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Consumer Rights

Resolving Business Credit Disputes Can Be More Problematic Than Consumer Credit Issues

By | Consumer Rights, Credit Scores, Personal Finance

If you own a company, whether it is a corporation, partnership or sole proprietorship, you have probably raised questions — if not concerns — regarding business credit reporting. More specifically, you may have wondered, “Is it O.K. to access my personal credit for use in my company, or should I keep business transactions separate?” or, “What happens if I run into credit problems, business or personal?”

There is no one-size-fits-all answer to these questions. Depending on how your company is structured for tax filing purposes, there are advantages and disadvantages in using either type of credit — personal or business — or both. Some business owners or managing officers contend that personal credit financing can be a lifesaver when meeting short-term operational or funding challenges. Others claim that business credit holds more value in covering large overhead expenses because of the convenience and tracking features.

Regardless of the type of financial credit you access, favorable credit reporting is still contingent upon your attention and discipline in paying back creditors. Something you should keep in mind, though: Credit counseling and repair services can only address issues concerning personal credit reporting. When it comes to business credit reporting, you are on your own with Dun & Bradstreet, the global leader in business-to-business crediting reporting and management.

Unlike personal credit reporting agencies such as Equifax, Experian, and TransUnion, there is no program or mechanism for consumer credit repair services to dispute D&B on your behalf. This is primarily because there are no established guidelines for such dispute resolution. D&B’s business credit reporting and rating system is a different animal from consumer credit reporting. D&B primarily measures a company’s creditworthiness using a Paydex score, which is numerical value — 100 being the highest — based on how a business pays its bills or creditors on an annual basis.

Unfortunately, not having an appeals process regarding business credit reporting can sometimes leave owners in the dark. It is not unusual for a new company to rely solely on an owner’s personal credit to begin business operations. Then, once the company starts logging consistent, favorable credit reports, the owner’s personal credit liability is reduced and replaced with some form of business credit, generally based on viable trade or business references.

Still, new businesses — and even established companies — can remain financially vulnerable for short periods of time. That is why it’s extremely important to protect your personal credit liability from “business spillovers.” The more you can build business credit without any personal financial guarantees, the better. After all, you shouldn’t risk lowering your personal credit score just in exchange for boosting your business credit, if at all possible. Should personal credit problems arise in your business, even for the short term, a reputable credit repair service with a strong legal footing can be a partner in resolving these matters. At the very least, if you can successfully address your personal credit issues, you might open a financial pathway toward fixing your business credit problems, too.

Moving Beyond Stall Letters

By | Ask a Credit Expert, Collections, Consumer Rights, Fair Credit Reporting Act, Fair Debt Collection Practices Act, Your Credit

We hate to be the bearers of bad news, but credit companies have never been your best friend. One of the reasons may be the fact that they hold a lot of control over a certain item that many people are fearful about: the credit report. In a perfect world, creditors would report only correct information on our credit reports and all would account as it should. Unfortunately, this world is far from perfect, and any disputes that we may have are not easy ones to settle.

When filing a dispute, the most common item the consumer will receive is a “stall letter.” When disputes are submitted by consumers, the bureaus will send out a vague response that most commonly says something like, “We’ve already verified this item” or, “We find this dispute to be frivolous.” To frustrate a consumer further, they are not informed how the bureau came to that conclusion, but these are the only statements bureaus are allowed to make as efforts to reject a dispute. An investigation costs money for both the bureaus and creditors, and they will use every power within their means to halt a dispute in the early stages. This irritating tactic is often a defective deterrent that buys time or chases the consumer away.

Do not let their “frivolous” statements discourage your efforts to dispute. Once the credit company realizes that their stall letter is not working – which requires you to send another letter disputing the item more aggressively – what usually follows is a request for proof of your identity. By having proof of identification on hand ahead of time, you can respond immediately and thwart the credit company’s efforts to stall for extended lengths of time. Do not let their evasive methods fool you; these companies are required to look into your dispute and investigate it as many times as you deem necessary, whether you have proof or not. As a consumer, you have the right to verify the information on your credit report and the bureau is required by law to accommodate. The burden of proof lays on them, not on you.

As a consumer, although you have the right to dispute multiple items as you see fit, this is not typically the most effective maneuver. When several disputes are received at once, you are more likely to get stall letters than anything else. The bureau will attack with their frivolous statements once again, but this time they will have reason to believe that your disputes are frivolous or designed to misdirect. Multiple disputes may also trigger internal concerns that slow the whole process.

