Posts Tagged ‘Credit Report’

Credit Karma featured this great article on an issue that is important to many Southeastern Wisconsin families from Milwaukee to Racine. Miller and Miller can help you to rebuild and repair your credit score. Call us today for a free consultation in one of our three locations: Milwaukee, Germantown, and Kenosha.

Closing old and unused credit accounts on your credit reports can help you avoid unnecessary fees and guard against identity theft. It can also cause your credit score to drop if you are not careful. Here are a few do’s and don’ts for closing those dormant accounts:

Do…

•Consider closing unused and idle accounts. These accounts could be charging you unnecessary fees and are often targets for identity thieves. Close the accounts with annual fees or the highest interest rates first.
•Check your credit reports online to see the status of your accounts. Look for late payments, high balances and signs of identity theft. As a bonus, checking your credit report can save you some research time by providing you with contact information for each of your creditors.
•Be aware that you can cancel accounts that have an active balance. You can ask your creditor to close the account to new charges and continue paying down the balance each month. This may be a good way for heavy credit users to prevent new spending while they are reducing their balances but watch out for hidden fees.
•Keep four to six credit accounts open. This will keep your credit score and debt balances healthy. Signs of active and responsible credit use are viewed positively by creditors
•Designate one card for regular use and try to pay the balance in-full each month. Reserve the other cards for emergencies only so that you are not tempted to overspend.

Don’t…

•Close the oldest account on your credit reports . This could cause your credit history to appear shorter and could harm your credit score.
•Just throw away old cards and expect your accounts to close automatically. The safest way to close an account is to send a certified letter to the customer service department of the credit company. You should receive an account closing confirmation letter in 10 days.
•You shouldn’t be pressured to cancel several accounts all at once. Gradually paying down and closing accounts may be the best plan if you are unsure about the impact on your credit score or the amount of debt you need to carry. If you want to cancel numerous credit accounts, spacing the closures over time will reduce the chance of attracting negative suspicion from potential creditors.
•Avoid over-consolidating balances onto one card. If your credit balances rise to above 35% of your available limits, you may see a drop in your credit score.
•Don’t forget to check your credit reports for updates and errors after you close your credit accounts. Wait 30-60 days for the creditor to report the closed account and the credit reporting agencies to update your records. While the accounts and their payment histories will stay on your report for 7 or more years, they should be marked as “closed.”

It is not uncommon for someone to enter my office, credit report in hand, with questions about items listed. Milwaukee, like everywhere these days has a lot of identity thieves lurking about and it is important that you know what puts your identity at risk. If you have debts that might be a result of identity theft call Miller and Miller today to discuss how to eliminate them and clean up your credit report. With offices in Milwaukee, Kenosha, and Germantown, we are only a short drive away!

In the meantime, check out this great test from Kiplinger on how to determine whether your identity is at risk. Click here.

From Milwaukee to Racine, Saukville to Waukesha, people in Wisconsin are coming to Miller and Miller, eliminating or reorganizing their debt, and getting the fresh start they deserve. One way of rebuilding credit after a bankruptcy is obtaining a prepaid credit card. If you are considering this option, keep reading the article below by John Ulsheimer:

The following question was recently submitted via Mint’s Facebook page:

Reader: What is the best type of FREE pre-paid card to get? I think I need to get a gas card because using the debit (card) is not working in our house — it’s too easy to just grab a soda, etc. I think it would be easier to manage our spending if we had a preset amount to spend each month, but I don’t want to pay any fees!

Why is this an excellent question? It’s an excellent question because the Facebook follower is exploring ways to control the household’s spending by investigating alternative payment options. This is the type of independent research that every consumer should perform when applying for, or buying, any sort of financial service product.

Before I answer her question:

In the spirit of full disclosure, I have written about and expressed concern over certain fees associated with some of the prepaid debit cards on the market. I have also suggested that prepaid debit cards aren’t necessarily an alternative to a responsibly managed checking account, nor are they a surefire way to build credit. That being said…..

