Robert's Blog

If The US Government Had A Credit Score, It Would Be A Negative Number

Robert Landreth (National Credit Management Association) — Tue, 20 Jan 2009 21:57:23 -0600

The parade is over, the speech has been given, the oath has been taken, all of the millions of pictures have been uploaded/downloaded to Facebook, and the Neighborhood ball is over…now what?

Let me start out by saying that I am proud to be an American, happy to be living in the United States of America, blessed to be married to a wonderful woman and humbled that God Almighty allowed me to wake up this morning.

Folks – we have a big problem in our great country. We are drunk on credit. Plain and simple.

Our government, more specifically our elected officials, has not been setting a good example for all of us citizens to model. Instead of being fiscally responsible, managing money correctly and behaving in a mature manner we have money being “dished out” willy-nilly, tax revenue that cannot be accounted for and elected officials being caught red-handed lying, cheating and stealing!

I am not even going to write about what is going on up on Wall Street (future article for sure).

As a parent, we are supposed to model to our children the behaviors, virtues and morals that we hope will guide them into becoming adults.

Let me ask you a question – “What are the government and our elected officials suppose to model to the citizens who elected them?”

Our government needs a nonstop 2-year group therapy session, shock treatment (for some), industrial size Prozac for others and taken out to the woodshed for the lingering attitude adjustments so sorely needed.

Why does America have the lowest savings rate in the world? Why are there so many foreclosures and bankruptcies occurring in the last 24 months? Where does the US Government keep its savings account? When was the last time an audit was done on all of the government agencies to determine where all of the money is spent? How much money does the US Government actually have?

Okay – take a deep breath in through the nostrils, hold for three seconds, and slowly exhale through your mouth. Repeat.

We have to put the US Government on a “credit diet”. What do I mean? No more credit can be extended starting tomorrow morning at 8:00am EST.

Stop using your credit cards for purchases. If you do not have the money in the bank, do not spend it. DO WITHOUT!!

SPEND WHAT YOU HAVE, NOT WHAT YOU DON’T HAVE. AND SAVE, SAVE, SAVE $$$$$ EVERY CHANCE YOU GET.

Resolve this year to write your State Representatives, Congressman and Senators. The status quo is no longer acceptable. Take responsibility for yourself and your family. There is no free lunch and it is not the government’s responsibility to take care of you.

Be ever mindful of have you use credit. Your credit report and credit score are very important.

The government doesn’t care……………but I want you to care. Be sure to write soon.

How Shopping At Christmas Can Be Bad For Your Credit

Robert Landreth (National Credit Management Association) — Thu, 11 Dec 2008 19:52:01 -0600

The holiday music is playing, Starbucks coffee is coursing through your veins, you are almost finished with your shopping and then you notice the CLEARANCE SALE signs in the window.

What do you do?

There has to be something in there worth buying. As you painstakingly peruse through all the racks, shelves, boxes and stacks there it is – the perfect gift for your loved one. Just the right size and it’s his/her favorite color. And it’s 60% OFF!

Waiting in line your mind wanders off to Christmas morning when the gift is unwrapped and the smile appears on the face and you’ve hit the happy button on your special person. Life is good!

Then as you approach the checkout counter the salesperson says, “If you get our (insert store name) card I can take another 20% off of your purchase today. Would you like to take advantage of this great deal?”

STOP!

Let’s review – Coffee, Clearance Sale, Christmas Shopping, Credit Card

Here’s the math: 60% reduction of the sales price plus another 20% if you get the card – Wow, you’re saving 80%. That’s great, right?

NO, NO, NO, NO, NO

1. You are getting 80% off; but how much was it marked up from the original wholesale price?

200% – 300% – 400%

Who knows for sure?

2. What happens when you get the credit card? Sure, another 20% off the sales price but…………………………..

The store will have you complete an application and they will access your credit report. This will count as an inquiry.
With a brand new revolving account on your credit report, you will see a reduction in your credit score. Depending on what your credit score is before you get the new credit card, it can take six (6) months or more before your credit score recovers to the same as it was before you accepted the new card.

Note* - That is if all else stays the same on your credit report (i.e. no other new cards, late payments, collections, charge offs, etc).

Department store or merchant cards are detrimental to your credit report and credit score. Let me explain.

