Home Loan Focus

Archive for the ‘Credit Improvement’ Category

After years of milking the Credit Card Bubble for all it was worth, American Express reported a 72% reduction in profits this quarter while simultaneously announcing 7,000 layoffs of its own employees.  That happened on a day some are calling Black Monday, when over 50,000 other layoffs were announced by other employers from Caterpillar, Sprint, Chrysler and more.

Now, the writing on the wall for credit card defaults has been glowing in neon for months now.  This was not something that American Express was surprised about.  We talked about American Express just last month when they offered up a change in their policy that might even allow them to take money out of an account holder’s bank savings or checking account without any notice or challenge.

Now the depression hasn’t yet set in because all credit cards have not yet been cancelled, but credit card companies that have merged to the point of over exposure might have to make that choice soon if they see repeated quarters of profit reductions or even losses.  So with that said, make sure you are protecting yourself and your credit because the ride has just begun.

Last month I purchased a new phone number from Skype.  Its an actual phone number, that brings calls directly to my Skype account (as opposed to just my user name). 

The number is recycled which is not that unusual in this age where everyone has a ridiculous number of phone numbers (home, office, mobile, Skype etc.)

Last week I started receiving automated collection calls from a company that has a notorious reputation for making debt calls on junk debt that is over 10 years old (see Google search).  One of the companies names and the one used on the automated call is JC Christensen & Associates, but these days they have a parent name on their website of Array Services Group.

They keep calling and leaving an automated phone message asking me to call them.  Now, this new phone number for Skype has not been given out to anyone and definitely not been used on credit related documents for myself or for my business.

I found one forum where a member was complaining about out dated collection calls for this company and even offered up a form to complete and send to them  to end the frivolous calls.

**MY NAME**
**MY ADDRESS**
J. C. Christensen and Associates
215 N Benton Dr
Sauk Rapids, MN, 56379-1530
10/13/06
To Whom It May Concern:
This letter is being sent to you in response to your recent phone calls to my home.
This is not a refusal to pay, but a notice that your claim is disputed.
Under the Fair Debt Collections Practices Act (FDCPA), I have the right to request validation of the debt you say I owe you. I am requesting proof that I am indeed the party you are asking to pay this debt, and there is some contractual obligation which is binding on me to pay this debt.
Your legal staff will agree that compliance with this request is required under the laws of the state of Virginia and Federal Statutes.
In addition to the questionnaire below, please attach copies of:
• Agreement with your client that grants you the authority to collect on this alleged debt, or proof of acquisition by purchase or assignment.
• Agreement that bears the signature of the alleged debtor wherein he or she agreed to pay the creditor.
Please also be advised that this letter is not only a formal dispute, but a request that you cease and desist any and all collection activities.
I require compliance with the terms and conditions of this letter within 30 days, or a complete withdrawal, in writing, of any claim.
In the event of noncompliance, I reserve the right to file charges and/or complaints with appropriate County, State & Federal authorities, the Better Business Bureau and State Bar associations for violations of the FDCPA, FCRA, and Federal and State statutes on fraudulent extortion.
I also hereby reserve my right to take private civil action against you to recover damages.
Sincerely,
**MY NAME**
Debt Validation Form
Questionnaire to be returned:
Account #: ____________________
Original Creditor’s Name: _________________________________
Name of Debtor: ______________________________________
Address of Debtor: ___________________________________
Balance of Account: __________________________________
Date you acquired this debt: _________________________
This Debt was: assigned ___purchased___
Please indicate any credit bureaus to which you have reported on this account:
Experian ______
Equifax ______
TransUnion _____

Techie Skype Wish list

My thing is that Skype is a VOIP service.  Its essentially an internet communication platform.  I can block spammers with spam tools in my email and even on my websites and blogs.  I should be able to block spammers with Skype by both IP or by calling phone number or user id.

Now this is a number coming from outside of Skype and there is no caller ID on it, but there still should be a way to trace it back to the source.  With that ability it should be able to block such a number or even dump them into an opt in request process whereby the caller has to prove that they are not an automated robot, state their business and why they should receive access to me, and then I should have the ability to let them through to call me, or later shut them off if they abuse the privilege.

Today, the day after Christmas, I received an email from American Express, stating something to the effect that your account is past due, and please make a payment.

That is never the type of email anyone wants to receive, but I was slightly confounded because I had paid my bill.  In fact, I had paid my bill three weeks before it was due.  So what was going on?

