Short Sales Purposely Reported As Foreclosures To Ruin Future Buyer's Credit

Short sales are known to be a great alternative to distressed homeowners who are facing foreclosure. In a short sale, banks will accept a lower amount than the homeowner owes on the property in an effort to avoid foreclosure.

Imagine being able to sell your home, avoid foreclosure, and have a chance to start anew.  You check your credit report to begin the task of rebuilding and... your short sale is being reported as a foreclosure of bankruptcy!

This is exactly what happened to persons who completed a short sale on their home with Wells Fargo & Citigroup Mortgage.  A judge has ordered they face claims of violating federal law by falsely reporting that thousands of homeowners went through a bankruptcy or foreclosure.

Consumers were able to provide proof to support their claims that Wells and Citi furnished inaccurate information to Experian, crippling their efforts to obtain a new home loan in the future.  What's really the kicker is that once the error was disputed by the consumer, Experian failed to conduct a true investigation, which is required according to the Fair Credit Reporting Act; and Wells & City were slow in correcting; often sending verification letters confirming that the error was reporting accurately!

According to the bank's representative it was merely a data entry clerical error.  My thinking is, if that was the case you would have corrected it upon being notified, right?  Umm, Hmm.  They will have to face the judge and the 1000s that were victimized by their 'clerical error';  Well, Citi AND Experian.

If you'd like to look it up; the case is Shaw v Experian Information Solutions Inc et al, U.S. District Court, Southern District of California, No 13-cv-1295.  Victims are seeking damages for violations of the U.S. Fair Credit Reporting Act.


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Credit Repair Companies - Revealing The Truth

I read a lot about the finance industry, from personal finance tips to ways on increasing your credit score to companies to stay away from when getting back on track to financial solvency, and I must say, most people who write about credit repair companies don't know squat!

It's really surprising that they call themselves 'experts' when they really just regurgitate the same mis-truths that have been spinning around for years instead of doing the real work of investigation that comes with being an author. I mean, a very well respected personal finance guru actually told a person writing in that there was nothing she could do about her bad credit but wait for it to fall off! What?! 

Here's the deal.  You can repair your credit and it is legal for a credit repair company to assist you. The Fair Credit Reporting Act makes it possible for you to challenge negative information on our credit reports.  Over 40 million Americans today have errors on their credit report; making those items eligible for deletion.  Now, if you are a company that makes billions of dollars storing and selling this information, how would you feel about businesses out there that educate consumers about their state and federal rights to challenge these errors, have them permanently removed from their credit reports, thereby improving their scores?  Not too happy with them right?  

Let's face it; these private. FOR PROFIT billion dollar companies - Equifax, Experian and Transunion - make a TON of money reporting and selling products to consumers and companies on bad credit.  We cut into their profits by successfully removing bad credit from consumer's credit reports!  So, they've put out information to confuse the consumer who could really benefit from having a professional on their side.  It's not all non-truths; they simply put out 1/2 truths and pump those up until they're believable.

So, let's address some of these partial truths.  

1.  There's nothing a credit repair company can do for you that you can't do for yourself.  

This is true. Just as you are able to file your own taxes without the use of a Tax Preparer/CPA or purchase and sell a home without a Realtor, or make investment decisions without a Financial Planner, you can repair your credit without the use of a credit specialist. So... why use one?  The same reason why you would use a tax preparer, realtor and financial planner!  You want someone who is well versed in the law, is extremely educated on consumer rights as it relates to Federal and State laws, and who is experienced with how to handle 3rd party debt collectors, credit bureaus, and original creditors.  Someone who's read and is educated on the Fair Credit Reporting Act, the Fair Credit Billing Act, the Fair Debt Collection Practices Act, the Telephone Consumer Protection Act; the Fair and Accurate Credit Transaction Act (2003); state laws and case laws; just to name a few.  To think that an average consumer would read through all of this is ludicrous.  Now, I have had some people be very successful in repairing their credit and have taken the time to do this; and I applaud them for this.  Similarly, I've had people sell several properties without ever paying a commission fee to a Realtor, kudos to them.  The average consumer, however, does not have the time or the desire to do this.  Plain and simple.  If you want proof, look up lawsuits and any of the 3 credit bureaus.  You'll see the millions of dollars they've had to pay out for blatantly ignoring disputes with proof of inaccuracies from consumers who were repairing their credit on their own.  

