Individual FICO scores after marriage stay that way
Mon Sep 6, 2010 02:09PM
Joint credit score misconception is something I have been finding really hard to grasp. Bunch of people I know, some considered somewhat intelligent, think quite adamantly that once married, a couple has a joint FICO score. Last Friday finally, I had enough. I was at the wedding rehearsal dinner, have you ever heard of that one by the way? - where several young kids were talking about the importance of marrying someone with good credit score, because it is going to greatly affect their future joint FICO score. One did the talking, others nodded vigorously in support. To my shear horror, one was majoring in finance with a year to go, and the other was about to take an entry level accounting position at downtown firm. I did not say anything but I am putting it here, in the clearest way.
Spouse bankruptcy, authorized user vs joint account holder
Fri Sep 3, 2010 01:09PM
Q: Here is the problem, I have been rebuilding my credit history for the last 4 years and have 690 score with Equifax. My wife lost her job 11 months ago and has been unemployed since then. By now we have no other choice but filing for Chapter 7 bankruptcy in her name only. She has mortgage in her name only as well as approximately 18,000 in credit card debt which we can't pay. My wife will most certainly foreclose also as we tried to short sell but got no offers. I am not on the mortgage, so my credit report should be clean from both bankruptcy and foreclosure, then once she gets a new job I can buy a house sometime in a future. Yesterday, my friend who is a loan officer at the local credit union ran my credit report and pointed out that I am listed as an authorized user on her Discover which is 90 days late, and Capital One which is 120 days late, and will be hopefully discharged in the bankruptcy. I want to remove both accounts from my credit report. My friend tells me not to worry since I am not a joint account holder but authorized user only. Still I am very worried. How can have credit bureaus to remove these accounts?
A: You should stop fretting, just like your friend explained, as an authorized user you are not legally liable to satisfy the credit card debt in the event when the principal who is your wife, unable to pay. Had you been a joint account holder for these credit cards, then you would have been very equally responsible for the balances and legally liable for the entire amount on Discover and Capital One. To have credit bureaus remove both accounts from your name, start a dispute and explain that these are not yours. They should comply, but even if they don't, don't worry too much. It should not affect your credit score or rating.
Debt collection payment and credit score
Fri Sep 3, 2010 11:09AM
Q: I have $530 outstanding with debt collection agency from my old Discover card account. They offer me to settle for one time payment of $447 or instead, I can make 6 monthly payments $104 each. What is better for my credit score?
A: Neither. When collection is paid, the account status changes to Paid Collection which really can make your credit go lower for some time. In best case, paying debt collection account no matter which way, will not change anything about credit scores. Try offering them something like $400 which is close to 75% of what you owe, for deletion of this record from your credit report. This is called Pay For Delete and you will find this debt settlement letter helpful.
Credit score drops by 75 points because of American Express untimely reporting
Thu Sep 2, 2010 06:09PM
Don't go above the credit limit on your credit cards. It may really throw your plans in disarray. But things like this one happen quite frequently, believe me. Friend of mine was prequalified for a mortgage few months. He had several rather big issues in the past but has been a law abiding citizen for the last 4 years, at least in credit terms. His scores were 688, 679 and 660 with Experian, TransUnion and Equifax respectively. Finally he found a property on short sale. His offer was accepted 4 weeks ago and he was ready to go. Once his mortgage broker reran his credit, which he had to do, the new credit scores came lower. Experian was the worst at 613 and first, the 75 point drop was impossible to explain. Nothing looked bad enough to justify such a decrease. Except that American Express account was over the limit for about 2 days by just $3 and some change.
He paid American Express account down to bring it well under the limit, but it was too late. American Express has just reported his over-the-limit account and that literally killed his credit score. After he paid it down, it took American Express 10 days to report the new account status. Not because it wanted to ruin his chances to buy a house, but because that how American Express reports. Once the account was reported current he recovered quite a bit albeit not entirely, and had to write a letter of explanation. Closing was also moved, but hopefully he will get the house. The bottom line is, no matter how little you go over the limit on credit card and for how short of a time, credit card issuer may happen to report in the most inopportune time.