When you make a payment on a revolving account, you may/may not reduce the balance owed. After payment is made on a revolving account, more can be charged between the time the bill is received, payment is mailed, payment posted to the account and the information sent to the credit bureau to update the information on your credit report. If you keep a balance on your account, that 20% discount you received on that purchase goes away after a couple of months.

If you compare this with an installment account (car loan or mortgage), each payment you make reduces the balance owed. What type of account do you think carries the higher risk – installment or revolving?

Imagine if someone had 3, 4, 5 or more credit cards. What impact does that have on the credit score? It depends.

How long have the accounts been active?
Are there any late payments on the accounts?
Are there accounts with past due amounts?
Any of these new accounts?

Caution should be exercised when the opportunity arises to get an additional 20% off a purchase. Do you really need another card?

Do you understand what it WILL do to your credit score? Can you use cash or a card you have to complete the purchase instead?

When the wise men brought gifts to the baby Jesus of gold, frankincense and myrrh, do you think they put those on a charge card? Of course not.

Credit cards are both a blessing and a curse. If you have to charge a Christmas gift purchase on a credit card, is that the right thing for you to do? Think about it.

Merry Christmas

Tired of Paying High Interest Rates On Your Credit Cards?...............Try This

Robert Landreth (National Credit Management Association) — Thu, 04 Dec 2008 20:07:09 -0600

Do you know what the current interest rate is on your credit card? Is it fixed? Variable? Have you ever made a late payment on your card? Do you know the definition for "universal default"?

Universal default is a little clause many credit card companies include in the contractual agreement. In a nutshell, it allows the issuer to change the terms of the agreement to the "default terms".

For a more detailed explanation of universal default, CLICK HERE.

What this means is that if a consumer is ever late making a payment on the credit card then the issuer can 'jack up' the interest rate to 19%, 27%, 30% or even higher. Talk about pouring salt in a wound. In addition, the credit score tanks. Now the salt really gets JACK HAMMERED in.

And get this - a late payment on one credit card can trigger the default charge on a different credit card that has NEVER had a late payment.

Unreal, you say? Impossible - Illegal - Immoral - Unethical - My thoughts exactly.

In my opinion (and this is just my opinion) this is legalized, modern-day loan sharking. Due to the deregulation of the industry back in the 1990's, credit card companies starting using universal default as a way of offsetting risk. Keep in mind that most credit cards are considered "unsecured debt". That is, it's not secured against anything like a house, car or boat.

What can a consumer do to LOWER the interest rate on a credit card?

I was talking to a good friend of mine the other day (by the way, he was the fastest guy in the 110 high hurdles from Missouri in 1978) and he was concerned about the high interest rates that his credit card company was charging him. In other words, the universal default charge had kicked in.

Here's the advice I offered:

Call customer service and say the following -

Hi, my name is ____________ and I need your assistance. I've had my _________ credit card for _______ years and it has served me very well. It has gotten me out of several tough situations, made my vacations more enjoyable and helped brighten other people's lives. I can't continue to pay the high interest rate on this credit card. What can be done to lower my interest rate? If my interest rate can't be lowered, I will have to take my business to another company. You wouldn't want that to happen would you? (Remain silent and wait for an answer)

You'll probably be told there is nothing that can be done.

Continue - Since you are unable to help me with this situation, I want to speak with your Supervisor or Team Leader.

When you talk with the Supervisor or Team Leader, repeat the same information to them as you did the customer service Rep.

Remind them that you are a GOOD CUSTOMER, pay on time, and enjoy the use of the card. However, they are not the only credit card company in town. Leverage your loyalty to them - make them feel indebted to you because you do business with them. (A little reverse psychology). Be persistent and sincere.

I know several people who have used this strategy with good results. One person told me that she called her local bank and had the interest rate on her Home Equity Line of Credit reduced. WOW!!

Be careful what you ask for...........you may get it. The good book says it, "Ask and ye shall receive". All it takes is a little time. What do you have to lose? Nada.

If you don't have any luck with the strategy, then you may want to consider moving your business to another credit card company. There are many to choose from and some exclude the "universal default" charge from their agreement.

A credit card is a two-edged sword. It can be a valuable tool if used properly. By properly I mean with thought and purpose. On the other hand (or should I say edge), it can cause you to start bleeding (sending $$$ every month for payments) profusely.

One final thought - Borrow when you don't need it.

To Your Credit Enhancement!