2.  Do not trust any company that charges up front. This is partially true.  The whole truth is that there are companies and professionals who are exempt from the Credit Repair Organization's Act (CROA) rule and who can charge up front fees; these vary slightly from state to state but for the most part include:  non-for-profit 501(c)3 companies, government agencies, attorneys, real estate brokers, loan officers, and debt counseling companies who are acting in the course and scope of their profession/license.  If you'd like to learn more on this Google your state's CROA laws (yes, it's that readily available).

3.  You cannot have true information removed from your credit report. Well, if the event is true but is reporting incorrectly, it can be removed.  I can't tell you how many bankruptcies I've seen reporting the discharged amount as $0.  REALLY???  Someone filed bankruptcy because their $0 debt was just too much for them to handle!  Yes, information that has really occurred can be removed from your credit report.  We've had 1000s of public records removed because they were not accurately reporting on our client's credit reports. Wrong counties, wrong courts, wrong amounts, wrong account numbers, wrong dates, wrong, wrong, wrong.  Which is why we delete, delete, delete!

4.  Negative information has to remain on a credit report for 7 years.  NO.  The law limits negative credit information on a credit report to 7  years (in some cases it's 7 years & 6 mths or 10 years); meaning it can come off anytime before that.   This means that nothing has to stay on your credit report at all.  As a matter of fact; none of your creditors have to report anything on your credit report; that's all voluntary.  Thus, negative information does not have to remain on a person's credit report for 7 years.

5.  Only Consumer Credit Counseling Services (CCCS) can legally help you fix your credit.  Are you kidding me?  You'd be amazed at how many of my clients come to me after a CCCS has screwed it up!  Not to say that they're all bad; I've referred some of my clients to them when they needed to get a handle on debts because they'd gotten way over their heads; I give my clients all their options from debt consolidation, debt management plans (which is what consumer credit counseling is), debt settlement, and bankruptcy; along with the pros and cons of each.  From there it's a personal decision. 

Nonprofit consumer counseling services are funded and regulated by credit grantors and credit bureaus. Gasp! That's why they direct you to them!!!  When you work with these agencies, there is a note placed on your credit so that any lender that pulls your report knows you are paying your debts through a debt management plan with a CCCS.  Lenders view this just as negatively as a Chapter 13 bankruptcy.  Don't believe the hype.  CCCS are not credit repair organizations; they are debt counseling agencies that help you pay your debts by creating a plan to pay off all your debts.  That's it.

6.  The credit bureaus lets me submit a 100 word statement to explain my story to potential lenders that I want to do business with in the future.  Yes, they do allow you to submit a 100 word statement; but what you don't know is that you have just admitted all this negative debt is yours,  You're basically saying, "Yes, I could not pay this debt because..."; it does not change your score or the information on your credit report; and you've done nothing to improve either by submitting this statement.  In reality, you've just made it harder to dispute any errors that are reporting in the future. Further, lenders don't consider the information you've submitted in your statement.  They could care less; they only review the data that their system pulls from the credit bureaus about your credit worthiness.  Therefore, if you've submitted a 100 word statement to the credit bureaus, ask that it be deleted immediately.

7.  If credit repair companies are successful at getting anything removed, it'll just come back on in the future.  Another partial truth spread like wild fire by the credit bureaus via the media, finance 'gurus' and government agencies.  The truth - once legally removed it cannot be put back on your credit report.  If the creditor initially verified the item the account may still be deleted at a later date as the credit repair process intensifies.  Further, if an item was deleted due to a slow response time by a creditor; the credit bureaus must notify you in writing 5 days prior, or it must be deleted again. Some times collection agencies will sell a debt and the new collection agency will report it; they'll just have to re-delete it.

8.  All credit repair companies are scams and are not to be trusted.  Every industry has some unethical members and the credit repair industry is no exception to that; you can Google crooks in every industry known to man and will find many faces.  However, to state that an entire industry is wrong is just.... wrong!  Especially when you have professionals such as myself and my team who go above and beyond to operate ethically, morally, and with integrity and who genuinely care about the clients we help.  It should not surprise you by now that a lot of the negative information about credit repair organizations stems from credit bureaus themselves.  They've publicly admitted that over 30% of the disputes they receive come from our industry and it ads to their overhead and directly affects their revenue.  They hate us. The work we do, however, is vital.  We help our clients save thousands of dollars in interest rates, loan terms, insurance premiums, rent payments, utilities AND MORE.  Where's the scheme in that?

