Get Qualified Credit

Online Disputing - "Never judge a book by its cover!"

2010-03-19T13:23:00.003-04:00

The Credit Bureaus dirty little secrets
Online Disputing – Don’t judge a book by its cover!

Written by Michael Parker
Vice President of GQcredit

The process of restoring credit can be a long grueling battle spanning months or even years! Writing endless letters to each of the credit bureaus, creditors, and collection agencies only to get back little or no results may hamper the majority from pursuing a complete accurate credit report.

With this in mind, the credit bureaus have made an “easy” online process to instantly dispute errors found on your credit report! An average consumer would much rather go to a website and dispute some items with a few clicks of the mouse.

Disputing online is the epitome of the quote “Don’t judge a book by its cover!” While the idea is not bad, it is deceiving; an easy instant online way to correct your report; while in all actuality this process was created to make it easier and more profitable for the credit bureaus, not the consumer.

Let’s take a closer look…

The FCRA (Fair Credit Reporting Act) is a federal law that states that the bureaus must have a reasonable process in place to ensure accuracy on all credit reports. In a nutshell all items must be accurate, verifiable and report timely. In the event an error is found (by the consumer, since the credit bureaus have no system in place to check for errors) the consumer has the right to dispute the information. By law, the credit bureaus must conduct a “reasonable investigation” to ensure that the information is in compliance. This investigation includes communicating with the parties involved as well as providing any documents/proof the consumer attaches to the dispute.

So why should I NOT dispute online?

Disputing online allows the bureaus to further automate the process. Automation allows the bureaus to process more disputes faster since it reduces or completely bypasses human interaction. By law the bureaus have approximately 30 days to respond to a dispute. If they do not report timely, then the account is to be deleted off the credit report. Therefore it would not be in the consumers’ best interest to make it easier for the bureaus.

Making it easier is one thing, but giving them consent NOT to comply with the FCRA is another thing!

FCRA section 611a(8) : Expeditious Dispute Resolution

Expeditious dispute resolution states that the bureaus shall not be required to comply with paragraphs 2, 6, and 7 in regards to the online dispute if they do not delete the trade line within 3 days.
Paragraph 2 requires the credit reporting agency (CRA) to forward your dispute and all related documents the consumer provides to the creditor. (Unfortunately the online dispute system does not have any means to attach a file to support your dispute.)
Paragraph 6 requires the CRA to provide the consumer with written results.
Paragraph 7 requires the CRA to provide the consumer with the method of verification on request from the consumer.

What the consumers don’t know will hurt them! For instance, the bureaus frequently delete information without contacting the creditors at all. In this case, since the creditors were never contacted the item that was deleted is commonly re-reported in the near future.

In conclusion, when fighting for your right for an accurate credit report, the decks are stacked against the consumers. Unfortunately the masses are subject to propaganda spread by the credit bureaus and other agencies to do it yourself, instead of leveling the playing field and hiring a competent representative to ensure the best results!

*Multiple sources and experts were used to ensure the information in this article is factual. The link to the FCRA is http://www.ftc.gov/os/statutes/031224fcra.pdf. We encourage you to see for yourself!*

You can get more FREE information from www.GQcredit.com.

Also feel free to contact:

Michael Parker
800-250-7047
info@GQcredit.com
www.GQcredit.com

CARD Act of 2009 *** Important Facts

2010-02-01T15:56:00.005-05:00

Credit Card

Accountability

Responsibility and

Disclosure Act of 2009

CARD Act Regulation Effective Dates

August 20, 2009

· More advance notice of any significant changes to terms of credit card account, 45 day advance notice of any significant adverse change to your account.

o Significant does not include Closing the Account or Reduction of Credit Limit

· Requires that Credit card issuers mail statements at least 21 days prior to due date, previously 14 days.

