Can I Control My Credit Score?
WHAT DO THEY LOOKED AT WHEN CALCULATING YOUR CREDIT RATING ANYWAY? YOUR CREDIT CARD RATING includes a number of factors which you should be aware of. Following are the main points that lenders consider in an attempt to measure the risk associated with each individual. ♦ Payment History: No surprise here. If you have a record of making payments on time, you already know this is a good thing. But if your record shows delinquent payments your credit rating will go down. ♦ Risk/Longevity: If you’ve been at a job and in your home for longer than 2 years (the longer the better), ...
The Truth About Debt Settlement Percentages
[caption id="attachment_133" align="alignright" width="286" caption="Know before you go."][/caption] SETTLEMENT PERCENTAGES AND WHAT TO EXPECT. I’ve been in the debt negotiation industry since 1998 and have worked with one of the premier debt negotiators, Paul Killmar so I am well acquainted with the debt industry and what to expect from the negotiator. The truth is, the settlement percentage that is the industry standard runs between 43% and 45% of what is owed. That is the average settlement percentage. Now, you will get these incredible settlements where the percentage is 7%, which was one we got for a $35,000 debt, but those are very, ...
What Is Debt Consolidation?
TRUE OR FALSE: DEBT CONSOLIDATION IS THE “NON-PROFIT” COMPANIES THAT “HELP YOU” TO GET OUT OF DEBT? You’ve seen the ads on TV on how they will help to “lower your payment” and “help get you out of debt faster” and other eye catching stuff. To “consolidate” means to take a number of things, like credit cards, and make 1 payment out of them, thus, you consolidate your payments to 1 payment. So what does that mean to you regarding your debt, and especially your pocket book? THERE ARE BASICALLY TWO FORMS OF DEBT CONSOLIDATION: 1) Taking your credit card debt, taking out ...
Who’s side are these guy on, anyway?
CAN A CREDIT-CARD COMPANY CANCEL YOUR CARD AND NOT TELL YOU? The following excerpt is from a post on the Wall Street Journal about a person who had 4 Chase cards canceled at once without any notice. Now, my first thought would be that this guy must have a really bad payment history for a credit company to cancel one, let alone four cards. However, that’s not the case. This person appears to pay off his balance every month and is rarely late: “However, I’ve always paid the balance on my Chase credit cards in full every month ...
DEVIOUS WAYS OF THE NON-PROFIT DEBT COUNSELORS
NON-PROFIT DEBT COUNSELOR I want to say that if you are going to go to a non-profit Debt Counselor, take your calculator so you can run the numbers yourself. I recently had a lady that has $50,000 in credit card debt, about 10 of them were Store Cards and 1 was a Discover card. She went to the non-profit Debt Counseling company and was given a quote of getting out of debt in 32 months paying $1400 per month with the average interest rate of 9% per card. The math makes it impossible – $1400 a month times 32 months = $44,800! INTEREST RATES IN DEPARTMENT ...
YOUR CREDIT CARD RIGHTS AS A CONSUMER
KNOW YOUR RIGHTS! When you deal with something that you don’t fully understand, you can be taken for a ride. For instance, if you don’t understand your rights as a consumer when it comes to your credit cards, you can be bluffed by the collector. Statute of Limitations on Unpaid Debts An example that came up recently with one of our clients – a debt they had not paid on for 8 years came back into existence with a collector calling them. The client didn’t know that there is a statute of limitations in their state on unpaid debts. For credit card ...
3 things to know and remember about Debt Collectors:
1. Debt Collectors are either collecting for another company, or 2. They have purchased the debt from another company for 7 to 8 cents on the dollar (yes, that's 7 to 8 cents on the dollar the first time your debt is sold. Then, when it is sold again, it can go down to 1/2 of that and on the 3rd time it's sold, it can be even cheaper). 3. They are regulated by the Fair Debt Collection Act. I would strongly suggest going to Google and getting a readable version of this law. In my 12 years of experience in Debt Negotiation, I ...
DEBT NEGOTIATION COMPANIES: WHAT TO WATCH OUT FOR
The process of negotiating debts is a very, very old activity. You can think back to the times where the Native Americans negotiated land and so forth with furs, beads and other such things. Even recently in Europe, the debt load of the US was negotiated so that the interest was less which somehow increased the value of the dollar. The point here is that negotiating debt has been around for as long as man. DEBT NEGOTIATION WHAT TO LOOK! In the Debt Negotiation (Debt Settlement, same thing) industry, the average settlement is 43 to 45%, period. There is no one that does ...
THE BANKS, CREDIT CARD COMPANIES AND THE NON-PROFIT DEBT CONSOLIDATION COMPANIES – HOLDING HANDS TOGETHER!