How to refinance mortgage if you cosigned for student loan
Sun Aug 29, 2010 05:08PM
Q: I wonder how to refinance my home loan. I owe about $150,000 on the mortgage and $30,000 on the line of credit. My house is worth conservatively around $250,000. I am only looking at the first mortgage. I am about 6 years into the 30 year fixed rate mortgage at 5.375% and thinking about 20 year term. I earn $90,000 a year and credit score is above 730. My biggest concern is that I cosigned for nephew's student loans. He owes close to $130,000 and has paid since April, $615 per month. Is this going to negatively affect my credit score and interest rate?
A: The fact that you are a cosigner has very little to do with the interest rates in ongoing mortgage and housing mess. And as long as the nephew is paying on time, will not do anything to your credit scores. However, it has everything to do with debt to income ratio which is the decisive factor if you are to qualify for the new mortgage. So stop worrying about would be mortgage interest rate and start worrying about your recurring monthly payments like credit cards, auto loans, child support, alimony, etc. How to go about? Just put them all on the piece of paper including that $615 student loan payment, because as a cosigner you are responsible. Then sum all the payments up and divide the resulting dollar amount by your gross monthly income. Gross means before taxes. The resulting ratio between your monthly payment amount and gross income with today lending guidelines should be under 50%, to the best knowledge.
The only way for the payment on student loans that you cosigned for not to be counted against your monthly expenses is to show 12 to 15 monthly bank statements that prove that the nephew is paying on time without you helping him. While you are still responsible for this loan as a cosigner, such a payment record would show that he can handle it himself. Here is some relevant reading,
Erasing or disputing cosigned student loan won't work
Cosigning a student loan - a sure way to ask for troubles!
How to build credit history fast
Tue Aug 24, 2010 11:08PM
It's important to learn how to build credit history fast, because it is going to save you money. And on the long run, lots of money. When you build credit score fast and reach certain level, you see immediate results - better loan terms with less fees and lower interest rate. Paying extra $50 a month doesn't seem much to many of you, but it amounts to $600 a year, enough to take vacation or buy a new set of tires and decent ones. So how can you achieve this? You can compare the process involved to build your credit history with the battle to lose weight. Do it too fast and it can cause more harm, so credit building takes time and there is no quick fix. One must manage his or her credit responsibly over time. The tips provided here are for someone who has a decent credit history without too many delinquencies and wants to raise credit score further. If you have real credit problems and want solve them fast, see quick credit fixes.
Cease and Desist letter to payday loan company
Sun Aug 22, 2010 01:08PM
Q: Where can I have Cease and Desist letter template for payday loan companies? Can't find any. I have had payday loan issues for a year, paying as little as possible. Now, I started paying my debts back in earnest to all 4 payday loan companies. Comes out to $140 a month and I should be done in 15 months, including fees, interest, etc. I owe close $1,800 altogether, $450 a piece. I sent certified letters to all 4 with detailed explanations that this is what I am planning to do and they'd better take it. If not they won't see a dime. I hit a rather rough patch 2 years ago and had to use payday loans. Now I am in great financial shape but being smarter, they will never be able to get anything unless I am willing to pay. I figured that $300 in interest is enough for them on $1,800 loans total. Each is going to get its $75 share in interest. They made their money on me. Of course, they do not like it.
Now I need some sort of Cease and Desist letter. I want them to stop calling my home and my cell which they had since I had to cancel my land line. They do not know my work number. I do not want to talk to them on the phone, period. They do not like my proposal, they can send me a letter, but no calling. I have already told several times to each of these payday loan companies that this is as good as they get it, period. I can change my both phone numbers, I can even disconnect my home line, but before I would do that, I want to have payday loan shops shut up.
