AAACreditGuide.com

Credit Cards 101: Helping College Students be Responsible When it Comes to Credit

2008-08-30T12:11:00.003-04:00

It's that time of year again - back-to-school. College students across the country are looking forward to the chance to gain independence both academically and financially. However, the decisions made at this juncture can have a serious impact on the future creditworthiness of college students who get in too deep with credit cards and loans. So how best to teach your college student to be a financially responsible adult? There are no easy answers, but there are some things that you can do to help your college student understand the role of good credit.

Avoid multiple credit card accounts - students who rely heavily on credit cards may find themselves in over their head with debt well before graduation. Instead of credit cards, consider using debit cards with a Visa or MasterCard logo, or prepaid cash cards. These provide the freedom necessary to purchase supplies without having a negative impact on credit. Exception: if your college student has job, you may wish to allow one credit card with a low credit limit that can be repaid steadily. This will allow your student to build a solid history of payment without the risk of racking up too much debt.

Don't take on excessive student loans - student loans can quickly add up over the course of a four-year degree. While they can be necessary to cover such things as books, food, clothing, and school supplies, student loans should not be used to finance excessive or frivolous spending. Some students have a problem with understanding that student loans will have to be repaid; you can help your student to understand the impact of future interest rates and the cost that they will pay if you clearly outline exactly how much interest will be paid back with each loan compared with the amount of money they are receiving now.

Encourage budgeting - help your college student create a budget and stick to it. By providing clearly defined guidelines and goals, you can help your college student avoid the path of problem credit. Unless it's an emergency, don't bale your student out if he or she goes over budget. By having to confront the negative consequences of financial irresponsibility, your student will learn the importance of keeping within proper financial guidelines.

But what to do if credit is already a problem for your college student? Credit repair services may be able to help your student if the debt is severe. However, you should not let these problems linger as having problem credit early on can make employment opportunities more difficult to come by. Problem credit can also have an adverse effect on some insurance rates, so be certain to handle the problem as soon as you are made aware of it. The earlier these types of problems are taking care of, the better your student's chances of having an excellent credit rating when the time comes to make a major purchase such as a car or home. It's never too soon to learn the value of good credit and financial responsibility. If you help your student learn the proper role of credit and how to manage spending wisely, you are setting him down the path to financial success and stability.

"Re-aging" Debts and Illegal Debt Collection Practices

2008-08-27T23:31:00.004-04:00

What does it mean when a debt is re-aged? For credit reporting purposes, a debt is considered re-aged when the date of delinquency is moved forward. For example, a debt that was originally past-due in August 2006 may be "re-aged" to show that it was originally past-due in August of 2007, or even later. Your original creditor may do this as a part of a mutual agreement – if you had problems paying your bills in the past, but have worked out an arrangement for payment that allows you to avoid a charge-off. This type of re-aging is perfectly legal and can even be in your benefit if you are able to make the payments per the arrangement agreed upon.

However, there is another type of "re-aged" debt. When your past-due bills are charged-off by the original creditor, they are oftentimes sold to collection agencies. These agencies pay mere pennies on the dollar to acquire these debts, and then attempt to collect and make a profit. Sometimes, unscrupulous collection agencies will "re-age" this newly purchased debt. This is a major problem for two reasons:

1. It makes the debt look like a new debt that is delinquent, rather than the same old debt, owned by a new creditor.
2. It gives the collection company additional time to attempt to collect the debt, even if the debt is too old to legally collect.

The additional delinquency will cause your credit score to take another hit, and the revised delinquency date gives the credit agency a longer time to pursue the debt. While this type of "re-aging" is illegal, there is no simple way for the average consumer to get immediate relief from this type of unfair practice. In order to dispute re-aged debt, the consumer has to carefully document the discrepancy and file a complaint with the FTC. If the collection agency states that the falsely re-aged debt is legitimate, you may be able to sue.

Unfortunately, if you've made a payment on one of these "re-aged" debts, it can be almost impossible to have the matter corrected, as the payment serves to renew the time that the debt remains on your credit report! This means a payment to a collection agency can leave you with a delinquent debt that cannot be removed for another 7 to 10 years if it is not paid off.

Unscrupulous practices like these are why it is so important to carefully monitor your credit report, and to avoid dealing with any collection agency that uses high-pressure, unfair tactics to try to get you to pay. Most importantly, if the debt in question is too old to collect based upon the laws of your state, do not offer to pay! It is in your best interests to state that the debt is past the statute of limitations for collections and to send a certified "cease and desist" letter to any agency attempting to collect. Don’t let "re-aged" debt ruin your credit score or your chances for good credit.

Deleting a Charge-Off from Your Credit Report

2008-08-06T14:05:00.003-04:00

“How can I get a charge-off deleted from my credit report?” is one of the most frequently asked questions at the credit repair forum - and for good reason. Credit report charge offs can linger on your report and damage your credit scores for 7 years. It seems like an awfully long time to pay for a single slip up, but having just one charge off on your credit report can prevent you from getting a mortgage in some cases. If you are fortunate enough to be approved for a home loan, high interest rates could end up costing you $100,000 or more over your life time, depending on the house you choose.

What most people don’t understand is that credit reporting is voluntary. Your creditors don’t have to report your accounts to the credit bureaus. In fact, they can even pick and choose which ones they report to! Your creditors can also delete a charge off that they have reported if they wanted to. In fact, before you ever agree to pay a charge off, you should ask for the creditor to delete the reported charge off in exchange for your payment. Always get it in writing.

The problem with the “pay for delete” theory is that most creditors and collection agencies will blatantly lie to you and say that once it’s been reported they can’t remove it. This is obviously a lie because thousands of charge offs get removed on a daily basis.

If you have already paid the charge off, perhaps you could send the creditor a good will letter or make a call and simply ask them to delete it for you. Chances are they won’t (because the employees are told they can’t) but, it’s worth a try.

Another way, and perhaps the most effective way, is to dispute the charge off with the credit bureaus. There are right ways to do it and wrong ways to do it. In fact, some of the wrong ways can basically ensure that it stays on for 7 years. That is why I recommend letting a credit repair service do it for you; because they know what they’re doing! However, for the do-it-yourselfer's, I do teach people how to write credit repair letters at the forum. The biggest mistake you can make is just jumping into it. Do your homework, put in your time and repair your credit.

What is the Fair Credit Reporting Act?

2008-07-05T17:35:00.003-04:00

Simply put, the Fair Credit Reporting Act (FCRA) is the federal law that governs credit reporting. The FCRA is enforced by the Federal Trade Commission. It was designed to protect consumers regarding the use, accuracy and privacy of consumer credit reports. The law was originally passed in 1970 to ensure that consumers have access to information being reported about them by the credit bureaus. It gave consumers the right to see the exact information that creditors, insurers and employers use to make decisions about providing credit and other services.