I hope this helps!  Hopefully yours eyes are open now to the real schemers out here.  And if you need assistance getting your credit back on the right track; please do not hesitate to reach out to me.  I'd love to help!

Multiple Collection Accounts For The Same Debt - Who Do I Pay?

Q & A:

"I have a number of collection agencies reporting the same debt on my account. Is this legal? I don't mind paying it off since it's not much but how do I know who to pay? If I do find out who to pay should the other collection agencies be allowed to stay on my credit report if I no longer owe them?"

Great question! It is common for people to have a number of collection agencies on their credit report for the same debt. It is legal IF the ones that no longer own the debt mark their tradeline (the item they have reporting under their company) as CLOSED or TRANSFERRED. Only one collection agency should have an open or active tradeline showing for you for that debt. If you look at your credit report again you may see the original account on there as well; it's typically marked as CHARGED OFF; meaning it's no longer an active debt. Whenever you see CHARGED OFF, CLOSED OR TRANSFERRED it means the account is closed or no longer active.

So, I would normally suggest to look for the company that is active, but in your case because there are so many companies I would send them a validation letter to see who owns the debt. Not doing this may run you the risk of paying a company that no longer owns the debt and still being liable for the debt with the company that does own it - not a good situation to be in. Further, there's a lot of fraud out here when it comes to collection agencies; many 'ghost' companies pretend to be the owner just to take consumer's money. Another point to mention is that if a debt has passed to a few collection companies, the chances of them having all of the paperwork they need to collect from you in the first place is slim.

So, send a validation letter so that the collection agency can prove that they own the debt.

As far as the reporting on your credit report; the 'Date of Last Activity' or the 'Date of First Delinquency' should be the same on every single company that has ever tried to collect from you for this debt. This is the date your payment was first missed and never made current again. A collection account is a continuation of the debt with the original company. Thus, the dates must remain the same so that it can be deleted at the same time. If it is not the same; you have grounds for a deletion based on inaccuracies. Because a collection account is treated as a continuation of the original debt, it will be deleted at the same time as the original account.

In addition; if you're going to pay the debt; make sure that it is not past your state's statute of limitations. You didn't tell me what state you're in but a quick Google search will give you the answer. If you're going to pay it in full, you don't have anything to worry about. If, however, you're going to settle, beware; you will restart the clock on the statute of limitations giving them more time to pursue you for the remainder of the debt - namely take legal action against you.

Hope this helps! If you need further assistance feel free to contact me to review your report.

~ Netiva

Will Paying A Charge-Off Improve My Credit Score

I get asked quite often if paying a collection or charge off or some other negative item listed on a credit report will improve a credit score.  The answer is always the same...

NO.  Once a negative tradeline always a negative tradeline.  

A charge off is when a creditor does not receive payment for around 6 months and eventually 'charges it off'' on the company's receivables as a loss and closes the account so that you own't be able to use it anymore.  Once this happens the creditor will report the charge off to the credit bureaus so that it can be placed on your credit report.  This does not mean that the debt is no longer owed (although I have my personal beliefs about this rule).  The company will still report both your past due amount and the amount owed on your credit report.

The effects of a charge off can be detrimental If the consumer had a pretty high credit score at the time the charge off was reported.  If the credit score was not that high due to other negative information being reported, there won't be much of a drop in the score. 

The charged off account can remain on the credit report 7 years from the date the first payment was missed - often referred to as 'Date of Last Activity' (DLA).  The amount showing charged off on your credit report should be for the balance that was written off. Now if you notice, I said that the charge off can remain on your credit report for 7 years; NOT THAT IT HAS TO.*

If you decide to pay off a charge off just keep in mind that it will do nothing to positively increase your credit score.  It'll just change the reporting message from 'Charge-Off' to 'Paid Charge-Off'.  The original amount written off will still be reported in the account history as well.  Thus, whatever positive payment(s) you've made on the account after it was reported as a charge off won't matter - it will not be reflect or reported on your credit.  The damage has been done.  The only way to repair the damage done to your credit is to replace it with newer, positive credit information.  