As it turns out, I had used my credit unions Bill Pay Service.  I had made a batch of payments back on December 1st, and for no apparent reason their system completely dropped/deleted/lost my payment to American Express.  I don’t know if it was due to user error, gremlins, a bug in the system, or some reverse lottery system.

All I know is that I had entered the payment, had marked it in my own bookwork along with several other payments made at the same time.  My credit union accepts these payments in batches and so it would seem impossible for the transaction to be lost.  There was money in the account, so this was not an issue of insufficient funds.  The transaction was just lost.

The Notification Problem

In this case, I made my payment on the 1st and it was not due until the 19th.  I assumed that everything was just fine.  American Express did not know there was a problem until 12-20, when they realized that my account was past due.  They sent me an email on 12-26, and sent a new bill.  I got the email but have not seen the bill yet.

The notification problem is that I’m not told about a problem until after it is too late.  After my account has been assessed a late fee and after my interest rate has been increased!

That can be avoided with many different solutions, but I’d like to focus on fixing the notification problem.  When I called in to fix things today, they mentioned that I could use alerts possibly to configure my account to keep me up to date as to what was going on.

So I logged into Americanexpress.com and clicked on this option

This took me to a screen where I could then configure a number of options, including a warning about an approaching due date, and a notification that my payment had been accepted.  With this configuration, if I always work to have my payment sent at least 5 days before it is due, I will know that there is a problem with my payment, if I receive an alert 3 days before the due date!

I also set up a couple other alerts to help protect my account as well.

I should point out that the spam filter on Firefox 3.0 blocked me from setting up these alerts all together as the enroll button triggers a pop up window with the terms and conditions.  I had to instead use Internet Explorer 7 and even then I had to allow the pop up windows completely for this site (not just the one time allow) in order to get this to work.

We all know the importance of maintaining a good credit rating. We also know that the better your rating is, the better you will do when it comes to getting good rates on loans, credit cards and even gaining employment in some states. There are easy steps that can possibly increase your score 15-20 points in one day! That can make a big difference whether you are applying for a car loan, signing a condominium lease for Hilton Head rentals for a long weekend, renting a new apartment or buying your first home.

The five steps a based on the premise of paying attention, so it should be no major lifestyle change or burden.

1. “Check with your bank” to see if they have an auto payment program. You can set up the payment program to make the monthly minimum payment in order to avoid potential late fees.
2. “Get a copy of your credit report” so that you can see just what accounts are listed and where you stand on them
3. “Check for mistakes” because any error, no matter how miniscule, can have a devastating effect on your overall score.
4. “Resolve the errors” by contacting your lender and straightening out the problem before it begins to have negative effects on your financial wellbeing.
5. “Check your credit limits” you may be stretched a little too thin. If you are using over fifty percent of your credit, a quick solution may be to call a creditor and ask for a credit line increase thus lowering your debt ratio.

When you open up your wallet do you have take your credit score into account? If not, maybe it is time. There are a number of effective ways to increase your score while gradually paying down your card debt that won’t require new computer software or computer memory or a lot of extra time even to crunch the numbers.

We all know that carrying a number of cards that are near maxed out will put a big hurt on your score and that paying them off can be a process, so why not utilize an installment loan?

An installment loan will not affect your credit in the same fashion as excessive card debt. Regarding debt ratio, the loan isn’t subject to the same scrutiny and will most likely not accrue as much interest as a credit card. In addition, an installment loan will also reduce your overall “debt over time” as the amount due is set.

Here are some Reminder or Refresher Tips that we can all benefit from to help continue to manage our credit card debt effectively.  As a general rule of thumb these need to be executed with the overall strategy of paying down and off all credit card debt as rapidly as possible.

1. When Setting up the card, choose a convenient due date that fits your cash flow cycle or incoming paychecks.
2. Schedule a new due date if your cash flow cycle or paycheck cycle changes
3. If you mail your payment, send it at least 5-7 days before the due date. 
4. If using a bill pay service do not rely on the services’ scheduling software to get your payment there a day before hand.  Again make payments several days before the due date to allow for problems or delays from your bill paying support system.
5. If your payment gets close to the due date or if it goes past the due date, call the company and pay over the phone if they allow you to do that.  Be sure to ask them to forgive the late payment and dismiss late fees when you pay over the phone.  Use your ability to pay over the phone as leverage to get these items corrected "Will you remove late fees and keep my interest rate at the same level if I can pay you over the phone right now?"
6. Review Your Statements regularly to insure that you do not go over your credit limit and to insure that your credit has not been hijacked to buy energy pills or take a vacation around the world.
7. Work to stay at least 5% under your credit limit at all times and for maximum credit try and stay below 90 – 50% of your credit line.  Zero percent of course is the absolute best.
8. If your balance takes your percentages over these levels, consider calling to ask for a rate increase, but do this only while considering the other ramifications on your credit, such as the number of credit inquiries that you have had in the last 90 – 180 days.