Amendments

Amendments to the FCRA were passed in 1996 to provide new consumer rights to improve the accuracy of credit reports. Another amendment was made in 2003, called the Fair and Accurate Credit Transactions Act (FACTA). Under FACTA, consumers are able to receive one free credit report a year.

Consumer Reporting Agency Guidelines

FACTA also gave the consumer reporting agencies (CRAs) new guidelines, including the following:

1. CRAs must take steps to verify the accuracy of information disputed by a consumer.

2. If negative information is removed as a result of a consumer's dispute, it may not be reinserted without notifying the consumer within 5 days, in writing.

3. CRAs may not report negative information for an excessive period. Most negative items must be removed within 7 years from the date of delinquency with exceptions to bankruptcies (10 years) and tax liens (7 years from the time they are paid).

Creditor Guidelines

Creditors and other information furnishers were also given new guidelines:

1. They must provide complete and accurate information to the CRAs.

2. They must to investigate disputed information by consumers.

3. They must inform consumers about negative information which has been or is about to be placed on a consumer's credit report within 30 days.

Users of Information Guidelines

Users of consumer information for credit, insurance, or employment purposes (including background checks) also have guidelines in which they must follow under the FCRA:

1. Users must notify the consumer when an adverse action is taken on the basis of such reports.

2. They must identify the company that provided the report, so that the accuracy of the report may be verified or contested by the consumer.

Civil Liability for Violations of the FCRA

A consumer may seek a maximum of $1,000 in statutory damages, plus actual damages, punitive damages and reasonable attorney's fees and costs for willful noncompliance of the FCRA. If you believe your rights are being violated you may consult with an attorney and file suit in state or federal court.

Legal Credit Repair vs. Illegal Credit Repair

2008-06-04T03:36:00.016-04:00

When it comes to credit repair, the law is on your side. The laws created by the FTC on credit repair are to protect you from the credit reporting agencies, collection agencies and credit repair companies. Legal credit repair methods are not only smarter (because you won’t end up in jail), but they are also less expensive.

Most unlawful credit repair companies have been taken down by the FTC; however there are still some in operation. If you are would like to repair your credit, it’s important that you don’t get lured in by illegal tactics and fraudulent companies. If you follow illegal advice and commit fraud, you may be subject to prosecution. Below is a list of illegal credit repair techniques to look out for:

Illegal Credit Repair Tactics

Changing your social security number or starting a “new” credit file. Some companies will offer to teach you how to start a new credit file by applying for an Employer Identification Number to use instead of your Social Security number. Avoid and report such companies.

Companies that ask you to pay for credit repair services before they provide any services.

Companies that don’t tell you your legal rights and what you can do by yourself for free.

Remember, it is also illegal to try to obtain credit by lying or making false statements on an application.

Now that you know what to avoid, let’s look at some of the things you can do to repair your credit.

Legal Credit Repair Tactics

Dispute erroneous information on your credit report. Not only is it legal, it’s your federal right. The Fair Credit Reporting Act gives you the right to dispute items on your credit reports directly with the credit bureaus. The burden of proof is on the credit bureaus. If they can’t verify that information is correct, then it must be deleted.

Debt validation is a tactic that’s used when dealing with collection accounts. The FDCPA gives you the right to demand that collection agencies validate any debts that they are trying to collect on.

Negotiating directly with creditors is a tactic that is sometimes used to ask the creditors politely to remove the negative items from your credit report.

If you would like to have professionals repair your credit, check out the top legal credit repair services. If you prefer to do-it-yourself, the credit repair forums are a great place to start!

Stop Debt Collector Harassment Dead in Its Tracks!

2008-05-07T21:53:00.012-04:00

If you are being harassed by lowly debt collectors, there are ways to stop them cold! You have legal rights and you do not have to endure any type of degrading treatment from these leeches of society. It's not bad enough to them that you are obviously experiencing some financial difficulties; they need to accentuate the problem - it's just in their bloodlines. Check out the following tips to stop debt collector harassment quickly.

Under the Fair Debt Collection Practices Act (FDCPA), debt collectors have their boundaries explained to them. You can use these guidelines to understand what they are allowed to do and what they are not. You should also download a free copy of your credit rights from the Federal Trade Commission's website. Alternatively, you can call 617-542-9595 (National Consumer Law Center) and request a copy of "What You Should Know about Debt Collection".

After you educate yourself about the debt collection realm, you can start ridding your life of any debt collector that has been bothering you. The first thing to do is to record your conversations. Tell the collector that you need a minute to get your recorder turned on. Flick the switch into the microphone of your telephone so that they can hear it. This alone will put you on a whole new level of conversation. Suddenly, they won't feel so brave with their disrespect and lacking professionalism. A tape recorder will definitely put any debt collector in check.

Keep excellent records of your phone conversations with debt collectors. Ask for their names. Write down the times of the calls. Write down the dates. If you are not recording the conversation, take accurate notes of what is said.

If you enter into any payment agreement with a debt collector, tell him that you will be happy to stick to it as soon as you receive it in writing - no other way. If you fail to get your deal in writing, you really have no deal at all. Avoid talking to them on the phone.

Send a letter to the collection agency outlining your understanding of the deal that has been made with the debt collector. Send it to them certified with a reception receipt requested. Show them that you are paying attention and demand professional courtesy and respect. Make sure to keep the copies and receipts in your records.

Add the following if you pay by check: "Cashing this check constitutes payment in full." Write this right on the check itself.

Request that the negative item be removed from your credit report. At a minimum, ensure that the item will be marked as "Paid in full" and not left as unpaid. Again, get everything in writing.

Never let yourself be bullied or rushed. Debt collectors will pressure you greatly to act immediately to remit payment. Tell them no - not until you have everything that has been agreed to in writing. Again, avoid talking to them on the phone altogether. The best way to communicate with them is in writing.

You can stop debt collectors from harassing you and make them show proper respect and professionalism!

Do-It-Yourself Credit Repair

2008-04-21T07:40:00.005-04:00

Having bad credit in the US is a nightmare. There are do-it-yourself credit repair tips that can help to restore your credit rating to a level that you can be proud of. Our journeys through life sometimes lead us into difficult times. It is not very hard to get behind. Once that happens and your credit rating drops, it will take some time and effort to get it back up. Don't let it get to you though, you can do it. Here are some do-it-yourself credit repair tips to help you along:

Tip #1: Know what you're dealing with. If you want to restore your credit to a given level, you have to know where to start from. You are entitled to a free copy of your credit report once every year from each of the 3 major credit reporting agencies, but if you're looking to do some credit repair, you should purchase them from each credit bureau separately.

Tip #2: Once you know what you are dealing with, you can begin your credit repair efforts. Do-it-yourself credit repair is all about having negative items removed or updated to a positive account. Even if the accounts are "really yours", they must be removed if they are not verified within a reasonable amount of time - normally 30 to 45 days.

