Blog Archive for June 2009
Friday, June 26, 2009
Cell Phone Contracts
Question - If we pay the penalties to get out of our cell phone contract will it affect our credit score. right now we have high scores and do not want to jeopardize them
Answer - The answer is no, it should not impact your credit score. The reason is becase there's nothing for the cell phone company to report. And since you don't owe them any money there would be no reason for a collection agency to get involved. That's really the only way the debt would have made it to your credit reports and impacted your credit scores. Traditionally cellular providers don't report, although they certainly could do so if they wanted to.
Monday, June 15, 2009
Repairing Credit Report After Medical Expenses Layoffs and Bankruptcy
During 2005 we incurred substantial medical bills for my husband ( heart surgery). We filed bankruptcy and it closed on Nov 2005. We have noticed several entries were not updated to reflect bankruptcy, and we have been advised we need to pay huge money to get these updated and corrected. In the meantime, we have several utilities that were sent to collections due to lay offs. I really want to clean this up but, it has taken on a life of its own. With limited funds, and time I would like to clean this up in the next year. Would you consider providing assistance with this matter? Also, we are paying off the IRS for 2004 and 2005 taxes. We have made some head way but, will be paying for another 50 installments.
Monday, June 15, 2009
TransUnion
Hi John. I watch you on TV all the time and have learned a lot. I have credit scores in the 700s with the two other credit reporting agencies, but Transunion shows a 675 because the city of Atlanta made a mistake with taxes on my rental properties and filed a lien, which I straightened out immediately. Transunion continues to show this old lien, is there anything I can do? Thanks
Saturday, June 06, 2009
Credit Limit Lawsuit
Our credit expert, John Ulzheimer, is the expert credit witness for the Plaintiff's for this case...
Article written by Eric Connor, Staff Writer for the Greenville News
An upstate federal judge is considering whether class-action lawsuits against the nation's top three credit reporting agencies should continue, in what has been a three-year legal battle over whether the agencies wrongly allowed a credit provider's accounting practices to raise the cost of borrowing money for millions of people.
In nearly identical complaints filed in Greenville district federal court, plaintiffs allege that beginning in at least 2004, Equifax Information Services, Experian and TransUnion issued inaccurate information by failing to force Capital One Financial Corp. to report credit limits on individual credit card accounts.
The information that credit reporting agencies gather is used to determine a credit score, which lenders use to determine the likelihood that a borrower can repay a loan.
Last week, U.S. District Judge Ross Anderson listened as attorneys battled over whether the lawsuits should be dismissed. Anderson said a ruling would take “a while.”
At issue is how the credit reporting agencies would leave blank or report as $0 the “credit limit” entry for Capital One accounts provided in their reports. The lack of information caused credit scoring software to reflect an artificially lower credit limit, the complaints allege, misrepresenting exactly how much available credit a cardholder had actually used.
However, as a result of the lawsuits, Anderson wrote in an earlier ruling, Capital One has since begun reporting credit limits “and have indicated they intend to continue to do so.”
In the past, members of the credit industry have viewed reporting credit limits as effectively providing sensitive, proprietary information to competitors.
Last week in court, former 4th U.S. Circuit Court of Appeals Chief Judge Billy Wilkins argued on behalf of the reporting agencies, telling the judge that the agencies hadn't violated “reasonable procedures” by failing to obtain information a provider wasn't willing to give and that no actual damages had been proven.
“There have been no damages, no adverse effect, no harm,” Wilkins said in court
In arguing to have the case sent before a jury, however, an attorney for the class of plaintiffs — which consists of those affected in South Carolina, North Carolina, Virginia, West Virginia and Maryland — said that the practice of omitting limits caused credit reports to be “patently incorrect.”
The defendants, attorney James Ledlie argued in court, failed to “assure maximum possible accuracy” as required under a 2003 amendment to the Fair Credit Reporting Act , which is best known for its requirement that each credit agency offer a free credit report to customers once every 12 months.
When the "credit limit" entry is left blank on a credit report, scoring software automatically plugs in the "high balance" amount, which is the highest amount a customer has ever owed on the card, according to the suits. That would mean, for instance, a customer who used $3,000 and never more than $3,000 on a card would appear to have a credit limit of $3,000 — even if the unused credit limit in reality was thousands of dollars more.
Ledlie told the judge that in 1999 an Experian company official said that the practice of not reporting credit limits pushed down scores, “as you would intuitively expect,” Ledlie said. The agencies could have at least provided consumers a notice of the practice since they knew the reports were inaccurate, Ledlie said.
However, Wilkins argued that a report found that only 7 percent of credit scores decreased as a result of the practice, while 88 percent stayed the same and in 5 percent of the cases they actually increased.
Saturday, June 06, 2009
Credit Card Debt Settlement
I have a credit card balance of $14,400 and am being offered a settlement amount of $7,000. The credit card company has threatened me that if I do not respond with an answer on Monday 06/08/09 I will be sued for the full amount. I'm currently in the process of selling my house. It has been on the market for 1 month.I have a few questions that I'm hoping you can help me with.1) If I borrow money from a friend to pay off the settlement amount, what will this do to my credit? Is it worse to settle or should I try to borrow the entire amount from friends until my house is sold?2) I have additional credit card debt in the amount of $26,000 that I plan to pay off once my house is sold. If I settle with this 1 credit card company mentioned above should I then try to get the others to settle as well?I'm being told I need to contact this credit card company 1st thing Monday 6/8/09 and I'm not sure what the best answer is to provide to them. I appreciate your help on this urgent need.
