Credit Check Errors Go Unchecked!
Americans are virtually powerless to correct damaging mistakes in their credit reports because of loopholes and obstacles in the federal law governing credit-reporting agencies, an Ohio newspaper reported.
The lack of government regulation allows errors that wrongly deny thousands of people the chance to buy homes or cars, take out a college loan, receive medical care or even open a checking account, The Columbus Dispatch wrote in a story on Sunday. The report is the first of four parts looking at the three largest national credit-reporting agencies and the lack of federal regulation over the reporting system.
The newspaper’s yearlong investigation collected and analyzed nearly 30,000 consumer complaints filed with the Federal Trade Commission over 30 months beginning in 2009 and with attorneys general in 24 states in 2009 and 2010. The newspaper said it requested complaints from all 50 attorneys general, but some states don’t make the records public, some did not cooperate and others charged fees that were too high.
The complaints alleging violations of the Fair Credit Reporting Act by Equifax, Experian and TransUnion document how consumers across the country have failed to get even obvious mistakes such as wrong birthdates and names corrected.
More than 5 percent of complaints to the FTC and more than 40 percent of those to attorneys general say reports had wrong personal information. An Ohio man born in 1968 complained that his report identified him as having been a police officer since 1923.
Nearly 200 people complained to the FTC that their credit reports listed them as dead, preventing them from accessing credit. Almost a fourth of the complaints to the FTC and more than half of those to attorneys general involved mistakes in consumers’ financial accounts for credit cards, mortgages or car loans. Car loans that had been paid off were reported as repossessions, and credit cards that had been paid off showed up as delinquent.
The newspaper also reported that more than 5 percent complained to the FTC about accounts wrongly listed as belonging to them, and more than half of all who filed complaints with the FTC said they could not persuade the credit-reporting agencies to fix problems.
Paul Pierce, 51, of Daytona Beach, Fla., said he began receiving phone calls in 2007 from an agency trying to collect more than $2,000 in cellphone debt belonging to Paul Louis of New York. Pierce kept receiving payment demands and three years later found the debt on his credit report. He said Experian kept telling him it was his debt. The debt wasn’t removed from his report until he complained to the Florida attorney general.
Estimates of those experiencing errors range from less than 1 percent from an industry-funded study to 25 percent by consumer advocates, the newspaper reported.
Re-posted from Associated Press
New Ruling Makes It Easier To Get an FHA Loan For Some
A new rule prohibiting homebuyers from getting a Federal Housing Administration mortgage if they owe more than $1,000 in outstanding collections accounts could cut demand by up to 20%, according to banking analysts.
The rule went into effect April 1. If a borrower enters into a payment plan on these accounts, then an exemption could be granted. Also, the FHA clarified the rule this week, stating if a borrower documents the collections account stems from a “life event” such as a medical bill, divorce or loss of employment, he or she could still qualify for the loan.
On the bright side, it means that someone with $999 in collections will no longer be impacted or required to pay these to qualify.
Fired For Her Credit Score!
Fired for having student loans? Latoya Horton says she was fired from her job as an accountant, not because she did 
anything wrong, but because her employer checked her credit report and decided her debt-to-credit ratio was too high. Latoya was outraged: “How are you supposed to pay off your student loans if you can’t get — or keep — a job because of your loans?”
It happens more than you think: Latoya found out that 60% of employers now check employees’ credit reports. They often buy them from TransUnion, one of the largest credit reporting companies. TransUnion’s chair, Penny Pritzker, even sits on President Obama’s jobs panel. She’s responsible for spurring job creation, but her company is profiting from a practice that makes it harder for people with debt to find work.
You can help: Latoya started a petition on Change.org demanding that TransUnion stop selling credit reports to employers immediately. If thousands of people sign Latoya’s petition, it will shine a national spotlight on what Latoya thinks is an ethically dubious practice, and TransUnion’s executives will be forced to respond.
Click here to sign Latoya’s petition.
Here’s a lot more information about Latoya’s campaign in her own words:
Years ago I went to college to study accounting, and like millions of other Americans I took out loans to pay for it. A few years later I got a temporary job in the accounting department at Bain & Co., and after 6 months of reliable work I was thrilled to be offered a full-time position.
However, just a few weeks after starting in my new position the company fired me because my debt-to-credit ratio was too high. I later learned that 60% of employers now check credit reports, which typically include student debts. How are you supposed to pay off your student debts if you can’t get (or keep) a job BECAUSE of your debts? And what do my student debts have to do with my ability to do a job well anyway?
25 states have debated bills in the last year to restrict this practice, and in a number of these states one company has fought hardest against these efforts: credit reporting company TransUnion.
What’s ironic is that Penny Pritzker, TransUnion’s Chair and part owner, sits on President Obama’s Jobs and Competitiveness Council, which advises the President on putting Americans back to work. How can someone advise on national job creation when her company sells products that may keep qualified people out of work?
Please join me and 25 national civil rights organizations in calling on TransUnion to stop its sale of credit reports to employers. As the only one of the “Big 3” credit reporting companies that’s privately held, TransUnion has the ability to stop this practice overnight.
It was recently announced that in the coming weeks TransUnion will be sold to two private equity companies, including Goldman Sachs. If Penny Pritzker is serious about job creation, she should do what she can to ensure that her company stops this abusive practice before the company is sold.
Can You Be Taxed For Forgiven Debt?