It's important to go through your report and dispute negative items in the correct order. Your first letter should be disputing any contact information that is not current. In your second letter, you can start disputing the negative accounts. It's not wise to dispute more than 5 accounts at the same time.

It's up to the credit reporting agency to investigate the information at this point. They do so by contacting the originator of the negative complaint. If that individual or organization does not respond and verify the item in time, the law states that it is to be immediately stricken from your report. Additionally, there is a statute of limitations on almost all credit report items. They are automatically to fall off after a given time period. Check for them and inform the CRAs of any discrepancies.

Tip #3: You need to keep good records. You want to always be a thorn in the side of these reporting agencies. Clerical errors, human laziness, company mergers and bad record keeping are but a few of the reasons why your negative items may not be verified in a timely fashion. This is what you want to happen! Also, send in your dispute forms at the busiest times of the year like major holidays and the peak of tax season.

Tip #4: After you send in the dispute letters, go about your business and make sure that you are not creating any more negative issues concerning your credit. Make your payments on time - every time. After 30 days, the credit bureaus should have sent you another copy of your credit report. They don’t always do this. If not, you may need to call them or write them and request it. Go over it again and check to see if every dispute that you filed has either been removed or verified. The statistics say that around 40% will have disappeared. That's great! Sometimes, it's a lot higher.

Do-it-yourself credit repair is a simplistic endeavor. It only requires organization and a plan. With some attention to detail and patience, your do-it-yourself credit repair efforts will save you thousands of dollars as compared to hiring the services to be done for you. Your credit rating will be enhanced and your life will begin to flow smoother. When it comes to repairing your credit, do it yourself!

How to Stop Collection Agencies

2008-04-18T03:38:00.005-04:00

You can stop collection agencies from contacting you in a number of ways. There is a federal law called the Fair Debt Collection Practices Act (FDCPA) and you can use what it states to cease any efforts of collection agencies to collect any monies from you. It's true! Remember, this applies only to collection agencies - not creditors who may employ them. If you feel that you are being harassed, then you should definitely utilize any or all of the following methods:

Method 1: The prevention of delinquency.

Creditors will either turn over delinquent accounts to a collection agency or they will have an in-house collection department. Either way, they will not simply forget about the debt. The best way to avoid collection attempts is to not become delinquent in your payment responsibilities. A lot of misplaced anger results from people who would have no problems were they just to pay on time and protect their credit to begin with.

Method 2: Write a cease letter.

Federal law requires collection agencies to stop their attempts to collect a given debt if they receive a written cease letter. There are many online to use as samples. Basically, they simply state that you wish for their organization to stop any type of attempts to collect from you. You further state that you will deal only with the creditor that you owe the debt to.

Method 3: Attorney cease letters.

If your personally written cease letter fails to be effective in stopping a collection agency's attempts to settle debts with you, a letter written from an attorney will normally do the trick. Federal law requires collection agencies to cease contact with any consumer when that consumer is known to be represented by an attorney.

Method 4: You can work out an agreement to pay with the collection agency.

You can certainly stop a collection agency from calling you by agreeing to pay. That's what they're really after anyway. Aggressive debt collectors are paid based on what they collect in a given time period. They become more zealous about their endeavors to collect when they believe that you are simply ignoring them. If you talk with them in a professional manner and come to terms for repayment, they will be much more polite. Remember, if you strike a deal with a debt collector; tell them you will not pay anything until you receive the deal in writing.

Method 5: Bankruptcy.

There is an automatic stay on collection attempts that goes into effect when you file for personal bankruptcy. In order for any debt collector to further attempt debt collection, he or she must obtain specific permission from a bankruptcy court. This is a rare occurrence. Also, bankruptcy courts will never grant this permission to anyone attempting to collect unsecured debts from you. As you know, bankruptcy is a most serious act. It should be reserved for use only in cases of severe financial turmoil.

You do not have to suffer the harassment of collection agencies anymore. You can stop collection agencies from contacting you and disturbing your quietude. Utilize the above methods to stop collection agencies today!

Is Credit Repair Affordable?

2008-03-21T00:54:00.004-04:00

Let’s play a game. It’s called "Which is More Expensive?"

Here’s how it works: I give you 2 things and you tell me which one of the 2 is more expensive. Ready? Go!

1. Buying your favorite magazine every month at Barnes & Nobles.

2. Getting a 1 year subscription to that same magazine.

Did you answer #1? If you did, you’d be correct. #1 is obviously more expensive. Getting a subscription can save you lots of money.

One of my favorite magazines is Men’s Health. It’s $4.50 an issue at the newsstand. A 1 year subscription (10 issues) is $19.97.

Let’s do some real quick math:

10 x $4.50 = $45.00
$45.00 - $19.97 = $25.03

That means if I get the subscription I save $25.03 a year!

Ok, that was a no-brainer. Here’s another one:

1. Having a credit repair service fix your credit for about $500. Then, enjoying a low interest rate of 6% on a 30 year mortgage.

2. Save the $500 by not repairing your credit. Then, get a sub prime mortgage with an interest rate of 8%. (You may pay much higher, but let’s just use 8% as an example.)

#2 would be much more expensive. Hopefully you chose to hire a credit repair service. If you’re purchasing a $100,000 house and paying 6% interest; according to my mortgage calculator you're monthly payment would be $599.55. If you purchase the same home at an 8% rate you're monthly payment would be $733.76.

Let’s do some real quick math.

$733.76 - $599.55 = $134.21

You’d be paying $134.21 more every month. Multiply that times 12 and you’re paying $1610.52 more per year.

Multiply that again times 30 for the life of your mortgage and now you’re paying $48,315.60 more than your neighbor paid after 30 years for the EXACT SAME HOUSE.

So, which is smarter? All of the sudden paying $500 to get your credit repaired seems quite affordable, doesn't it?

By playing my little game, hopefully you were able to see my point. By even paying .25% more in interest on such a major purchase, you're really throwing a lot of money away. When you up that by 2-4 percentage points, it's disastrous.

This is just one example of what bad credit will cost you. Don’t forget about cars, credit cards, cell phones, jobs, insurance rates and everything else.

I hear it everyday, "I can’t afford that kind of money to get my credit repaired!"

Here's the truth: If you have bad credit or even mediocre credit, you can’t afford NOT to get your credit repaired.

STOP paying higher interest rates and start reaping the benefits of a good credit score. For a one time set up fee of $99 and as low as $39/month, Lexington Law Firm will work to increase your credit score by removing negative items from your credit history.

How to Repair Your Credit

2008-03-06T13:08:00.005-05:00

No matter how bad your credit situation is there are always steps you can take to make it better. Everyone’s situation is unique, so what might be the best thing for you right now, may not be the best thing for someone else.