February 22, 2010

· Interest Rate Increases

o Consumers who are casually delinquent will not see interest rate increases

o Consumers who are 30 days past due will not see an interest rate increase

o 60 days or more late will see an interest rate increase

§ If pays on time for 6 consecutive months can earn the lower rate back

· Restrictions on over limit fees

o Act automatically opts out all consumers from allowing cards to be charged above and beyond the limit. Unless a consumer calls and requests to opt in again and receive the $39 over limit fee.

o Over limit transaction is allowed to increase your interest rate after the first year

· Interest rate can only increase on new purchases, not existing

o <>

o > 1 year interest rate can increase, but only affect new purchases. Existing purchases will continue to be calculated at the old interest rate

· 3 Reasons interest rates can increase prior to 1 yr after opening account

1. Promotional rate can increase after promotion has ended or when you are delinquent

2. If interest rate is variable then interest rate can increase

3. If you fail to payback timely within your Debt Management Plan, DMP, then your interest rate can increase

· Payment option flexibility

o Any payment received by 5pm local time has to be credited as being received that day.

o If you walk into a branch or pay by phone they can no longer charge you a fee

· Consumers 21 and under

o Consumers who are under 21 will run into more problems getting qualified for a credit card

o Need a co-signer OR Must have a job

· Payment Allocations

o Any overage of the minimum payment will be applied to the balance of the higher interest rate, previously was applied to balance at lower interest rate

· Double Cycle Billing – no longer allowed

August 2010

· Gift Cards – currently lose value after 12 months

o Gift Cards can no longer expire or charge inactivity fees for 5 years after issue date

Notes

· Debit Card industry is not regulated by CARD Act

· Retail store credit card is not regulated by CARD Act

· Expect the banks to adjust existing fees and create news ones.

o ATM fees may increase

o Cash Advance fees may increase

Credit Score: How many points can mistakes cost?

2009-12-03T11:38:00.007-05:00

Fair Isaac Company (FICO) has recently released information that explains the estimated amount of points that mistakes can damage your credit score!

The Fair Credit Reporting Act (FCRA) is a federal law that requires all credit bureaus to be 100% accurate, 100% verifiable, and timely reporting. What this means is that you might have made a mistake, however if the credit bureaus are not in compliance with the FCRA they must remove or correct the information!

It is important to understand that your credit report is a snapshot of your credit at that particular point in time that it was pulled. Your credit picture can change daily, and you have the right to hire the best representation to ensure that your credit is at its peak!

After all, your credit score can cost or save you an enormous amount of money! For example, when thinking in terms of mortgages, a 40 point difference in credit score can save you a few hundred dollars a month for the entire term of the mortgage! ($100 savings per month on a 30 year mortgage is $36,000!)

Call GQ Credit for a no obligation credit consultation at 800-250-7047 and speak to a live credit expert today!

FICO 08: The new credit scoring model

2009-09-14T12:11:00.001-04:00

FICO 08 will eventually be the industry standard credit score despite not being available yet from Equifax or Experian. We should see FICO 08 at Equifax before the fall and at Experian as soon as they start losing customers to TransUnion or Equifax. Experian has alluded to the fact that their ongoing litigation with Fair Isaac over VantageScore is causing some stress in their relationship and delaying the roll out of FICO 08. The problem is eventually lenders are going to get sick and tired of getting caught in the middle of the “Experian versus FICO” arm wrestling match and move their business elsewhere when they find out that Experian isn’t offering the new gold standard credit scoring model. When that happens you will be able to time the FICO 08 implementation at Experian with the second hand on your favorite watch.

So what is so different about FICO 08 and the other versions of the FICO score? There are three primary differences of note. They are:

1. Negligible Collection and Public Record Exclusion – The newest FICO score will ignore any collections or public records with an original amount less than $100. It’s important to note that for a collection to be bypassed by the score, thanks to the new logic, it has to be reported as a 3rd party collection agency account and not the collection department of a credit card company. If the collection shows up as “trade” then it will still count against your score even if it is less than $100. And, if the original amount was over $100 but it has been paid down to a current balance of less than $100 it will still count in your score. This is exceptional news for consumers who are haunted by low dollar collections caused by misdirected final utility bills and some insurance snafus.

2. Credit Card Utilization – Credit card utilization, the ratio of your current balances to your current credit limits on revolving credit card accounts, remains a highly important factor in your FICO credit score. However, in FICO 08 it takes on a whole new level of importance. Consumers who have balances that approach the reported credit limit will find their scores lower with FICO 08 than with previous versions of the scoring software. FICO’s research has apparently discovered that consumers who are highly utilized with their credit cards are more risky than they were in the past, hence the more punitive treatment.

