seem to be increasing throughout the financial services industry.

A telephone survey by the Consumer Federation of America, a nonprofit association of more than 280 pro-consumer groups, found the most common fake check scams are those involving lotteries (66 percent), grants (36 percent) and work-at-home opportunities (35 percent).

“Unfortunately with tough economic times, people are even more vulnerable to phony claims of sudden riches or ways to make money,” says Jaworski. “Western Union takes steps to help prevent these types of crimes, but the public is the first and best line of defense against fraud. Always be skeptical.”

Western Union and other concerned businesses have teamed with the Consumer Federation of America to help educate people about what fake check scams are and how to avoid becoming a victim. Here are seven tips for avoiding fake check scams:

1. When faced with an offer that sounds too good to be true, take a moment to ask yourself a few simple questions:
* Who is this person?
* Does this money really have to be sent immediately?
* If you received a lottery check, did you actually sign up for the sweepstakes?

2. Never agree to pay to claim a prize. No legitimate sweepstakes or lottery would ever send you a check or money order and ask you to send payment in return. If you really won, you would pay taxes directly to the government.

3. Never agree to pay for grants from the government or foundations. They don’t offer money to people unexpectedly or charge to get it. Most grants go to organizations, not individuals, and require a lengthy and extensive application process.

4. Never agree to cash checks and send the money somewhere as part of a job working from home. That is not how legitimate employers operate.

5. Never agree to wire money to anyone you have not met in person or known for a long time.

6. If it seems suspicious, get advice. Consult your state or local consumer protection agency, the Federal Trade Commission, the Postal Inspection Service, or another trusted source.

7. Remember that there is no legitimate reason why anyone who wants to give you a check or money order for something would ever ask you to send money anywhere in return.

Go to www.westernunion.com to learn more about how to protect yourself from fake check scams.

Here are the steps you must follow for successful do-it-yourself credit repair

admin — Thu, 09 Apr 2009 15:19:59 +0000

Get copies of, study, and understand the legal obligations of each party under the: Fair Credit Reporting Act, Fair and Accurate Credit Transactions Act, Fair Debt Collection Practices Act, Fair Credit Billing Act, and Truth in Lending Act. The credit reporting agencies, your creditors, and the collection agencies you will deal with are not going to help you because they want to – but because you will convince them that they have to.
Get and review your credit reports from all three credit reporting bureaus, and from the fourth "hidden" credit reporting bureau that almost nobody even knows about.
Decode your credit reports. Understanding every detail in the tradelines is critical.
Analyze your credit reports.
Make a list of all items you consider questionable or negative.
Identify every item in each of your reports that you should dispute. Each credit bureau will likely have some different information.
Prioritize the questionable and negative items. You cannot do everything at once.
Draft a dispute letter for each credit bureau tailored to each questionable or negative item.
Set up files to document every detail of every communication from every credit bureau, creditor, and collection for each dispute.
Send your letters to the credit bureaus.
Wait for responses.
Analyze the results of your initial dispute letters.
Determine if your strategy should be expanded to verification and validation techniques with creditors and collections.
Draft reinvestigation dispute letters, validation letters and verifications letters, as the case may be.
Send your letters to the credit bureaus, creditors or collections as the case may be.
Modify and repeat as many times as necessary, but be careful to make the basis of each mailing different enough to avoid the "frivolous dispute penalty" that will get your dispute file tossed into the garbage can in a New York minute.

If you are not deterred then go to your library and take out all the books you can find on credit repair. Search the net for all the free credit repair help you can find. Be prepared for 6-12 months of the grind. Make a commitment to yourself that you will not get discouraged and quit.

Legal credit repair professionals we recommend – and the reasons why…

Bad Credit Repair Advice From a Major Newspaper

admin — Sun, 28 Sep 2008 19:29:54 +0000

Here is an example of terrible credit repair advice from the Independent, a major UK newspaper. In an article titled “If there’s a stain on your name, erase it yourself…” the paper said “Put simply, these firms do nothing more than you can do yourself with very little effort and at a fraction of the cost. .. For example, does the report say you failed to make certain repayments, when actually you did? If you find an inaccuracy then you ask the reference agency to correct the entry.”

The Independent goes on to say that what we call the credit reporting bureau will fix the problem, and with a smile apparently. I suppose the credit bureaus could be more cooperative in England than in the USA, but I doubt it. They are owned by the same big American firms and their systems are modeled after their American cousins, if not exact duplicates. Consumer credit disputes are not a profit making activity of the credit reporting companies. These departments are run as efficiently, and cost effectively as possible. They cannot afford to spend more than a couple minutes on any credit dispute letter.

The worst, however, is the advice that “…the credit reference agencies do allow people to add an entry explaining any mitigating circumstances surrounding the CCJ, such as you were in dispute with the firm that placed it there because of an unpaid bill.” This is terrible advice. It is the same as pleading guilty to a crime before the bailiff even reads the charges and you know the evidence against you.

The law, in America at least, is that the credit reporting bureaus can keep negative items on your credit report only if they can verify the accuracy of each disputed item.

Here’s an example. You make the call. You defaulted on a personal loan from ABC Finance Co. three years ago. The account is in collection and appears as such on all your credit reports. You learn from your sister in law’s neighbor that ABC Finance Co. just went through a merger and to make their database compatible purged all inactive customer records older than two years.

If you send a properly drafted dispute letter to the credit reporting bureaus telling them to remove the negative ABC Finance Co. tradeline they would be required by law to remove it because it cannot be verified. If you had done what the Independent columnist recommended and gave the credit reporting bureau a written explanation of why you defaulted on that ABC Finance Co. loan – you’re screwed – because you have provided all the verification to keep that negative item on your credit report that the credit bureau could not otherwise get.

Credit repair is not for amateurs. Let the professionals do it.