To repair your bad credit, you must find a starting point. The best way to do that is to obtain a copy of your credit reports from the 3 major credit reporting agencies, also known as credit bureaus. You will also need to know what your credit scores are.

Once you have your reports, you’ll want to make sure all the information is accurate. There are mistakes in about 80% of all credit reports. If you find any accounts that you are unfamiliar with or are reporting incorrectly you should dispute them with the credit bureaus. Creditors are notorious for reporting erroneous information on your credit reports. So, even if it’s just a small error; that gives you the right to dispute it. It’s important to note that whether the account is actually yours or not makes no difference on their responsibility to verify it. If the account can’t be verified, it must be deleted.

The credit bureaus get thousands of disputes each day and many times they don’t do a very careful job of investigating items you’ve disputed. So, it may take a few rounds of letters until the credit bureaus remove the negative information. Be patient and wait at least 30-35 days before sending another round. Do not give up. It may seem like just one or two small errors that they are falsely reporting about you – no big deal, right? Wrong! Just one error can cause your credit scores to suffer immensely and could end up costing you thousands of dollars. This is very serious business. It’s extremely important to make sure everything on your credit reports is being reported correctly.

Another thing you should do is pay off the most recent past due accounts. Be careful making payments on older charged off accounts as paying them could possibly bring your scores down even further which means they can report the negative account for 7 more years. You will also want to try to get an agreement with the creditor to update it to “paid as agreed” or remove the account BEFORE you pay it. It’s much harder to get it updated or removed after you pay it because you don’t have much leverage.

Another important part of raising your credit scores is to keep your existing balances below 30-40% of your credit limit. You’ll also want to minimize the number of inquiries you make by not applying for credit unless you absolutely must. Use your inquiries wisely and sparingly, as applying for too much credit in a short amount of time can be very damaging to your credit scores.

Don't have time to repair your credit? Let the professionals at Lexington Law Firm take care of it for you. They delete all kinds of negative credit including bankruptcies, foreclosures, repossessions, charge offs, judgments, tax liens, collections, and more.

Charge Offs and Bad Debts

2008-02-29T11:40:00.002-05:00

Did you know that having just one charge off on your credit report can keep you from being approved for credit? Creditors see a charge off as a sign that you have not been responsible with your finances in the past and cannot be counted on to fulfill your financial obligations in the future. Unfortunately, charge offs can be remain on your credit report up to 7 years. However, there are steps you can take to remove them.

That’s great, but what exactly is a charge off?

A charge off is basically a bad debt. When a creditor is unable to collect on an account they write it off. Creditors usually write off bad debts after a certain amount of time (usually 180 days or so without payment) for tax reasons. Every year, corporations file a Profit And Loss Statement with the Internal Revenue Service. All of the year's bad debts are added together as an item in the "Loss" section of the P & L Statement, and are deducted from the corporation's tax return, much like other business expenses. To creditors, bad debts and even fraud are simply part of the cost of doing business.

Once it’s been charged off, do I still owe it?

Of course you do. The debt is still legally valid and the creditor can attempt to collect the full amount. Most creditors will sell or assign the account to a debt collector. So, here’s what happens: The original creditor reports the account as a charge off and the collector reports it as a collection account. So, now you have 2 negative accounts on your credit report.

Ok, so what if I pay it off?

Paying off a charge off will not remove it from your credit reports. It will simply be updated to a "paid charge-off," which is slightly better, but still considered a seriously derogatory item and can still remain on your credit report for 7 years.

Yikes! So, how can I get charge offs removed?

Through creditor negotiations and credit bureau disputes, you may be able to improve the status of the charge off or completely remove it from your credit reports. In exchange for resolving the debt, your creditor may be willing to remove the account or report it as "paid in full." In the event where a charge off is being inaccurately reported on your credit reports, you can dispute it directly with the credit bureaus.

Learn more about removing charge offs!

The Real Cost of Bad Credit

2008-02-28T10:28:00.002-05:00

It’s difficult to say exactly how much it will cost you to have bad credit. Each person has a unique financial situation. Depending on how long you decide to go without repairing your credit, it could cost you literally hundreds of thousands of dollars over your life time. I think most people would agree that they work too hard to pay the banks that kind of money. Imagine what you could do with that money if you saved it or invested it instead of giving it to the banks in the form or late fees and high interest rates.

Doesn’t it make you sick to think about how much money you’ve already thrown away? It made me sick. So, I finally decided to do something about it. I finally realized that by cleaning up my credit and managing my money instead of letting it manage me, I didn’t have to live like that anymore.

I realized that I hadn’t been taught how to manage money correctly. I hadn’t been taught how the credit game works. We just weren't really taught that in school. So, I decided to teach myself about money management and personal finance. It’s one of the smartest things I’ve ever done.

I no longer pay twice as much for things. I no longer worry about whether I’m going to get approved or not. I no longer worry about whether I’m going to have enough to pay my bills. I no longer have these issues. I have piece of mind because I’m responsible with my money and I have control over it. It no longer controls me.

If you are not at that point yet, I really hope that you get there. It's not just about money. It's about time. Your time is precious. Stop living and thinking like a slave. To have financial freedom, you need to change your whole mindset. You need to learn how to repair your credit and how to manage your money. Then, you need to pass that knowledge down to your loved ones. It’s one of the best gifts you can ever give. Get started today.

If you're ready to start living and stop worrying, let the professionals at Lexington Law Firm help you remove negative items from your credit reports.

What is a FICO Score?

2008-02-13T04:57:00.002-05:00

To answer this question, let’s start off by revealing what the acronym stands for. FICO stands for Fair Isaac Corporation. Fair Isaac was founded in 1956 by engineer Bill Fair and mathematician Earl Isaac. They developed the FICO scores, a measure of credit risk, that are the most used credit scores in the world. In fact, according to MyFICO.com, 90% of the largest U.S. banks use FICO scores.

FICO scores are available through all of the major credit bureaus in the United States including Equifax, Experian, and TransUnion. You can also get your scores directly at MyFICO.com. It’s important to note that the credit bureaus and many other credit monitoring companies also offer you their version of your credit score based on information from your credit reports, but these scores are NOT the same as your FICO scores and usually not the same scores your lenders will use. These scores are what are commonly known as FAKO scores and are more often than not, way off from your actual FICO score.

FICO scores can range from 300 to 850, but the majority of scores usually fall within the 600s and 700s. MyFICO.com reports that they are the only site offering all 3 of your FICO scores and the median FICO score in the U.S. is 723.

The exact scoring formula of FICO is kept very secretive, but they do tell us this:

Credit scores are calculated based on your rating in five general categories:

35% - Payment history
30% - Amounts owed
15% - Length of credit history
10% - New credit
10% - Types of credit used

Higher scores mean lower interest rates. If you’ve been declined for a loan, chances are lender has made their decision based on your credit scores. You can increase your FICO scores by removing bad credit and adding good credit to your credit. Learn how you can remove late payments, collections, charge-offs, bankruptcies, foreclosures, repossessions, judgments, and tax liens on your credit report to improve your chances at getting a loan.

