How To Spot A Credit Repair Scam

Repairing your credit can be an uphill battle. You’re looking at months of hard work, headache billsnegotiating with creditors, reworking your budget and identifying the factors that are making your credit score lag. In short, it’s a hassle and it takes lots of time.

Those two aspects are what makes credit repair scams so successful. They know you’re looking for a quick way out, and they’re offering it to you on a silver platter. Unfortunately, when they’re done with you, not only will your credit score be just as low as when you started, but you’ll also be out hundreds or thousands of dollars, and may even be facing criminal charges.

There are legitimate credit repair companies, but without educating yourself, finding them instead of the scammers who only want your money can be tricky.

Here are the most common warning signs of a credit repair scam:

1.) Demands upfront payment

Know your rights. Under the federal Credit Repair Organizations Act, credit repair companies are forbidden to request or receive payment until they’ve completed the services they’ve promised. If a company is demanding upfront payment, it’s surely a scam.

2.) Makes big promises

To lure you into their trap, many scammers make wild promises about your credit score. They may assure you that they can remove negative information from your credit report, even if that information is accurate and current. Don’t believe them; no one can do this.

They might also promise to boost your score a huge amount in just a few weeks or less. This, too, is absolute hogwash. You will never see an improvement on your score until at least 30 days has passed since you’ve taken action.

3.) Promises to help you create a “new credit identity”

This red flag should alert you to one of the most devastating credit repair scams possible. In these scams, companies promise to create a new credit identity for you in exchange for a fee. After you cough up the money, the company will provide you with a nine-digit number that’s similar to a Social Security Number. They may refer to this number as a CPN – a credit profile number or a credit privacy number. Alternatively, they may direct you to apply for an EIN – an Employer Identification Number – from the IRS.

Once you have your new number, the company will instruct you to use this form of ID to apply for credit. They assure you that the process is legal. In reality, though, it’s not – and you’ve just been scammed.

These companies are actually selling you a stolen SSN, often one belonging to a child. They walk away with the money you paid them, while you are stuck in a far deeper hole than when you first contacted them. It is a federal crime to misrepresent your Social Security number, to obtain an EIN from the IRS under false pretenses and to lie on a credit application.

Falling for a credit identity scam could mean facing fines or prison time. If you come across a credit repair company offering you a new identity, run the other way and don’t look back (and report them to the authorities)!

4.) Tells you not to contact the credit reporting agencies

Every U.S. citizen has the right to a complimentary report from the three major credit reporting agencies every year. If a company advises you not to contact these agencies directly, they will probably charge you for obtaining the report on their own. In other words, you will be paying for a free service.

5.) Tells you to dispute accurate information on your credit report

Disputing accurate information on your credit report is dishonest and illegal.

6.) Is evasive about your legal rights and their services

The Credit Repair Organization Act made it illegal for credit repair companies to lie about your legal rights and about their services. This law is enforced by the Federal Trade Commission (FTC). To comply with this law, credit repair companies are required to explain:

  • Your legal rights and clear details in a written contract of the services they’ll perform
  • Your three-day right to cancel the contract without charge
  • The anticipated amount of time it will take until results are evident
  • The total cost you will need to pay for their services
  • Their guarantee

If you’ve already hired a credit repair company and they haven’t lived up to their promise, you still have options.

You can choose to sue the company for your losses in federal court or seek punitive damages – money to punish the company for violating the law. You can also find other victims so you can band together and file a class action lawsuit against the company.

To protect others from falling prey to the same scam, it’s best to report it to your local consumer affairs office or to your state Attorney General.

It’s also advisable to file a complaint with the Federal Trade Commission. The FTC cannot resolve individual credit disputes, but it can take action against a company for multiple law violations. You can file your complaint online at ftc.gov/complaint or call 1-877-FTC-HELP.

Finally, if you’re in financial trouble of any kind, we can help! Stop by today to ask about our free credit counseling services and assistance with creating and sticking to a budget. [We even offer debt consolidation loans, providing you with the opportunity to transfer your debt to one low-interest loan, making the prospect of paying down your debt a lot more manageable.]

Your Turn: Have you been targeted by a credit repair scam? How did you spot the scam? Share your experience with us in the comments!

