High Foreclosure Rate Prompting Credit Score Changes

The next time you apply for a loan, you're likely to face even tougher standards than those already clamped on the consumer credit market by wary lenders. The still-soaring foreclosure rate is prompting changes in the way the nation’s major credit bureaus evaluate credit risk and determine credit scores. Changing consumer attitudes about credit responsibility sparked by the devastated housing market, high unemployment and a recessionary economy have too often left mortgage lenders holding the bag. An increasing number of homeowners, even those with respectable credit scores, are handing over the keys and walking away from their mortgage loans.

When the bottom dropped out of the housing market, a significant number of homeowners found themselves paying high interest rates on homes that were worth only a fraction of their mortgage value. Battered by layoffs and reduced incomes, unable to sell their homes in the stagnant post-bubble housing market and angry at the banking/financial industry they held responsible for their woes, consumers lashed out. An “I don’t care any more; let it be someone else’s problem” attitude surged across the country. Homeowners that just a few years ago would have quailed at the disgrace of defaulting on their mortgage loan chucked the keys at their lenders and walked out the door without a backward glance.

The nationwide change in consumer attitude took the lending industry by surprise. The long-held assumptions used to evaluate credit risk were turned upside down. Borrowers with good, even excellent credit scores who had always been considered a dependable credit investment could no longer be counted on to honor their debts. Finding themselves rudderless in shifting seas, the two systems used to determine credit scores in the U.S. — Fair Isaac and VantageScore Solutions — grabbed back the tiller late last year and started charting a new course that would more honestly reflect actual credit risk in today’s stormy mortgage climate.

The revised credit rating systems scheduled to be introduced the first half of this year and will increase the weight placed on the more subtle signs of financial stress that often contribute to late payments and default. Depending on how you stand on the new credit score rating parameters, you could see your credit score go up or down by a significant number of points the next time you apply for a loan.

To find out more about Peak Credit Solutions along with testimonials and frequently asked questions, visit us at www.peakcreditsolutions.com

Why Not Dispute Online

Never Dispute Online

Disputing online sounds fast and efficient right? Wrong! Disputing online was created to make the credit bureaus jobs easier not yours. There is little regard to consumer interests when disputes are generated online. When fixing or improving your credit, it is not about making the job easier for credit reporting agencies but for them to actually do their job!

Don't dispute online because:

Time - The credit reporting agencies do not have to process an online request. The online dispute gets tracked automatically and a request to verifY is automatically forwarded to the data furnisher through E-Oscar. The restrictive 30 day clock is accomplished easier if everything is automated.

Paper Trail - With online disputes there is no paper trail to evidence the details of the dispute.

Limited Dispute Reasons - With the limitation of dispute reasons, an accurate description of the dispute is difficult in most cases.

"Expeditious Dispute Resolution"- The Fair Credit Reporting Act, FCRA, section 611a(8) changes the standard requirements and protections afforded to the consumer by the FCRA. Feel free to look up this section of the rule but in essence, the credit bureaus are allowed to cut corners when doing their investigation into you case. They also are not responsible to provide their methods of confirming negative information on a credit report.

To conclude, always send in any dispute having to do with derogatory information via the USPS and send it certified. Make the credit bureaus supply you with the proper verifications in writing that if need be you can dispute at a later date. Have a game plan around what to do next if you do not get the favorable response you require. Remember you do have rights as a consumer to challenge any information on your credit report that you feel is not accurate.

Solid Strategies to Avoid Credit Card Smackdown

We’re officially four months away from the Credit Card Holder’s Bill of Rights going into effect. And, if certain Democrats have their way, we’re only thirty days away. But, for the sake of argument let’s assume that the CARD Act provisions will wait until February 2010 to become enforceable law.