Credit Repair - Take a Stand

2008-02-09T16:44:00.001-05:00

Are you there yet? Have you gotten to that point? Are you sick and tired of paying high interest fees? Are you sick and tired of being declined and embarrassed every time you apply for a loan? Don’t you think it’s time to take a stand?

When you finally get to that point, then you’re ready. But, until you get there, you’re probably not going to take action. If you’re not there yet, you might as well stop reading this.

But, if you are ready, then it’s time to start on your journey to financial peace and good credit. And once you get there, never go back. You work just as hard as the next guy. So, why should you have to pay more on a loan than he does? Don’t you think you’ve paid the banks enough money? The banks have plenty of money. Quit paying them more than you have to!

If you are sick and tired of living paycheck to paycheck and always begging the lenders to give you crappy loans then I want you to say this out loud right now:

“I’m done. I’m done living like a broke fool and I’m taking a stand RIGHT NOW. I will not let the banks make me their slave any longer.” Then, you’re going to take action, RIGHT NOW. Here’s what you’re going to do:

1. Get your credit repaired. Sign up with Lexington Law Firm and get it repaired NOW. Let the professionals clean up your credit for you. It’s very affordable.

2. Never let your credit get that bad again. Learn how the credit game works and promise yourself that you will never find yourself in that hole again.

3. Live below your means. That doesn’t sound fun, does it? Well, neither does being broke and being a slave to your lenders. Start living on a budget. Control your money so that it doesn’t control you. You know which spending habits you need to change. Change them. It’s time RIGHT NOW.

4. Pay off your debts and start saving money. If you're not sure how, check out Dave Ramsey's Financial Peace.

5. Help your family and friends. Help them realize what’s going on. Show them that they don’t have to be miserable and live like everyone else. They can break free from their chains too. Show them how.

Dave Ramsey, one of my favorite financial experts, says it like this: “If you want to be rich, look around and see what rich people are doing and do rich people stuff.” Rich people don’t pay high interest fees. If you keep doing what poor people do, you’re going to stay poor. You don’t have to. Take action and take advantage of all that life has to offer!

Top 10 Credit Repair Myths

2008-02-04T20:20:00.001-05:00

With so much misinformation being spread about consumer credit repair, I’ve decided to take it upon myself to list the top 10 lies, myths, and fallacies about credit repair. All myths have been researched, but as always, I encourage you to research them for yourself. The truth is out there; seek and ye shall find. Here we go:

Myth #1: Credit repair is illegal.

The Truth: Credit repair is not only legal, but protected by federal laws such as the FCRA and FDCPA. However, creating a new credit file and/or new identity is illegal.

Myth #2: Credit repair doesn’t work.

The Truth: The credit repair agency that I regularly refer clients to has helped over 400,000 clients improve their credit since 1991. That’s just one company. Thousands more have gotten great results by doing it on their own.

Myth #3: You can only dispute negative items on your credit report if you think they are not yours.

The Truth: You can dispute any negative account on your credit report that you want. Whether the account is "really" yours or not has no bearing on the consumer reporting agencies responsibility to verify it. Under the Fair Credit Reporting Act, the only information that can remain on your credit report is not what is accurate, but what can be proven as accurate. If it can't be proven and verified then it must be removed.

Myth #4: The consumer reporting agencies are non-profit, government agencies.

The Truth: CRAs are privately owned, for-profit corporations.

Myth #5: Credit repair agencies are all scams.

The Truth: The FTC has been coming down hard on all credit repair agencies that don’t abide by the Credit Repair Organizations Act. Most of the scam artists are gone and most of the credit repair companies that exist nowadays are not scams.

Myth #6: A credit counseling service can help me restore my credit rating.

The Truth: Whoa is this one ever a lie! Credit counselors work with your creditors, to help them get their money from you destroying your credit in the process.

Myth #7: After a major financial plunge like bankruptcy, foreclosure or repossession, I won’t be able to get credit for 7-10 years.

The Truth: You can start enjoying good credit almost immediately after such an event if you start repairing and rebuilding your credit right away.

Myth #8: Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost.

The Truth: Ok, this one isn’t really a myth. It’s true…kind of. You see, the credit bureaus will try to make it as hard as possible for you to repair your credit. They have many tactics that they use to discourage consumers from contacting them. Most consumers get frustrated and give up because of the obstacles put before them by the credit bureaus.

The credit bureaus consistently violate consumer’s federal rights and constantly get sued for doing so. Credit repair agencies have been dealing with them for years and they know how to play the game. They know what works and they know when your federal rights have been violated. Many of them will help you seek litigation or refer you to an attorney if and when it comes down to that.

Myth #9: You have to hire a credit repair agency or lawyer to fix your credit.

The Truth: As mentioned above, there are benefits to hiring a credit repair agency. However, if you are willing to put in the time to learn how to do it on your own, you don’t need to hire anyone. There are many credit repair communities online that are willing to help you out and share methods with you for free.

Myth #10: Pulling your own credit report will count as an inquiry and hurt your credit scores.

The Truth: You can pull your own credit as many times as you want – if you are not applying for a loan. It’s considered a soft pull and does not count as an inquiry towards your scores. However, if you have a lender pull it for you, that does count as a hard inquiry and will make your scores drop.

Top 5 Credit Repair Tips to Increase Your Credit Scores

2008-01-25T15:21:00.001-05:00

Having good credit is very important in today’s culture. We now live in a world where credit determines how much interest you’ll pay on your house, car, boat etc. Your credit scores are used by landlords, employers and insurance companies to determine whether or not you get an apartment, a job and what your insurance rates will be. It can also mean the difference between having to pay no deposit for a cell phone (or other utility) and having to deposit $500 or more.

Which side of the fence do you want to be on? Do you want to go through life with good credit or bad credit? The decision really is up to you. Below are some top credit repair tips for consumers with credit problems.

1. Become familiar with the Fair Credit Reporting Act.

Right off the bat, let’s start with one of the best tips I could ever give you. It doesn’t sound like much fun especially when you see it on paper, but it really is very important and it won’t take that long. I’m not saying you need to read all of the technical legalese from top to bottom, but get familiar with what the FCRA is all about.

2. Any information can be disputed on your credit report.

I don’t know how else to put this: ANYTHING on your credit report can be disputed – personal information, public records, accounts, inquiries...ANYTHING!

3. Credit repair is a process.

If you have 20 negative accounts reporting on each credit report, do NOT dispute every single account. Credit repair is a process, not a one time deal. The credit bureaus are more likely to label your dispute as frivolous if you trying disputing that many items. Dispute no more than 3-5 accounts at a time.

