Is your credit costing you?

While some surveys show that 9 out of 10 consumers are unaware what their credit score is, I’d like to quickly share with you how your credit score could be costing you a fortune… in more ways than you can imagine.

We all know a low credit score will make everything in the world of finance more expensive because of higher interest rates from lenders due to being considered a greater credit risk (i.e. higher interest rates on car, homes and credit cards). While this may be considered common knowledge by some, it’s truly devastating effects are understood by few.

For example. If you purchase a $200,000 home on a 30 year fixed mortgage at 8% interest instead of 6% (because of your credit score); that 2% is going to end up costing you a total of $96,934.11 over the term of the loan. Now, think about how many “extra” years you’ll have to work to pay off $96,934.11 because of an extra 2% in interest?

The part few people talk about is all the other areas in life where a low score will increase your cost of living on an annual basis. For example. In addition to paying more for a car, home and credit cards, a low credit score will most likely have you paying more for the following as well.

1.) AUTO INSURANCE. As many as 92% of the 100 largest personal automobile insurers use credit information to underwrite new business, according to a 2001 study by Conning & Co., an insurance-research and asset-management firm.

2.) HOMEOWNERS INSURANCE. It’s thought many insurance companies see a correlation between low credit scores and increased property insurance claims. Therefore, a low score will result in higher rates.

3.) LIFE and HEALTH INSURANCE. Customers who are unable to pay their monthly insurance premium thereby pass along that increased cost to the insurance company whose stuck with the bill… resulting in a loss for the company. Since customers who pay without lapse are more profitable it is felt by many that a low credit score now even affects a monthly life and/or health insurance premium negatively.

One of the more shocking areas where a low credit score will you cost you is in the area of employment. It’s estimated as many as 42% of employers now do credit checks on applicants before hiring them (according to a 1998 survey by the Society for Human Resource Management).While many employers claim they only do it to “verify” information on your application (such as where you live and where you have worked etc.) we can both assume they are taking the liberty to “have a peek” at how you handle your financial affairs as well.

According to the Public Research Interest Group (PIRG) as many as 79% all credit reports contain errors — 25% of which are serious enough to cause the denial of credit (according to a 2004 report).And that’s all the more troubling in light of the increasing impact a bad credit report can have, says Ed Mierzwinski, director of PIRG’s consumer program. “It’s outrageous that the credit bureaus are claiming their scores are accurate enough to take people’s lives and screw with them like this”.

To learn other valuable credit tips go to http://www.propertyinfodirect.com/creditboostingsecrets.html Today!

 

Facts Consumers Should Know Before Considering Credit Counseling or Debt Consolidation

There is one topic which every time I write about it seems to generate some hate mail while at the same time spawning a flurry of wonderful praise from consumers. Of course, the hate mail is always from a few people that happen to own these “certain types” of businesses I discussed and those businesses of course are Credit Counseling or Debt Consolidation companies; of which many “claim” to be non-profit organizations.

You’d almost have to be an ostrich with your head stuck in the sand to not see or hear at least one advertisement a day from a Credit Counseling or Debt Consolidation Company. However, you can expect this to change and change soon. Since this is a topic that tends to “stir up” the owners of these businesses, I am going to take a different approach by NOT sharing my opinion, but rather, the opinion of others. I will start with the news media and the Internal Revenue Service:
“(NPR News, May 15, 2006).

The Internal Revenue Service is revoking the tax-exempt status of some of the largest credit counseling agencies in the country. An IRS investigation disclosed that the firms solicited business from people seriously in debt and that they didn’t provide counseling or consumer education, as required.

Prodded in part by a congressional oversight committee and consumer advocates, the IRS began investigating dozens of credit counseling agencies — most holding non-profit status — two years ago. IRS Commissioner Mark Everson says the companies “poisoned an entire sector of the charitable community.”
Everson says in many instances, companies were organized merely to funnel business to loosely affiliated for-profit companies. Many of the firms spend millions of dollars on commercials that urge anyone with debt to call them to solve their financial woes. And because tax-exempt organizations are not bound by the federal do-not call list, the firms were able to randomly call consumers, pitching their services under the guise of a non-profit counseling service.

