Marketplace for Judgments!! Who Knew??

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Just when I think I seen and heard just about everything there is to hear about credit and issues, a new subject comes up and for some it’s a real kick in the butt!!  It seems that many businesses, including collection agencies and Junk Debt Buyers are ready for some quick cash.  To acquire this cash, they sell their outstanding judgments to a company for less than pennies on the dollar.

There were approximately $132 million plus dollars in judgments available for purchase in February, 2013,  when I began working with a customer who had a judgment on his credit report.  He had a letter from NCO, a major Junk Debt Buyer, stating the account had been paid in full but he did not have a letter of Satisfaction of Judgment from the Attorney group in Birmingham, AL that has gotten the judgment in the first place.  After repeated attempts to get information from NCO and the attorney group, it was discovered that NCO had recalled the account, a court approved judgment, from the attorney group.  When I questioned why it had been returned, the lady in the collection division of the attorney’s office said, because my customer was deceased.  I immediately called my customer, who was named after his father and asked if he was  deceased.  After we both finished laughing at the absurdity of the question and we got a copy of the obituary from the paper and I sent it to the agency.  The obituary specifically stated the father was senior and the son was junior.  The son was indeed very much alive.

Finally, after repeated requests to get this judgment marked as satisfied with the local Probate Judge’s office, it was done.  At that point, I got a copy of it and the customer was able to get it mailed to the all three credit reporting agencies to prove the Satisfaction of Judgment!  It took over six months, many phone calls and letters but for my customer, it was well worth the effort.  Hopefully he will be able to purchase the home of his dreams within a few months.      .

Mistaken Identity and YOU!

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It happens every day.  Someone calls your number looking for someone with the same name.  They tell you what they want and you explain, you are not the person they are looking for.  But has it occurred to you, that person’s information, good or bad, just might be on your credit report?  Another good reason to request a copy of your credit report every four months from www.annualcreditreport.com.  If you’ve read any of my other posts, you will know that I recommend you request one of your FREE credit reports every four months from one of the three major credit reporting agencies, Equifax, Transunion and Experian.  A good way to monitor your credit report for free.

Some years ago while working in the collection department of a local bank, I received a call from a automobile dealership in a distant down.  The finance manager said he had a young man in his office wanting to purchase a car but there were some confusing items on his credit report.  There was good trade lines, showing ontime payment history with no problems.  But there was also a repossession and a foreclosure showing up as well.  The finance manager knew something wasn’t right but didn’t know what to make of what was showing up.  When he said the name of the person, I knew immediately what had happened.  Their credit files had become “confused.”

It seems the young men had lived in the same area, graduated from the same high school, were born the same year and even had the same first and last name.  Their middle initials were the same but different middle names.  Because they were born in the same year, their social security numbers would have been fairly close number wise.  There were enough common factors for the computer to say, “they might be the same, they might not.  But there is enough commonality, we will merge them.”   Their files  then reflected the credit history of both.  Fortunately, I was able to make the finance manager comfortable enough about what I knew and who I knew it was for him to be able to go ahead with the deal.  But that was in the days before credit scores.  Would we be able to get it done by phone today?  I seriously doubt it.

Confused files can also happen with fathers and sons, especially if the son is a junior named after his father.  One credit file had the son with a Sears account opened when he was just six years old.  Fortunately, the father paid his bills on time and the payment amount didn’t affect the total debt to income ratio.  The loan was approved.

A current client is dealing with a judgment that is on his credit report and has been paid.  But the collection agency that had turned it over to an attorney’s office for legal action recalled the account when they received a notification of death.  Problem is, it was the father of my client tht died, not his son who happens to be a junior.  The attorney’s office refuses to recall the judgment because they haven’t received their money and the collection agency is refusing to send the attorney’s office what is due them after it’s been paid.  The attorney’s office is refusing to recall the judgment or mark it Satisfied.  Because the outstanding judgment is showing on his credit file, he is unable to purchase a home.  All because my client was named after his father and has Junior behind his name.

