What the Credit Reporting Agencies Don’t Want You to Know

A Few Things Credit Reporting Agencies Don’t Want You to Know

Everyone needs to take advantage of the new Federal Free Annual Credit report program, and everyone means you! Why? Because the odds are about 4 to 1 against your credit report being accurate at all 3 bureaus. That’s one of the things the big three credit reporting agencies don’t want you to know. A recent study did random pulls of credit reports from Equifax, Experian and Transunion, with the consumers involved prior permission. They then contacted each consumer and verified all information on those reports. In 79% of the cases, there were one or more errors on the reports from at least one agency! This indicates that there is about a 4 out of 5 chance that there may be an error on your credit report.

Now, some of these errors were pretty harmless, such as incorrect past addresses or employers, but a lot them were not. And many of these errors had a negative impact on the consumers credit scores. This means you could be turned down for a loan or credit card, or charged a higher interest rate for your loan, all through no fault of your own. In our own experience in consulting on Florida mortgage loans, we’ve seen many instances of errors somehow appearing on clients reports. One client had several derogatory items listed, simply because he had once lived in the same apartment complex as a man who had the same first and last name, and who also had some problems with his credit. Even though their age and middle initials, and in fact their addresses, were different, the bad credit data had shown up on his report as well.
And of course, they obviously had different social security numbers...

In another case we had a customer who had a collection listed on their account for an unreturned cable box. After disputing it with the cable company for several weeks on the phone, and reporting the discrepancy to the bureaus, they finally dug through old paperwork from 3 years before and found the receipt for the unit's return. Only after carrying the receipt down to the cable company for their inspection was the collection removed from their account, and then it was simply posted as a collection that had been “satisfied”! It took another series of phone calls, letters to all three bureaus, and almost 2 months to get the incorrect item removed completely.

In other instances, we’ve seen derogatory credit posting on a son’s account from his mother’s credit history, or on a daughter’s from her father, and vice versa. The bureaus “assumed” that since their addresses were the same, that there was a legally binding link between their credit. But this would normally only apply if they were husband and wife, or if they had applied jointly for the credit. In these cases, they had not applied jointly, and one would think that the 25-30 year age difference would give the credit bureaus a clue as to their real relationship, or would at least cause them to seek verification of a marriage through public records.

In my own case, one of my credit card accounts has now shown up on my wife’s credit bureau reports, simply because I mentioned her name on the phone to a credit card company representative, while I was declining their offer to add her to the account. In this instance, it does neither of us any harm, since we both have excellent credit, and as husband and wife are responsible for each other’s debts anyway, but it was an “intentional error”, none the less. I would be willing to bet that the credit card company offers a bonus to their reps for getting co-signers added to an account, and the rep I was speaking to simply cross referenced my address to find my wife’s account.

When confronted with the errors discovered in the study referred to above, all of the credit bureaus had basically the same response. Human beings help compile the data in these reports, and being human, may make mistakes. All of the bureaus have procedures in place for consumers to dispute erroneous items, and say they are happy to remove any that are shown to be incorrect. But if any of you that are reading this have ever tried to have an erroneous listing removed from your credit report, you know what a frustrating and time consuming job it can be. Plus, in my experience in dealing with client’s credit reports, I have rarely seen good credit listings from another consumer magically appear on someone’s report, but I see derogatory ones that don’t belong there, show up all of the time. Somehow the credit bureaus manage to spot differences in consumers account details and social security numbers when posting good credit lines, but ignore them on a regular basis when posting bad ones. Some consumers would just as soon pay off a small delinquency, even if it isn’t theirs, rather than holding up buying a home or a car for 30-90 days while they dispute the item and get it removed. This of course benefits the company listing the delinquency, since they really don’t care who pays, as long as someone does.

All of these problems are why the credit bureaus are now required by law to give you access to your credit reports for free on an annual basis. Even if you’ve never had a issue with your credit rating before, you need to take advantage of this free service. Do it before you need a new mortgage or other loan, so there are no surprises when you do apply. And do it every year, to insure that no new errors appear on your report. It only takes a few minutes of your time to order the reports, and it is time well spent. Consider this, at current fixed rates for an average $200,000 Florida mortgage, a half of one per cent increase in you interest rate, caused by an error on your credit report lowering your score, could cost you over $23,400 in interest over the life of the loan. If it takes you 1 hour a year to request and look over your credit reports to correct that error and save that money, (and it shouldn’t even take that long), you’ll have been paid about $780 an hour for that time.