4. Keep your dispute letters simple.

Unfortunately, many amateurs on the net are giving people long, drawn out, unnecessary "sample letters". Sample letters are fine, but it’s unnecessary to mention laws, procedures, court rulings, or threaten law suits, etc. The credit bureaus know the law. There is no need to be condescending or act like you are a professional. That won’t get you very far.

Simply dispute the accounts you would like to have removed or updated. If your letter is confusing, it will more than likely get returned or thrown away. There is also no need to tell them your life story or why you were late or why it should be removed. They do NOT care. Keep it short and simple!

5. Procedural Request - Ask for Method of Verification.

So, after you’re first dispute you got a few accounts deleted – that’s great! But, what about the ones that came back as "verified"?

Send them a procedural request. If you request it, the credit bureaus are obligated by law to provide you with the method the creditors used to verify the information that they are reporting on your credit report. By requesting this information, you are forcing the credit bureaus to actually provide you with what they received from the creditor as valid proof. If the creditor replied to your dispute stating that the account should remain on your credit report, they need to have proof. The creditor rarely provides the credit bureaus with this information. So, when you do this you are putting pressure on them to either "prove it or remove it".

Keep records of everything the credit bureaus and your creditors send you in case you should ever after to sue them for violating your federal rights.

Credit Report Repair

2008-01-10T22:37:00.004-05:00

Credit report repair is typically referred to as the process of disputing credit history items disclosed in a credit report. Under the Fair Credit Reporting Act, consumers have the right to request an investigation with the credit bureaus for any item on their credit report. The credit bureaus and the original furnisher of the information must investigate the claim within 30 days and report their results back to consumers.

Consumers may also submit statements explaining why they received certain negative credit marks. Congress passed amendments to the FCRA that went into effect in October of 1997 which improved consumers' privacy rights and further protected the accuracy of credit report information. For example, the revision made it a civil law violation for someone to obtain a consumer report without a permissible purpose. The amendments also state that when a consumer disputes information, the consumer reporting agency and the original furnisher of the information must investigate the claim.

The FCRA also states that a consumer can make a legal claim against, and sue the credit bureaus, creditors and debt collectors who report erroneous information. The Fair Credit Reporting Act offers specific consumer protections for people that are victims of identity theft. The law also allows you to request a reinvestigation of information in your file that you dispute as inaccurate or incomplete.

Everything on a credit report can be disputed, including bankruptcies, charge-offs, collections, foreclosures, judgments, late payments, repossessions and tax liens. Consumers should also look for incorrect personal information such as incorrect names, birth dates, addresses, former addresses, social security numbers, aliases, spouses name, etc.

Even though the FCRA is enforced by the Federal Trade Commission, the credit bureaus and some exploitative creditors still try to make credit report repair complicated and difficult. The process of credit report repair can be a difficult and frustrating experience for many consumers. If you decide to dispute items on your credit report please take the time to learn the relevant consumer protection statutes.

I strongly recommend that every consumer thoroughly read over and get a basic understanding of the Fair Credit Reporting Act (FCRA), the Fair and Accurate Credit Transaction Act of 2003 (FACTA) and the Fair Debt Collection Practices Act. You should also get familiar with your state’s collection laws.

Credit Repair After Bankruptcy

2008-01-05T23:03:00.005-05:00

Many consumers believe that after filing bankruptcy their financial lives are ruined. One of the biggest myths about bankruptcy is that you can’t get credit for 10 years. The truth is the bankruptcy will generally stay on your credit report for 10 years (unless you are able to get it removed) but you will still be able to start rebuilding your credit immediately.

You can dispute a bankruptcy on your credit report the same way you can any other listing. If you are fortunate enough to get the bankruptcy removed, you will be able to start repairing your credit much easier. However, if you don’t change your spending habits and make some lifestyle changes, removing your bankruptcy will only delay your financial misery and you will be back where you started.

Learning from your mistakes and living below your means is the only way you will ever attain financial peace. Learn how to make a budget and stick with it. You should probably only get a couple credit cards strictly to rebuild credit. Discipline yourself to use them for nothing but credit rebuilding.

When you are ready to start rebuilding your credit (which should be immediately) you will need to start small. Don’t expect lenders to give your high credit limits right away. You may have to start off with unsecured credit cards with high interest rates. That’s why I suggest keeping a balance of only $50-$100 and ONLY using these credit cards to rebuild your credit.

While you are adding positive trade lines, it is important to also try to remove bad credit from your credit report. If you use both methods correctly, you should have respectable credit scores within 6 months to a year. At that time, you will be able to get better interest rates and should consider transferring any balances from the high interest cards to the new lower interest cards. Just remember, the best thing you can do for your financial future is learn how and why you got yourself into this situation and how you're going to avoid it from happening again.

Visit the Credit Repair Forum!

2007-12-30T00:07:00.003-05:00

Have you been to the credit repair forum yet? If not, you’re missing out! You can find tons of free information and meet a lot of great people who have experienced the same situations as you. AAACreditGuide.com has one of the best credit repair forums on the net! We discuss pretty much everything having to do with credit and personal finance. Some of the topics are:

Credit Repair – Here we discuss late payments, charge-offs, repossessions and inquiries on your credit report. We also talk about issues with the credit bureaus.

Collection Agencies – An excellent place to ask questions and get answers about collection accounts and debt collectors.

Public Records – The public records area is for discussion about foreclosures, judgments, tax liens and other records that can damage your credit reports.

Mortgage – Everything having to do with mortgages, refinancing, interest rates, adjustable rates, etc. gets discussed here.

Auto Financing – Learn about buying and leasing cars, motorcycles, trucks and every other kind of automobile financing at the auto financing forum.

Bankruptcy – At the bankruptcy forum, everything from bankruptcy alternatives to how to repair your credit after bankruptcy can be found here.

Student Loans – Lots of great questions and answers about Stafford Loans, scholarships, grants, student loan consolidation and so on.

Money Management – Personal finance, setting up a budget, debt elimination and all that good stuff you can find in the money management area.

Off-Topic Lounge – When you get sick of discussing finances or have something else on your mind, take a break in the off-topic lounge.

You can really get some great advice at the Credit Repair Forum. Feel free to jump right in and don’t be afraid to ask questions! See you there!

Choosing a Credit Repair Company

2007-12-19T18:31:00.004-05:00

Finding the right credit repair company can be a big decision for anyone with bad credit. Choosing the right one could end up being one of the best things you can do for your financial future. Repairing your credit scores can help you qualify for lower interest rates and increase your financial options.

A typical credit repair service usually charges a few hundred dollars and takes about 6 months to repair your credit. It usually depends on how bad your credit is. Some clients can be finished within a month or two and will pay considerably less. Others can take over a year and cost more than a thousand dollars. Most credit repair companies have a one-time set up fee and then low monthly payments. It is in violation of the Credit Repair Organizations Act to charge the full amount before they provide any services.

