I’ll get right to the point.  Collection agencies report accounts they are in the process of collecting to the credit bureaus.  This could be for any type of loan including medical bills, utilities, broken apartment leases and credit cards. The name of the collection agency is listed on the credit report instead of the credit grantor, who originally hired the collection agency.

Collection agencies begin collection efforts soon after the accounts have been written off by the creditor.  The debt is not only reported as a collection but also reported by the original creditor as a “charge-off.”  The original account is listed under the trade section of the credit report and includes your payment history on that account, which ends when the account is charged-off or sold to collections.  The collection agency reports a new account under their name as a 3rd party collection account.

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On February 24th the IRS announced new policies regarding the collection of unpaid taxes and liens. Specifically, if the tax payer pays their liens “in full” the IRS will “withdraw” them. What does this mean for consumers’ credit reports?  Simply put, tax liens are now the only derogatory item on a credit report that will be removed once it has been paid, as long as you play your cards right.

Do you have an IRS tax lien on your 2013 credit report? Visit here to see your full report online now.

An unpaid tax lien can remain on a credit file indefinitely per the Fair Credit Reporting Act.  In the old days, pre February 24th, even when paid the lien remained on file for an additional 7 years and was only shown as “released.”  And, a released tax lien is just as bad for your credit as an unpaid tax lien.  This new IRS policy suggests that if you pay your liens in full they will be removed from your credit files much sooner, and this was confirmed by all three credit reporting agencies and their trade organization, the Consumer Data Industry Association (CDIA).  According to Norm Magnuson, Vice President of Public Affairs for the CDIA, “I’ve confirmed that all three credit reporting agencies remove withdrawn IRS tax liens.”

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You should familiarize yourself with the term “trade” or “trade line.”  This is the common reference to the “account” section of your credit reports.  And, it makes up the bulk of the information in your credit files.

The trade section contains details of your credit card and loan payments such as the type of account, current and historical payment history.  For credit card accounts the information includes; the date the card was opened or “date opened”, the credit limit, the highest amount you have ever charged or the “high credit”, the amount you currently owe or “balance”, and the date this information was reported or “date reported”.

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Credit reports contain a variety of liability information including loans, collections and public records.  But, there is also an incredible amount of highly sensitive personal information.  So, what personal information should you expect to see on your credit reports?  Before answering the question it’s best to summarize all of the information in a credit report.

A credit report can be segmented into four distinct sections: personal information, inquiries, trade (or account), and public records.  We’ll focus only on the personal information.  And, you’ll be surprised what information is included and maybe more surprised that there isn’t as much detail as you would come to expect from a credit report.  Follow me…

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Many people are afraid to pull their own credit reports because they have been trained that every time you do so it costs you points in your credit score, but this is not exactly true.  You can pull your credit reports as often as you like and it will never impact your credit scores, as long as you are using a site or process that is for a personal credit pull, also called a consumer disclosure.  Let’s go through this in a semi-organized manner…

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Is it time to add debit cards to the endangered species list?  Can anyone imagine a financial services world without debit cards?  Is that even possible considering the growth of debit card transactions?

Not only is it possible but some bankers are even predicting it will happen sooner rather than later if the Federal Reserve has its way and caps interchange fees on debit card transactions.  An interchange fee, more commonly referred to as “merchant fees” or “swipe fees” is the fee paid by the merchant for the ability to accept payment in the form of plastic.  Right now the average fee paid by the merchant for debit card transactions is about 44 cents.

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New settlement documents have been mailed in the White, et at v Experian Information Solutions class action case.  The class action, which also includes TransUnion and Equifax as defendants, was filed over 4 years ago in Federal Court in the Central District of California.  The plaintiffs, all whom filed a chapter 7 bankruptcy, allege that their credit files still showed debts that predated the filing date of their chapter 7.  These debts, if statutorily discharge-able, should be shown as having a $0 balance since they were canceled by the bankruptcy.

Settlement was reached in the case in 2009 and award documentation was sent to the members of the class, which numbered in the millions.  If you submitted a claim for an award you recently (or will soon) receive another document asking for additional information about your claim.

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With the way things are in our economy lately, there seems to be a recurring theme in credit reports…judgments!  The question that always comes up is, “What has this judgment done to my credit?”

What is a judgment?  The definition of judgment is:  a formal decision given by a court.”  Once the court renders a judgment the chances of you getting out of this without paying it off decreases significantly.  If, for example, a creditor has gone to the extent of suing you and getting a judgment, they may not be willing to make payment arrangements with you when they are almost guaranteed money if they can garnish your wages; which is exactly what a judgment is setting them up to do.

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How many of you have heard (or believe) that negative items can remain on your credit reports for 7 years?  Would you be surprised to learn that that’s not exactly correct and that the law allows for the reporting of negative items for longer than 7 years?  And, in some cases, the negative item can remain on your credit files for much longer than 7 years.

Here’s the lowdown on how long the bad stuff can hang around…per the Fair Credit Reporting Act and the Higher Education Act.
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2011 marks a new era of lender transparency as a new set of disclosure rules went live at 12:00am on January 1^st.   As of January 1, 2011 any lender who adversely approves an application because of a credit report must provide the applicant with a notice that they’ve received less favorable terms as a result of information on their credit report.  This complements the Fair Credit Reporting Act’s adverse action requirements, which require lenders to send declination letters to consumers who have been denied credit based on credit data.
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