The IRS investigations are also likely to affect consumers, thanks to a new bankruptcy law that requires consumers considering bankruptcy to get counseling before they are allowed to file. The IRS wants to ensure that only legitimate non-profit agencies are doing the counseling. In addition to the actions announced Monday, the IRS is sending more than 700 compliance letters to the rest of the credit counseling industry (END).”

Since almost all Credit Counseling and Debt Consolidation companies claim a non-profit status, I feel most consumers are easily sucked in with their skepticism and defenses at bay. After all, when most of us hear the word “non-profit” the first thing we usually think of is a church or homeless shelter.

From the NPR article and the actions of the IRS, I think it’s fair to assume that many of these “non-profit” organizations have been operating under a scenario similar to that of a wolf guarding a hen house. However, this doesn’t mean all credit counseling and debt consolidation companies are bad but… you do need to know the truth about how they operate and their limitations.

The first thing you want to understand is these companies are ALL more interested in making money off you than they are in preserving your credit rating. The bottom line with either credit counseling or debt consolidation is that it absolutely ruins your credit. I can just hear the companies arguing this with a consumer right now, telling them nonsense like “It helps your credit since it tells creditors that you’re working on your situation and not just running away from it.” Listen… if one these places tell you that, than watch out. Why? Because they will lie to you about other things as well!

One of the first actions these programs usually require you to do is for you to CLOSE all your revolving credit accounts. You then make payments to the organization and they take care of everything for you. What this says to all your creditors (as well as anyone considering giving you credit) is that you are so out of control with your finances that you can’t even manage paying everyone back on your own. Therefore, you’re hiring someone else to do it for you!99% of the time these companies will claim they can negotiate with your creditors and get interest rates reduced thereby saving you money. While this is true, what’s also true is you can easily negotiate these same rates as well as they can by just calling your creditors yourself. You’d be amazed at how many of your creditors would love to hear from you (especially when the chips are down!). Not too mention, any money the counseling company was to save you would more than likely be sucked back up by their monthly fees (usually around $500 to $1,000 per year).

This brings us into a whole other dynamic of their business model. Because these companies always make their money off of monthly fees paid by the consumer, the longer they can keep those monthly fees coming in the more profitable their business will be. It’s for this reason that most consumers who sign up with these companies usually find themselves on payment plans with the lowest monthly payment possible (which turns out to also be the LONGEST payment plan as well). Not surprising is it?
Am I against Credit Counseling and Debt Consolidation companies? Absolutely not. After all, there are millions of people in America who will never be able to manage their finances. Credit to them is a destructive addiction much like alcohol or drugs and they will never be able to control it. Instead, it will always control them. We’ve all seen these people. Every time they are extended credit shortly thereafter they are in financial trouble (usually blaming it on some external factor). For these people I think these credit and debt counseling programs can be a good thing (as a ruined credit report is not a hindrance to them but actually an asset). It keeps them out of future financial trouble by forcing them to live their lives on a “cash and carry” basis; which is ultimately conducive to a better standard of living down the road.

On the other hand. If you’re good with your finances and have control with credit but went through some type of hardship beyond your control in the past (i.e. divorce, job loss etc); then the services of these companies will never be for you. You will do far better and preserve your credit rating by taking matters into your own hands. Reason being is that you understand your credit rating is a powerful tool that can help you move ahead faster, help others and help yourself as well as create the life you want. It all comes down to self-management. We all know that others will ultimately manage those who cannot manage themselves. Credit is no different. When you learn to manage it well, you are the master and it is the servant.

If you care about your credit and want to benefit from it in the future, then you will never rely on a credit or debt counseling service to help you get out of any trouble you find yourself in. Instead, you’ll look inward and get yourself out while preserving your credit rating the best you can. Credit and debt counseling is for people who are “ok” with throwing their credit rating in the trash so they can have “someone else” manage their payments for them (since they are unable to manage them themselves). And again, as far as negotiating interest rates, you can do just as good as them or better. If you don’t believe me just call any of your creditors and straight out tell them your situation. You will quickly find you don’t need to be afraid of them. They just want to get paid like the rest of us.