3. No Piggybacking Allowed – This new version of FICO apparently has the ability to determine if an authorized user credit card account is an attempt to game the credit scoring system through piggybacking, which is the process whereby a consumer with poor credit would pay to be added to the credit card of someone with good credit as an authorized user. Fair Isaac will not disclose how they’re able to tell the difference between a legitimate authorized user account belonging to, say, a husband and wife versus one that has been made it to a credit report through other means, such as piggybacking. You will recall that FICO 08 was originally going to completely ignore all authorized user accounts. This new logic seems to split the difference between ignoring all authorized user relationships and doing nothing to discourage the use of piggybacking services.

So why does FICO 08 pose a problem for VantageScore? It’s actually quite simple. As long as FICO keeps improving what they refer to as their “classic” risk scores the less compelling it is for a lender to test, let alone switch, to a new score brand. Implementing a new version of FICO is much easier than implementing a whole new scoring model, like Vantage. In fact, a company called SubscriberWise has already implemented FICO 08 not more than two weeks after it became available.

The best advice for consumers who will begin to be scored with this new FICO score is for them to continue to do what they’re doing now. Continue to make all of your payments on time. Continue to work down your credit card balances as much as possible. Continue to apply for credit only when needed. If you can do all of these things then your FICO 08 score will be solid as a rock and, who knows, maybe your VantageScore will be solid too, although nobody will care.

The new Credit CARD ACT starts today!

2009-08-20T11:48:00.003-04:00

The first phase starts today!

On Friday May 22 President Obama signed the landmark Credit Card Accountability Responsibility and Disclosure Act, or better known as the CARD Act. The CARD Act is meant to protect consumers from the abusive acts of credit card issuers. It becomes enforceable law at the end of February 2010, a full five months earlier than similar protections adopted by the Federal Reserve, which would have gone into effect in July 2010.

The first phase which starts today includes:

Creditors must now notify card holders 45 days in advance (opposed to the lesser 15 day window in the past) before they increase interest rates unless the account goes into default in which the interest rate can be increased immediately.
The ability to opt out of rate/fee increases, and the right to cancel their account while maintaining the ability to pay under the lower interest rates. Until now it was not the consumers right, but left to the creditors discretion.
Card holders now have at least 21 days to pay their monthly credit card bill(s) without any threats of late fees.A highlight of the new law and its provisions is as follows:

Future changes shall include:

Gift Card Longevity – Today gift cards have descending value, meaning that as the gift card remains unused the balance can be reduced a few percentage points each year. This self-reducing balance is important to the card issuer, especially if they are publicly traded because of current accounting rules that prevent a company from claiming the revenue until the card is actually redeemed.

What this means is that if you buy a $500 gift card from an Apple Store and never use it, Apple cannot claim that $500 as revenue despite having the $500 in the bank. This is why many companies reduce the value of unredeemed gift cards over time. Under the new CARD Act a gift card cannot be reduced in value for a full five years.

There are studies that have shown that the longer the “safe harbor” period for gift cards the less likely they are to be redeemed. So, it seems as if the lawmakers may have gone the wrong way with this provision. Think about it from a consumer perspective. If you have a gift card that expires in 7 days aren’t you more likely to use it quickly rather than a card that retains its full value for five years?

Under 21 Marketing Restrictions – Today you just have to be over the age of 18 in order to obligate yourself to a credit card agreement. That will change under the CARD Act. In fact, you will now have to be 21 years old starting next March if you want to apply for a credit card. An exception will be made for those who can prove that they have the capacity to make credit card payments and for those who can convince a parent to co-sign for them.

This is a “good news/bad news” provision in that it prevents consumers from establishing credit at 18. This costs you a full three years of credit history and credit experience, both of which are essential to someone who wants to build up his or her credit scores. Now someone who can’t find a parent willing to co-sign will have to wait until they turn 21 before they can get their credit career started. An obvious question to ask would be “exactly what happens between the ages of 18 and 21 that all of a sudden indicates that a consumer has learned the value of proper credit management?”

