Credit Questions? Just Ask Nicole

Your Credit Card Interest Pays for Non-Paying, Deadbeat Cardholders

The Wall Street Journal had an interesting article on this leap year day entitled "Yet Another Reason to Pay Off Credit Cards."

I'm sure we all could come up with a heck of a list of reasons why we should pay off credit cards - like to get out of debt, to avoid paying high interest rates, or to avoid paying interest all together - but in this WSJ article, we're given yet another reason to consider...

The interest you pay on your outstanding credit card balances actually goes toward footing the bill for other people who can't or won't repay their credit card bills!

So if you don't pay off your credit card bills in full, you're paying interest, and up to a third or more of that interest is paying to offset the cost of "deadbeat cardholders."

And remember, a credit card is a credit card, so this surely would apply to business credit cards also.

You can read the article by clicking here.

Number One Consumer Complaint in Michigan: Credit and Financial Concerns

According to the Michigan Attorney General's Office, the #1 complaint among Michigan consumers in 2007 was credit and financial concerns.

Surprise, surprise.

Michigan consumers complained most about credit report disputes, collections, billing and finance charges, misrepresentation of the terms of credit, predatory lending and identity theft complaints.

Rounding out the "top 10" list of Michigan consumer complaints for 2007 are:

#2:  telecommunications, cable, satellite TV - telemarketing, do-not-call violations, cell phone issues, cramming (unauthorized charges), slamming (unauthorized switch of service provider)

#3:  internet - internet purchases and auctions, failure to deliver or refund, fraudulent email solicitations, internet service provider complaints

#4:  retail issues - quality of merchandise, rebates, scanner or pricing errors

#5:  motor vehicle and automobile issues - lemon law, advertising, warranty, quality, misrepresentation

#6:  gasoline, fuel and energy - companies charging grossly in excess of competitors, high utility rates, billing errors, contract misrepresentations

#7:  mail order issues - failure to deliver merchandise, unsolicited merchandise, contest deceptions, failure to refund, lottery scams (especially among seniors)

#8:  multilevel marketing and business opportunities

#9:  small business providers - small businesses receiving unsolicited goods or services, unsolicited faxes, leases for business equipment that can not be canceled

#10: personal service providers - failure to refund, failure to cancel a contract, failure to deliver services

Although this list of consumer complaints is based on Michigan consumers, it is certainly representative of complaints made by consumers all over the country.

As a consumer, you can never be too careful.

If you run into problems with a good or service you've purchased and need some assistance resolving your issue, try contacting your local Better Business Bureau or your state's Attorney General.

Consumer Debt Still High and Rising

OK, I know I'm a little tardy in posting the latest consumer credit statistics that were released by the Federal Reserve this month - but now the wait is over!

Like as if your life was hanging in the balance while waiting for this most precious information. J

The preliminary consumer credit statistics for December, 2007:

• revolving credit increased at an annual rate of 2.7%, with a total outstanding of $943.5 billion

• non-revolving credit increased at an annual rate of 1.8%, with a total outstanding of $1,576.0 billion

• overall, consumer credit increased at an annual rate of 2.1%, with a total outstanding of $2,519.5 billion

• consumer credit increased at an annual rate of 5.5% over the year as a whole

If interested, remember to check back here next month to compare these preliminary December, 2007 stats to the revised numbers that will be released later.

The revised figures for November, 2007 were:

• revolving credit increased at an annual rate of 13.7%, with a total outstanding of $941.4 billion

• non-revolving credit increased at an annual rate of 4.9%, with a total outstanding of $1,573.6 billion

• overall, consumer credit increased at an annual rate of 8.2%, with a total outstanding of $2,515.0 billion

Cartoon: Bad Credit and National Debt

LOL! :)

Happy Valentine's Day!

FREE Michigan Foreclosure Forum: 2/14 in Grand Rapids

REMINDER...

The last of 3 free "Avoid Foreclosure" forums sponsored by the office of Michigan Attorney General Mike Cox is being held tomorrow, Thursday, February 14th, in Grand Rapids.

Avoid Foreclosure Forum
Thursday, February 14th
12:00 pm - 7:00 pm
The DeltaPlex Entertainment and Expo Center
2500 Turner Ave. NW
Grand Rapids, MI 49544

This forum is for Michigan consumers that are having trouble making their mortgage payments, have adjustable rate mortgages that are due to adjust soon, or are facing foreclosure.

The forum is FREE and open to the public.

Michigan home owners will have the opportunity to meet directly with lenders, servicers, and independent loan counselors to help them find a solution to their mortgage problems.