How to protect yourself from Identity Theft

How to Make Yourself Virtually Identity Theft PROOF in 60 Minutes or Less

Copyright 2007 Jay Peters

The FBI has called it “The fastest growing crime in America.” Close to 10 million Americans every year are victimized by it and the costs are estimated at 50 billion dollars annually. Many criminals get off easy while the victims spend years working to restore their damaged credit reports and reputations. Worse yet, there seems to be no end in sight.

“The popularity of the crime is simply growing faster than the solutions to stop it,” many experts conclude. The task of recovery is so time consuming and tedious, multiple states have resorted to creating “Identity Theft Passports” for victims in an attempt to ease the pain for them as they endure the lengthy and frustrating clean up process.

By the end of this article I will share with you the secrets of making yourself virtually identity theft proof in 60 minutes or less (for free). I use the term “secrets” because less than 1% of the country is aware of these techniques (let alone practicing them).

If Americans took these preventative steps up to 99% of all identity theft would be eliminated. However, “why” this beneficial approach is not being made common knowledge in the mainstream media is something I will not disclose in this article (more on that another time). For the moment I believe the biggest crime one can commit is to not share this information with their friends and family (by the end of this article you will understand why).

Unlike other authors covering this subject I will not insult your intelligence by sharing common sense tips like “Don’t carry your SSN Card or ATM PIN# in your wallet or purse” or “Keep all data sensitive documents like credit card and bank statements locked up in your home or office”. This is elementary advice at best. The key to protecting yourself from identity theft is to look at what the masses are doing and then do the opposite (to say the least).

Almost 70% of Americans are now shredding all their mail and documents and many are even subscribing to credit monitoring services or buying identity theft insurance in an attempt to protect them from becoming victims. While this is better than doing nothing it’s a far cry from TRUE security.

Study The Past To Predict The Future

Contrary to popular belief statistics show the majority of identity theft does NOT result from the Internet as most consumers have been led to believe. In fact, less than 10% of identity theft cases (where data compromise can be determined) originated online. In almost 50% of cases consumers are the ones who detect the breach. In nearly 40% of cases the criminal was someone who was in close contact with the victim (friend, relative, neighbor, coworker, in-home, employee, waiter/waitress or financial institution employee). In then end, nearly one third of identity theft cases come from a stolen wallet/purse, checkbook or credit card.

More interesting, the age of the primary victim has lowered. If you are between the ages of 25 to 34 you are now the largest target for the crime (65+ has become the smallest). The bad news is that while identity theft nationwide is on the decline (8.9 million victims last year down from 9.3 million in 2005) the dollar amount per victim is going up ($6,383 last year, up from $5,885 in 2005) and so are the number of hours victims spend cleaning up the mess (40+ hours last year, up from 28 hours in 2005).

We’ve all heard the saying “An ounce of prevention is worth a pound of cure”. Yet, no one is practicing it in the pandemic of identity theft. Credit monitoring is nice but only 11% of consumers ever catch identity theft through this means. Identity Theft Insurance (according to many experts) is even more of a hoax. A product marketed by playing on the fears of American consumers which does nothing more than assist them in cleaning up the mess only AFTER their identity has been stolen.

A Different Approach

The following is a completely different approach to preventing and protecting yourself from identity theft. It is based on the reality that we live in a world now where there is zero privacy of personal data. Meaning that your name, address, phone number, social security number, date of birth (even your mothers maiden name) can be obtained by ANYONE for a fee.

If you’re one who feels this is paranoid thinking let me tell you about Amy Boyer. In 1999 Miss Boyer had an old high school classmate (Liam Youens) come back into her life many years later. Mr. Youens obtained Amy’s SSN and other personal information after paying Docusearch Inc. $150. After Youens shot Miss Boyer to death he then turned the gun on himself. Today the company tells visitors to its website that “not all searches are available to the public” and some are reserved for the investigative and legal industry. How’s that for homeland security?

