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Credit Repair Disputes Significant

May 27, 2010 By

Credit repair is the process whereby consumers attempt to get negative but accurate information removed from their credit reports. Opinions vary on the practice. Some would have you believe that credit repair companies are scam artists. Still others would say that credit repair is as legitimate as hiring someone to change your oil, a service that you can likely do yourself but choose not to. Wherever you fall on the credit repair debate one thing is certain, they are here to stay. And in almost all states their services are perfectly legal as long as they follow state and Federal law, such as the Credit Repair Organizations Act.

One credit repair company boasts that they had over 1,000,000 negative credit entries removed on behalf of their clients in 2009. Others are not so bold with their success meters. The process involves submitting dispute letters to the credit reporting agencies asking for verification of credit entries. If the credit bureaus cannot confirm their validity they must remove them until confirmation is received. According to Stuart Pratt from the Consumer Data Industry Association, the trade organization of the credit reporting agencies, "Our members estimate that on average across our members operating as nationwide consumer reporting agencies, no less than 30% of disputes filed are tied to credit repair." This number is estimated to be greater than 15 million annually across all credit reporting agencies.

The fees charged to credit repair customers range from $39 per month subscriptions (and higher) to several thousand dollars as a flat fee. Some claim to have found the magic formula for getting negative data removed from credit reports yet boast websites that look like they were built by 7th graders. Some insinuate “insider” access at the credit bureaus, which would be a criminal act. And some insinuate to have found legal methods for getting negative data removed. And while non of these claims can be substantiated, there’s little doubt that the credit bureaus will find themselves dealing with credit repair companies for the foreseeable future, especially with lenders increasing their credit scoring requirements.

John Ulzheimer – Credit scoring and credit reporting expert and author, John is the President of Consumer Education for Credit.com. Formerly with Equifax and Fair Isaac, John shares his unique insight of the inner workings of credit scoring models and the credit reporting industry on CreditBloggers.com.

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How Can I Add An Account to My Credit Report?

May 26, 2010 By

Recently, I had an interesting back-and-forth conversation with someone who is frustrated over the fact that a mortgage he paid off is not appearing on his credit reports.

His mortgage was originated through a bank’s Trust/Private Banking Department, which does not report information to credit bureaus for privacy reasons. While the situation is unique, his question is one that I've received numerous times over the years:

How do I add a credit reference to my credit report if the lender does not report?

The answer is that typically you cannot.

The three major credit reporting agencies don't accept credit references from companies that are not approved to report information to them. Companies must be screened and sign contracts with the credit reporting agencies to make sure that they follow the requirements of the Fair Credit Reporting Act. As my colleague John Ulzheimer points out:

You have to have an account with the credit bureaus if you want to report to them.  It’s not free and it’s not cheap.  By reporting you open yourself up to possible FCRA liability and you have to have someone on your staff who will investigate disputes.  Smaller lenders are not equipped to absorb the cost for this.

If the lender from whom you borrowed money is not a subscriber to at least one of the major credit reporting agencies, your loan will not be reported, and there currently is no way to add an individual account.

There is an alternative credit bureau called PRBC which is set up to accept payment information that traditional credit reporting agencies don't. And while I like what PRBC is trying to do, it still doesn't carry the same clout as information compiled by the three major credit reporting agencies. Right now, though, it's your only option.



Gerri Detweiler – Personal finance author and Credit Advisor for Credit.com, Gerri contributes budgeting, debt recovery and savings information online. She is also the co-author of Reduce Debt, Reduce Stress: Real Life Solutions for Solving Your Credit Crisis.
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Lending Web Site Aimed At Helping Consumers

May 25, 2010 By

Before you read this post, check out the Web site for Esteemed Lending

What did you think?

I think it’s a great example of the type of Web site we get complaints about every week in the Credit.com forums. Fortunately this one won’t rip people off like the ones we’ve heard about. That’s because it’s a fake Web site created by the Federal Trade Commission to try to show consumers how convincing advance fee loan scams can be.

We’ve written about advance fee loan scams on our site and blog before. Here are just a few of the more recent complaints we’ve received from would-be borrowers who were taken:

I sent all the money I had in my bank to them- with the assurance that i would have the 50 grand... So they said they would refund my $2160. (My note: No refund was forthcoming.)

My wife and I were victims of the same scam. We Western Unioned them almost $3000.00 for 'loan insurance'. After we didn't receive our $10,000.00 loan that they told us we qualified for, we of course called them to ask what the problem was and they wont take my calls. Now there number is disconnected.