Unfortunately, the credit repair industry has received a bad reputation because of the publicity given to credit repair scams. While fraudulent credit repair firms tend to be shut down quickly, it is still in your best interest to learn how to identify the differences between a legitimate credit repair service and a credit repair scam.

Some warning signs to look out for:

The company wants you to pay for credit repair services before they provide any services.

They don’t tell you your legal rights and what you can do for yourself for free.

They suggest that you try to invent a “new” credit identity and a new credit report by applying for an Employer Identification Number to use instead of your Social Security number. This is highly illegal. If you follow illegal advice and commit fraud, you may be subject to prosecution.

You should also research a credit repair company at the BBB (Better Business Bureau). The BBB keeps notes on complaints made against companies. If the BBB report for a credit repair company lists multiple unresolved complaints or an overall low rating, you should be wary of the company.

Check out the Top Credit Repair Companies online.

How to Raise Your Credit Scores

2007-12-15T23:02:00.004-05:00

You can raise your credit scores by taking a close look at your credit reports and creating a plan of action to improve them. Most increases to your credit scores take place over time and require a continuing effort from you. The only quick-fixes of raising your credit scores are to pay down debt and to successfully dispute negative information on a credit report.

At the same time, you want to always pay your bills on time – that should be obvious. Late payments play a major role in driving down your credit scores. You will also want to keep your debt-to-credit-limit (or available credit) ratio as low as possible. Never let it get above 40%. If you don’t have many positive accounts reporting, you may want to open some new accounts to raise your debt to available. Try to get an unsecured credit card from your local credit union or a secured card from a legitimate site online.

Don't close unused accounts, especially if they are old and reporting positive, because zero balances can help your score. Also, don't open several new accounts in a short period, especially if your credit history is less than three years old. Too many inquiries in a short period of time can really be hurtful to your credit scores. Apply for credit wisely.

It should be mentioned though, that pulling your own credit does not harm your scores. In fact, many people think it’s wise to use a monthly credit monitoring service online to monitor your progress and make sure there are no unauthorized inquiries or new accounts showing up on your reports.

As mentioned, disputing negative accounts on your credit reports is an excellent way to raise your credit scores. All negative accounts on your credit report should be disputed to make sure they are accurate. If they are not, they must be removed. You don’t have to be dishonest when disputing accounts; the burden of proof is on the credit bureaus and the lenders. If you know that an account is yours, do not dispute it as “not mine”.

It’s their obligation by law to verify the account and show proof that every little thing they are reporting is 100% accurate. If it’s an old account and the lender no longer has the records to verify an account, guess what? It must be removed. Just remember to always be careful and honest when disputing. Unintended consequences happen quite frequently with credit bureaus. They know how to play the game and they are NOT happy about having to verify your accounts, so be smart about it or you will find yourself with even worse credit.

If you don't have time to repair your credit, why not let the professionals at Lexington Law Firm take care of it for you? Lexington deletes all kinds of negative credit including bankruptcies, foreclosures, repossessions, charge offs, judgments, tax liens, collections, and more.

Free Credit Repair Letters

2007-12-01T04:00:00.006-05:00

The best way to repair your credit is to write letters to the credit bureaus and collection agencies. These letters are commonly referred to as “Credit Repair Letters”. There are many different credit repair letters for many different situations. The most popular credit repair letters are dispute letters, debt validation letters, pay for delete letters and cease and desist letters.

Dispute Letters

Dispute letters are written to the credit bureaus to dispute an account, public record or personal information. Dispute letters are incredibly effective. There are many sample letters available on the internet; unfortunately most sites offer letters that state much more than they really need to. They quote the Fair Credit Reporting Act and other laws in hopes of “scaring the credit bureaus” into removing negative accounts. Some of the letters even make threats of litigation. All of this is unnecessary and will usually end up hurting your case more than it helps. Keep your dispute letters simple and to the point.

Debt Validation Letters

Debt Validation Letters are written to collection agencies to ask a collection agency to validate a debt. Debt validation is simply a consumer's right to challenge a debt and/or receive written verification of a debt from a debt collector under the Federal Fair Debt Collection Practices Act (FDCPA).

Pay for Delete Letters

A pay for delete letter is usually written to a debt collector in hopes of negotiating to pay on an existing account in hopes of having the account removed or updated as positive on your credit report.

Cease & Desist Letters

A cease & desist letter can be sent to anyone, usually a debt collector, to request that they immediately stop contacting you. These letters should be sent certified, return receipt so that you have proof that it was received by the collector should you ever have to provide the evidence in court if they violate your federal rights.

How to Dispute Credit Report Errors

2007-11-16T17:25:00.004-05:00

Your credit reports contain information about where you live, how you pay your bills, and any public records that you may have. Credit bureaus sell your report to creditors, insurers, employers, landlords and anyone else who will pay for it. They use this information to evaluate what kind of risk you will be for credit, insurance, employment, renting and sometimes utilities.

Most of you probably already knew that...but, did you know a study released by the U.S. Public Interest Research Group in June 2004 found that 79% of the consumer credit reports surveyed contained some kind of error or mistake. That’s right, that means about 4 out of 5 people have information on their credit reports that is erroneous! Astonishing isn’t it?

Even worse, more than 25% of credit reports have errors serious enough to result in the denial of credit or increase rates. A good score can save you $100,000 over the life of a $250,000 mortgage. So, technically, you could be paying $100,000 more on a 30 year mortgage because of MISTAKES THE CREDIT BUREAUS MADE in reporting your information!

That’s really just the beginning of the awful things that could happen to a consumer because of credit bureau’s erroneous reporting. For this reason and many others, it’s crucial that you review your credit report periodically.

To dispute these errors you must first get your credit reports. Then, you must spend some time analyzing your credit reports. Make sure that all of the information being reported is accurate. The credit bureaus must investigate the items in question within 30 days. They also must forward all relevant information you provide about the inaccuracy to the creditor that provided the information.

After the creditor receives notice of a dispute from the consumer reporting company, it must investigate, review the relevant information, and report the results back to the consumer reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file.

There are many more techniques to get inaccurate information removed from your credit reports. Stop by the credit repair forum or check out the Credit Secrets Bible to find out how you can get started repairing your credit today!

If you prefer to let professionals handle the job, give Lexington Law Firm a shot!

Identity Theft

2007-11-11T14:09:00.003-05:00

What are the steps I should take if I'm a victim of identity theft?

If you are a victim of identity theft, take the following four steps as soon as possible, and keep a record with the details of your conversations and copies of all correspondence.

1.Place a fraud alert on your credit reports, and review your credit reports.