With this “different” approach we break down identity theft into two distinct categories. 1.) Basic Identity Theft, and 2.) Credit Hijacking. By definition “Basic Identity Theft” is when the perpetrator steals your identity and then uses it to obtain NEW credit accounts for their personal gain. “Credit Hijacking” falls under a criminal stealing your identity in order to access and use your EXISTING credit accounts. Each type of fraud is different and therefore so is your plan of defense.

BASIC ID THEFT DEFENSE: The best proactive defense against basic identity theft is through the placing of an “Initial Fraud Alert” on all three of your credit reports. This “Initial Fraud Alert” accomplishes three important factors:

1. Your name and personal information can no longer be sold by the credit bureaus to ANY third parties for any marketing purpose (i.e. credit card offers, loan solicitations or credit pre screenings).
2. No one can be approved for credit with your personal information until the creditor personally calls you at the telephone number you list on your consumer credit report. And,
3. Requesting this initial fraud alert entitles you to a free copy of all three of your credit reports (one copy from each of the three major credit reporting agencies). Please be advised that this is an “Initial Fraud Alert” which lasts only 90 days. To extend the fraud alert and obtain the above mentioned benefits for 7 years you will need to write to each credit bureau at the address provided within your initial fraud alert confirmation letter (Note: It is likely credit bureaus will make the extended alert harder to obtain as a great deal of their revenue comes from the third party rental and sale your information).

CREDIT HIJACKING DEFENSE: Most online merchants now utilize a security feature known as “Address Verification Service” or “AVS”. AVS is a security feature for online merchants allowing them to only authorize credit card transactions for merchandise to be shipped to the same address, which appears on the consumers’ credit card billing statement. If the address does not match that of the credit card billing statement the transaction will automatically be declined. In other words, if someone gets your credit card number, expirations date and CVV code (the three digit code on the back of the card) the only way a transaction can be authorized online is if the merchandise if shipped to the SAME address that your credit card billing statement is currently sent to.

This is what makes credit hijacking so dangerous. When a criminal hijacks your credit they call up the banks (posing as you) and change your address on your credit cards with your personal information (i.e. last for of SSN and mothers maiden name) as if you were moving. They then proceed to order thousands of dollars in merchandise (online or over the phone) to be shipped to the “new” address. Because they changed “your address” on your credit cards they will bypass the AVS security from online merchants and the charges will be approved.

The only real defense against credit hijacking is to establish a personal security code with all your bank accounts and credit cards. This is a form of security, which goes beyond your SSN, Zip Code, Date of Birth or Mothers Maiden Name to give you a whole new tier of personal security. This is a unique number or group of letters and numbers, which you create and give to every credit card provider you, have.

For example. The number could be as simple as “JACOB2801″ which is a combination of your best friend as child and the numerical address of the home you lived in growing up. By establishing this auxiliary pass code with all your credit card providers no one will be granted access to your accounts without it providing it to them. Since you are the only one who knows it and it is non public it is truly secure. I have yet to find a credit card company, which will not allow you to create a pass code and added layer of security.

Summary

So now with the initial fraud alert established on your credit reports (and later extended) as well as the personal security code set up with all your bank and credit card accounts, you are virtually identity theft proof in under 60 minutes for free. Sure, someone can always “steal” your identity but the real joke will be on him or her. If they try to open a new credit account anywhere in the country the creditor is going to have to call YOU at the phone number listed on your report in before it can be approved and it’s GAME OVER.

If they try to hijack your credit by changing the address on your credit accounts they will be asked for not only the last four digits of your SSN and mother maiden name, but also your personal security code which they will NOT know and again it’s, GAME OVER.

Please understand that this article deals only with the topic of “financial” identity theft, which is by far the most prevalent today. However, you should be aware you also have the following “5 MAJOR” identities in computers across the nation which are your:

1. Driving Records/History (DMV Databases).
2. Medical Records/History (Medical Information Bureau Database).
3. Social Security Records/History (SSA Database).
4. Insurance Claims/History (C.L.U.E. Database).
5. Criminal, Legal and Public Record databases from birth records and real estate deeds to corporations, trusts and court cases.

Yes, we are in the information age but all information is stored in databases. I think we are now living in the database age.

