Reader mail
Friday, December 04, 2009
Reader mail: telephone credit and bankruptcy consultation?
i see that you do not offer consulting by phone, but I was possibly going to file for bankruptcy next week and have a unique situation and need to move quickly. ...
This was a long email about the specific situation and reasons for wanting to do the telephone consultation, but I want to focus on why I don’t do telephone consultations.
The reader obviously doesn’t understand that I need to know A LOT about my clients in order to give the appropriate advice and I’m not Super Woman. I would only talk to clients on the phone if they agreed to pay my regular hourly fee of $200 for the time on the phone AND the time I have to spend afterwards to put the information in their private forum. I estimate that would take anywhere from 2 to 10 or more hours, depending on how much the client has to say.
And that’s BEFORE I even review the credit reports. After I did the credit review, would the client want me to call with my questions and then have me spend a few more hours posting the answers in the forum? Or am I supposed to give advice WITHOUT reviewing the credit reports?
I’ve had VERY wealthy clients, yet none ever asked for telephone service. And that’s probably why they were wealthy—they were efficient and realized that they can only benefit from having all the info posted for MY and THEIR subsequent review.
No professional would give advice based on a quick phone call—that’s for the psychic hot-line.
BTW, I also do NOT consult by email. Every client gets a private forum, every account gets a topic and every question / issue gets a topic. Correctly reported/deleted accounts and completed discussions are moved to the “DONE” folder, but remain in the forum for future reference. As long-time readers know, the credit bureaus sometimes revert back to the incorrect reporting.
I’ve had many years to refine my methods for maximum efficiency.
OUR time is valuable. Not only do my clients benefit from a well organized presentation of their accounts and issues, but when they need additional services a year later, all the information is still there—a tremendous time saver. Most clients don’t need subsequent services because they can review my recommendations and the actual reporting of the accounts and they can post a quick question at no charge as long as I don’t have to review the new reports. Often it only takes a few minutes to scan the previous posts and tell the client what to do.
I realize that most people don’t want to spend the time to discuss account details and they prefer to spend a few bucks on credit repair services instead of having to work.
That’s why we have Stephen Snyder, Lexington and all the other credit repair outfits. Their services have NOTHING to do with improving credit, as they focus on DELETION of derogatory accounts through frivolous moronic disputes.
Only a COMPLETELY INCOMPETENT credit consultant would strive for deletion of late payments, charge-offs and discharged accounts without thorough analysis of all three reports. Please see my post:
There are the technical aspects of credit reporting and scoring, but when it comes to deciding whether to file for bankruptcy, I have to consider many more aspects of my clients’ lives. I’ve had clients who contacted me initially to improve their credit scores, I recommended bankruptcy, they discharged their credit card debt and a year later they had the FICO scores to buy a house with the LOWEST FIXED rates.
Others want to file for bankruptcy and I recommend against it. It all depends not only on the client’s financial situation, but also on the client’s personality. It takes significant interaction to try to determine what will be best for each PERSON.
Advice for everybody:
Once you file for bankruptcy, it will count as a bankruptcy for your credit scores even if you do NOT discharge any debts, dismiss the filing and pay all your accounts in full. The credit bureaus can legally report the bankruptcy filing because it is on the public record.
The bankruptcy filing can NOT be undone.
I usually recommend to prospective clients who have filed for bankruptcy to wait with ordering personal services until after they have discharged (or confirmed the Ch. 13) and to subscribe to CreditFactors and learn about credit concepts. They can also post their questions at the member forum and get free advice to avoid costly mistakes, such as discharging OPEN accounts with small or no balances instead of trying to keep these extremely valuable accounts open.
It is definitely NOT faster to get telephone advice and I’m always willing to prioritize and often get started with new clients on the day they order. But I don’t do miracles and I do have to WORK to come up with recommendations for my clients.
My first step is to review the credit reports and to post all the problem accounts. I OFTEN change my initial assessment of a client’s situation after we discuss the accounts and issues. The credit reporting is important but, by the time we’re done with the credit review or analysis and I know what really happened and what the client’s goals and resources are, my recommendations are very different than they would be if I had only looked at the reports.
Additionally, the client’s mental state is a primary and sometimes deciding factor for my recommendations. Some people have so many other problems and are totally overwhelmed or just too ill to focus on their credit. There is a BIG difference between wanting to fight creditors and collectors and being able to actually follow through.
Credit reporting and scoring are more complex than the IRS tax code and we don’t even have any official publications explaining the rules. Telephone calls are NOT suitable to make recommendations for IMPORTANT issues impacting on peoples’ lives for many years to come.
Monday, November 09, 2009
Reader mail: How does removing a collection or a bankruptcy bring down the credit scores?
How does removing a collection or a bankruptcy bring down the credit scores?
Removing a collection will NOT bring down the FICO scores.
ALL collections reported as such (not tradelines) SHOULD be deleted. However, removing the bankruptcy often lowers FICO scores when you still have derogatory accounts reported.
That’s because the FICO scoring models (about 10 different formulas) will rate derogatory accounts less severely when you also have the public record bankruptcy reported.
And that’s why I’ve seen FICO scores OVER 720 frequently WITH the bankruptcy public record AND with many correctly reported discharged accounts.
And of course you’re dead meat if you submit false disputes to get the bk deletion (as the credit repair companies do), then an old discharged account is reported incorrectly, your score goes to 590 and what are you going to do?