There are at least five different women in my own hometown with the same first and last name I have.  I dare not leave my drycleaning in my own name because it was almost given to one of them by mistake.

When was the last time you checked your credit report?  You just might have a case of “mistaken identity” going on that you need to know about.

 

Taking Care of YOUR Business

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Many people are unaware of how some items such as tax liens and judgments manage to get reported on credit reports but then are never reported or updated when paid.

Credit Reporting agencies such as Trans Union, Experian and Equifax have contract employees who make regular trips to local county court houses to get the latest on new tax liens and judgments.  This information is then electronically reported back to the agencies and placed on credit files.  When  any of these items are paid in full or satisfied, these same contract employees are not required nor do they check for updates on the previously reported information.  The debtor must do that for themselves.

Sometimes judgments are paid to the clients owed the money and they never report it to the office of probate judge or small claims court.  Some have even refused to update the information after being paid in full. The debtor then has to go through the lengthly process of having a judge declare the debt satisfied. There have been cases when a collection agency or attorney’s office has received payment in full but has never reported to the correct office within the court system.  One attorney withheld the information for five years before being caught up with and forced to report it.  Even then, without proof in the form of an Official Check, he would have attempted to collect more money.  The Official check had his endorsement and showed where he had deposited the money into his account.  He finally did what he should have done five years before but not happily.

If you have had a judgment or tax lien that you, the debtor,  knows has been satisfied, go to the court house and request a copy of Satisfaction of Judgment or Satisfaction of Tax Lien.  Make a copy of it and then send, by Certified Mail, to each of the three major credit reporting agencies along with a letter stating your name, address, Social Security number and birthdate, requesting the information be updated. The longer you wait to do this, the worse your credit score will become.  It will still take time for the score to move into a more satisfactory range but at least it will be a start.  Do NOT wait on anyone else to do it for you.  It won’t happen.  Within two to three weeks, you should receive an updated credit report showing the judgment or tax lien as Satisfied.

You, as the consumer, must do your own work and take care of your own business.  There is no one else who will do it for you. No one will care about your credit score but you.  Don’t wait until you’re ready to buy a home or a car.  Request a copy of your FREE credit report from www.annualcreditreport.com and go over it carefully.  Note any duplications of accounts, any collections or accounts that should be updated.  You can be fairly sure if it’s incorrect on one, it will probably be incorrect on all three.

Learn to become your own advocate and Take Care of Your Business!

Credit Scores, Why Do They Change So Much??

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Several people have come to me with the same question.  “Why is my credit score changing so much from one month to the next?”  For some, there has been a dramatic drop after paying off accounts when it would have seemed their scores would have gone up.  For others, there seem to be no real reasonable explanation.  With these thoughts in mind, here are a few points to consider if you, as a consumer or hopeful homebuyer, are seeing dramatic changes in your credit scores.

1.   Have you applied for credit recently?  If so, where?  And how many times?     Applying for credit can and will take points off the credit score.  For each inquiry, the score drops from the three to six points.  If you are denied credit at one place, don’t immediately go to another place and apply again.  Everyone who is denied credit has the right to a FREE copy of their credit report.  Request the free report or go home and request a copy online from www.annualcreditreport.com.  Go over the credit report to make sure there are no errors or accounts that don’t belong to you.  If there is a Credit Coach in your area, contact them, if not, contact me by email and I’ll try to answer your questions.

2.   With tax refunds coming in now, many are paying off accounts and sometimes closing them.  Don’t do that until you know for sure what your standing is on that account.  Whatever the status is when you pay off the account is what will remain on your credit report for the next seven years.  If the account was past due at the time of payoff, you’re stuck with that rating.  If the account was a revolving charge card of any type and you’ve paid it off and closed it, that rating will be on the credit report for the next seven years.  Before paying off an account that is past due, get the account into a current status, pay on it for a few months and then pay it off.  The credit rating of an account, whether closed or open, affects your credit score.