For more information on the lenders and servicers that will be present at the forum, what to bring with you, and a flyer for FREE parking, click here.

Or you can call 877-765-8388.

If interested, you can also read this post from January 23rd about these foreclosure forums.

FYI, solicitors are NOT welcome!

How to Remove Inquiries from Your Credit Reports

I was recently asked how to remove inquiries from credit reports. This is a very common question that a lot of people have.

[Thanks, Jason from Livonia, MI for bringing this up!]

I first want to make it clear that I'm going to give you some general guidance on how to deal with "unauthorized" inquiries on your credit reports - not just any 'ole inquiries! :)

But before I go into any details on how to remove unauthorized inquiries from your credit reports, let me give you this little tid-bit of useful info first:

• Inquiries are classified into 2 categories: "hard" inquiries and "soft" inquiries.

• "Hard" inquiries are the ones that appear on your credit report as a result of you applying for some type of credit or insurance, such as a credit card, apartment, car lease, auto insurance, mortgage, etc. These are inquiries that are initiated by you. Hard inquiries will be the subject of this post.

• "Soft" inquiries appear on your credit reports as a result of you being "pre-screened" for credit offers (marketing purposes), applying for a job, requesting your own credit reports, or from one of your existing creditors taking a "peek" into your credit report to "manage" your account.

• "Hard" inquiries are the ones that can affect your credit score. They account for 10% of the top-secret calculation of your FICO credit score. "Soft" inquiries do not affect your credit score.

• Excessive hard inquiries, especially within a short period of time, signal trouble in the credit scoring system. They make you look "credit-hungry," which could be a sign that you're in some sort of financial trouble and that you are desperately looking for access to credit.

• Hard inquiries remain on your credit reports for 2 years. However, only the ones that occurred within the last year affect your credit score.

• There is no hard-and-fast rule on how many points your credit score loses for each inquiry. The impact could range anywhere from 2 to 50+ points, depending on the other things going on in your credit report and how many recent inquiries you have. So it all becomes relative. How much an inquiry will impact your credit score will depend greatly on your overall credit report.

• Inquiries don't have a long-standing impact on your credit score. The more recent they are, the more impact they have on your credit score. The older they get, the less impact they have.

Now... if you have cause to want to remove inquiries from your credit reports, I'll assume it's because you feel strongly that they should not be there. And you must feel that way because you do not ever recall authorizing those inquiries into your credit. And if you did not authorize those inquiries, they should not be on your credit reports. Right?... Right!

Well, here are the general steps I've used to help many of my student clients successfully remove "unauthorized" inquiries from their credit reports...

1.   Carefully review your Equifax, Experian and TransUnion credit reports to identify all of the "unauthorized" hard inquiries that you do not recall initiating. You can get free copies of your credit reports here.

2.   Focus particularly on the unauthorized inquiries dated within the past year. These are the ones impacting your credit score.

3.   Draft a letter - in your own words - to each of the credit bureaus containing language to the effect of the following:

• you recently reviewed a copy of your credit report and would like to bring some errors to their attention
• you are alarmed because you noticed some inquiries that you did not authorize (or you do not recall authorizing)
• list the unauthorized inquiries, including the names of the companies that made the inquiries, and the dates of the inquiries - make it plain and clear!
• as you understand it, they (the credit reporting agencies) did not have the right to provide your credit report to anyone without a permissible purpose or without your express written permission, as mandated by Section 604 of the Fair Credit Reporting Act
• the companies you listed (you can list them out by name again if you choose) did not have a permissible purpose and you did not authorize the inquiries into your credit report
• the unauthorized inquiries are damaging to your credit score and therefore, currently have a significant negative impact on your financial status and/or financial future
• the unauthorized inquiries are inaccurate and you request their removal from your credit report immediately
• once the inaccurate, unauthorized inquiries are removed from your credit report, you'd like an updated credit report sent to you
• you look forward to having them (the credit reporting agencies) resolve this highly sensitive matter within 30 days of receiving your certified letter

4.   In your letter, remember to:

• use the Equifax, Experian and TransUnion mailing addresses provided in your credit reports for disputes
• reference your credit report confirmation number
• include your name, address, date of birth and social security number
• sign it!

5.   Mail your letters to Equifax, Experian, and TransUnion via certified mail with return receipt. They will have 30 days from the date they receive your letter to investigate your complaint and respond.

If you have any questions about this post, feel free to ask them using the "Comments" link below, or by clicking here.

Hope this helps!