Consumer-Friendly Prepaid Debit Cards

If you’re looking for the least expensive prepaid debit card option, then I believe the American Express prepaid debit card is an excellent choice. I’ve researched most, if not all, of the prepaid cards on the market and the American Express fees structure is the very consumer-friendly — the card has only one fee, an ATM fee of $2 (your first ATM use is free each month).

There’s also a fee that you’ll pay to load the small or “preset” money on their card but you’re not paying that to the card issuer — you’re paying that to a company like Western Union or MoneyGram.

Not a Solution for Impulsive Spending

Another thing to keep in mind when using any prepaid card, or any debit or credit card for that matter, is that you can still use it to buy gas, sodas, and anything else the gas station sells. So, neither a gas card or a prepaid debit card will solve the problem of impulse purchasing. That’s something you’ll have to control on your own, since it can’t be addressed systemically by choosing a certain card.

If you wind up deciding not to use prepaid debit card, a gasoline gift card might be a good alternative. They’re very common and can be purchased in various denominations — $5, $50, $100 and many other amounts. You can purchase them at the gas stations you use most often or even at drug stores. This options is fee free and it allows you to pay at the pump, in most cases.

Keep in mind that a gasoline gift card also does not solve the issue of impulse buying because, like prepaid debit cards, they can be used to buy anything the gas station sells. I know this personally because I used a Shell gift card I claimed as a reward from my Chase Sapphire credit card and used it to pay for getting a tire patched after I ran over a nail.

The Bottom Line

In the end, whether you use a prepaid debit card, a gas card, or a gift card, learning to control impulse spending has nothing to do with what kind of card you use — it’s about adopting responsible habits.

While overall bankruptcy filings are down when compared to recent years. The article below, from the New York Times, certainly rings true for people living in the Milwaukee, Racine, Waukesha corridor and throughout Wisconsin. Call Miller and Miller today if you need help getting a fresh start!

The recent financial crisis left the median American family in 2010 with no more wealth than they had in the early 1990s, erasing almost two decades of accumulated prosperity, the Federal Reserve said Monday.

The median family, richer than half of the nation’s families and poorer than the other half, had a net worth of $77,300 in 2010, down from $126,400 in 2007, the Fed said. The crash of housing prices explained three-quarters of the loss.

This vast loss of wealth was compounded by a loss of income, as the earnings of the median family fell by 7.7 percent over the same period.

The new data come from the Fed’s much-anticipated release Monday of its triennial Survey of Consumer Finance, one of the broadest and deepest sources of information about the financial health of American families. The latest survey is based on data collected in 2010. Figures are reported in 2010 dollars.

Unsurprisingly, the report is full of grim news, and although it is news from 18 months ago, fresher sources of economic data make clear that most households have since seen only modest increases, at best, in wealth and income.

Despite these setbacks, consumers have continued to spend surprising amounts of money in recent years, helping to keep the economy growing at a modest pace. The survey underscores where the money is coming from: Americans are saving less for future needs and making little progress in repaying debts.

The share of families saving anything over the previous year fell to 52 percent in 2010 from 56.4 percent in 2007. Other government statistics show that total savings have increased since 2007, suggesting that a smaller group of families are saving more money, while a growing number manage to save nothing.

The survey also found a shift in the reasons that families set aside money, illustrating the lack of confidence that is weighing on the pace of economic growth. More families said they were saving as a precautionary measure, to make sure they had sufficient liquidity to meet short-term needs. Fewer said they were saving for retirement, education or for a down payment on a home.

And the report highlighted the fact that households have made limited progress in reducing the amount that they owe to lenders. The share of households reporting any debt declined by 2.1 percentage points over the last three years, but 74.9 percent of households still owe something and the median amount of the debt did not change.

The drop in reported incomes could have increased the weight of those debts, requiring families to devote a larger share of income to debt payments. But one of the rare benefits of the crisis, lower interest rates, has helped to offset that effect. Families also have been able to reduce debt payments by refinancing into mortgages with longer terms and deferring repayment of student loans.