DO YOU KNOW HOW THE NON-PROFIT DEBT CONSOLIDATION COMPANIES GET PAID? I guarantee you, it doesn’t all come from the $35 monthly fee that each person pays. The non-profit debt consolidation companies get paid 8% of the money they collect for a major bank or credit card company. That’s right, a majority of the income for the non-profit debt counseling, debt consolidation companies comes from the banks and credit card companies! For many years, the non-profit companies were paid 15% of what they collected and sent to the banks and credit card companies. At that point, these non-profit companies were doing fine. ...
CREDIT SCORE: TRAPPED BY AN IDEA
THE BEST WAY TO MAKE SOMEONE WORRY is to give them an idea and then convince them to believe it. You see this everywhere. For instance, when gas prices when rocketing up, the news media (oil companies using the news media) convinced everyone that there was a shortage in oil, so the prices needed to go up. How crazy is that? In the end, it was realized that we have plenty of oil (especially when we saw the oil company profits also rocket straight up) and that the oil companies just “invented” the problem. CREDIT SCORE AND YOUR DEBT Credit scores are the ...
WHAT DO THEY LOOKED AT WHEN CALCULATING YOUR CREDIT RATING ANYWAY?
YOUR CREDIT CARD RATING includes a number of factors which you should be aware of. Following are the main points that lenders consider in an attempt to measure the risk associated with each individual.
♦ Payment History: No surprise here. If you have a record of making payments on time, you already know this is a good thing. But if your record shows delinquent payments your credit rating will go down.
♦ Risk/Longevity: If you’ve been at a job and in your home for longer than 2 years (the longer the better), lenders view this as a sign of stability and lower risk.
♦ Risk and Debt Control: Lending more money to someone who is living beyond their means is considered a higher risk than lending to someone who has their debt under control. One rule of thumb for non-mortgage credit payments each month is that the payments should not exceed more than 15 percent of the borrower’s after-tax income.
♦ Risk and Balance Limits: The old adage that “It’s easier to get a loan when you don’t need it” is reflected here. The closer your credit cards are to their maximums the greater risk associated in your credit score.
These are not all the factors that are reflected in your credit score but they are among the ones that would have the most awareness of and can exert the greatest control over.
Know before you go.
SETTLEMENT PERCENTAGES AND WHAT TO EXPECT. I’ve been in the debt negotiation industry since 1998 and have worked with one of the premier debt negotiators, Paul Killmar so I am well acquainted with the debt industry and what to expect from the negotiator. The truth is, the settlement percentage that is the industry standard runs between 43% and 45% of what is owed. That is the average settlement percentage.
Now, you will get these incredible settlements where the percentage is 7%, which was one we got for a $35,000 debt, but those are very, very rare.
BANKS AND CREDIT CARD COMPANIES CASH-FLOW
Part of the settlement percentages have to do with the cash-flow needs of the banks and credit card companies. If they are cash light, they may be willing to settle for a lesser percentage. For instance, Citibank is having a hard time and they are now more willing to settle credit card debt for about 20% less than they had before.
MBNA use to give good settlement percentages, then in 1999, they settled for around 60%, but more recently, they have lowered their settlement percentages to around 40%.
EAGER SALES PEOPLE
I give you this information so you know ahead of time what to believe from the sales person. Sometimes, it is popular to talk about the 1 credit card that settled for a very low amount and act like that is the norm of the banks and credit card companies. It is not.
Just beware of the eager sales person and know ahead of time what is true and what isn’t. Then, you can better judge the Debt Negotiation company.
Debt Negotiation by .
TRUE OR FALSE: DEBT CONSOLIDATION IS THE “NON-PROFIT” COMPANIES THAT “HELP YOU” TO GET OUT OF DEBT?
You’ve seen the ads on TV on how they will help to “lower your payment” and “help get you out of debt faster” and other eye catching stuff. To “consolidate” means to take a number of things, like credit cards, and make 1 payment out of them, thus, you consolidate your payments to 1 payment. So what does that mean to you regarding your debt, and especially your pocket book?
THERE ARE BASICALLY TWO FORMS OF DEBT CONSOLIDATION:
1) Taking your credit card debt, taking out a second on your house and putting all the credit card debt on your house. That way, per the ads, you can “pretend” you are out of debt! Which of course, you aren’t. You just took the debt and rearranged it so you didn’t see it every month, so it looks like it’s all gone.
2) The “non-profit” debt consolidation companies. These are the other ads you see on TV and are basically companies that are set up to help you pay off your debts by lowering your interest rates and your monthly payments.
But, DO THEY REALLY DO ALL THAT?
Do you remember when 10% interest rates on credit cards seemed outrageous? Do you remember when 24% interest was only given by people we called, Loan Sharks?
Well, it looks like times have changed! Now, it’s the banks and credit card companies that have become the Loan Sharks.
The non-profit Debt Consolidation companies are touting the 9 – 10% interest rates like they are giving you the biggest gift possible so you can really get out of debt fast.