Our advice? Be smart about what you dispute as a consumer, but never shy away from keeping creditors on their toes.

Consumers Have Power? There’s No Dispute

By | Ask a Credit Expert, Consumer Rights, Credit Reports, Fair Credit Reporting Act

To anyone who’s ever doubted the ability of individuals to convince large faceless institutions (like, say, credit bureaus) to fix their errors and do what’s right, the National Park Service’s recent announcement that it will be restoring a quotation at the Martin Luther King Jr. Memorial in Washington, D.C., must represent a ray of hope.

For those not familiar with the story, the granite memorial, which was dedicated last fall, featured a quote of King’s that had been condensed from 45 words down to 10. The problem was that the truncated version actually conveyed the opposite meaning of the “drum major” speech it was taken from. After poet Maya Angelou and others disputed the abridgement, Interior Secretary Ken Salazar finally ordered the park service to correct it.

“Yeah,” you might be saying, “but they could prove THAT error. How am I supposed to prove an error on my credit report is wrong?”

Answer: You don’t have to.

No, really. The burden of proof is on the credit bureaus and creditors, not the consumer. The Fair Credit Reporting Act ensures that when you contact the bureaus with a dispute about your credit report, their responsibility is to contact the creditor, and the creditor has to verify it.

The only exception is that sometimes you’ll need to prove your identity. The bureaus frequently will require proof of identity — a photo ID with your current address, something with your Social Security number, and something else confirming your current address — if you’ve moved within the last couple of years. Creditors, too, will sometimes require completion of a fraud affidavit if an account appearing on your credit report isn’t yours.

One last thing to remember: The bureaus can’t tell you to stop disputing, or that they won’t investigate a dispute anymore. As a consumer, you always have the right to dispute. For us, if a bureau responds to a client’s dispute by saying, “Yeah, it’s verified, and it’s correct the way we’re reporting it,” if the client says it’s still not correct, then we continue to fight on that item and continue to dispute.

Ultimately, whether you’re talking about faulty credit reports or botched memorials, there’s no reason people should feel powerless to correct bad information. And fortunately, unlike the King quote, credit reports aren’t written in stone.

Will Your Credit Score Affect Potential Employment?

By | Consumer Rights, Credit Laws, Credit Scores, Your Credit

A small number of states prohibit the use of credit information by employers as a means for making hiring decisions. California is the most recent state to join those that restrict use of credit information for that purpose. Certainly, it makes sense that if you are applying to work in an institution that demands at least average accounting skills, your ability to demonstrate that you have good credit may be important.  However, if you are applying for a job in which money is not an object (other than earning it), your personal business should remain just that.  Fortunately, states in increasing numbers are seeing the wisdom of separating personal business from business business. Unfortunately, the reality is that the oversight does not exist to prevent employers from screening employees as they see fit.

In a 2009 discussion for National Public Radio, evidence is shown to support the claim that employers indeed use credit ratings to determine the trustworthiness of a candidate, as well as to judge the character of a person they consider qualified to work for them.  While you may consider this to be unfair, unethical, and in some instances illegal, as a potential candidate for any job, your goal is to present the best image possible. Right or wrong, if you want to present such an image, one way to do that is to ensure that your credit score is not considered less than acceptable.

Ovation offers numerous financial tools that can help you manage your payments, save you money, and improve your credit score. From the start, a common-sense approach to your finances will help you avoid a poor rating. Credit is a necessary evil in our society, but you can manage credit by using it regularly yet sparingly. Pay your bills on time, and pay more than your minimum balance. If you have multiple credit payments, pay towards the credit card with the highest balance and the highest interest rate. Do not over-extend your credit, and manage your spending habits. By taking these steps, you will be better able to manage your credit score, thereby putting yourself not only in control of your finances, but also in control of your professional future, regardless of where you want to be employed.

Ultimately, legislation may be drafted compelling employers to ignore your credit score.  Regardless, do not take that risk with your future. Your choice today to manage your credit rating responsibly will demonstrate that you are a professional regardless of the circumstances.

What Do Spielberg, Nimoy, and DeVito Have In Common?

By | Ask a Credit Expert, Consumer Rights, Credit Repair, Fraud Protection

Sorry to disappoint, but there’s no movie in the works. But Stephen Spielberg, Leonard Nimoy and Danny DeVito have more in common than you might think: They have all been victims of identity theft.

James Rinaldo Jackson enjoyed a spurious lifestyle by stealing the identities of these famous individuals. Jackson became privy to their most intimate information including social security numbers, bank and credit card statements and even credit reports.

