Credit Questions? Just Ask Nicole

Free Credit Reports: No Hidden Fees, Absolutely Free

This video from the FTC (Federal Trade Commission) serves as a light-hearted reminder that you can get your credit reports from all 3 of the major credit reporting agencies - Equifax, Experian, and Transunion -totally free of charge from annualcreditreport.com (once every 12 months).

This is an obvious spoof of one of Experian's freecreditreport.com television commercials. The lyrics are kinda cute (and true), check it out...

By the way, when was the last time you saw one of those freecreditreport.com commercials on TV? Sure seems like they'e shown a lot! At least in my area, that is. Experian must be shelling out big, big bucks to keep those ads running in such heavy rotation.

Can't make rental payments on sunken dozer. How bad will this affect my credit?

This question comes by way of Longview, Texas...

"I have good credit now and I am 25 years old, I co-signed on a rental note for a dozer and basically the dozer got sunk in a pond, the insurance while it was being repaired did not cover down time, it's rental bill is $28,000. I do not have the money to make monthly payments or pay this. Do you know how bad this will effect my credit? Will they take my credit card back that I already have? I know it will screw me in the long run just wondering how bad... If u have a answer to my problem please help me understand better."

Well, how bad this may affect your credit is really going to depend on how it all plays out and the policies and practices of your lender.

First of all, I'd brainstorm with the person you are on the note with to figure out a game plan. After all, this is not your debt alone. They say two heads are better than one, so you just may be able to come up with a way to make the payments after all.

Second, I'd thoroughly review your insurance policy to make sure they were not liable to help cover your payments while the dozer was being repaired. Insurance companies are infamous for not wanting to pay out on claims and sometimes you have to kick them in the butt and STAY on their butt to make them do so.

If you find the insurance company is not liable to pay, then definitely consider making an adjustment to your policy to prevent this type of thing from happening in the future.

Third, I'd call AND write your lender to explain the situation. For maximum impact, both you AND your co-debtor should call (repeatedly if you have to), and the letter should be signed by you both (write repeatedly if you have to).

In your phone calls and letter(s), ask the lender for a work-out plan or payment arrangement plan. Express and stress to them your willingness and intent to pay, but because of your current incapacity to pay, you need their help right now to make good on your agreement with them.

Also, tell them that this is only a TEMPORARY bad financial situation that you are in and that you are working diligently and vigorously to correct the financial problem.

If the insurance company will end up having to pay, make sure the lender is aware of that, and stay on top of coordinating the payment from the insurance company to the lender so that it gets processed ASAP.

Hopefully they will be helpful to you and willing to work something out with you.

Be sure to stay in constant communication with them (think stalker taken down a notch), and don't be afraid to escalate your case to a supervisor, manager, or even the President to get some results.

But keep in mind that in the meantime, if the rental payments continue to go unpaid, the lender could repossess the dozer. And a repossession would be horrible for your credit.

And... if you have a credit card with the same lender that financed your dozer, they could easily close your credit card account, reduce your credit limit, or raise your interest rate.

Hell, even a different credit card company could do the same things if they were aware of your late payments on the dozer (i.e., universal default).

If your credit card gets closed and you still have a balance on it, or if your credit limit gets reduced and your balance is higher than the reduced credit limit, that will negatively affect your credit. The credit scoring model does NOT like outstanding balances that are higher than the credit limit.

Hope this bit of info helps, and best of luck to you!

Credit Card Company & 2 Banks in Trouble for Subprime Credit Card Practices

The FDIC (Federal Deposit Insurance Corporation) and the FTC (Federal Trade Commission) have taken actions against CompuCredit (Atlanta, GA), First Bank of Delaware (Wilmington, DE), and First Bank & Trust (Brookings, SD), and have reached a settlement with Columbus Bank & Trust (Columbus, GA).

They are all in trouble because of CompuCredit's shady marketing practices involving certain Visa and MasterCard products aimed at subprime cardholders.

Check out what they were doing...