Really?
WILL DEBT CONSOLIDATION GET YOU OUT OF DEBT?
Did you know that after 40 years of being in business that 18% of the people that go into the non-profit debt consolidation companies actually get out of debt? That means 4 out of 5 people do not finish the program.
In 12 years of being in the Debt Negotiation business, I have found that the biggest reason people quit the non-profit companies is because they don’t see their balances go down enough to get them out of debt in 3 to 4 years.
Do you know how the non-profit companies and the banks and credit card companies work together? Check out the ”holding hands
” article on the Debt Consolidation companies. You might be surprised!
CAN A CREDIT-CARD COMPANY CANCEL YOUR CARD AND NOT TELL YOU? The following excerpt is from a post on the Wall Street Journal about a person who had 4 Chase cards canceled at once without any notice. Now, my first thought would be that this guy must have a really bad payment history for a credit company to cancel one, let alone four cards. However, that’s not the case.
This person appears to pay off his balance every month and is rarely late:
“However, I’ve always paid the balance on my Chase credit cards in full every month and rarely ever am I late (the last time was at least 6 months ago).”
What that means is that the credit card company is not making any money off this consumer.
It’s certainly no secret that credit card companies are in the business of making money, and most of their money is made from consumers who do not pay off their balance every month, which means no interest payments.
Regardless of whether this person’s consumer rights were violated, it would be a tough battle to fight and hardly worth the effort for most individuals, since they can just pull out another credit card….
We're your best friend...until the money runs out.
Credit Card Debt by .
NON-PROFIT DEBT COUNSELOR
I want to say that if you are going to go to a non-profit Debt Counselor, take your calculator so you can run the numbers yourself.
I recently had a lady that has $50,000 in credit card debt, about 10 of them were Store Cards and 1 was a Discover card. She went to the non-profit Debt Counseling company and was given a quote of getting out of debt in 32 months paying $1400 per month with the average interest rate of 9% per card.
The math makes it impossible – $1400 a month times 32 months = $44,800!
INTEREST RATES IN DEPARTMENT STORES
It gets worse. Most department stores will not participate in the non-profit program, meaning, they will not reduce their already high interest rates. Discover card will not participate in the non-profit program, so whatever their interest rates are, they will not reduce them.
Most of the cards that this lady had were store cards!
So, the question is, why would they tell you that you would be able to pay off your debt at less than you owe when most of the cards (about 30% of the total debt) is in cards that will not participate in the non-profit program?
Because they want your business!
If you check out a non-profit company, take a calculator and do the math. Then, verify which cards the non-profit company will be able to work with to lower the interest rates.
We all want to believe someone that seems to make things easier for us. But, when you LOOK, then you will know for sure.
Must be that "new math."
KNOW YOUR RIGHTS! When you deal with something that you don’t fully understand, you can be taken for a ride. For instance, if you don’t understand your rights as a consumer when it comes to your credit cards, you can be bluffed by the collector.
Statute of Limitations on Unpaid Debts
An example that came up recently with one of our clients – a debt they had not paid on for 8 years came back into existence with a collector calling them. The client didn’t know that there is a statute of limitations in their state on unpaid debts. For credit card debts, if the company can not collect in 6 years, the debt is gone and can not be collected any more.
The client didn’t know there was a statute of limitations on their credit card debt, so grew worried that something bad would happen. We simply told the creditor that the statute of limitations had gone to its limits and that the client no longer owed the debt.
This was, for the client, a big relief. But, it was his lack of knowledge that lead him to worry and think that he was going to have to pay it.
Creditors Cannot Call You If You Write Them And Tell Them To Stop
Did you know that you can tell a creditor not to call you at your home or work? Yep, you send them a letter (registered mail, always) and tell them that you don’t want them to call you at work or home and they have to obey that request. After that, they can only send you letters.
You can find out about your rights as a consumer by searching on the internet under consumer rights concerning credit cards, or debt.
We make sure our clients know their rights. It saves them the grief and worry with their creditors as a few of them try to mislead the client.
Know your rights! It’s a very simple and good thing to know.
Don't be bullied! Know your rights!
Credit Card Debt by .
If they can’t call you, they can only send you mail.Credit Card Debt by .
The process of negotiating debts is a very, very old activity. You can think back to the times where the Native Americans negotiated land and so forth with furs, beads and other such things. Even recently in Europe, the debt load of the US was negotiated so that the interest was less which somehow increased the value of the dollar.
The point here is that negotiating debt has been around for as long as man.
DEBT NEGOTIATION WHAT TO LOOK!
In the Debt Negotiation (Debt Settlement, same thing) industry, the average settlement is 43 to 45%, period. There is no one that does better than that. I’ve been in the debt negotiation business for 10 years and it has always been 43 to 45%. My business mentor has been negotiating debt for 20 years and the settlement amounts have always been 43 to 45%.