The former identity thief describes his wicked gift in his book, “Your Evil Twin.” When recounting his misadventures Jackson said, “It is very easy to be anyone you please, on any given morning you awake.”  Jackson, who was quite good at thieving identities, has since gone straight. However, don’t take comfort in the fact that he is off the job or that when he was in the identity theft business he targeted the rich and famous.  Though Jackson has turned over a new leaf, there are countless criminals who would rather steal your identity than create a financial identity of their own.

Identity theft occurs when personal identifying information is accessed, without permission, and used to commit a crime. Stealing the information in the first place is criminal and the Federal Trade Commission indicates that at least nine million Americans are victimized each year. The sad fact is most of these people will not realize the violation until their credit report or credit score is negatively affected and they are turned down when applying for credit. Then where to turn?

The first thing a victim of identity theft should do is to file a police report. With the police report in hand, you can go back to lenders, requesting the account be closed as fraud and to write off the debt so that you’re not responsible. Go through reports of all three credit-reporting agencies with a fine toothed comb. It is extremely important to move as much damage away from your credit as possible. Many lenders will provide a fraud affidavit – a notarized form – which indicates you had nothing to do with the fraudulent account.

Figure out the extent of the theft – whether, for example, your social security number has been compromised. Monitoring programs that are in place for monitoring your credit reports can help you. Placing a fraud alert on your credit report will necessitate that the creditor contact you before any credit in your name is approved.  It will also assist you while cleaning up the mess left behind by the identity thief. There may be a number of accounts to dispute and a copy of the notarized affidavit and police report will go a long way as documented proof of innocence.

Forget the 1% or the 99%, be in the 21%!

By | Consumer Rights, Credit Reports, Credit Scores, Your Credit

Human error. Our idiosyncrasies are charming, and our pet peeves make great cocktail party banter, but our errors can be maddening to others. This is especially true in credit reporting, where 79% – yes, SEVENTY NINE PERCENT – of credit reports include inaccurate information. Sure, many errors are small, such as a misspelling of your name, but 25% of the errors are large enough to cause you to be denied credit.

Each lender and creditor has its own database of information. The timeliness of reporting from these databases to the credit bureaus can vary dramatically (some report immediately, some on a 2-3 month rolling period, some never report at all). Further, some lenders report to all three major bureaus while others report to only one or two. When data is reported, the information is often transferred via manual data entry, passing through several sets of human hands (and thus human foibles) as the data is consolidated and moved from system to system. Some errors, large and small, are destined to occur, and they can be time consuming and labor intensive to correct.

A place where errors often occur is with bankruptcy. Some errors are from data entry, but the far more nefarious error in this case is an inaccurate Charge Off…

Each and every account should be included in a bankruptcy filing, even the accounts that are in good standing. Lenders though will sometimes write off an account once they stop receiving regular payments, and this is called a Charge Off. This happens due to the timing of the bankruptcy paperwork, and it allows the lender to write the loss off on their books and lower their tax liability. However, a Charge Off on a consumer’s credit report can have devastating long-term effects, even worse than the bankruptcy. The Charge Off continues to carry an unpaid balance on the credit report, and that is a red flag to potential lenders that this consumer doesn’t pay his or her debts. Current lenders can use a Charge Off as a reason to change the terms of their lines of credit and start charging more interest.

Errors, mistakes, slip-ups, and blunders – they happen. Thankfully, even credit reporting errors can be remedied with early detection (periodically review your report – at least annually – to ensure there aren’t any inaccuracies) and diligent correspondence with lenders. In the event of a bankruptcy, ensure all outstanding accounts are included and aren’t charged off to help you get back on your financial feet as soon as possible.

Somebody’s Watching You…

By | Consumer Rights, Credit Laws, Credit Repair, Credit Reports, Credit Scores

No, we’re not reminiscing about the 80’s hit by Rockwell…this is more sinister. From hacking computer systems to trapping codes at ATM machines, identity theft is rampant and can have a devastating impact on your life. It can affect your ability to buy a car or a home, it can prevent you from getting a job, and there have been (albeit rare) cases of innocent people being arrested for crimes committed by an identity thief. Keeping a close eye on credit reports is an excellent way to detect fraudulent activity, and credit monitoring can be a helpful tool to do just that.

The three credit reporting agencies – TransUnion, Equifax, and Experian – are required by the federal government to provide an annual copy of your credit report at no charge. Go to AnnualCreditReport.com to order it and monitor your own credit by reviewing it carefully to ensure all information is accurate. Doing this once a year is the first step toward thwarting thieves.