One card they offered was a fee-based credit card that was marketed to consumers with low credit scores, of which they failed to adequately disclose the significant up-front fees associated with the card, and misrepresented the consumer's initial available credit. Their solicitations appeared to offer a $300 credit limit, but then consumers were immediately charged $185 in fees and left with only $115 in available credit.

Another card they marketed offered "up to $3,250" in credit to consumers with slightly higher credit scores. But again, they failed to adequately disclose important information - namely, that only half of the consumer's credit limit would be available to them for the first 90 days of having the card. Further, they didn't tell consumers that they were going to monitor their purchases and potentially reduce their credit limits based on certain "behavioral" triggers.

And yet another card that got them into trouble was a debt transfer credit card marketed to consumers with charged off debt. Their solicitations represented that the consumer's charged off debt would be immediately transferred to the credit card and reported to the credit bureaus as "paid in full." However, consumers were actually enrolled in a debt repayment plan instead, and didn't receive the credit card unless they paid off 25-50% of their charged off debt over a 12-month period. And after everything, the consumers who went along with this plan only ended up receiving nominal available credit on the credit card.

If enforcement actions are granted, the companies will have to pay restitution to consumers in the form of credits for certain charges and fees, overall totaling somewhere north of $200 million.

Why You Should NOT Let a Mortgage Loan Officer Pull Your Credit Just to See Where Your Credit Stands

Phil from Virginia asked this question...

"What's the big deal about not using a loan officer to pull your credit if you want to see what your credit is like and what your credit score is? I don't get why that's a problem."

Well, you should NOT let a mortgage loan officer "pull your credit" just to see where your credit stands because...

1. When a mortgage loan officer pulls your credit, a hard inquiry is added to your credit report. And hard inquiries affect your credit score. They reflect how actively you are seeking new credit and account for 10% of your credit score. Depending on the overall condition of your credit, hard inquiries can cost you some serious credit score points and cause your credit scores to drop. Therefore, you should not initiate hard inquiries into your credit unnecessarily, especially if you are not truly seeking new credit.


2. If your credit scores drop because of excess and/or unnecessary inquiries, it could cost you dearly in other ways. If your existing creditors pick up on the drop in your credit scores (and chances are they will because they do regular reviews of your credit for "account management purposes"), depending on your credit agreement, they could increase your rates, impose additional fees, or even lower your credit limit. And heaven forbid you go to apply for credit you really need! With lower credit scores you could receive unfavorable terms or be denied all together.



3. You should only have a mortgage loan officer pull your credit if you are actively shopping for a mortgage loan. And in turn, they should only do it under those same circumstances. They are legally obligated to only access consumer credit reports for their permissible purpose, which is to process mortgage loans, not to provide credit reports to consumers. This is in accordance with the Fair Credit Reporting Act. They could get themselves and their company into big trouble for accessing credit reports when it has nothing to do with a mortgage loan. Basically, this should not be used as a way to just randomly check your credit reports or credit scores, even if the loan officer does it for you for free!



4. If you just want to see what's on your credit reports, you can get copies of them yourself for FREE from www.annualcreditreport.com, so there's really no need to have a loan officer involved. You can get instant access to your credit reports if you request them online, and if you request them over the phone, you should receive them in the mail within just a few short days.



5. If you're concerned about what your credit scores are, you can get your FICO credit scores and your credit reports from MyFico.com. Again, there's really no need to have a loan officer involved because you can get your credit scores directly from MyFico yourself. This may cost you a few bucks, but it's well worth it when you consider what price you might pay if unnecessary inquiries cause your credit scores to drop.

So if you come across someone who tells you that it's no big deal to have your credit pulled by a mortgage professional just to see what your credit is like or what your credit scores are, IGNORE THEM!

It could end up being a very big deal!

They obviously don't know how such an action could affect your personal credit situation, and they probably don't really care.

You have too much access to your own credit information to have an unnecessary inquiry added to your credit report just because you want to know where your credit stands.