Now, maybe the credit bureaus are correct, and are being honest, when they claim that all of the mistakes in their credit reports are simply human error, but that doesn’t mean you have to be a victim of those errors. Find out NOW if your reports are accurate, and make sure to get any errors corrected before you need your next loan. Don’t be put in the position of having to pay for someone else’s mistake in order to buy your dream home. Or having to pay too much, year after year, for that home.

I’ve said before that dealing with a local, fully licensed Mortgage Broker, is the best way to get your home mortgage, and this is just another reason why. With most banks and large, on-line lenders, all you’ll get is a standard turn down letter if you have problems with your credit. But a truly dedicated Broker will discuss your credit report with you (although they are restricted from actually giving you a copy of your reports), help find any mistakes, and help you get them corrected. Now I may well be prejudiced, considering I’m associated with the one of the best, if not the best, Florida Mortgage Brokers, but considering that about 4 out of 5 clients can use that help, and banks and on-line lenders usually don’t offer it, I think my opinion is actually fair and unbiased. Solving one problem with your credit report could save you 5-10 times a Mortgage Broker’s average fee. And that’s not counting the lower interest rate you’re likely to get to begin with.

To get a copy of your credit reports for free go to this website;

http://www.annualcreditreport.com or call 1-877-322-8228

To contact any of the big three credit bureaus, use the numbers below;

Equifax 1-800-685-1111

Experian 1-888-397-3742

Transunion 1-800-916-8800

And finally, if you live in Florida and want getting your Florida Mortgage or your Florida Refinance Mortgage to be as easy and relaxing as a day at the beach, with no hassles and no pressure, call;

Star Mortgage, Inc. 813-882-8878

Or visit their website at;

http://www.starmortgagebroker.com email - starmtg@tampabay.rr.com

So, check your credit reports now, and correct any mistakes before they become an issue. One thing your free reports won’t give you is your actual score, but if your report is clean, and you’re still paying more than 7% on your first or second mortgage, give Star Mortgage a call. They’ll pull your credit just one time, run it through a matrix of hundreds of programs from dozens of wholesale lenders, and find the best mortgage to solve your problems and save you money. The consultation and mortgage analysis is free, and you’re under no obligation. If there is a solution that will work for you, they’ll be happy to help you find it.


FMI

Federal Reserve's Balancing Act Creates Unique Situation

Unique Opportunity for Consumers

The Federal Reserve's consistent increasing of rates since June 2004, and recent statements by new Federal Reserve Chairman Ben Bernanke, have created a unique opportunity for consumers. During a Senate Banking Committee hearing on Thursday, Bernanke refused to say how high interest rates would need to climb in order to balance the economy, but economists predicted at least one more increase at the end of March, when he has his first meeting as Fed chief.
"There are two possible mistakes. One is to go on too long and one is not to go on long enough," Bernanke said during the hearing. "And, it's a very difficult balancing act."
On the future course of interest rates, Bernanke made a statement Wednesday before the House Financial Services Committee saying that he agreed with an assessment made by his Federal Reserve colleagues in January, and that interest rates would probably need to move higher. Because of this gradual increase in the Fed rate, the available rates on fixed and adjustable rate mortgages have converged, and in some cases, inverted.
"For the first time in 5 years, many lenders have rates on fixed rate mortgages that are almost the same as an adjustable rate mortgage (ARM)," said Karen C. Pooley, President of Star Mortgage, Inc. "This means that many people who shied away from refinancing because the best rates were only available on ARMs, can now get a fixed rate that is much better than what they have now. And even people who have seen the rate on their ARM shoot up in the last year can usually refinance at a lower fixed rate."
In a speech to the Credit Union National Association early in 2004, Federal Reserve Chairman Alan Greenspan had stated that American’s preference for fixed rate mortgages means many are paying more than necessary for their homes, and suggested consumers might benefit from considering ARMs as an alternative. In fact, a Federal Reserve study at the time concluded homeowners could have saved tens of thousands of dollars in the last decade if they had ARMs. But the Federal Reserve’s policy of raising rates 14 times since June 2004 has challenged the validity of that position today. Normally, the difference between rates for fixed and adjustable rate mortgages can be more than 1%, with the ARMs having the lower rate, but now, for most consumers, the rate is almost the same on both.
There are still millions of homeowners with fixed rate mortgages that have interest rates of 8% or more, and they could save thousands of dollars a year by refinancing before the Federal Reserve’s next meeting on March 27-28. Many homeowners may think they have already waited too long, and that rates are now too high, but that isn't the case. There are still many programs available from Licensed Mortgage Brokers, who deal with wholesale lenders, that have fixed rates that are in the 6%-7% range, and actually less than the Prime Rate. A drop of just 1% in the rate on a $200,000.00 loan can lower your payment over $1500.00 a year, and many homeowners could actually lower their rates by 2% or more.
"They can normally save back the total cost of the new loan in 2-3 years or less," said Ms. Pooley, who is a Licensed Florida Mortgage Broker, "and pay little or nothing out of pocket to do it."
Economists are predicting the Fed will boost rates by another quarter percentage point to 4.75 percent at their next meeting, and that the average rate on home loans will increase by another one-half of a percent or more by the end of the year. Although economists, and Fed officials, disagree on how many more rate increases may be coming, most agree that the Fed's rate-raising campaign may be coming to an end soon.
According to Ms. Pooley, "The current situation is something that probably won’t last very long, and anyone who wants to get these below Prime fixed rates on a mortgage needs to act now, before the opportunity is gone."
Star Mortgage, Inc., is a licensed mortgage broker based in Tampa, Florida, and offers prospective clients a free mortgage analysis and consultation. They specialize in mortgages for the Florida market. Further information and a short on-line application are available on their web site at www.starmortgagebroker.com.