SOURCES:
https://www.consumerfinance.gov/ask-cfpb/how-can-i-tell-a-credit-repair-scam-from-a-reputable-credit-counselor-en-1343/
https://www.consumer.ftc.gov/articles/0225-credit-repair-scams
https://www.thesimpledollar.com/dont-fall-for-these-credit-repair-scams/
https://www.lexingtonlaw.com/blog/credit-repair/is-credit-repair-a-scam.html 

Changes In The VantageScore System

The VantageScore system is getting an overhaul. Many people wonder what kind ofa1522-credit2breport changes are being made and how will this affect the way their score is calculated.

The VantageScore, which dictates the way credit bureaus — Experian, TransUnion and Equifax — determine your credit score, is going through a shake-up this fall. The company is looking deeper into specific circumstances and what they say about your financial responsibility.

Having a favorable credit score comes into play when you need to qualify for financing on a new car, if you’re opening a new credit card, or you want to take out a loan. In each of these scenarios, your credit score is the most important deciding factor for your approval, and will also influence your terms and interest rates.

It’s important to note that the new system will not impact mortgage loans. This is because few mortgage lenders use VantageScore; most use FICO scores to verify eligibility.

The changes will affect the credit scores of many people, though, for better or for worse. It’s wise to learn all you can about these changes so you can make the necessary adjustments to your credit behavior.

Lucky for you, we’ve made it easy! We’ve broken the changes down into the three main areas they impact, and then we’ve simplified it by telling you what these changes mean for you.

Read on to learn all about it!

1.) Trended data and trajectories

What it means:

Under the modified system, VantageScore won’t just check if you’re meeting your minimum monthly payments; it will consider trended data, too. This means the company will analyze the trajectory of your debts on a month-to-month basis. They want to know the direction in which your finances are going. Are you gradually paying down debt, or are you scraping by with the minimum payments as your balance slowly grows?

What it means for you:

In the past, your score wasn’t affected by growing debt as long as you were making the minimum payments on your cards. Now, if you’re careful about making the monthly payment but your balance is increasing each month, your credit score will take a hit.

Conversely, if you’re working toward actually paying down your debt, your score will likely get a boost. If you don’t fall into this category, it’s time to get serious about doing away with your debt for good. Even small steps toward this goal will be recognized and rewarded.

2.) Large credit lines

What it means:

Having lots of available credit was once considered a mark of good credit. After all, if the companies deemed you responsible enough to merit all that credit, it’s gotta be a good thing, right? Well, not anymore.

With the new system in place, VantageScore will mark a borrower negatively for having excessively large credit card limits. The theory behind this rationale is simple: lots of open credit means the borrower can quickly rack up a huge bill.

What it means for you:

If you enjoy an excellent credit score, you likely have a large line of credit available and will be negatively impacted by this change unless you take action. This change also upends the old advice that the more credit cards you have open, the better. The rationalization behind that maxim was to build your available credit, and thus, improve your score. With the modified system, though, the opposite is true.

Let’s say Bob has $4,000 in credit card debt with a $40,000 limit across several cards. He’s only using 10% of his available credit. In the past, this would net him a higher credit score. Bill, on the other hand, has $1,500 in debt out of an $8,000 limit. In the past, this modest credit limit would lower his score.

With the new changes in place, the realities are shifting. Bob, who has a lot more available credit, will likely score lower than Bill, who only has $6,500 available to borrow.

Aside from those who enjoy prime credit scores and have several open cards, this change will also affect people who enjoy playing the credit card rewards-and-points game.

Whichever category you fall into, it’s best to use less than 30% of your available credit. Also, if you have a large credit line open across several cards, consider closing some of your cards to lower that number. Finally, if you’re thinking of opening a new card in the near future, ask for a smaller credit limit over a larger one.

3.) Medical debt, tax liens and civil judgments

What it means:

Medical debt, tax liens and civil judgments will no longer be factors at play when determining your credit score. These elements are being removed with the rationale that they often harm a credit score prematurely and are later proven erroneous. Civil judgments and tax liens are often inaccurate, and can significantly lower one’s score before the error is corrected. Similarly, medical debt can hurt credit scores before insurance can reimburse the borrower for the payments.

What it means for you:

If you’ve had any of the above dragging down your credit score, you have cause to celebrate. In fact, you might even see a jump of as much as 20 points to your score! On the flip side, if you have negative marks from things like delinquencies and debts that have gone to collection agencies, this new rule won’t help you much.

