Credit Debt Trap #8
By Mike Wayman
How are you “sold” to other debt collectors? This is an interesting concept. When you apply for credit one of the things that many people don’t ever realize is that credit issuers have the right to sell or assign your debt for pennies on the dollar to debt collectors. This is how and why many people begin receiving collection notices from agencies that seem to have no relation to the original creditor. The worst part about this whole process is that the collectors can make far more money than the original credit issuer.
If the collector buys your debt for pennies on the dollar and you actually pay the debt the profit margins are enormous. The benefit for the original creditor is that they earn some money from the sale of your debt but they also gain a large tax break. They get to write your debt off as a loss and this really helps credit card companies decrease the taxes they have to pay. It’s a win-win for the credit industry and a big loss for the consumer.
What’s even worse is that when you have a collection, it hurts your credit in two ways. First, you have a negative tradeline from the original credit issuer. Second, you can have a collection for the same debt on your credit from the collection company. This can make the credit repair process exceedingly difficult. If you want help stopping the damage to your credit then call us today and we will help you repair your credit fast.
Credit Debt Trap #7
By Mike Wayman
Trillions of dollars are made off the backs of Americans everyday. Debt is perhaps one of the best ways for people to rake in billions, especially from people that have the worst credit. It should make sense that if you have bad credit that you’d be considered a bad credit risk and that executives at major credit companies would want to learn how to avoid extending credit to the credit challenged. Doesn’t it make sense that the credit challenged offer the worst possible return on credit? This is, unfortunately, not the case at all. In fact, its actually the opposite.
The people with the worst credit represent the most income to a major credit issuer. Late fees, high interest rates and penalties are easily assessed to people with sketchy credit and the credit companies are well aware of this. SO, does this mean that credit card companies are hoping and praying that you won’t pay off your balances in full or make minimum payments on time? I would venture to say “Absolutely Yes!”
Credit issuers don’t care about you personally and neither do the debt collectors you are “sold to” after the credit issuer realizes there’s nothing else they can get from you. The moral of the story is be very careful when applying for credit if you have a less than perfect credit history. You may very well want to consider credit repair before you apply for new credit to avoid debt traps.
Credit Debt Trap #6
By Mike Wayman
Sometimes I can’t believe the extent that people will go to make a buck illegally. This video exposes the collection industry for what it really is. These people are calling consumers posing as police officers telling people behind on their payments that if they don’t pay up they’ll be arrested and brought to Maryland where they’ll face charges and be jailed. The collectors claim to be calling from Maryland but in reality they’re calling from a Buffalo, New York.
Getting out of these debt traps can be very difficult and the damage it can do to your credit can be immense. If you think that a collection company is breaking the law call an attorney. There are attorneys that specialize in litigation against debt collectors that harass people. If you notice that a fraudulent collection appears on your credit report then you can get in contact with us and we’ll help you repair your credit.
Credit Card Debt Trap #5
By Mike Wayman
Debt traps are not all the same. Let’s say that you’ve fallen behind on debt and now you’re in collections. The collections industry is yet another level of debt trapping that is, by the admission of people in the industry, largely unregulated and the “salespeople” in debt collection often blatantly break the law just to make a buck. They call repetitively even if you’ve claimed bankruptcy. They will even continue to harass you after you’ve had an account included in a bankruptcy. One of the worst parts about these collection practices is that it can harm your credit even more after you claim bankruptcy.
Here’s how collections can hurt your credit even further after bankruptcy. There are a few creditors like auto finance companies and credit card companies that will extend credit to people after a bankruptcy has been discharged. However, one of the most important factors in determining whether or not to extend credit is if the borrower has had a late payment or collection after a bankruptcy. When you get a collection after a bk it really damages your ability to obtain credit in an effort to build your credit back up.
Collections are dangerous, collection companies are out of control and unregulated and you need to deal with collections as soon as possible to avoid problems with your credit after, during or before a bankruptcy occurs.
Credit Card Debt Trap #3
By Mike Wayman
Hopefully you’ve seen the last two posts on credit card debt traps. The first was a general introduction while the second covered a bit of history. The important thing to glean from these videos is exactly how credit cards negatively affect the financial lives of American citizens and how we can all avoid debt traps. Not only are these traps financially difficult to overcome, they often lead to a negative credit rating.