You just LIED to bureaus about the bk. Your FALSE disputes and in the case of credit repair company disputes MORONIC letters are scanned and stored by the credit bureaus for MANY years.
Wednesday, October 14, 2009
Reader mail: Credit reporting of authorized user for deceased husband’s credit cards
I’m an authorized user on my deceased husbands credit cards. I have been making payments on the cards but, it is getting hard to keep the payments up. If stop making payments will this have an impack on my credit.
thank you ...
There are TWO issues - the credit rating and the ability of creditors to pursue YOU for the debts.
Re. credit reporting:
1) First notify the card issuers that you are no longer an AU and return the credit cards to them.
2) Dispute with all three credit bureaus who report the accounts (often not all report) and advise that you are no longer an authorized user.
Re. COLLECTION efforts by creditors and collectors:
Whether YOU are liable depends on YOUR STATE LAW and whether the debts were COMMUNITY property.
Of course the estate is also liable, but if there are no assets (as so often), creditors often turn into the most vile predators you can imagine. The HORROR stories I’ve heard are unbelievable and I personally know people who were continually harassed by creditors and collectors for their PARENTS’ debts—no matter how many times they explained that they weren’t their debts.
The bigger the bank, the more vicious the collectors. I had a neighbor who was tortured by Chase. I’ve seen major litigation such as MBNA pursuing an AU because she also made the payments. You can count on them trying to hold you legally liable because you made payments even if you’re not in a community property state. You should get some legal advise for YOUR state.
BUT—if there’s nothing they can take from you and you’re (near) judgment-proof, you might as well stop paying.
Friday, October 02, 2009
Reader mail: Experian updated discharged charge-off and score went down 100 points
Good Morning,
I came across your blog and wanted to ask you how everything turned out? I ask because Experian just “updated” a charge off that was included in bankruptcy, and took my credit score down 100 points! the other two bureaus left it alone. How can this be that an “update” to an item that is correct takes down my score?
Can you please help, advice, or give me feedback?Thanks,
...
I don’t know WHICH blog you read, if you’re referring to my post Experian REFUSING to correct rehabbed student loan and incomplete and false Afni collection reporting—attorney Chang forwarded my email to an Experian in-house attorney and I’m waiting for the response.
My first question regarding your problem:
WHICH score went down 100 points?
Since Experian FICO scores are no longer available at myFICO.com, I suspect you are looking at the COMPLETELY USELESS bureau scores used primarily to deceive consumers and of course to increase the credit bureau profits. MOST lenders use FICO scores and I documented that they can differ from the bureau scores sold to consumers by 50 or even 100 points.
Please read Credit Scoring Basics for more information.
If you actually got the Experian FICO scores because you’re applying for a mortgage, you should also have the score factors and the change in factors should provide important clues. And of course you can compare the reporting on the Experian reports—what EXACTLY was updated?
For FICO scores the Experian STATUS DATE is very important. I documented years ago that when Experian changed the status date for a discharged account to a more RECENT date, the FICO scores were lowered dramatically. That’s because the more recent an account was charged off or discharged, the lower your FICO scores.
They could also have removed the bk notation and/or reported a delinquent balance. But without actually reviewing the reporting, I can’t say what happened.
To learn more about FICO scoring and how to analyze your reports, please subscribe to my CreditFactors knowledgebase and forum.
Wednesday, September 30, 2009
Reader mail: credit reporting of settled HELOC
I settled my HELOC loan with Wells Fargo for less than the full balance. But I was never late/delinquent. In their letter to me, Wells Fargo states that they report to credit bureaus as follows: “Paid and Closed, for less than full balance, with no delinquencies in the account.” Equifax and TransUnion report this account as “Paid as Agreed”/”Closed” and only under comments they have “Paid and Closed, for less than full balance”. Experian reports it differently; their account status states “Paid in Settlement” and because the status is something other than “Paid, Closed/Never late”, they report it as a Potentially Negative Item. I called and asked them why they look at my Wells Fargo account as a negative item when the account was always current and settled. I assume “Paid, Closed/Never late” is more appropriate description. They disagree. Do I have a case or you think I just got lucky with Equifax and TransUnion?
You did NOT get lucky with Equifax and Trans Union. They both report the account as settled. The DEROGATORY comment is all it takes to have the account rated just like a charge-off for FICO scores.
NOT paying the full amount as per the contract is definitely NOT the same as paying an account as agreed.
However, since you were never late, one could of course argue that WF agreed to the NEW terms.
One could consider it a loan modification, but most likely a judge would rule that they can also report the account as settled (because it’s true)—and that’s derogatory.
You SHOULD have negotiated the CREDIT REPORTING at the time of the settlement.
When it comes to these negotiations, YOU are in charge if you’re willing to WALK AWAY from the property. The lender either agrees to the terms or gets wiped out when the 1st mortgage forecloses.
You need to review your myFICO reports to determine the impact of the settlement comments on FICO scores. The reported DATES are very important. If it’s your only derogatory account and you have other POSITIVE OLD tradelines, your scores should not be impacted too much. Carefully review the score factors to determine how the HELOC is rated.
If you have a legitimate dispute and they then report the account as disputed to the credit bureaus, it shouldn’t impact on FICO scores. Review your accounting and you might find some disputable charges or maybe there’s something incorrectly reported to the CRAs. If your credit is important, it might be worth the effort.
It’s really too bad that the people who SETTLE their accounts instead of just walking away from their overmortgaged homes get punished for the next 7 years with higher interest and insurance rates.