If you are looking for a way to track your credit score for free, take a look at WalletHub.*

*Please note: WalletHub gives you TransUnion and VantageScore credit scores.  Not all lenders use TransUnion, so your score when you apply for a loan may be different.

Your Turn: Do you think the new system encourages responsible use of credit? Why or why not? Share your thoughts with us in the comments!

SOURCES:
http://onemileatatime.boardingarea.com/2017/04/19/credit-score-changes-2017/  
http://www.cnbc.com/2017/04/19/major-changes-coming-to-how-your-credit-score-is-calculated.html   
https://amp-usatoday-com.cdn.ampproject.org/c/amp.usatoday.com/story/100653342/   
http://www.pressherald.com/2017/04/24/changes-coming-in-the-fall-to-how-major-credit-score-is-calculated/
https://www.thepennyhoarder.com/smart-money/changes-might-raise-your-credit-score/
https://www.nerdwallet.com/blog/finance/vantagescore-fico-score-the-difference/
https://thepointsguy.com/2017/04/changes-credit-score-calculations/ 

Five Ways To Partner With Destinations Credit Union To Build Your Credit Now


Perhaps you may have had good credit in the past, but are now experiencing a much lower credit score due to choices or life circumstances. Or, you may be building your credit for the first time as a young adult or as a newly single adult. Whatever the reason, you can rely on Destinations Credit Union as your partner in building or reestablishing your credit.

Here are five ways we can help you get your credit rating going in the right direction if you’re just starting out, or boost your credit rating at any time:
1.)   Telephone counseling – Give us an opportunity to work with your credit report and your budget to help you find ways to pay down and eliminate debt or unnecessary expenses. Sometimes, it takes a fresh perspective to see your own situation clearly, and we’ve already helped countless members do just that. This is especially true if you feel weighed down by debt and monthly payments. Give our credit counselors a chance to show you how to pare down your debt and build up your credit score. It’s one of your many free benefits as a credit union member!
2.)   Credit builder (or re-builder) loansWe offer a credit builder credit card for members with limited credit history.  In addition, if your credit is damaged, we offer a variety of loans to help you get back on track.
3.)   Secured credit card – Consider setting aside $200-$300 to secure a credit cardin your name. You’ll have the convenience of shopping with a reputable card brand, and we hold the funds in a savings account to secure your purchases. You pay off your card balance or make monthly payments by the due date each month, and your credit score goes up.
Compare our low interest rates with no annual fee to bank products, and you’ll see they generally have higher interest rates and annual fees. It’s easy to see why it makes sense to build your credit with your Destinations Credit Union membership benefits.
4.)   Online budget/financial management tools – Our credit counselors will help you set up your online budgeting program and provide you with options for saving and investing, too. You can use the program on your own, whenever you’re ready. You’ll find options for monthly spreadsheets, and profit and loss statements for your personal and small business needs.
5.)   Rent payment reporting – Make sure your rent payments are tracked and reported to Experian RentBureau, the only major credit reporting agency to include on-time rental payment data on its reports. Use of timely rent payments to build and boost credit scores is relatively new, and many people don’t know about it yet.
If you’re already leasing a home, or looking to find a suitable property to lease, ask your management company if your payments are reported to Experian RentBureau. And if you pay rent to an individual rather than a management company, you can still take advantage of a service that collects your rent payments electronically, pays your landlord and reports to Experian. It may be possible to include your excellent rent payment history, too.
Here’s the important thing to remember – to use your timely rent payment history for building or rebuilding your credit, you’ll need to be proactive about it. There are a handful of services that will collect, disburse and report for you, but of course, you’ll pay a small fee for the service each month. You must contact them to pay the small fee, but it can be a valuable investment in building your credit score, along with credit counseling, credit builder loans and secured credit cards from Destinations Credit Union.

Planning for a good credit rating is just as important as planning for major purchases and life transitions. The importance of a good credit rating means it can’t be an afterthought and it shouldn’t be left to chance.
You’ve made the decision to become a credit union member, and that’s a step in the right direction! Give Destinations Credit Union a call at 410-663-2500 to take a look at your credit score and to talk about options for improving it.
SOURCES:

https://www.rentreporters.com/