The good news is that many students who would have ended their college career with a nice degree and a ton of credit card debt will now end their career with just the degree. According to a study performed by Sallie Mae in 2008 found that 84% of college undergraduates had a credit card. And, the same study found that the average senior carried more than $4,100 after graduation. Both of these numbers will surely decrease with the new law.
Prevents Double Cycle Billing – Most credit card issuers have scrapped this practice voluntarily but the new law makes it official. Double cycle billing is the practice of using your average daily balance for the current and most recent past billing cycle and use that figure to determine finance charges. It’s complicated but safe to say that if you carry a balance from one month to the next then this method costs you more interest.

Longer Guaranteed Grace Period – Today many issuers are reducing grace periods, which is the number of days after your bill is mailed before it is due. This is the “free loan” period. If you pay your balance in full before the grace period ends then you’ve just enjoyed a free short-term loan.

Many issuers were reducing this grace period to 14 days, which caused many consumers to miss payments because their due date would fall between paychecks. The longer grace period guarantees that you will be paid at least once before their bill comes due, assuming you’re employed.

Prevents Universal Default – Universal Default is the practice whereby a credit card issuer adversely changes the terms of your credit card account because of your actions with another lender. Today credit card issuers practice universal default and then publicly decry the practice, depending on which way the wind is blowing.

Allows Consumers To Control Over-Limit Spending – This provision allows consumers to avoid over-limit fees. In fact, a consumer would have to contact a credit card issuer and proactively opt in to allow over limit transaction approval. Otherwise the issuer will decline the transaction while you’re standing at the register or waiting for the waiter to return with the bill. Fees represent a multi-billion dollar revenue stream for credit card issuers. This provision will cost them big time.

Allows Consumer to Earn Back Lower Rates – Consumers who have gone 60-days past due can still see their credit card interest rates increased. This act, according to the American Banker’s Association, is meant to punish a consumer for doing something that they didn’t want them to do, which is the pay late. This allows credit card companies to still punish the delinquent consumer but it also allows the consumer to earn back their lower rate if they can make their payments on time for six months. Today all you can do is ask for your rate to be returned to its lower baseline.

This provision also guarantees that your rate will not increase for the first year after you’ve opened a credit card account. And, if also guarantees that promotional rates have to last at least six months. This provision is neutral and doesn’t benefit either side.

So there you have it, the CARD Act. Still the best way to not have to concern yourself with legislative protections is to not have credit card debt. Doing so makes many of these provisions interesting but not applicable.

Busy Couple of Weeks for FICO

2009-08-13T14:03:00.000-04:00

Over the past few weeks the news surrounding FICO has been coming fast and furious. The Federal lawsuit filed by FICO against Experian, TransUnion and VantageScore Solutions was partially dismissed but left several counts that will now proceed to trial later this year. Additionally, the credit scoring company announced that FICO 08, their newest credit score, would be available at all three of the national credit reporting agencies starting in August 2009. This means that Experian has finally agreed to install and make available the credit score several months after TransUnion and Equifax had done so.

Regarding the FICO lawsuit:

On July 24th the Honorable Ann Montgomery ruled on a request to dismiss a lawsuit filed in Federal court by FICO (more formally referred to as Fair Isaac) against VantageScore Solutions, TransUnion and Experian. Judge Montgomery dismissed some of the counts and left others in place therefore leading the parties toward trial later this year.

The lawsuit, among other things, claims breach of contract and trademark infringement. The Order sheds a public light on a number of very interesting things that were not previously known, including email communication between executives of the credit reporting agencies. Some of the more interesting nuggets of gold, with emphasis added, from the Order are;

1. The proposed joint venture between the three credit reporting agencies was referred to as either “Operation Triad” or “Project Trident” and eventually lead to the creation of VantageScore Solutions and subsequently the VantageScore scoring model. VantageScore is a credit risk score but uses a different credit scoring range (501-990) as the FICO score (300-850). VantageScore also converts their numeric score to an alpha display using the academic A-F range, which seems comical considering VantageScore is not a lender and doesn’t underwrite loans. The assertion that they know how to grade a consumer’s as being an “A” versus a “B” is a responsibility solely for a lender, not a credit score developer.