FMI

Lack of Ethics Comes From the Top

This is a little off topic for this newsfeed, but I do click through and read other listings while I'm here. This seemed pertinent to the recent Ameriquest scandal, and how less than ethical behavior is rationalized by those engaging in it. This is a post I saw on another blog;


How to rise to the top of Memeorandum 101
Alex and I discussed, at length, strategy on getting our posts to rise to the top of Memeorandum. You see, it's a well-known fact that appearing on the pages of Memeorandum means you have 'arrived'. Getting to the top makes you a total rockstar.

However, it is actually trivially simple. I've put together a wee step-by-step (There may or may not be a screencast in the future) 'how to':

Get quoted saying something quite controversial

Squawk about the quote

Get a whole bunch of attention for squawking about that quote

Watch your Memeorandum star rise

Wish you had just shut up in the first place 'cause nobody but youwould have probably even noticed it
See? Simple. ;)

[alternatively, you can take the fasttrack and just 1. say something incredibly controversial, 2. have others squawk about it, 3. watch your star rise...but it's gotta be good...like an article on blogging lynch mobs or something]

File under: suprcilious
posted by http://www.horsepigcow.com/2005/11/how-to-rise-to-top-of-memeorandum-101.html
at 8:22:00 PM


If you go to the link for Alex, he actually does have a podcast on how to do this. Alex then states that "It's better that we find out how this works and do it before the spammers do (the same thing)". In other words, he doesn't feel it's wrong for his friends and him to hack Memorandum's code, just anyone else who has a different reason to do it. Now this may have some merit, (killing someone who is threatening your life is much more justified than killing someone in order to rob them, for instance), but then proceeding to make a podcast instructing anyone who sees it on how to do it seems a bit like the pot calling the kettle black. It seems to me the whole reason Alex and the rest of his group did it was for attention (or publicity), much the same reason as the worst of the so called "spammers" out there.
My point here is simple. I don't have a problem with Alex or his friends hacking into Memorandum, or teaching others how to do it. Really, it's a small thing in a very big world. But the lack of ethical consideration is a big thing in a big world, in a lot of other cases. The recent Ameriquest indictment that I commented on before is one example. Although Ameriquest agreed to a huge settlement of 295 million dollars, they "refused to admit any wrong-doing". Home Finance Corp had an even higher settlement back in 2002, with the same failure to admit any guilt. Now I know this is simply a legal, corporate ploy to avoid further losses through lawsuits, and no one believes that either company was blameless, but should they be protected by their lack of admission?
There are plenty of small, ethical, well intentioned Mortgage Brokerages out there that were penalized by Ameriquest's lack of ethics (by losing business to them because these small companies wouldn't lie to prospective clients to "rope them in"). Then they are further penalized by the bad rap the whole industry suffers from the large corporations unethical behavior. I've mentioned before that they are usually your best bet for getting a great deal on your mortgage, because they won't con you or scam you to get your business.
I guess what I'm saying here is that ethics is a "slippery slope indeed", and one false step can lead to a big slide. Hopefully Alex and his friends simply pointed out a problem that will soon be fixed, and their reasons for doing it were well intentioned. I don't think I can say the same for most other ethical slips.

FMI