10 Extra “Financial” Identity Protection Tips

1. Keep a list of all credit card and bank account numbers with bank phone numbers so in case of loss or theft they can be notified immediately.
2. Use only one credit card for personal expenses and one card for business expenses and monitor accounts online weekly.
3. Always send or receive mail only through secure and locked mail boxes.
4. Never give out any sensitive information (SSN, Acct #, Pin #, Password Etc) via an email solicitation. Always type in and visit the website directly.
5. Limit the information on your checks to your first initial, last name and address (nothing more).
6. On all credit cards instead of signing your name write “Check ID!”
7. Never use a debit card or Visa/Master Check card, as recovering fraudulently accessed funds from these accounts can be extremely difficult.
8. Store all credit cards, bank statements and passports etc in a secure and locked place.
9. Never give out your Social Security Number, Drivers License Number or Date Of Birth unless they have just cause and really need it.
10. For details about establishing and initial fraud alert on your credit reports visit: www.experian.com, www.equifax.com, www.transunion.com

This FREE Report was made possible by:

The Bronson Barber Real Estate TEAM
www.bronsonbarber.com
(801) 712-1607

For all of your Utah Real Estate Needs
Utah Select Realty

Click Here for more FREE Credit TIPS

How getting a good deal on a home goes beyond the purchase price

As a real estate professional I talk to tons of people about homes and know that everyone wants to get the best deal possible.  Everyone wants to feel good about the purchase they are about to make and know that they didn’t get ripped off.

To get the best deal possible as a buyer you need to look beyond the selling price.  Yes the price is an important factor yet it isn’t the most important.  The most important factor for getting the best deal is getting the best terms.  The terms can mean getting a deal and getting a great deal.

You can follow these simple tips to make sure that you can get the best terms so that you get a great deal.

Cleaning up your credit.  In a few weeks time almost everyone can do a little credit clean up which will increase the chance of getting better terms and interest rates on the new mortgage.

Shop your lender.  I have seen more people go with the wrong lender and get over charged on their mortgage on up front fees and also on the rate.  Buyers need to understand that a lender can up your interest rate so that they make more money.  One tactic is when lender will advertise no points up front.  This is an indication that they are making money on the back end. 

Have a plan.  You need to determine how long you plan on being in the house or if it is an investment.  This is another place where buyers will make the mistake of getting the wrong type of loan for what they are trying to accomplish.

Not having a down payment.  By not having a down payment you as a buyer are at a higher risk.  Therefore, lenders will give you higher rates that will end up costing you more money in the long term.

Looking for creative financing.  This is one area that is never used enough especially if you are buying investment properties.  Finding homes where the owner will carry some or the entire mortgage can be a great resource for getting a great deal on terms.

Regardless of how you plan on buying your next home you need to have a plan that will help you get not only the best price but also the best terms.

For All Of Your Utah Real Estate Needs Contact:

The Bronson Barber TEAM

801-712-1607

www.bronsonbarber.com

 

Better to be ‘Satisfied’ than to be ‘Settled’

When negotiating with a collection company to pay off a debt we need to understand the difference between ‘satisfied’ and ‘settled.’  These two terms can have two very different impacts on our credit scores.

A settled account is derogatory while a satisfied account is viewed more positively.

A settled account means that you have come to a negotiated settlement with the lender that is less than the original repayment terms of the loan.  Once the settlement has been reached, the lender will update your credit file with the words ‘account settled.’  Such a reference in a credit file is a bad mark.  The term “settled” implies that you did not meet the full terms of the loan. Failing to properly negotiate your collection can drop your credit score even more.

When negotiating a reduced payment amount, we need to make sure that on our credit file it will say ‘paid in full’ or ‘satisfied.’  Ether one of these terms on our credit file will imply that we met the full terms of the loan.  This reflects more positively on our credit report than settled accounts.

When a negotiated collection has been reached we should ask the creditor for a copy of the proposed agreement before sending the money.  Doing this will confirm that the creditor is listing the loan as Satisfied. 

Though the best negotiation would be to have the account removed from our credit after paying off the collection, this is a second viable solution to make sure that your credit is protected from another bad mark.

For All Your Utah Real Estate Needs

The Bronson Barber TEAM

801-712-1607

www.bronsonbarber.com