It’s also important to note that while Equifax was originally named as a defendant they reached a settlement with FICO on or around June of 2008 and is no longer a party to the lawsuit. The fact that the bureaus named the project after a military weapon sheds light on their mindset at the time.

2. In February of 2005 Experian enlisted the assistance of a consulting firm, which at the time was called Mercer Oliver Wyman. Today this firm is referred to as Oliver Wyman and is a division of Marsh & McLennan. According to the Order this firm created a document for Experian that suggested “through the joint venture (VantageScore), the credit bureaus could build their own scoring model and transfer Fair Isaac’s revenue ENTIRELY to themselves.” The difficulty of replacing entrenched credit scoring systems seems to have been grossly underestimated. I wonder if Experian asked for a refund considering the consultant’s misread of the market.

3. The original VantageScore scoring model “relied on the algorithms in Experian’s own in-house, tri-bureau scoring model, which Experian made available to the team.” The bureaus announced VantageScore to the market in March of 2006. FICO files their lawsuit on October 11th of the same year. This seems to contradict VantageScore’s marketing literature, “The nation’s three consumer credit reporting companies – Equifax, Experian and TransUnion – worked together to develop a tri-bureau generic credit scoring system.”

4. Each of the credit bureaus pays $300,000 annually to secure royalty-free and global licenses for the use of the VantageScore model.

5. Prior to the introduction of VantageScore TransUnion’s royalty payments to FICO was $40,000,000. After the introduction of VantageScore the royalty payments were $44,000,000. No time frames were given so these figures could represent an annual amount or cover some other period of time but assuming the comparison is apples to apples it seems to suggest that FICO has not lost any market share to VantageScore. This means consumers applying for credit will likely have their loans underwritten by a lender using a FICO score.

6. With respect to the confusion in the consumer market of other scores with similar score ranges to that of the FICO score (300-850), “The evidence identified by Fair Isaac lends support to the inference that Defendants intentionally copied Fair Isaac’s 300-850 mark and that consumers confused Defendants credit scores with FICO credit scores as a result.” In English what this means is the credit bureaus intentionally chose score ranges that were similar to FICO’s 300-850 in order to confuse consumers who were shopping online for the credit scores. This has been a consistent criticism of both Experian and TransUnion for years. Equifax does not sell any credit score to consumers other than the legitimate FICO score so they’re not a target of the criticism. The simple question “why did you choose a score range similar to FICO’s” is one that they finally had to answer in court, although smart consumers already knew what they were up to.

7. The published FICO score ranges of 300 to 850 seems to not be the actual FICO score range. From the Order “Fair Isaac argues in response that the term 300-850 is not the "actual scoring range for any of [Fair Isaac's] classic FICO credit scores. The actual scoring range for the first FICO score developed for Trans Union is 397-871, for Experian is 368-839, and for Equifax is 407-829. Every version of these scores has a different range-none of which is 300-850."

Regarding FICO 08:

According to a press release issued by FICO on July 22nd “FICO 08 Credit Score Available at All Three National Credit Reporting Agencies” by the end of July. Experian had refused to adopt the model because of their ongoing litigation with Fair Isaac. And already “five of the seven largest U.S. banks and four of the five largest credit card issuers” have begun testing or using the new score.

What this means is consumers who have a large amount of credit card debt or are highly utilized will likely see lower FICO 08 scores. This is because of the added importance of credit card debt built within the model. It also means adding yourself onto the credit card of another person in an attempt to “piggyback” your way to a better score will be impossible sooner rather than later.

A benefit to consumers is FICO 08’s logic, which ignores very low dollar collections, commonly referred to as nuisance collections. Consumers who are seeing their scores lowered by collections with an original amount less than $100 will see immediate benefit with FICO 08. This is an incentive for lenders to more quickly adopt the new score because savvy consumers who have these small collections will know that a lender who uses FICO 08 will see them in a much better light. Nothing will incent a lender to adopt the newer model faster than prospects going to competing banks just to ensure a better credit score.

This is the 20 year anniversary of the introduction of the FICO score at a credit bureau. Consumers who conduct banking or insurance business at pretty much any bank, mortgage lender, or insurance company are subject to FICO’s evaluation.