The next step would be to hire a company to monitor the credit reports real time and inform you, probably via email, of any changes. Most notices would regard changes in account balances on credit cards or an inquiry for a line of credit at a retail store. In an identity theft scenario though, a thief might use your social security number, stolen while dumpster diving at a local bank, to apply for a new credit card. The timely credit monitoring service notification of this fraudulent application for credit could mean the difference between a small hassle and full-blown, financially crippling identity theft.

Sadly though, not all credit monitoring services are created equal. The ones managed by the three credit reporting agencies are typically pretty good, and the timeliness of the information is excellent – which is the most important element in the detection of fraud. Some of the second tier services though report outdated information since they have to pay for the data and retrieve it periodically from the primary agencies. Another potential problem with the second tier services is that they may offer a free credit report (mimicking the government-mandated service), but once the consumer accepts the free report, they are unwittingly enrolled in a potentially expensive service. What a sneaky and underhanded thing to do – it sure doesn’t make us want to trust them with our financial information.

The Federal Trade Commission (FTC) has a program called “Deter, Detect, Defend: Avoid ID Theft.” It is a good program, especially in its education about how to protect personal information (and thereby deter ID theft). Combine this with credit monitoring by a high quality provider and good financial decision-making, and we will stop letting the identity thieves bully us.

How Long Can Information Be Reported On Your Credit Reports?

By | Bankruptcy, Collections, Consumer Rights, Credit Cards, Credit Laws, Credit Repair, Credit Reports, Fair Credit Reporting Act, Your Credit

One of the first credit repair steps involves removing information that is outdated.  The problem is that many consumers cannot tell when information is outdated.   On the surface, it seems like a simple exercise – just compare some dates.  While that is correct, the more difficult part involves determining which dates to compare.  The answers are provided in The Fair Credit Reporting Act, section 605.  According to section 605, the following items may not be reported on your credit reports:

  1. Bankruptcy: Cases under title 11 [United States Code] or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years.
  2. Civil suits, civil judgments, and records of arrest:  Civil suits, civil judgments, and records of arrest that from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period.
  3. Paid tax liens: Paid tax liens which, from date of payment, antedate the report by more than seven years.
  4. Collections and Chare Offs: Accounts placed for collection or charged to profit and loss which antedate the report by more than seven years.
  5. Other Adverse Items: Any other adverse item of information, other than records of convictions of crimes which antedates the report by more than seven years.

So What Are The Exceptions?

There are exceptions to these general rules.  Most of the exceptions are based upon the use of the report.  The general rules are not applicable in the case of any consumer credit report to be used in connection with the following:

  1. Credit transactions involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more;
  2. Underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $150,000 or more; or
  3. Employment of any individual at an annual salary which equals, or which may reasonably be expected to equal $75,000, or more.

If you have ever wondered why there are so many different credit scoring models, this is one of the primary reasons.  The information that is permitted to be included on the credit report can vary depending on what the credit report is being used for.

So When Does The Time Period Start?

In regards to bankruptcy, the 10 year period starts at the date of entry of the order for relief or the date of adjudication.   In regards to the other items, the 7 year period begins, with respect to any delinquent account that is placed for collection (internally or by referral to a third party, whichever is earlier), charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, or similar action.   Clear as mud, right?

So What Does This Mean?

In order to understand if items on your credit report are outdated, you need to understand how the dates are calculated.  Remember, you should review your credit reports frequently for errors and signs of identity theft.  It is not uncommon that dates are incorrect.  In fact, in the case of debt collection, errors in the proper dates are very common.  These errors may result in negative items being reported longer than necessary.  Check the dates on your reports and verify that the information is correct.  If you need help, give us a call – we would be happy to assist you.

 

Can Debt Collectors Contact Friends and Family Members?

By | Ask a Credit Expert, Collections, Consumer Rights, Credit Repair, Debt, End Debt Collector Abuse Act of 2010, Fair Debt Collection Practices Act

It is not uncommon for debt collectors to go to extreme measures in order to get information about a debtor.  In fact, many debt collectors call friends and family members of debtors they are trying to reach.  While this practice is permitted and regulated by the Fair Debt Collection Practices Act, it is frequently abused.

Are Debt Collectors Harassing You About Someone Else’s Debt?