During these last few days of the credit card world’s version of the Wild Wild West we should continue to see credit card issuers behaving badly, very badly, (see past blog on Banks Acting Badly), in fact the mega-credit card issuers have a shrinking window of opportunity to finish remolding their cardholder base to look more like what they will finally deem as being to their liking. This means consumers will continue to suffer the at the hands of their credit card companies, that is of course unless they employ one or more of the following strategies.

1. Don’t Not Use Your Card – Ok, the poor grammar was intentional and corny but I think I’ve made my point. Credit card issuers are in busy to make money and make a profit. They can’t do either unless you are using your credit card. And, the best news is that you do not have to carry a balance from one month to the next in order to drop a few dimes in your credit card issuers pockets. Each time you use your credit card the merchant (aka the place you used the card) has to pay the bank a fee. This fee is called interchange. It technically comes out of your pocket because many retailers will build the assumed fee into the price of the merchandise but it sure doesn’t feel that way when we buy stuff with our credit cards. So, knock the dust off your cards and use them for modest purchases. Don’t revolve a balance and don’t get into a position where your balances spiral out of control and you’ll be fine.

2. Shut Up! – In the past a viable strategy to get fees waived and interest rates lowered was to call your credit card issuer and complain or otherwise plead your case. That’s still a decent strategy but beware. Your credit card
issuer might turn the tables and start asking YOU questions in order to determine whether or not they still want to do business with you. If you call them and THEY start asking questions about your job status and salary then end the convo and hang up or you might just end up with a closed credit card.

3. Open Another Card, NOW – One of the worst strategies I see people employing today is the 1-card strategy. This is a consumer who has swallowed the Dave Ramsey gospel hook, line and sinker. The problem is that it’s unrealistic and appealing only to the lowest common credit denominator. You should have MORE cards, not fewer cards. Clearly this is a credit score play as well since having more available and unused credit limits are always good for your credit scores. So, if you have one or two credit cards right now, think about opening at least one more. This gives you options in case one of your credit card issuers starts behaving badly towards you. Nothing
is more empowering than saying “I’ll take my business elsewhere” and then actually doing it.

4. Don’t Hide Behind Great FICO Scores – FICO published a study earlier this year and the findings showed that the median FICO score for a consumer who has seem his or her credit limit reduced was 770. A 770 FICO score is fantastic in any lender’s book and especially in this credit environment where lenders are gravitating to stronger borrowers. What this means is that just because you have great FICOs it doesn’t fully shield you from adverse treatment from lenders.

5. Go Small and Go Local – John Ulzheimer, founder of http://www.credit.com/ and a nationally recognized credit expert and he made an interesting point. He said that we, as consumers and watchdogs, tend to focus on the largest 5-10 banks and tend to forget about the thousands of lenders who are NOT treating their customers poorly. Credit unions are a great example of these lenders. If you are sick of how you’re being treated by your Manhattan bank then perhaps you need a local credit union or local bank on your side.

6. Don’t Exit The System – The blogs are on fire with angry consumers who are claiming to have sworn off credit for the foreseeable future because of how they are being treated by their lenders. “From now on if I can’t pay cash for it I won’t buy it.” Eh, that plays well on the big screen but it’s not realistic. Carrying around cash to pay for things is a bad idea. And good luck using debit cards for things like business travel and European vacations. Stay in the system, please.

7. If All Else Fails, Litigate – If you’re finding yourself saddled with a garbage credit report because of errors and you can’t the credit bureaus or lenders to correct your files then think about filing a lawsuit. You certainly wouldn’t be alone. There will be over 8,500 credit related lawsuits filed this year. Collections agencies are the targets in most of them but certainly the credit bureaus and lenders are in the cross hairs a fair amount too. Just be
sure to hire a lawyer who knows what he’s doing.

So there you have it, seven solid strategies to hopefully minimize your chances of being treated poorly by your creditors. And while there are certainly no guarantees that you’ll exit this credit environment without a few scars, you can certainly make yourself as immune as possible by doing a few easy and inexpensive things. Good luck!!

Visit us at http://www.peakcreditsolutions.com/