The survey also confirmed that Americans are shifting the kinds of debts that they carry. The share of families with credit card debt declined by 6.7 percentage points to 39.4 percent, and the median balance of that debt fell 16.1 percent to $2,600.

Families also reduced the number of credit cards that they carried, and 32 percent of families said they now had no cards, up from 27 percent in 2007.

The cumulative statistics concealed large disparities in the impact of the crisis.

[Related Video: The 'American Dream' is a Myth: Joseph Stiglitz on 'The Price of Inequality']

The losses of income and wealth fell most heavily on the middle class. Families with incomes in the bottom and top 20 percent of the population sustained smaller losses on a percentage basis than those families in the middle 60 percent.

One reason for this disproportion is that the middle class puts its wealth in housing, and the median amount of home equity dropped to $75,000 in 2010 from $110,000 in 2007. And while other investments have recovered much of the value lost in the depths of the crisis, housing prices have hardly budged.

The credit report dispute process is fairly mysterious, which means most people don’t actually know what happens when they file a dispute with a credit reporting agency. Here’s a step by step process that should help clear things up a bit.

Step 1: File a Dispute
You communicate with the credit reporting agency(cies) that you disagree and formally dispute an item on your credit report(s). This can be done in writing, on the phone, over the Internet, or in person. It’s important that your dispute is clearly written in a way that a layman would understand it. For example, “I disagree with my credit report” is not a dispute. “I was never late on my XYZ Bank account, please correct my credit report” is a dispute. This is where your involvement ends and the “system” takes over.

Step 2: The Investigation
The credit reporting agency will send a form to the furnisher of the disputed information. The form is called an ACDV, which stands for Automated Credit Dispute Verifications. In the old days when I used to work for a credit bureau it was simply called a CDV, meaning it wasn’t terribly automated. This ACDV form is then sent to the furnisher of the disputed information via an Internet based system called e-OSCAR, which stands for Online Solution for Complete and Accurate Reporting.

Step 3: Verification of Dispute
The data furnisher (normally a lender or collection agency) receives the dispute and “processes” it. Basically the data furnisher confirms that what they sent to the credit bureaus is correct or incorrect by reviewing their records. If they believe what they sent is correct then they respond, via e-OSCAR, that what they sent is correct and no changes should be made. If, however, they determine that what they sent is incorrect they’ll make corrections and the consumer’s credit reports will be updated.

Step 4: Investigation Closed
The credit bureaus will now either update the consumer’s credit reports –or not, based on the data furnisher’s response. Either way, the credit bureaus will send the consumer a communication, normally in the mail, giving them the results of the investigation. At this point the industry considers the dispute closed.

Next Steps: What if the Dispute is Rejected?
If the consumer still disagrees with the way an item is being shown on their credit reports, they can choose to re-dispute the item with the credit bureaus and steps 2-4 will happen again. However, it’s likely to yield the same outcome so this might be a waste of time for the consumer. And, if the consumer simply files the same dispute verbatim, the credit bureaus can choose to ignore the dispute as being frivolous. This can occur if the consumer has hired a credit repair company that is simply disputing negative credit information –regardless of whether it’s accurate or not –over and over in hopes of getting it removed.

If the consumer wants to ensure that a second or third dispute of the same item isn’t ignored then they’ll want to provide new context or supporting documentation. This triggers a requirement for the credit bureaus to investigate the item again. And, of course, the consumer can always bypass the credit bureaus and take their dispute directly to the furnishing party.

Most consumers don’t know that they don’t have to file disputes with the credit bureaus and that banks, other financial service providers, and collection agencies also have obligations to investigate if you contact them directly. But, be aware that if you skip the credit bureaus entirely you can’t file a claim against them for violating the Fair Credit Reporting Act. You must give the credit bureaus an opportunity to correct any alleged inaccuracies before you can sue them for credit report errors.

As you can imagine, Steps 2-4 happen very quickly thanks to automation. In fact, most disputes run their course within a couple of weeks. This is well in advance of the requirement for the credit bureaus to complete investigations within 30 – 45 days, albeit perhaps, not satisfactorily completed in the consumer’s mind.