The FTC has warned you, and we've warned you. No matter how convincing these sites may seem, there are no "private investors" or "private lenders" eager to make high-risk loans to consumers. Please, please don't send an upfront fee to one of these companies.


Gerri Detweiler – Personal finance author and Credit Advisor for Credit.com, Gerri contributes budgeting, debt recovery and savings information online. She is also the co-author of Reduce Debt, Reduce Stress: Real Life Solutions for Solving Your Credit Crisis.

Filed Under: Credit Card Blog Tagged With: ,

A Closer Look at the FACS Act

May 20, 2010 By

It’s a big week for financial reform bill amendments! In keeping with the week’s theme, Credit.com expert John Ulzheimer follows up his earlier post on Senator Mark Udall’s (D-Colo.) Fair Access to Credit Score Act (FACS Act) with a more detailed look at the proposal.

The big deal with this one is that consumers are not entitled to the score that got them turned down for credit or a loan. According to a statement from Udall’s office, the FACS Act aims to even the current playing field in which banks and lenders “know the consumer's credit score, but the consumer does not.”  If it passes, lenders will be required to automatically disclose to the consumer the particular credit score that was used in a decision to deny them credit, a loan or a credit limit extension.

In his arguments on the Senate floor (below), Udall volleys back at the credit reporting agencies’ argument that a consumer’s credit score is the property of the agency, rather than to "the individual who creates the credit score. I can’t help but think, Mr. President: Would a doctor say that someone’s blood pressure reading is their information and not their patient’s?”

Filed Under: Credit Card Blog Tagged With: ,

Will Cash Become King Again?

May 19, 2010 By

Last week I was in Washington DC, and it seemed like every time I turned on the radio I heard an advertisement calling for action to lower the “swipe” fees merchants pay when they accept debit and credit cards. Retailers’ efforts to curb these fees appear to be working, as the Senate overwhelmingly passed an amendment to the financial reform legislation aimed at helping reduce the “interchange” fees small businesses pay on debit card sales.

Introduced by Assistant Senate Majority Leader Dick Durbin (D-IL), this legislation would direct the Fed to issue rules to ensure that debit interchange fees are reasonable and proportional to the processing costs incurred. Visa and MasterCard currently charge debit interchange fees of around 1-2% of the transaction amount. Proponents of this amendment say that while processing fees have decreased, interchange fees have increased. The ads I heard called these fees a hidden tax on retail purchases.

Whether or not consumers will see prices come down if interchange fees come down is is debatable. A press release issued by Durbin’s office states that an estimated $48 billion in swipe fees were charged by credit and debit card networks in 2008 and that 80% of this money went to ten large banks.

Minimum Purchase Requirements

However, the provision that most interests me is the one that would allow merchants to impose a minimum purchase amount for card purchases. Currently, merchants are supposed to accept your debit card for purchase of any amount. (Those signs posted in stores claiming a $10 minimum purchase required for debit or credit cards are technically violating those merchant agreements with their banks.) The press release on Senator Durbin’s web site says the minimum would apply to credit card purchases, however when I read the legislation, it appeared to me that it applies to both credit and debit card purchases.

About 20 years ago, when I was working for a consumer group in Washington, we first alerted consumers to the fact that minimum purchase requirements are not allowed under Visa and MasterCard’s rules. We were absolutely flooded with consumer requests for more information. It seems they really wanted to be able to use their cards whenever and wherever they could.

Since that time, a lot of us (myself included) have gotten away from carrying cash. Instead, we whip out or debit or credit card for all kinds of purchases – even small ones. What would be the possible effect of allowing merchants to set minimum purchase amounts for debit or credit card transactions?

- Consumers may find themselves spending more on a purchase to meet the minimum if they don't have enough cash on hand.

- ATM fees may see a boost as consumers scramble to pull out cash to cover small purchases.

However, if merchants were free to set minimum purchase requirements then perhaps the industry would come up with more competitive pricing to make accepting cards for small purchases more attractive to retailers. What do you think? Are you accustomed to using your credit or debit cards for small purchases? Do you think the rules should be changed? Are you a small business owner who would like to be able to impose minimum purchase requirements? Share your comments below.



Gerri Detweiler – Personal finance author and Credit Advisor for Credit.com, Gerri contributes budgeting, debt recovery and savings information online. She is also the co-author of Reduce Debt, Reduce Stress: Real Life Solutions for Solving Your Credit Crisis.

Filed Under: Credit Card Blog Tagged With: , ,
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