3.   Credit score change each month due to activity on any account you owe money on.  If it’s a revolving credit card of any type, the score will be based on the debit to credit available.  In plain language, if your limit is $1,000 and you are maxed out or over the limit, the credit score will drop.  If your limit is $1,000 and the balance drops to $300, it should help your credit score.

4.    Credit scores are also based on the types of accounts, whether bank, finance company, revolving credit card accounts and any derogatory accounts, such as collections, judgments or tax liens. Too many open accounts will hurt a credit score as much as not having any or enough credit history to show a person is credit worthy.  The activity of the  most recent two years is what potential creditors or underwriters look at.

5.   The age of your credit file also affects your credit score.  Never close out a revolving credit card, even if you only use it once every six months.  Check to see the date you received that card.  That’s the age of your credit file and that again affects your credit score.

It’s recommened that a perfect mix is an unsecured loan, a secured loan (car, furniture, appliances, etc) and a revolving credit card.  I recommend a Master Card or Visa because they can be used anywhere for most anything.  Always keep the debt to available credit limit low. Don’t apply for every store card offer just to save 15% on your purchase.  Remember, every inquiry takes points off the credit score.  Is saving that 15% really worth lowering your credit score?

Last, always make your payments on time.  Unless your phone, cable or utilities are disconnected and turned over for collection, late paymentst won’t show on your credit report.   Being over 30 days late on ANY trade line account  WILL show up and cost points on a credit score.  If it’s choice on which payment will be late, let it be the ones that won’t affect your credit score.

Sometimes, there is just no rhyme or reason as to why credit scores change.  We are all at the whim of the credit reporting agencies and their computers.   “Let’s Talk, What You Don’t Know About Your Credit Can Hurt You”  (ISBN 978-1-934610-70-9) gives more detailed information about ratings and is available through amazon.com.

Divorce and Credit, What You Don’t Know Can Hurt You!

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It’s estimated that 50% of marriages today will end in divorce.  Some will be amicable, others a bitter and angry fight to the end.  Whatever you decide to do, don’t go through a divorce or sign ANY papers without benefit of an attorney, sound legal advice and a financial advisor!  Be aware, attorneys are not always the best judge of good financial advise.  Unless the attorney or other advisors have a good handle on divorce litigation and the financial consequences of divorce, you could face real issues in tihe future.  No matter how much you or the other person just want to get it over, not having sound legal advice and financial guidance may spell disaster for all concerned.

One man wanted out of his marriage so bad, he agreed to pay alimony until his ex-wife remarried or chose to co-habit with someone.  She moved out of state and if anyone knows anything, they aren’t telling.  When he talked with an attorney twenty years later about possible options to end this situation, the attorney looked over the original paperwork and just shook his head.  The man had agreed to pay alimony for life, no matter what his financial conditions might be.  He had not sought the advice of an attorney but had agreed to the terms based on the advice of the attorney his ex-wife was using.  Not the smartest move.

Beware of those who practice law without a degree, such as a paralegal or legal secretary.  Gerald should have known  better than to trust his soon to be ex-wife when it came to the papers she had drawn up by a friend who just happened to be a paralegal.  He signed the papers without reading over them.  She assured him everything was just as they had verbally agreed.  They were to have joint custody with the minor children living with her.  After the divorce was final, a question came up about custody arrangements.  When he finally read the divorce papers, after the fact, she had tricked him again.  She had full custody of the children.  Gerald  had neither the money nor the will to put his children through such a costly and mean spirited court battle.  When she was arrested for bad checks, identity theft and securities fraud, he was unable to enroll his son in a new school because he didn’t have joint custody.