Your "Other" Consumer Reports

Robert Landreth (National Credit Management Association) — Mon, 17 Nov 2008 20:18:34 -0600

It is common knowledge that all consumers have a credit report. The Fair Credit Reporting Act (FCRA) controls the gathering, distribution and usage of consumer credit information.

However, the FCRA covers much more than just consumer credit reports. Refer to Sec. 612 (a)(1)(C) of the FCRA - "Specialty" consumer reports.

Here's some examples of the "Specialty" reports:

Homeowner and auto insurance claims
Residential or tenant history and evictions
Check writing history
Employment background checks
Medical conditions

Congress has designated the companies that collect the information for these reports as, you guessed it "Nationwide Specialty Consumer Reporting Agencies". These companies are separate from the major credit bureaus and collect information other than your credit history.

Why should I care what information is in my Specialty report?

Similar to your credit report, it is important that any information contained in a report be accurate. If the information is not accurate, the possibility exists that when the information is requested about a consumer for the purpose of renting, employing, issuing an insurance policy, etc the consumer could be denied.

How can I access my homeowner and auto insurance claims report?

There are two companies that collect this information:

ISO Insurance Services
ChoicePoint

To order a free consumer report from ISO, go to:

http://www.iso.com/Products/A-PLUS/Consumers-Order-Your-Free-A-PLUS-Loss-History-Report.html or call 1-800-627-3487.

To order a free consumer report from ChoicePoint, go to: www.ChoiceTrust.com click on "CLUES" report or call 1-866-312-8076.

While on ChoicePoint website, review their opt-out policy which is under the ACCESS YOUR PERSONAL INFORMATION link.

It is important to make a clarification concerning "consumer report" versus "file disclosure". A consumer report is (I'll paraphrase from the FCRA) a collection of information provided by a consumer reporting agency that represents a consumer's credit worthiness, credit history, character, personal characteristics, etc.

A file disclosure is all of the (consumers) information that is retained and recorded by a consumer-reporting agency regardless of how the information is stored.

A consumer report is provided to employers, financial institutions, landlords, etc that reflect information at any given time. On the other hand, a file disclosure contains ALL of the information that a consumer-reporting agency has pertaining to each individual consumer.

Every consumer is entitled to a free "file disclosure", not a report.

See the difference?

Next week, we will review how to access the other reports.

The Value of Your Name

Robert Landreth (National Credit Management Association) — Mon, 10 Nov 2008 00:03:33 -0600

What's in a name? A mixture of consonants and vowels. Maybe a Jr., Sr, II, IV, or Dr? Does your NAME have a VALUE? WHO values your name?

It depends.

Your name absolutely, most definitely and without a doubt has value TO YOU. But how does society, the government, your employer, your local bank or your friends calculate the worth of your NAME?

Proverbs 22:1 says: A good name is more desirable than great riches;
to be esteemed is better than silver or gold.

Think about that for a minute. Your NAME is more desirable (i.e. valuable, advantageous, beneficial, gainful, helpful, useful) than great riches. Some people would probably go with "great riches are more desirable than a good name.

What if you could have both? What if you could have riches, a good name and be able to do anything with your riches and it wouldn't damage your good name? Maybe even move you up to a GREAT NAME!

Okay Credit Maven, where are you going with this?

Your GOOD NAME is your CREDIT REPORT. Your GOOD NAME is your CREDIT SCORE. Do you know what is on your credit report? Is all of the information accurate, up-to-date and complete?

The Consumer Federation of America and Washington Mutual performed a credit report survey back in July 2008. Take five minutes and read this report.

The one big comment that sticks out to me in this survey is, "If all consumers raised their scores by 30 points, total annual CONSUMER SAVINGS would be an estimated $28 BILLION. That's right - BILLION not MILLION.

How valuable is your name to the creditors that you make your monthly payments to on the accounts that you have with them? The value they put on your name is directly proportional to your credit report and credit score. With them you are more valuable with a lower credit score (because they can charge you a higher interest rate) versus a higher credit score as they charge you a lower interest rate. Doesn't make sense, huh? All creditors prefer to loan money at a higher interest rate versus a lower one because it puts more money in the kitty. If everyone in America had spectacular credit, creditors wouldn't be making as much money as they would if everyone had mediocre or so-so credit. Money is made on the margins.