Fraud alerts can help prevent an identity thief from opening any more accounts in your name. Contact the toll-free fraud number of any of the three consumer reporting companies below to place a fraud alert on your credit report. You only need to contact one of the three companies to place an alert. The company you call is required to contact the other two, which will place an alert on their versions of your report, too. If you do not receive a confirmation from a company, you should contact that company directly to place a fraud alert.

Equifax
P.O. Box 740241
Atlanta, GA 30374-0241
1-800-525-6285;

Experian
P.O. Box 9532
Allen, TX 75013
1-888-EXPERIAN (397-3742)

TransUnion
Fraud Victim Assistance Division
P.O. Box 6790, Fullerton
CA 92834-6790
1-800-680-7289

Once you place the fraud alert in your file, you're entitled to order one free copy of your credit report from each of the three nationwide consumer reporting companies, and, if you ask, only the last four digits of your Social Security number will appear on your credit reports. Once you get your credit reports, review them carefully. Look for inquiries from companies you haven't contacted, accounts you didn't open, and debts on your accounts that you can't explain. Check that information, like your Social Security number, address(es), name or initials, and employers are correct. If you find fraudulent or inaccurate information, get it removed. See Correcting Fraudulent Information in Credit Reports to learn how. Continue to check your credit reports periodically, especially for the first year after you discover the identity theft, to make sure no new fraudulent activity has occurred.

2. Close the accounts that you know, or believe, have been tampered with or opened fraudulently.

Call and speak with someone in the security or fraud department of each company. Follow up in writing, and include copies (NOT originals) of supporting documents. It's important to notify credit card companies and banks in writing. Send your letters by certified mail, return receipt requested, so you can document what the company received and when. Keep a file of your correspondence and enclosures.

When you open new accounts, use new Personal Identification Numbers (PINs) and passwords. Avoid using easily available information like your mother's maiden name, your birth date, the last four digits of your Social Security number or your phone number, or a series of consecutive numbers.

If the identity thief has made charges or debits on your accounts, or has fraudulently opened accounts, ask the company for the forms to dispute those transactions:

For charges and debits on existing accounts, ask the representative to send you the company's fraud dispute forms. If the company doesn't have special forms, use the sample letter to dispute the fraudulent charges or debits. In either case, write to the company at the address given for "billing inquiries," NOT the address for sending your payments.

For new unauthorized accounts, ask if the company accepts the ID Theft Affidavit (PDF, 56 KB). If not, ask the representative to send you the company's fraud dispute forms. If the company already has reported these accounts or debts on your credit report, dispute this fraudulent information. See Correcting Fraudulent Information in Credit Reports to learn how.

Once you have resolved your identity theft dispute with the company, ask for a letter stating that the company has closed the disputed accounts and has discharged the fraudulent debts. This letter is your best proof if errors relating to this account reappear on your credit report or you are contacted again about the fraudulent debt.

3. File a complaint with the Federal Trade Commission.

By sharing your identity theft complaint with the FTC, you will provide important information that can help law enforcement officials across the nation track down identity thieves and stop them. The FTC can refer victims' complaints to other government agencies and companies for further action, as well as investigate companies for violations of laws the agency enforces.

You can file a complaint with the FTC using the online complaint form; or call the FTC's Identity Theft Hotline, toll-free: 1-877-ID-THEFT (438-4338); TTY: 1-866-653-4261; or write Identity Theft Clearinghouse, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580.

Be sure to call the Hotline to update your complaint if you have any additional information or problems.

4. File a report with your local police or the police in the community where the identity theft took place.

Then, get a copy of the police report or at the very least, the number of the report. It can help you deal with creditors who need proof of the crime. If the police are reluctant to take your report, ask to file a "Miscellaneous Incidents" report, or try another jurisdiction, like your state police. You also can check with your state Attorney General's office to find out if state law requires the police to take reports for identity theft. Check the Blue Pages of your telephone directory for the phone number or check naag.org for a list of state Attorneys General.

When you go to your local police department to file a complaint, bring a printed copy of your ID Theft Complaint form and your supporting documentation. Ask the officer to attach or incorporate the Complaint into their police report. Also ask the officer to sign the “Law Enforcement Report” section of your Complaint. If the officer wants more information about the ID Theft Report, you can tell them it is available on the FTC’s Web site’s Section for Law Enforcement at the link for “Identity Theft Report”. Ask the officer to give you a copy of the official police report with your ID Theft Complaint attached or incorporated. (In some jurisdictions the officer will not be able to give you a copy of the official police report, but should be able to sign your complaint and write the police report number in the “Law Enforcement Report” section.)

The ID Theft Complaint can be used to supplement an automated police report. If you can file online an automated report, complete the “Automated Report Information” block of the ID Theft Complaint. Attach a copy of any confirmation received from the police to your ID Theft Complaint.

Soure: FTC.gov

The Truth About Consumer Credit Counseling

2007-11-03T16:41:00.002-04:00

If you are worried about your debt, credit counseling may sound like a great idea, but before you make an appointment with a credit counseling service, it’s important that you know the facts.

First of all, credit counseling companies are not regulated by the federal government. There are only 17 states that have any laws that do regulate such businesses. That pretty much means that anyone can start up a credit-counseling or debt-consolidation company. The largest credit counseling company is actually a national network of offices; member agencies typically use the trademarked name Consumer Credit Counseling Services.

Debt counselors make money by charging a small “start-up fee”, often called a "voluntary contribution". The start-up fee varies significantly. Some companies charge around $20 while others charge much as 100 percent of your first monthly payment as a start-up fee. On top of that there is a monthly “maintenance fee”, which is around $20 on average. But, here’s where it gets a little strange:

The biggest source of income for debt counseling companies comes from credit card companies themselves. Creditors kick back a percentage of each monthly payment to the debt counselor. The creditors write this off as a debt-collection fee, assuming that they are getting more money back than if the customer went bankrupt.

The most important thing to remember when signing on with a debt counseling company is that the company is playing both sides of the fence. They are in business to make money off of both you and your creditors. And the truth is, everything they do for you, you can do yourself!

The credit counseling company wants to place you in a “Debt Management Plan” so it can earn money from creditors. Credit-counseling agencies are all registered as non-profits. Don't be fooled, this does NOT mean that they are not profiting from your debt. They are basically paid by your creditors to be their debt collector.

On top of that and most importantly, your credit scores will suffer tremendously by using a debt counselor. The words "Managed by Credit Counseling Company" will appear under each account on your credit report that is involved in the Debt Management Plan and is just as damaging to your account as a “charge-off” is. Also, if you fail to make monthly payments as agreed, it gets even worse.

If you are in serious financial trouble, the best thing you can do is negotiate directly with your creditors. If your creditors won't budge during negotiations, get approved for lower interest rate cards and transfer your balances.

You may also want to check out some of the financial experts programs like Dave Ramsey’s Financial Peace or Jean Chatzky’s Pay it Down: From Debt to Wealth on $10 a Day,.