Wednesday, June 03, 2009
A Legal Victory for Credit Card Holders
The following is an Associated Press story. It seems that everyone is taking aim right now at the credit card industry. It's been awhile coming and quite honestly just seem like good business sense to disclose that rates on your credit cards can go higher based on your credit risk.
PORTLAND, Ore. (AP) - In a legal victory for consumers, a federal appeals court has ruled that Chase Bank must clearly disclose it can raise the annual percentage rates for cardholders based on credit risk.
The 9th U.S. Circuit Court of Appeals ruled in favor of an Oregon couple who claimed that Chase violated the Truth in Lending Act, reversing a lower court that had dismissed their complaint.
Cheryl and Walter Barrer filed a class-action lawsuit against the bank after it nearly tripled the annual percentage rate or APR on their credit card from about 9 percent to more than 24 percent in April 2005.
The couple claimed that Chase violated the act by failing to disclose the criteria it used to raise the rate, including the risk factors involved.
The court noted that Chase cited general reasons that included
outstanding loans it deemed "too high" and too many recently opened credit accounts.
The judges, however, sided with Chase on the general principle "that it must be able to adjust the price of credit according to how risky it is to lend to a given cardholder."
The court also said the bank's failure to disclose that adverse credit information was the reason for raising the couple's APR and "that Chase would look up their credit history to acquire that information" was not enough to violate the act.
But the opinion by Judge Diarmuid O'Scannlain said Chase had a duty to "clearly and conspicuously" disclose that it could change interest rates "for any reason at all."
Such disclosures, he added, must be made in a way "that a reasonable cardholder would notice and understand." The 2-1 opinion issued last month said Chase's change-in-terms provision came "five dense pages after the disclosure of the APR" and "is buried too deeply in the fine print."
Judge Susan Graber was even more critical of the bank in a dissenting opinion that concurred with the majority in part. Graber said allowing the bank to change the rate for any reason so long as it clearly disclosed that it reserved that right could lead to "bizarre and unexpected" results.
She said under the majority reasoning, Chase could change the rate if it had "adequately disclosed it had a pre-existing plan to raise the Barrers' APR to 50 percent if they dye their hair red."
The court noted it took the couple three months to pay off their balance at the higher rate.
Wednesday, June 03, 2009
Authorized User on Credit Card
I am listed as authorized user on two accounts that are in good standing. The oldest account dates to 2005 and is a credit card with a credit limit of $19k and has a high balance of $16k. I am keeping my name on that one since it is the oldest. The other credit card has a $10k limit and the balance is $7k, and was open in 2004. I have my own credit card with Capital One with a limit of $750 and was open in 2008. I recently asked my girlfriend to remove me from her newest account (2004) as an AU. Will this cause my score to drop? In addition, last year we purchased two timeshares and the balances of course show as well. All accounts are in good standing. I was simply trying to reduce my debt ratio. Did I make a mistake?I appreciate any advice you can offer. I have been proactive in rebuilding my credit. my average FICO score from all three scores is 667. Thank you
Tuesday, June 02, 2009
Credit Card Companies Raising my Interest Rates
I saw on CNBC's site where John had responded to someone saying a lot of credit card companies are upping their interest rates; this is happening to me too but I cannot afford to close all my accounts, I need the available credit. I do not have other accounts with low enough balances to transfer existing higher balances on cards with limits being jacked up. What recourse do I have?
Tuesday, June 02, 2009
Will Credit Limit Decrease from Bank Lower My Fico Score
My primary credit card is a Bank of America Master Card with a credit line of $17,000. My secondary card is an American Express card that I rarely use with a credit line of $2,000. Recently I discovered that American Express had lowered my credit line to $1,750. I really don't understand why. I have a job, I'm debt free, and my credit report only shows 1 late payment...three years ago! Nothing has really changed. Will this credit line lowering affect my credit score? I learned from your book that closing accounts is a bad move, but I want to get a third card (probably Discover), and I don't want to deal with American Express anymore. How's that going to affect me?PS I bought your book some time ago. Great stuff. I'm recommending it to all my friends.
Tuesday, June 02, 2009
Credit Card Lawsuit
Dear John. I wonder if you could help me with a credit card issue. I'm being sued by a credit card company for non-payment. I stopped paying as a negotiating tactic to get them to reverse a string of predatory fees. The tactic, however, didn't work; they filed suit, and I don't know where to turn for defense or to force them to finally reverse the charges. At issue is the dead zone between the due date of one bill and the statement date of the next. For months my auto payment was arriving during this dead zone. I stress that the payment was early, never late, and not excessively early. It arrived well after the previous due date but a couple of days ahead of the next statement date. The payments were far above the minimum.Since I wasn't using the card--only paying down the balance--and since I receive no paper statement, paying through recurring bank bill pay, months of late fees and interest-rate hikes occurred before I became aware of the problem. My argument is that if I send a payment after the due date of the previous statement, that payment counts toward next regardless of whether or not that statement has opened. In other words, I refuse to accept the payment dead zone. I need someone to help me make my case. I'd appreciate any advice or referrals you could give me.
This article should not be interpreted as legal advice or testimony. It does not represent any conclusive opinion of the author or any of the credit experts from ExpertCreditWitness.com.