The path to great riches can be found in having a good name (credit report and score). If your name is good, you'll be saving money because you are NOT PAYING HIGH INTEREST RATES.

Here's a crazy thought for you to consider - Imagine what would happen if everyone in America paid off all of their credit cards and only kept one (1) credit card to use for purchases. WOW!!! I'll bet you that would create a very competitive market place for your business and we might even see a few credit card companies go the way of the DINOSAUR.

Protect your name as you would a newborn child. Be cautious about who you deal with on any financial matter. Beware of anyone who wants to do business with you - instead seek out people for financial transactions and KNOW the person you are doing business with and not some flashy, sexy blinking website. When you look at your computer screen, envision a GREAT WHITE SHARK on the other side getting ready to eat you when you hit the "ENTER" key.

Here is your ACTION ITEM. Call your credit card company and tell whomever answers the phone that you are tired of paying the high interest rate on the card that you currently have. Tell them that you've been an outstanding customer, you really like having the card but you can't afford to pay the extremely high interest rates. Tell them also that if they don't reduce the interest rate on your credit card that you will have to take your business elsewhere.

Email me back and let me know what happens.

Your name is worth more than SILVER or GOLD.

That's a FACT Jack!

Robert Landreth (National Credit Management Association) — Mon, 27 Oct 2008 23:16:12 -0500

Does you know what November 1^st is?

It's a Saturday
Three days before we elect our new president
The 306^th day of the year
54 shopping days till Christmas - Uugh!!
All of the above?

November 1^st is the deadline for all financial institutions to comply with the Red Flag Rules of the Fair and Accurate Credit Transactions (FACT) Act.

The Red Flag Rules pertain to any businesses with "covered accounts". Any business refers to "financial institutions and creditors" i.e. banks, finance companies, automobile dealers, mortgage brokers, utility companies and telecommunications companies. This is just a partial list and does include others.

The regulations apply to businesses that have what are called COVERED ACCOUNTS. What's a "covered account?"

A covered account is any account that has even the slightest RISK (now or in the future) of identity theft. Credit cards, utility accounts (gas, water, electricity), cell phone bills, checking account, social security numbers, investment advisor, drivers license numbers, health club, Credit Union, car dealership, bank, medical insurance accounts, and many others. This significantly expands the definition to include all companies, regardless of size that maintain, or otherwise possess, consumer information for a business purpose. Because of the broad definitions in these regulations, few businesses will be able to escape these requirements. Your employer will probably fall into this category.

Here are the THREE new regulations:

The first one calls for all businesses to create and put into service an Identity Theft Prevention Program in relation to both new and existing accounts. The Program must contain reasonable strategies and guidelines for detecting, preventing, and mitigating identity theft;

The second one requires users of consumer reports to respond to Notices of Address Discrepancies that they receive; and

The third one places special conditions on issuers of debit or credit cards. These issuers must validate a change of address when they receive notification of a change of address for a consumer's debit or credit card account. They must do this within a short period of time should they receive a request for an additional or replacement card for the same account.

The FBI has identified Identity Theft as the fastest growing crime in the United States. This is another way the government is trying to help consumers avoid becoming a victim of the criminal elements lurking in our society.

Don't wait on businesses to implement the programs that Congress has required them to create. Take proactive measures to prevent identity theft from happening to you. Never count on anyone or any business to protect YOU.

Buy a paper shredder and shred all personal documents - never throw them in the trash. Don't give your credit card to the waiter at the restaurant and let them walk away with it. Instead, watch them make the transaction with your own eyes so that they don't copy your credit card and go on a spending spree. Never and I mean never carry your Social Security card with you in your wallet or purse.

If you are a person who writes a check for a bill and mails it along with the statement to the provider, don't put that bill in your mailbox and raise the flag so that the mail carrier will pick it up. A criminal can steal that letter and what does he have? Well for starters, he has your signature, bank account number and bank routing number. I wonder what he could do with that information.

Do you ever receive those "pre-approved" credit card offers in the mail? How easy is it for someone to take that application, complete it, change the address and SHAZAM - they are now you! OUCH. You can stop those offers by going to:

http://www.optoutprescreen.com/

And last, but not least when you have some time I want you to look at this website:

Datalossdb.org is a collection of data base breaches all over the world. If you don't think systems are being hacked into every day, think again. Social security numbers, names, addresses, bank accounts of ordinary citizens, military personnel, government employees - no one is safe from the carnage going on.