US News and World Report offers up a good list to help reduce your borrowing cost that we have paraphrased below.

1) Borrow as little as possible.

2) Check your future salary to see what you can afford in the future.

3) Shop around for the lowest rates.

4) Fill out the FAFSA to qualify for low-cost federal student loans.

5) Don’t charge tuition or other school expenses to your credit card.

6) Consider nonprofits offering access to loans such as MOHELA and NHHEAF have offered lower-cost loans. Graduate Leverage, a cooperative, is also offering competitive terms.

7) See if you can qualify for one of the many loan repayment or loan forgiveness programs, so your employer—not you—pays off your student debts. 

How to Reduce Your Borrowing Costs – US News and World Report

In addition to these tips, its also very wise to do some paid work while you are in school.  It generates income to help keep your debt and borrowing down while building up your experience.  Many companies are having a very difficult time finding students to work for paid coops these days.  The work may not always be glamorous (that’s why its called work) but it can save you a fortune in interest and give you some great work and life experience rather than wasting money on funny t-shirts and concerts.

We previously tried adding some credit and finance calculation tools a couple weeks back.  The tools were sponsored by credit companies, and they did not deliver what we were looking for.  You’ve probably seen teaser calculation tools in the past.  They ask you for some information to calculate a new payment or what if scenario on your finances and before you know it, you have no answer and they are sending your personal information off like a loan application.  Well, we think that is bogus. 

If you want to check out our sponsors, more power to you, but we want you to do that with your eyes wide open and preferably when you have all the facts in front of you and all your ducks in a row.  When you negotiate a new mortgage or even a refinance, you need to have everything in your finances straight and tight if you are going to actually get the highest rate possible.

With  that in mind we have established several tools to help you with this without having to send any information at all to a sponsor.  If you have ideas about additional tools that we should add, please let us know and we will try and develop it.  The bottom line is that we want you prepared to get the best deal no matter if you are financing a jumbo mortgage in San Francisco, looking into the real estate Branson market for a possible relocation, or refinancing credit cards into a home equity loan (not a good time to do that in general.)

Quicken Loans offers up a short and somewhat useful article detailing how the recent Federal Reserve’s Rate Cut might impact your mortgage.

Now, I personally do not trust Quicken Loans as they once promised me a rate on my own home refinance.  I locked in at the rate and 2 weeks before the close they called to tell me that it was no longer possible unless I paid a higher interest rate.  They offered up excuses that were unprovable, but the reality was that it was either their way or the highway. 

I chose the highway and refinanced with Wells Fargo instead!

Regardless, their short article Does the Fed rate cut affect your mortgage rate? offers up the examples necessary to understand how the Federal Reserve Rate Cut a can impact your finances ( a little ) both positively and negatively.  The article is not likely to save you a fortune this year or even save your house from foreclosure if you are in trouble, but understand the situation might save you enough money to buy a truck rack on clearance from an after christmas sale.

The key concept to understand is that the Federal Reserve has the ability to impact short term interest rates.  Here are some loans that may be impacted in the short term:

Credit Cards
Adjustable Rate Mortgages (ARMs) – under 7 years, even more if 3 or under
Home Equity Lines
Some (but not all) Student Loans
Your Savings Account rates
New Vehicle Loans – Ergo new loans that you take out as opposed to the loans that you already have.
Other Lines of Credit – such as Overdraft Protection

Can you live in a diamond ring?  Can a diamond ring keep you or your kids warm and dry?

The answer is no.  So why would you waste money on a Christmas gift this year that does you no good?

I’d suggest that instead of wasting money on diamond rings, you should consider doing one of the following things that will actually help you protect your biggest investment, your home.

Quite simply, make an extra house payment this month.  Save the money on presents you do not need and drop a grand or two on your house.  This is good for your own finances as it increases your equity, reduces your total interest expense and helps the US economy by putting money in the sector of the economy that needs it the most right now.

If you are not sure about your own finances as you look 3-9 months into the future, then take that same couple thousand dollars that you might spend on Christmas and park that money into a 3 month CD.  Renew that CD every 3 months, and if by chance you come up short for your house payment, this becomes your financial reserve for a rainy day.  It might just save you from foreclosure.

Similarly, if you want to help your finances tremendously, pay that money towards your credit card debt, do not spend any money on your credit cards and reap the rewards.