If you’ve received a surprise 1099-C tax form in the mail, you may be wondering if it’s taxable income for you. I want to explain.
The 1099-Cs popping up in people’s mailboxes are really fallout from the financial crisis over the last five years. Let’s say hypothetically you lost your job three years ago and couldn’t pay off your $3,000 credit bill so it was charged off by the credit card company. Now you’re getting the tax form for the $3,000 they wrote off.
The law requires that lenders must report your charged-off debt as income to you. You have to report this on your income tax. But are you responsible for it as taxable income? Maybe not.
- With foreclosures, in most cases, it is not taxable. The only way it would be taxable is if you did a cash-out refi at some point and then walked away and your house went into foreclosure. The cash-out money you got would then be taxable. But if you just took out a mortgage to buy a home and then foreclosed, that is not taxable.
- For credit cards, if you were essentially insolvent at the time your debt was written off, the IRS has a form for you to attach to your return where you zero out that 1099. It’s your way of basically saying, “Hey, look I was broke!” Then you’re not responsible for the paying tax on it.
The idea here is if you had money and chose not to pay, then it’s taxable. But if you didn’t have any money or didn’t get any money out of the deal, then it’s not taxable.
I know it’s confusing, but whatever you do, don’t ignore a 1099-C! Because if you do the IRS will send you a tax due bill in the future, plus interest, plus penalties. It’s very hard at that point to get out of what may not have been a legal obligation for you in the first place.
Meanwhile, if you’re curious about the H&R Block Second Look program, know that it is a legitimate thing. You take your tax return for a prior year to them and they claim that close to two-thirds of the time they will find you paid too much tax. It’s free to see if you are due money back that you didn’t know to ask for. Then if you want them to file a new return, you pay them for the new return and you get that refund.
It’s a win/win for you and for H&R Block!
Repost from Howard Clark
Free access to credit report and score
Reposted from Www.HowardClark.com
Just as there’s no reason to obsess over your credit score, there’s also no reason to ignore it either. What you don’t know can hurt you. Fortunately, getting free access to your credit report and credit score can be easy.
At AnnualCreditReport.com, you can get a free copy of each of your credit reports once each year. In just a couple minutes, you can see how your credit is, but only once a year.
Then there’s a site I’ve talked about called CreditKarma.com that allows you free access to both your credit report and your credit score. CreditKarma does this routinely; it’s not just once a year.
I’m looking at CreditKarma right now as I write this and it shows my credit score on the 850 scale. My (non-FICO) credit score is 769. That’s a good score, but not a great one. (Editor’s note: You won’t be able to receive your free credit score from Credit Karma with a credit freeze in place.)
CreditKarma also tells me what factors make up my credit score. Their data shows my total debt, plus what I owe on credit cards, home loans, auto loans, student loans and personal/other loans.
Then they show my credit card utilization. I’ve told you before never to use more than 30% of your available credit. But if you really want top-drawer credit, keep it below 10%. I failed the test as I’m using 11% of my available credit, according to CreditKarma. So I’m not getting that booster shot, but I’m still in great shape.
Other factors CreditKarma tells me about are my on-time payments (that’s 100% of all my payments); the average age of my credit lines (7 years, 4 months); the number of recent inquiries to my credit (2); and derogatory marks on my credit (0).
So I can get that instant snapshot and know if my credit is healthy or not.
Why does CreditKarma do this for free? Because it’s all about data mining. I give up my privacy in return for providing them access to my information. Then with my information, they can turn around and barrage me with offers for credit cards, mortgage loans, car loans or whatever else.
I’m fine with trading my privacy for information. You may not want that. But it’s the same thing that comes up with Mint.com, which is a great free budgeting and financial tracking tool, but they hammer you with solicitations too.
In my book, that’s a fair trade. In yours, it may be a foul ball.
Why Aren’t My Credit Scores Going Up?
There is a great deal of misconception surrounding credit scores and negative credit. Although you may have derogatory credit it may not be impacting your credit as much as you think. In fact, the older the negative credit is (in years, not months) the less impact it will have on credit scoring. And of course, at 7 years the law requires the credit bureaus to remove any negative reporting (except bankruptcy which is 10 years).
Far more important, is the fact that you must be constantly posting positive payment histories on current and new accounts. This means monthly. Credit underwriters give far greater weight to the last 24 months of credit history then anything prior to this. If you don’t have a current history, they would have to 
go back farther to determine your qualifications.
However, that does not mean if you have older negative credit that it won’t impact your credit score or the fact that you may pay a premium to obtain financing in the form of higher interest rates and fees.
As you are challenging negative credit (and having it removed), you must also be establishing or re-establishing a consistent positive credit profile. Our credit education manual details how to do this, establish new credit (regardless of your current credit condition), optimize your credit and balances and maintain them.
The other factor involved is that as you are restoring your credit and using the credit you have, your credit scores will be in a constant state of flux, going both DOWN and up. There are various factors, such as, when a creditor reports to the bureaus, when your payments are received, have you been searching to extend more credit, who has inquired on your accounts, are some accounts not being used with available balances, what are your current ratios to available credit and so on. Another little know fact, if you dispute or challenge an item, it cannot be used in calculating your credit score until the dispute has been resolved. This may give you a temporary positive in you score.
If you are looking to get your credit scores say from the 500′s into the 700′s remember it is a journey. You won’t be able to have “instant gratification”! Your will need patience and perseverance.
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