Before agreeing to pay off debt, especially credit card debt, set a cap on what you will pay and get copies of the most recent statements showing the date and balances. Make sure that amount is what is shown on the divorce decree.  DO NOT leave accounts open.  Close them immediately.  You should open a new account in your name only!  Patrick had agreed to pay off his ex-wife’s credit card debt as part of their settlement agreement but no amount was specified.  She had a wonderful time charging the cards up to the max because no limit had been placed on them and they had not been closed.  He had agreed to pay them and had to.  Doing so took almost all the proceeds from the sale of the home they had owned jointly.  A judge may say one party is responsible for the debts but if the accounts are jointly owned, the lender, whether bank, finance company or credit card company, is going to hold both parties liable until the debt is paid off. Lenders don’t enforce divorce decrees no matter what the courts may say.

Divorce can indeed be a blow to your ego, your finances, future income and/or retirement.  Therefore, it is imperative you ask questions and interview more than one attorney and financial advisor before agreeing to go forward with the process.  Make sure they know and understand how this will affect you financially and have your best interests at heart..  Continue to pay all bills on time, regardless of what your attorney may tell you.  It isn’t their credit that will be adversely affected but yours if the accounts aren’t paid on time.

Check back for more on Divorce and YourCredit!

Tips From Barb’s Desk

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When you dispute an account, does it really get taken seriously?? According to a recent 60 Minutes segment done by Steve Croft about the three major credit reporting agencies, probably not. So how do you make sure your request for information to be updated, to report identity theft or a dispute on an account is really looked at? Start by sending ALL correspondence by Certified Mail. You will note that none of these credit agencies have a street address so correspondence must be done by email or snail mail. There are no real guarantees with either but at least sending it by Certified Mail, someone, even if it’s the mailroom clerk, has to sign for it and the card is returned to you, the consumer with a problem. You then have real proof it was received. Keep copies of all correspondence and attach the little green card with that all important received date and initials of who signed for it, in a safe place.

Stay tuned for more tips from Barb.

Where Do You Get A Copy of Your Free Credit Report?

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www.annualcreditreport.com

It will come as surprise to many how easy it easy it is to request a copy of their credit report.  But yet when asked how many people do this, the answer is, not a lot.  Why don’t they do this simple thing?  There are a couple of reasons.

One, they are afraid to find out what is really on their credit report.  For some, ignorance is bliss, even when  it’s to their detriment.  What they can’t see, they don’t have to deal with.  Suddenly there is an emergency and there are problems that should have been dealt with a year ago or longer.  Panic hits and ffrantically they are running around, angry that someone, anyone can’t solve their problems right away.  A friend kept saying to me, “I’m afraid to find out what’s on my credit.”  After talking about it on several occassions, I explained to her what I’ve just said.  It wasn’t that I hadn’t already said several times before but for the first time, she really heard what I was saying.  She did request her credit report and things weren’t nearly as bad as she had been afraid they would be. Now, she knows what needs to be done.

Second, some are under the impression that because they think they will never need to apply for credit again, there is nothing to be concerned about.  What they don’t realize is, someone else may find their information very valuable and be using their good credit to obtain credit, merchandise and other nice things. The person doesn’t become aware of the problems until they begin getting calls about unpaid acccounts.  By then, identity theft has occurred and the nightmare has already begun.  If they have government contracts or jobs, security clearances may be denied, jobs and careers lost.  The whole situation might not have been avoided but the damage could have been minimized and cleared up much faster if a free credit report had been requested.

Now is the time to begin marking your calendar to request your FREE credit report from www.annualcreditreport.com.  According the terms of the Fair Credit Reporting Act, consumers are entitiled to one free credit report each year from each of the three major credit reporting agencies, Equifax, Experian and TransUnion. If you haven’t requested yours yet, think about doing so now.  Select one and request the information.  Go out four months and mark the calendar to request the second one and then again another four month after that to request the third one.  At the end of the first year, begin the process again.  If for any reason, you suspect you are  a candidate for credit fraud, request a Fraud Alert be placed on your credit report.

Remember, what you don’t know about, you can’t deal with.  So, get busy, request a copy of your credit report and become proactive in dealing with and protecting your credit.