A: I suspect that the reason you can not find templates or samples is because Cease and Desist clause is only applicable to the collection agencies since only a debt collection agency is bound to follow the Fair Debt Collection Practices Act. Not the original creditor which is what a payday loan company is your case. Besides, Cease and Desist forces debt collectors to stop all forms of contact with a debtor, written included. You can try the following letter which asks your payday loan companies to refrain from calling you.
Settling credit card debt with Chase - why settle?
Wed Aug 18, 2010 10:08PM
Q: I have two Chase credit cards with total debt of $27,000, around $12,000 and $15,000. Think of settling this credit card debt and can not decide if I should go with a debt settlement company or do it myself. I mean I am unemployed for 5 months and have nothing much going, so I can just start settling with Chase without any help, at least try. I have may be $10,000 in savings and are moving with my brother since I will be loosing my house to foreclosure soon. So I can offer them around $5,000. I am afraid that once I am foreclosed and my credit is ruined, Chase won't be settling on good terms.
A: Before you start settling see if there is another way out. I mean, you are unemployed, about to get foreclosed and you are worried about credit card debt? No matter which state you live in, you sound pretty insolvent to me. By the way, settling credit card debt with Chase or every other lender should be done without any third party dent settlement shop. What you need to do is start talking to a bankruptcy attorney because you may be riped to file Chapter 7. Depends on how long your unemployment benefits will continue, how much you are getting and what are your expenses.
I would not worry about what Chase would offer later. If you are not working and will lose you home shortly, Chase or any other lender will probably offer you a good deal. They understand your credit is ruined regardless and you have nothing much they can garnish as I do not think any state allows garnishment of unemployment benefits. Had you worked then it would have been totally opposite scenario. Chase would see that your biggest monthly expense - your mortgage is gone and would be going hard after your paychecks if you give them hard time settling credit card debt on their terms.
But that is besides the point. Now you need professional help, so find a qualified bankruptcy attorney and have him or her go through your finances. I have a gut feeling, you will be in much better shape a year from now, at least debt wise.
Sued for credit card debt
Sun Aug 15, 2010 09:08PM
Got several credit cards and decided to go on a shopping spree. Big deal, it is an unsecured debt after all. I can not be sued for credit card debt, there is no collateral, what they going to do to me? That was the topic of conversation among three dummies in their 20s that I overheard in the car repair shop. Recent immigrants, rather fresh of the boat. When I tried to explain them that unsecured debt doesn't mean that repaying such a debt is optional, they looked at me like I was insane. I went quite patiently on, saying - you sign a contract with credit card issuers when you apply for the credit cards, which specifically states various ways to collect the unsecured debt, including turning it over to a collection agency and taking you to court. If you are in default, you are in breach of that contract. And yes, you can be sued to recover unpaid debt. At this point the conversation started getting a bit heated so I wished them all the best and left thinking that I need to write about it. So here goes.
Debt reaging - what you should know
Wed Aug 11, 2010 10:08AM
There are basically two types of debt reaging and several important points about each to know. We will cover both in details. The first type is when the lender is reaging debt on consumer request. If you have a past due account, you can request the creditor to reset it anew. Reaging a delinquent account amounts to your creditor setting the account due date back to current. If you missed a few credit card payments and your creditor agrees to reage your account, then the missed payments are gone. Not all lenders reage past due accounts. Those that do, must follow two federal guidelines,
- creditors may only reage an account once in a 12-month period and
- twice in a 5-year period for open-ended accounts like credit cards
The account will be considered for debt reaging only if,
- you show a renewed willingness and ability to pay
- your credit card account is at least 9 months old
- you must make at least 3 consecutive minimum monthly payments
Helpful Links
Recent Entries
- Individual FICO scores after marriage stay that way
- Spouse bankruptcy, authorized user vs joint account holder
- Debt collection payment and credit score
- Credit score drops by 75 points because of American Express untimely reporting
- How to refinance mortgage if you cosigned for student loan
- How to build credit history fast
- Cease and Desist letter to payday loan company
- Settling credit card debt with Chase - why settle?
- Sued for credit card debt
- Debt reaging - what you should know
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