Get your credit reports and credit scores yourself and only have a mortgage professional pull your credit if you are actually shopping for a mortgage loan.

And on a related note, remember, if you do plan to apply for a mortgage, you should get copies of your credit reports yourself and thoroughly review them well in advance of applying. Make sure you give yourself enough time to correct any errors and get your credit in the best possible shape to avoid any last minute surprises.

Thanks Phil for asking this question!

Good Credit, Bad Credit and Marriage

Thanks goes out to Tiffany, from Chicago, IL, for asking this question!

"I'm getting married this summer and even though I love my future husband to death, he has horrible credit! My credit, on the other hand, is pretty good. My question is when we get married, will I automatically inherit his bad credit? What's going to happen to my credit after we get married? Should I be worried?"

Tiffany, I'm sure you already have plenty to worry about with your upcoming nuptuals, so you'll be pleased to know that you won't have to also worry about inheriting your future husband's bad credit!

When you get married, your spouse's credit does NOT automatically become yours.

You each have your own separate credit profile before you get married, and you each will keep your own separate credit profile after you get married.

However, if you apply for credit jointly, whether married or not, you both will be legally responsible for that debt, and that debt will appear on both of your credit reports and affect each of your credit scores.

Bottom line, there's no need to worry. Nothing will automatically happen to damage your good credit simply because you are marrying someone with not-so-good credit.

Just continue to keep up your good credit habits and check your credit reports often for accuracy to be sure your credit stays in tip-top shape.

And if you haven't already done so, you may want to encourage and help your fiance to start working on ways to improve his credit, as well as to learn how to manage money and credit better than he has in the past.

You'll find that both of you having good credit will come in handy over the course of your lives together, especially when it comes to things like buying a house, getting life insurance, etc., where both of your credit histories will play a part in the credit decision process.

Remember, that if one of you has good credit and the other one doesn't, and you apply jointly for credit or insurance, the person with the bad credit history may cause you to pay higher rates or fees, get less-than-ideal terms, or be declined all together.

Best of luck to both of you and congratulations!

Children are Targets of Identity Theft Too!

There was an interesting article in the Wall Street Journal the other day entitled "How to Stop Identity Thieves from Targeting Your Child."

The author of the article didn't necessarily lay out a step-by-step process to follow, but she did detail a personal experience at her son's dentist office, as well as mention a few of the things she does to try to protect and monitor her child's personal information.

It is quite unsettling that identity thieves target young children, but not at all surprising.

As the article points out, most acts of identity theft against minors is committed by a family member (for a number of different reasons).

And unfortunately, it is not until the child becomes a young adult and tries to obtain credit that they discover they've been victimized.

If you have children,

• Have you ever thought about your child potentially becoming a victim of identity theft?

• How great do you think the risk of identity theft against your child really is?

• What measures do you take to protect your child's personal information?

• Do you limit access to your child's personal information or do you just give it out all willy-nilly to any company or organization that asks for it and claims they need it?

Chase New Credit Card Interest Rate Policy Goes Into Effect Today!

If you have a Chase credit card, you will very happy to hear this news...

TODAY, March 1st, Chase implements their new and improved pricing policy for their cardholders as part of their Clear & Simple initiative.

Chase will no longer participate in the common credit card industry practice of raising your interest rate if your credit score drops - i.e., the universal default clause.

People often experience a drop in their credit scores for any number of reasons... one of which is inaccurate, negative information being reported on their credit reports through no fault of their own.

Which happens waaaay too often!

Well, we all know that negative credit report information translates into low credit scores. And that could mean big trouble with the credit card companies who will hike up your interest rate because your credit score dropped, or because there's something negative on your credit reports, even if you have a perfect credit history with them.

Hence the term "universal default."

Well, I, for one, am very excited about Chase not hiking up interest rates as a result of a credit score drop. This is good news for consumers. Hopefully in due time, other credit card companies will start to follow suit.

You can read a little more about this change with Chase in this post I wrote on December 10th 2007 last year.