Read the fine print in all of the credit applications you are considering applying for. Determining if a credit debt trap exists can only happen if you understand the terms of the credit you are applying for. While many people never stop to consider the general terms of a credit card they really should. To me, it seems like we all simply trust large credit companies because we don’t think they would engage in acts that are fraudulent, deceptive or illegal. Think again!
If you are the victim of a credit card debt trap then please give us a call. We may be able to help you remove negative credit from your credit report caused by a debt trap.
Credit Repair Strategies to Avoid Like the Plague
June 18, 2009
By Mike Wayman
There are vast numbers of credit repair plots and schemes proffered on the Internet. Some are designed to merely take your money. Others, however, while also designed to take your money, can get you in to serious legal trouble. Let me introduce you to the “Personal Credit Number” sometimes known as a CPN or PCN. This strategy requires you to get a new Employee Identification Number from the Internal Revenue Service and the “credit repair” company tells you they will create a new credit profile for you utilizing this new number.
This “new” credit profile is supposed to be a fresh start. In reality, using this new credit profile is considered a misrepresentation of your true identity and is nothing less than fraudulent if you apply for credit using this number. If you default on credit utilizing this fraudulent identity be advised that the credit issuer may very well come after you for fraud and they will be well within their rights.
This scam isn’t new and it has been used to defraud creditors for years. Some of these scams are simple while others far more ornate and calculated. For instance, some companies actually sell credit profiles with active CPN numbers and tell their clients they will never have to pay their debts back. These companies may promise signature lines of credit and credit cards as part of the package in their service agreements.
If anyone tells you they will create a brand new credit profile for you utilizing a different social security number or a CPN stay far, far away from the company. You can find yourself in a heap of trouble.
Credit repair isn’t easy and some people make it seem as though they can perform miracles. A CPN and a new profile may not be a miraculous achievement as many people have acquired these “new credit profiles” but it certainly is something to stay away from.
Beware Offers of Credit if You Recently Filed Bankruptcy
June 17, 2009
By Mike Wayman
Bankruptcy happens for a number of reasons. From financial hardship to medical problems, bankruptcy is a safety valve for the American Consumer. There are downsides to bankruptcy however. One of the biggest fears that people have when they file for bankruptcy is how long it will take to re-establish credit properly and whether or not they will be able to acquire new credit to buy things like automobiles or just to be able to qualify for a credit card.
One of the most interesting things about the credit industry, that surprises most people that file for bankruptcy, is that after your bankruptcy is discharged, offers of credit come pouring in to your mailbox and even your email. It seems to make absolutely no sense that if you recently discharged a bankruptcy that a credit issuer would want to take the risk of extending credit to you right? Well my friends, that’s not how the credit industry works.
Once you file bankruptcy you become a prime target for credit. You become a prime target especially after your bankruptcy is discharged. Here’s why: the credit issuers can charge you outrageous interest rates, some rates as high or higher than 20%.
It’s common for people that recently discharged a bankruptcy to receive solicitations in the mail from automobile dealerships that have financing arrangements with subprime automobile finance companies. Many of these companies will require large down payments with interest rates in the double digits. In thee cases, it almost makes more sense to save your money and buy a very inexpensive car if you can.
Other offers of credit can come from credit card issuers. These credit card issuers may only extend $500.00 of credit but charge up front “set up” fees and other annual fees that will make your available balance, just by accepting the card, less than $300.00.
Avoid falling for these kinds of traps as much as you possibly can. When you receive offers of credit after a bankruptcy, be sure to read the fine print on the contract if you are interested in reestablishing your credit.
The Importance of Good Credit in the New Economy
June 16, 2009
By Mike Wayman
Our economy has pushed millions of American consumers over the financial edge. Many have lost their homes, and, likewise, their credit has suffered tremendously. This can lead to a spiral of economic problems as many consumers use credit to bail themselves out of short term cash flow problems.
Imagine the following: one of the breadwinners in the household or the only breadwinner loses their job due to corporate downsizing. Credit card payments and other credit related payments fall behind first, as is common, due to the fact that most people prioritize making their mortgage payments before anything else.