One for the bad guys - On October 6, 2008 T-Mobile reported that a disk containing information on over 17 million customers had been lost.

http://www.nytimes.com/idg/IDG_852573C400693880002574DA0034AE43.html?ref=technology

One for the Good Guys - FBI smashes online credit card ring after two-year operation ends in 56 arrests worldwide.

http://www.vnunet.com/vnunet/news/2228489/fbi-wipes-online-credit-card

Be on GUARD at all times. Don't trust anyone to protect you from identity theft. You are your best defense.

What's So Important About A Credit Score?

Robert Landreth (National Credit Management Association) — Thu, 23 Oct 2008 16:13:44 -0500

So what's your credit score - 550, 780, 610, 826?

What is so darn important about a three digit score? Is the information on my report correct? Why does my report even need to have a score at all?

All very good questions indeed.

The importance of your three digit score is this - it will either:

A - Let you have access to the best financing options available, or
B - It will limit those options and those options will cost you more out of your pocket.

Which would you prefer? The former, of course.

According to PIRG (Public Information Research Group, Washington, DC):

* Seventy-nine percent (79%) of credit reports contain errors or mistakes

* Twenty-nine percent (29%) of credit reports contain serious errors, false delinquencies, or accounts that did not belong to the consumer

* Twenty percent (20%) of credit reports were missing major credit, loan, mortgage or other information to demonstrate the credit worthiness of the consumer

Download the Full Report

SAY WHAT?? IS THAT TRUE??

A study performed by the Consumer Federation of America and the National Credit Reporting Agency on 502,623 consumers seeking mortgage credit found:

"Wide variations in the credit scores for a given consumer among the three national credit repositories (Experian, Equifax, and Trans Union):

the AVERAGE DISCREPANCY for all consumers was 41 points

credit scores for nearly ONE in THREE consumers varied by 50 points or more

credit scores for ONE in TWENTY-FIVE consumers varied by 100 points or more

Download testimony of Stephen Brobeck Executive Director of the Consumer Federation of America

When was the last time you checked the accuracy of the information on your credit report?

2 months ago - 2 years ago - 2 days ago - NEVER?

Who is responsible for ensuring that the information on your credit report is accurate?

The Credit Bureaus - Your Creditors - The Government - Your Mom & Dad?

The reason that everyone has a credit score is to be "categorized". High scores get to call the shots, Middle scores have a little say-so and Low scores will have to take what they can get (if they can get anything at all).

Everyone has the potential to have a 700+ credit score.

According to Experian's National Score Index - the average credit score in the US is 693. This number was calculated from a representative sample of 3 million US consumer's credit profiles.

It would be great if a neutral third party organization were able to calculate the average credit score in the US. It's hard for me to accept the average credit score is 693 when foreclosures, delinquencies, and bankruptcies are increasing.

So, back to the original question - "What is so important about a 3 digit score?"

Your financial future, financing options, and your feeling of self-worth are extremely dependent on which "Category" your credit score resides.

Make sense?

"As a financial professional and consumer advocate, I have an educational mission; my purpose is to not only assist consumers who want to improve their overall credit standing, but to elevate the practice of credit management."

~ Robert Landreth

A Highly Sophisticated Credit Card Fraud Ring - In A Store Near You!

Robert Landreth (National Credit Management Association) — Mon, 20 Oct 2008 22:16:45 -0500

European law-enforcement officials uncovered a highly sophisticated credit-card fraud ring that funnels account data to Pakistan from hundreds of grocery-store card machines across Europe, according to U.S. intelligence officials and other people familiar with the case.

To read the full article access this link:

It seems there is one or more small criminal organizations that have been able to transfer credit card information from stores in Europe to locations in Pakistan. The information is some of the most sophisticated technology that British officials have ever seen. Law enforcement officials haven't identified the culprits. Estimates as to how much money has been lost is in the $50 million - $100 million range. The technology uses untraceable devices that were inserted into CREDIT CARD READERS that were manufactured in CHINA (of all places). Doesn't anything good every come from China anymore?

WOW!!

What could you do with 50 - 100 million dollars?

In my earlier articles, I have written about identity theft. This is another case about information being stolen and used for who knows what.

The next time you use your credit card for a purchase, ask the person who is waiting on you if they know if the card reader was "Made in China".