If you have below average credit, there are people out to get you. Unscrupulous scammers know that people with bad credit often need loans and use the opportunity to extract both money and personal information.
How do these kinds of scams work and how can you avoid them? Let's take a look.
==> How a Bad Credit Loan Scam Works
The scammer first comes into contact with you via email, phone or through a website.
Usually they have some sort of promise where they guarantee that you'll be approved for a loan, no matter what your credit looks like. (That should be your first red flag - no real lender guarantees loans without seeing your credit.)
They'll then ask for your personal information, including social security, address, birth dates and account numbers, in order to process your loan.
Finally, they'll usually ask for an "advance fee" which needs to be paid in order to process your loan.
Of course, once the fee is paid, no real money is ever wired to your account. The fee is forfeit, but the scam doesn't end there.
Your personal information is often then sold to third parties, who in turn use your information to write bad checks, open unauthorized credit card accounts or commit all kinds of other fraudulent activities.
In other words, falling for one of these scams will not only cost you money, but possibly result in a stolen identity.
==> How to Recognize and Avoid These Scams
The first step to recognizing a scammer is to always, always, always research the lender before giving any personal information.
Use the Better Business Bureau's website to look up any business you're considering. If you see any scam reports, avoid it. Also look them up on RipoffReport.
Never pay upfront for a loan of any sort. That applies for personal loans, bad credit loans and payday loans. In the USA and in Canada, it's illegal for lenders to ask for a fee upfront, so if they do you know you're dealing with a scammer.
Finally, only work with websites you trust and know. Never do business with a company you've never heard of, especially if they reached out to you first via email. Real lenders will never, ever send out unsolicited emails.
With just a bit of background information and a careful mentality, you can avoid getting scammed. It's unfortunate that there are people out there preying on people just when they can least afford the financial hit, but such scams all too common.
You now know how these scammers work, as well as a few tell-tale signs that'll allow you to spot these scams a mile away.
Thursday, November 28, 2013
Wednesday, November 20, 2013
How Long Does It Take for Each Item to Disappear?
If you have negative items on your credit report, how long does it really take for them to disappear? Knowing how long certain items stay can make a big difference on how you plan to improve your credit in the long run.
Here's everything you need to know about when items disappear from your credit report.
==> The 24-Month Rule
The first thing to realize is that 70% of your credit score is calculated from your last 24 months of credit history.
In other words, even if credit card defaults are reported for seven years, if you start building up your credit now you'll still have a good chance of getting a credit card in two years.
You don't have to wait for an item to completely fall off your credit report before its level of damage can be minimized.
==> When the "Fall Off" Clock Starts Ticking
There's often a bit of confusion that surrounds when exactly the clock starts ticking for something to leave your credit report.
There are two things creditors look at for gauging recency of credit report items: Date of Last Activity (DOLA) and Date of Last Delinquency (DOLD).
The clock for when something should leave your credit report starts at the DOLD. In other words, the date when you're first delinquent on a payment is when the clock should start ticking.
Making a payment on that account will increase your DOLA, bringing it up to the current date. However, your DOLD will remain as the old date. In other words, making a payment to a delinquent account will not "reset" the time it takes to fall off your credit report.
==> How Long Different Items Stay on Your Credit Report
In general, items on your credit report will fall off after seven years. That applies to both installment loans (e.g. car loans) and revolving credit (e.g. credit cards).
There are a few exceptions, however.
As a good rule of thumb, however, most items will stay on your credit report for seven years after the date you were first delinquent. If you find an item on your credit report that has passed that date and not been removed, contact the credit agency.
Here's everything you need to know about when items disappear from your credit report.
==> The 24-Month Rule
The first thing to realize is that 70% of your credit score is calculated from your last 24 months of credit history.
In other words, even if credit card defaults are reported for seven years, if you start building up your credit now you'll still have a good chance of getting a credit card in two years.
You don't have to wait for an item to completely fall off your credit report before its level of damage can be minimized.
==> When the "Fall Off" Clock Starts Ticking
There's often a bit of confusion that surrounds when exactly the clock starts ticking for something to leave your credit report.
There are two things creditors look at for gauging recency of credit report items: Date of Last Activity (DOLA) and Date of Last Delinquency (DOLD).
The clock for when something should leave your credit report starts at the DOLD. In other words, the date when you're first delinquent on a payment is when the clock should start ticking.