So, first off, don’t listen to some sales guy tell you that they will do 30 or 35% across the boards. That just isn’t going to happen unless the person has 1 account and it’s a Chase account.
DEBT NEGOTIATION FEES!
Next, on the Fees paid to the Debt Negotiation Company: My advice, don’t pay all of your fees to the company over 6 to 18 months.
What I have seen many times is that a Debt Negotiation company will have you pay them their fees each month, whether or not they have settled any account.
They do this by having you pay their fee each month on a decreasing basis until you have fully paid their fees. For instance, if you pay $600 a month to the company to get out of debt, they will take their fees out of that $600, starting in the first 3 months at the full $600 amount, then graduate it down so each month the amount that goes to them is less and less until it is all paid off. So, on your payment of $600 for the 4th month, they might have $350 come to them and $250 get set aside for settlements with your creditor. After the Debt Negotiation Company’s fees are fully paid, all of your $600 will go towards settlements.
If that is understandable, here is the problem. If a contractor came to your house to remodel your kitchen, you would NEVER just write him a check that fully paid for his quote.
You would give him some money and as he finished different parts of the kitchen, you would pay him more. This would continue until he had the whole project finished.
You would NEVER pay the contractor in full before he started the project for 2 reasons:
- He loses his incentive.
- You lose your leverage.
You want him to work for you and give you the best job. If you don’t like what he has done, you can hold back his payment until he gets it right.
Why would you want to pay a Debt Negotiation Company all of their fees over several months when they haven’t gotten you completely out of debt?
If you do that, you lose your leverage and they lose their incentive no matter what they tell you before you sign up. It’s just a natural law.
DEBT SETTLEMENT FEES
Make sure you pay the company’s settlement fees WHEN THEY MAKE THE SETTLEMENT AND YOU APPROVE THE SETTLEMENT.
That puts you in the driver’s seat and they are working for you!
DO YOU KNOW HOW THE NON-PROFIT DEBT CONSOLIDATION COMPANIES GET PAID?
I guarantee you, it doesn’t all come from the $35 monthly fee that each person pays. The non-profit debt consolidation companies get paid 8% of the money they collect for a major bank or credit card company.
That’s right, a majority of the income for the non-profit debt counseling, debt consolidation companies comes from the banks and credit card companies!
For many years, the non-profit companies were paid 15% of what they collected and sent to the banks and credit card companies. At that point, these non-profit companies were doing fine. In fact, in the late 1950s, banks came up with the idea of having non-profit companies that would help people pay their debts back.
Let’s look at this idea – if a “for-profit company” gives money to a “non-profit company”, the for-profit company gets a tax break. That’s how it works! So, if the banks can “donate” a portion of what they collect to a “non-profit debt collection company”, not only do they get income from the money collected, BUT they get a tax break for donating back to the non-profit company. It really is a brilliant idea – for the banks and credit card companies.
But, then there was a problem. About 5 years ago, the banks and credit card companies decided to cut the 15% to 8% for reasons best known to them. That means that the non-profit companies took a 45% pay cut!
Can you imagine getting a 45% pay cut? Maybe you have already experienced that and worse! So, you know what it’s like to have such a cut in your income. That’s what happened to the non-profit companies and they panicked! How are they going to keep up their staff and their overhead if they just lost 45% of their income?
Well, they did some things that lead to a US Senate investigation on the Consumer Credit Counseling programs (the non-profit companies) in 2004.
And the Senate found some very eye opening facts!
THE BEST WAY TO MAKE SOMEONE WORRY is to give them an idea and then convince them to believe it. You see this everywhere. For instance, when gas prices when rocketing up, the news media (oil companies using the news media) convinced everyone that there was a shortage in oil, so the prices needed to go up.
How crazy is that? In the end, it was realized that we have plenty of oil (especially when we saw the oil company profits also rocket straight up) and that the oil companies just “invented” the problem.
CREDIT SCORE AND YOUR DEBT
Credit scores are the same thing. 100 years ago, credit was the word of the person and whether or not they kept their word. That seemed reasonable.
Now, your credit is a complex scoring system that shows if you are a “good” or “bad” person. Can you be trusted!
Wait a minute! Does that mean you are now your credit score? Well, the advertisements are trying to get you to believe that you really are your credit score!
And there’s an idea that can trap a person!
In truth, there are very, very few people that are not worthy of credit. In economic times like these, there are a number of factors that can cause a person to suddenly get bad credit. Loss of job, lowered pay, medical problems, divorce, separation, etc. can all account for a person’s inability to be able to pay their credit cards.
Does that mean they are a “bad” person?
Hell no! It means they have run into problems and need to action to get out of the problem.
Building credit back up can be done and the road to it is not that long.
Why?
Just remember, your creditors are very interested in you being in debt! That’s how they make their money!
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