Luckily, the job loss was only temporary. This breadwinner was able to acquire a new job quickly, albeit, at a lesser rate of pay. Money is tight for the family but the family credit score has been completely damaged. Now, due to multiple past due account balances, the score of both individuals in the household is hovering just above 500.
The problem in the new economy is that underwriting guidelines for all forms of credit are now much more selective. Should the family described above encounter any financial difficulties in the near future, it will be nearly impossible to borrow money to help in the short term for a number of reasons. First, many credit card companies will reduce the remaining balances on existing credit cards down to what is owed if the borrower fails to pay on time. These clauses are in most credit card contracts. Second, acquiring new credit will be nearly impossible, that is, unless you are willing to pay rates that are sky high. These are burdens that most would like to avoid but nevertheless, these burdens are commonplace.
Credit repair can help some people but not everyone. Credit repair does not really help borrowers that habitually fail to pay their debts on time, whether they have money or not. However, if your hardship is temporary in nature, credit repair can be an effective way to restore your credit to the point that you won’t be saddled with a terrible score.
A Credit Repair Strategy that Works
June 15, 2009
By Mike Wayman
One of the credit repair strategies that works for consumers is to manage your debt ratios on consumer credit cards effectively. For example let’s say that consumer A has three credit cards with Chase, MBNA and Discover. Each have various balances and limits. For the purposes of illustration let’s assume consumer A has the following profile:
Chase card: balance $4374.00 limit: $6000.00
MBNA card: balance $2463.00 limit: $3000.00
Discover card: balance $3225.00 limit: $4500.00
Calculating the existing debt ratio on each card is simple: just divide the existing balance by the credit limit. The existing debt ratios on each of these cards is:
Chase card: balance $2374.00/limit: $6000.00 = 39.6%
MBNA card: balance $1463.00/limit: $3000.00 = 48.8%
Discover card: balance $2225.00/limit: $4500.00 = 49.4%
Maintaining a high ratio negatively affects your credit score. Typically, it is advised that your debt ratio on any given credit card stays lower than 25%. If you can afford to pay them down, do so. If not you still have a number of options at your disposal.
One option is to call your credit card issuer and ask them to increase your credit limits to make your ratios on your cards reach a limit that will improve your credit scores.
Another option at your disposal is to look for a new credit card that will give you a high enough limit to reduce your ratios so your score can benefit.
The recession has limited the practicality of this strategy as many credit issuers are scaling back on increasing credit limits. You can always inquire with your credit card issuer if they are offering credit limit increases before you ask for an increase in your limit.
With the credit markets drying up, seeking out trustworthy credit repair companies is a very good option that you still have at your disposal.
Who Should You Order Your Credit Report From?
June 15, 2009
By Mike Wayman
With so many credit report companies offering credit report services these days it can be difficult to tell who to get your credit reports from. National television commercials offer free credit reports to consumers but there has to be a catch, right?
The catch is quite simple. Many of these “free” credit report providers aren’t the well intentioned do-gooders they say they are. In fact, what they’re really after is what’s known as an “up-sell” in the sales industry. Sure, they might give you something that looks like a full fledged credit report, but what they’re really after is the ability to sell you their products and services.
The most annoying aspect of these free credit report websites is that they will continue to email you for years if you let them in their efforts to sell you their credit repair services. I like to think of these free credit report sites as gigantic bait and switch schemes. They reel you in with the bait (a free credit report) but they immediately switch to sales as soon as they give you the report.
You also need to be careful about who you give your social security number to these days. As a former police officer I’m highly suspicious of anyone that asks me to give out my social security number, especially when the product they provide is completely free of charge. Isn’t your social security number more valuable than a free credit report?
My advice is to get your credit reports directly from the credit bureau’s themselves. Just Google Experian, Transunion, and Equifax. You’ll be able to get a valid copy of your credit report directly from the source.
If you are looking for a free credit report to begin the credit repair process, I would first seek out a trustworthy credit repair company and ask what the credit repair representative advises. Some companies will want you to order your reports directly from the bureaus while other credit repair firms will want to pull credit on your behalf. If you are seeking a credit report for your own use, the bureaus will give you a free copy every year if you ask for it.
