It is important to be aware of what is in your credit report and make sure the information is accurate.  This is your right under the Fair Credit Reporting Act (FCRA).   It is another thing to try to remove negative information that you know is correct – that is illegal.

The Federal Trade Commission (FTC) charged the operators of a credit repair company in Texas, RMCN Credit Services, of violating the Credit Repair Organizations Act.  The FTC complaint, which can be seen here, alleges the company made false statements to the credit reporting agencies and charged retainer fees of $2,000 to the consumers for services. RMCN advertised a six-month program to improve consumer’s credit reports and, according to the FTC, did not show the consumers the letters sent to the credit reporting agencies disputing all the negative information on the consumers’ credit reports.   Even after the investigation was completed by the credit reporting agencies and information was verified with detailed payment data, RMCN continued to send the dispute letters. read more »

Experian, one of the three major credit reporting agencies, conducted their second- annual State of Credit list of cities with the highest and lowest credit scores.  The data from this report was based upon data from January through June 2011 and used the VantageScore.  The VantageScore was developed jointly by the three major credit reporting agencies – Equifax, Experian and TransUnion. The scores range from 501 to 990, a score in the 700 range is considered average or a “C”; a score is the 600’s is considered a “D”.   The average VantageScore before the recession was 754, was 748 in 2010 and was 749 in 2011.  There was a one-point gain in 2011. read more »

From September 9 to 11, 2011, GfK Roper conducted a nationwide phone survey for Visa of 1,000 adults over 18 years regarding credit scoring.  Many didn’t understand what was included in a credit score or what information counts the most. Approximately 42 percent of the responders didn’t check their credit score regularly.

Key Findings

They were correct on three items that were included in a credit score – payment history, debt and bankruptcy. read more »

How do you know if you have a credit report?  If you pay by cash or debt card and don’t own a credit card; or never had an installment loan, such as mortgage, auto or student loan; you probably don’t have a credit report.  If you haven’t used credit, there won’t be any credit information on you.   You could also contact www.annualcreditreport,com to get your credit report free from the three credit reporting agencies – Equifax, Experian and TransUnion.

It is great to have no debt and pay as you go, but is it?  When you need credit for a purchase for which you can’t pay in cash, such as a mortgage or card loan, you won’t be able to qualify for the loan.  Lenders base your ability to pay on your payment history in the both the present and the past.  If you don’t have any credit history there is no basis to make a decision on the loan.  You would probably have to get someone to co-sign for the loan and they would be responsible, if you can’t make the payments.  In addition without credit, you won’t be able to get the lower interest rates, which will cost you more for the loan. read more »

In previous blogs I’ve touched on the lack of security in social media and mobile devices such as smartphones, for example.  ProtectMyID, a division of Experian (one of the credit reporting agencies), hired StrategyOne Research to conduct a survey in September 2011.  The purpose was to obtain insight into how individuals protect their personal information online and in social media.

This survey was similar to other surveys. For example, many did not take precautions to password protect their devices, used smart phones to purchase items and conduct online banking, and  provided personal information on social media such as date of birth. read more »

This is one of the scoring myths that may be hard to believe. When you pay off an installment loan, there may be a slight positive impact to your FICO credit score, but very little.  And, in many cases your score won’t change at all.

Installment loans are usually auto and mortgage loans, and you pay a fixed amount per month for a specified number of years. The loan amount is usually thousands of dollars, secured either by your car or home.  Installment loans don’t have a large impact on your score, since borrowers tend to pay these loans before their credit cards. They don’t want to lose their home or car.  The amount of the loan compared to the balance remaining, does not impact the score as it does for credit cards, because it takes years to pay off the loan and reduce the amount owed.  For a mortgage loan, there is very little reduction in principal for many years. read more »

The latest data from the Federal Reserve G-19 Statistical Release indicated that consumer credit dropped in August 2011, which was the most in one year. Total consumer credit was $2.4449 trillion in August 2011; compared to $2.4544 trillion in July. The decrease was $9.5 billion or -4.6% from July 2011, compared to an $11.9 billion increase in July 2011.

Non-revolving debt (credit cards)

Most of the decrease was attributed to non-revolving credit, which decreased by 5.2 percent or $7.23 billion from July 2011; compared to a rise of $15.48 billion in July 2011.  This was the largest decline since August 2008. Non-revolving debt included student loans, auto loans and mobile home loans.  Loans secured by real estate, such as home mortgages and home equity lines of credit, are not tracked for this report. read more »

PriceGrabber, a division of Experian (one of the three credit reporting agencies), conducted their first winter holiday shopping survey.  It was conducted from September 7 to 15, 2011 on 3,070 U.S. online shoppers.  Almost all plan to spend the same or less than last year and are looking for bargains. Approximately 49 percent of those surveyed plan to spend the same amount in 2011 as they did in 2010, 45 percent plan to spend less and 7 percent plan to spend more.  Most (68 percent) attributed the economic climate to their spending. read more »

This is a continuation of The Institute for Financial Literacy’s Annual Consumer Bankruptcy Demographics Report for 2010. Part 1 of this blog covered income, education and cause of financial distress.  Part 2 covers the remaining areas: gender, age, employment and marital status.

Additional Key Findings

The largest increases from responders in the last five years were those in older age groups, self employed, and married. read more »

The Institute for Financial Literacy released its Annual Consumer Bankruptcy Demographics Report. This report included not only 2010 demographic information, but also comparisons to data collected since 2006. They surveyed their clients, who were fulfilling requirements according to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).  The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 required individuals to complete mandatory credit counseling in order to be eligible to file a consumer bankruptcy case under the bankruptcy code. The law also required certain debtors to complete a mandatory financial management instructional course to receive a discharge of their debts.  For purposes of this study, they didn’t know if the client filed bankruptcy after the credit counseling.

The survey covered January to December 2010, and included 52,851 of their clients from the 50 states, Northern Mariana Islands, Virgin Islands and Guam. The information surveyed included gender, age, education, income, employment, marital status and causes of financial distress. read more »