Now, I am not advocating not to pay off your past due debts, I just want you to know what to expect - or not expect - when you do as it relates to your credit score.  From a lending perspective, they like to see 'paid' charge off rather than just 'charge off' depending on how old the debt is.  If it's a charged off debt that is over 3 years old and you've managed to add additional positive tradelines to your credit report since then; that'll have more weight on their decision to lend to you than an old charge off lurking around.  

Hope this helps!  As always if you have any questions, feel free to contact me; and if you'd like assistance removing negative charge offs, collections, and settlements from your credit report; give us a call!  We've successfully removed over 480,000 of these accounts from our client's credit reports!  

~ Netiva

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Can I Remove An Unpaid Tax Lien From My Credit Report?

The short answer is yes. Anything that is inaccurate or unverifiable can be removed from your credit profile. With tax liens, however, if it remains unpaid you cannot avoid them. 'Them' meaning the IRS.  Just because it is not on your credit report does not mean you no longer have to pay them. It also does not keep lenders from finding out you have a tax lien and not granting you credit; most underwriters conduct a lien search prior to approving you for a loan.

The best method of permanent removal is to pay them either in full (if you have the money); negotiate an Offer in Compromise (pretty simple to do and the form with instructions are available on the IRS website; you can hire an attorney or accountant to do it for you as well) or to do a payment arrangement.

Since 2011, federal tax lien codes changed disallowing tax liens under $10,000 from being placed on credit reports. Any tax lien over $10,000 can be reported on a consumer's credit report, but can be removed by entering into a payment agreement and making 3 successful, consecutive auto-debited payments (Fresh Start Initiative). The lien will be released and removed from credit reports. I've only seen this happen for debts less than $25,000 but I've been told that persons with debts under $50,000 are eligible. You will not be approved for this if you have any other outstanding IRS debts. Once you've made your 3rd payment (or final payment) you can go on the irs.gov website and complete form 12277; which is an application for withdrawal. You will be notified of the approval (it's not automatic) within 90 days. I have had some tax attorneys get it in 2 days if you have the money to spare. They will usually mail you the letter and you can send it with a dispute letter to the credit bureaus for immediate deletion. They do report it to the credit reporting agencies, but I've been told it can take forever. There are some other qualifying factors as well, which can be read using the irs.gov link provided above.

Now, some credit specialist demand validation from the IRS to prove that the debt belongs to the consumer. Yes, this can be done since the IRS is a collector and not a government agency (it's true! Look it up!). The thing to remember is this; they are a collector working for the government! If you demand validation it can often wake a sleeping giant, so to speak and turn your life in to a living h$ll. Sometimes it's best to seek professional help.

If you don't recognize a tax lien as being yours, review your credit report, look at what county clerk's office is furnishing the information and research the public record with that county's clerk office.

If you have a debt that you're not sure has been paid off or not; consult with an attorney and have them file a Freedom of Information Act Request form for you (I've had clients contact the IRS directly and it did not go well!).

If it's an old tax lien there is a 10 year statute of limitation on the collection of that debt; however there are quite a few exceptions to that rule.

I do have tax professionals who act as advisers for MNH Credit Solutions' clients and I'd be more than happy to pass their information along. If you want someone to assist you with repairing your credit that has a proven track record of success and over a decade of experience; contact me right away!  My contact information is provided at the top right hand side of this page.

I hope you found this information helpful!

Help Your Kids Avoid Student Loan Debt

Student Loan debt equals $1 trillion in America - and growing. One of the things I regret is not researching all of my options prior to just jumping up and going to an extremely expensive college that I'm still paying for over a decade later - but that's another post all together .

So I've listed a few things to consider to help your kids avoid a 5-digit student loan debt when they graduate college:

1. Consider community college for 2 years and an in-state university for the remaining 2 years.
2. Scholarships - Apply! Apply! Apply! (did I say that enough?) Research programs that your child can get in to now to increase the chances of a grant/scholarship.
3. Discuss obtaining and maintaining a job. Believe it or not this gets much resistance. However, there are work-study programs at the school or part time jobs that have been negotiated by the school that will allow your child to meet their school demands. And let's face it; tuition and fees are not getting any cheaper the last time I checked.
4. Consider a free tuition college! Do I WISH I would have known about this when I went to school! I've left a link for you guys to research on your own; most charge room and board but nothing beats free!