Debt collectors are permitted to contact third parties for the purpose of acquiring location information about the debtor.  Section 804 provides the following:

Any debt collector communicating with any person other than the consumer for the purpose of acquiring location infor­mation about the consumer shall identify himself, state that he is confirming or correct­ing location information concerning the consumer, and, only if expressly requested, identify his employer.

Debt collectors are prohibited from stating that such consumer owes any debt.  They may not communicate with any such person more than once unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information.  Debt collectors may not communicate by post card and they may not use any language or symbol on any envelope or in the contents of any communication effected by the mails or telegram that indicates that the debt collector is in the debt collection business or that the communi­cation relates to the collection of a debt.

By the way, if the debt collector knows the consumer is repre­sented by an attorney with regard to the subject debt and has knowledge of, or can readily ascertain, such attorney’s name and address, they may not communicate with any person other than that attorney, unless the attorney fails to respond within a reasonable period of time to the communication from the debt collector.  In this case, family and friends may not be contacted at all.

How Can You Stop Debt Collectors from Harassing You About Someone Else’s Debt?

The purpose here is to allow debt collectors to try to obtain location information.  That makes sense.    However, many debt collectors abuse this provision to harass family members and friends in an effort to get the debtors to respond.  This practice is unethical, and it is illegal.  If you are being contacted by a debt collector regarding someone else’s debts, and the debt collector is violating the provisions above, let us know.  We’ll help you locate an attorney in your area that can help protect you from this type of abuse.

By the way, if the debt collector knows the consumer is repre­sented by an attorney with regard to the subject debt and has knowledge of, or can readily ascertain, such attorney’s name and address, they may not communicate with any person other than that attorney, unless the attorney fails to respond within a reasonable period of time to the communication from the debt collector.

 

Credit Repair: The Sony Security Breach And Your Credit Profile

By | Consumer Rights, Credit Repair, Credit Reports, Credit Scores, Fraud Protection

Sony recently announced a security breach for users of the PlayStation Network.  Today, up to 100 million users may have been affected.  Data concerning credit card information, addresses, email, birthdate and more may have been compromised. The magnitude of damages caused by this breach has yet to be determined, but it is realistic to expect extensive damages related to identity theft. So what does a company as large as Sony do in response to such an unfortunate event? 

Sony announced that they took following steps:

1) Temporarily turned off PlayStation Network and Qriocity services;

2) Engaged an outside, recognized security firm to conduct a full and complete investigation into what happened; and

3) Quickly taken steps to enhance security and strengthen our network infrastructure by rebuilding our system to provide you with greater protection of your personal information.

Sony also provided some good general advice:

“For your security, we encourage you to be especially aware of email, telephone and postal mail scams that ask for personal or sensitive information. Sony will not contact you in any way, including by email, asking for your credit card number, social security number or other personally identifiable information. If you are asked for this information, you can be confident Sony is not the entity asking. When the PlayStation Network and Qriocity services are fully restored, we strongly recommend that you log on and change your password. Additionally, if you use your PlayStation Network or Qriocity user name or password for other unrelated services or accounts, we strongly recommend that you change them as well.”

Sony also provided some good advice about protecting against idently theft:

“To protect against possible identity theft or other financial loss, we encourage you to remain vigilant, to review your account statements and to monitor your credit reports. We are providing the following information for those who wish to consider it:

          – U.S. residents are entitled under U.S. law to one free credit report annually from each of the three major credit bureaus. To order your free credit report, visit www.annualcreditreport.com or call toll-free (877) 322-8228. 

        – We have also provided names and contact information for the three major U.S. credit bureaus below.  At no charge, U.S. residents can have these credit bureaus place a “fraud alert” on your file that alerts creditors to take additional steps to verify your identity prior to granting credit in your name. This service can make it more difficult for someone to get credit in your name. Note, however, that because it tells creditors to follow certain procedures to protect you, it also may delay your ability to obtain credit while the agency verifies your identity.  As soon as one credit bureau confirms your fraud alert, the others are notified to place fraud alerts on your file. Should you wish to place a fraud alert, or should you have any questions regarding your credit report, please contact any one of the agencies listed below: Experian: 888-397-3742; www.experian.com; P.O. Box 9532, Allen, TX 75013.”

But the burden is on you to protect yourself.

While Sony provided some great advice, they seem to be pushing the burden of reducing the risks of identity theft to the consumer. Studies have shown that only about 10% of American consumers check their credit reports regularly. The reality is that consumers must take proactive steps to protect themselves.  If you think your information may have been compromised in this breach, and you are uncertain about how to protect yourself, give us a call at www.ovationcredit.com.  We’ll help explain the process to you.

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