Making a payment on that account will increase your DOLA, bringing it up to the current date. However, your DOLD will remain as the old date. In other words, making a payment to a delinquent account will not "reset" the time it takes to fall off your credit report.
==> How Long Different Items Stay on Your Credit Report
In general, items on your credit report will fall off after seven years. That applies to both installment loans (e.g. car loans) and revolving credit (e.g. credit cards).
There are a few exceptions, however.
- Tax liens will stay on your credit report for seven years after the debt is paid.
- Bankruptcy will stay on your credit report for ten years.
- Any application for a credit account of $50,000 or more can stay on your credit report for an indefinite amount of time.
As a good rule of thumb, however, most items will stay on your credit report for seven years after the date you were first delinquent. If you find an item on your credit report that has passed that date and not been removed, contact the credit agency.
Wednesday, November 6, 2013
What to Look for in a Contract with a Credit Repair Agency
Your most important tool against bad credit repair deals is your credit repair contract. Before you sign any kind of contract with a credit repair agency, you need to make sure you're protected.
Most contracts are written by the credit repair agency and are naturally written more for their benefit than yours. That said, if you know what to look for, you can make sure that everything you need is covered in the contract.
Here are the most important clauses to look for in any credit repair contract.
==> What They're Agreeing to Do
The contract should explicitly state exactly what the credit repair agency will do for you.
For example, they might commit to sending X letters to X agencies to help you remove items from your report. They might agree to follow up with those companies, as well as to advise you on lawsuit opportunities.
If you're having them also take on a debt consolidation role, make sure you also cover all your bases there. The agreement should spell out explicitly how the consolidation process is handled and what kind of support you'll have during the process.
==> The Cost Structure
The contract should contain details on how the program is priced. Any implied verbal guarantees should be written into the paperwork. There should be no additional costs that you don't understand, no fine print with extra fees.
Different credit repair agencies charge differently. Some require an upfront fee, others don't. Some charge a percentage of debt, others charge a flat fee.
If you're just having the repair agency remove items from your credit report for you, usually the payment will be made in the form of a "per item" fee. For example, an agency might charge $250 for each item they can remove from a credit report.
Make sure you understand the cost structure and any additional costs before signing the paperwork.
==> How Long before You Can Expect Results
The contract should have a set duration. Six months to one year is a good period of time for an extensive credit repair project.
If a contract doesn't have a set duration, make sure you have a crystal clear cancellation period. After all, if you've seen no results for six months, you want to make sure you can back out and find someone else to help you.
These are some of the most important things you should look for in a credit repair contract. Before you sign anything, make sure you read over every line and fully comprehend everything you're signing. If the contract accurately represents everything that you talked about verbally and you believe it's a good deal for you, then sign the paperwork.
Most contracts are written by the credit repair agency and are naturally written more for their benefit than yours. That said, if you know what to look for, you can make sure that everything you need is covered in the contract.
Here are the most important clauses to look for in any credit repair contract.
==> What They're Agreeing to Do
The contract should explicitly state exactly what the credit repair agency will do for you.
For example, they might commit to sending X letters to X agencies to help you remove items from your report. They might agree to follow up with those companies, as well as to advise you on lawsuit opportunities.
If you're having them also take on a debt consolidation role, make sure you also cover all your bases there. The agreement should spell out explicitly how the consolidation process is handled and what kind of support you'll have during the process.
==> The Cost Structure
The contract should contain details on how the program is priced. Any implied verbal guarantees should be written into the paperwork. There should be no additional costs that you don't understand, no fine print with extra fees.
Different credit repair agencies charge differently. Some require an upfront fee, others don't. Some charge a percentage of debt, others charge a flat fee.
If you're just having the repair agency remove items from your credit report for you, usually the payment will be made in the form of a "per item" fee. For example, an agency might charge $250 for each item they can remove from a credit report.
Make sure you understand the cost structure and any additional costs before signing the paperwork.
==> How Long before You Can Expect Results
The contract should have a set duration. Six months to one year is a good period of time for an extensive credit repair project.
If a contract doesn't have a set duration, make sure you have a crystal clear cancellation period. After all, if you've seen no results for six months, you want to make sure you can back out and find someone else to help you.
These are some of the most important things you should look for in a credit repair contract. Before you sign anything, make sure you read over every line and fully comprehend everything you're signing. If the contract accurately represents everything that you talked about verbally and you believe it's a good deal for you, then sign the paperwork.
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