Hope this helps! Feel free to add any tips you have on how to avoid the 'student loan debt trap'.

Credit Bureaus - Who They Really Are

Most people assume that the three credit reporting agencies – Equifax, Experian, & Transunion are government agencies whose job is to protect the consumer. That couldn’t be furthest from the truth. If you look on any of their websites in the ‘About Us’, ‘Who We Are’ or ‘What We Do’ section you won’t find one mention of ‘rights’ as it relates to consumers. They really could give two squats about us.

Credit bureaus are privately held, billion dollar companies whose main purpose is to make money, that's what for-profit companies do right?  They store data that lenders furnish them – whether accurate or inaccurate – about our credit relationship with them and sell it. Simple right?  This simple business model generates over $4 Billion a year!

One source of income for them comes from selling the information on our credit reports to other lenders, employers, insurance companies, credit card companies – and whoever else you authorize to view your credit information. Not only do they provide them with raw data; but they also sell them different ways of analyzing the data to determine the risk of extending credit to us. In addition to selling our information to lenders they also sell our information to us – credit scores, credit monitoring services, fraud protection, identity theft prevention - interestingly enough this area has quickly become one of their biggest sources of income. And those pre-approved offers in our mailbox every week; or junk mail? Yep, they got our information from the credit bureaus too. Companies subscribe to a service provided by the three credit bureaus that sell them a list of consumer’s credit information that fit a pre-determined criteria.

Now, contrary to popular belief, credit bureaus do not have any input on whether you should be approved for a loan or not; that is purely based on the credit criteria of the lender you’re working with. However, by using all of the information that has been placed on your credit report (payment history, personal information, and credit habits) and FICO’s method of scoring that data, they do provide them with how creditworthy you are.

This is why it’s so important to ensure that the information they are reporting is accurate. It would be nice if they would do their job according to the Fair Credit Reporting Act and make sure they have proof that the information they are storing is true and up-to-date – after all those inaccuracies could cost you $1,000s - but that won’t happen. Thus the burden of ensuring accuracy is on YOU. You are responsible for catching errors; they could care less if it’s wrong and they hate it even more when we challenge this inaccurate information by disputing it. Why? Because it’s time consuming and time is money. Remember, I said they’re main purpose is to make money? Credit bureaus store more than 200 million files on consumers; do you know how much money (time) it would take to ensure that everything is accurate and to store proof of accuracy?

We've seen the statistics; I have 2 videos that show proof of consumers having inaccurate information on their reports, the credit reporting agencies knowing this and still refusing to correct it!  The latest statistic shows that more than 40,000,000 Million Americans are walking around with errors on their credit reports right now. I personally think this number is off; I've honestly never seen a credit report that was 100% accurate; like NEVER.  Now you may say, well you work with people with bad credit so of course you see the worst of the worst, right?  WRONG! I've been a Realtor for 12 years and I've seen people with great credit have errors as well. What’s my point? Hmm, how can I put this?

CHECK YOUR CREDIT REPORT OFTEN!

Now you might say; but what about all the rules and regulations that the government has in place to make the credit bureaus act in the best interest of the consumer? My answer is what about them? Look on the FTC’s website and see how many complaints are out there right now regarding credit bureaus; look on the Consumer Financial Protection Bureau’s website and see how many complaints have been filed as well!  There are thousands!  But remember, this is about money.  So, if you’re making billions of dollars and you’re getting fined a few million you’re still winning, right?  What’s the incentive to change?  I rest my case. I recommend pulling one credit report every 4 months from www.annualcreditreport.com.  Don’t worry about a score; focus on the data and if errors are found; dispute them right away. Opt out of those list sold to other companies to prevent them from selling your information (optoutprescreen.com). Don’t let the credit bureaus cost you $1000s while they make billions.

If assistance is needed; contact us right away. We take pleasure in making sure the credit bureaus take their precious time, resources and money to verify and prove that the information on your credit is 100% accurate.