Raise your Credit Score for Free and By Yourself

Need to get your credit score up?  Don’t pay anyone to do it–its probably a scam!  There may be a very simple way for you to increase your score staring right at you on your credit reports: your balances.

This may not apply to some people, but for anyone with revolving accounts (credit cards or store cards), your score may be hurting (and badly!) because of these accounts.  Why? The balances.  Often I hear people talking about things like “debt to income” when it comes to credit scores.  Your debt to income ratio has absolutely no impact or effect on your credit score.  None.  What does, however, is your balance to limit ratio, which can have a huge effect on your credit score.

Your balance to limit ratio applies to your revolving accounts and it refers to how much you owe and how much your credit limit is.  It is a percentage calculated like this:

balance owed (reported) ÷ credit limit =

So if have a Visa card with a $1,000 limit and you owe $300 on it, it would be 300/1000 = 0.30. And 0.30 is, of course, 30%.  This percentage is calculated for each of your revolving accounts.

In addition, the scoring software looks at the total amount of credit made available to you compared with the total amount of credit you have used.  Here’s an example – on the table below, the individual has 3 major credit cards and 2 store cards.

 

So, the person above has a total credit card debt of $4,385.  The banks have extended him credit though of $17, 250; overall, he has used about 25% of his total credit available.  This is not bad – remember: credit scores ideally want to see this ratio at under 20%.  And the farther under 20% the better – basically, the best credit scores come from lots of available credit and little to no balances.  I have seen plenty of people with solid payment history – 2 or more years even of never missing a payment – and still have a score in the low 600s.  The BTL is quite often why.  So how do you quickly stop this from hurting your score?

Well, the obvious response is to pay down the balances. You may not have $4,000 lying around though, so you come up with a strategy to maximize the impact based on the amount of money you have.  And you start with correcting the problem from the other side.  Lowering the balance will lower the BTL. So too will increasing the limit.  Call your credit card company and ask for a credit limit increase.  In the table above, raising the Citibank limit from $3,000 to $5,000 brings the BTL on that account from 40% to 28% without a single dollar paid. NOTE:  Requesting a credit limit increase may or may not result in a hard credit inquiry.  If the reason you are working to get your credit score up is for a mortgage, for example, you should find out if your creditors will do increases without a hard inquiry.

As for paying on the balances, I would target one balance in particular first:  the Pier 1 card.  As is often the case with low-limit credit cards, the balance of $725 is not very high but because of it being just $25 shy of the credit limit it is hurting.  That individual account, because it has less than 10% of the credit limit available, is dinging the credit that way as well.  Try to get the limits on your store cards raised if possible.

Pay down the balances.  Determine your statement cut date – one day before the statement cuts is your last day to pay the balance as low as possible.

Free Credit Reports for Denial

I always hate trying to find the links to obtain your free credit report when you have been denied credit, so I am posting them here for everyone:

Experian

TransUnion

Equifax

Personally, I never have any problem getting mine from Experian or TransUnion.  Equifax, however, always redirects me to requesting my report by mail.

Suing Collection Agencies (Part II)

As I was about to drop the Complaint and Summons in the mail to the Sheriff for service, a light went off.  NCS’ Registered Agent was listed as Joel Lackey, their CEO.  NCS is headquartered in Atlanta, Georgia, presumably because that is where Lackey lives and he is the only owner of the company.  You may be thinking, “and?” – but I was absolutely thrilled.  Joel Lackey cannot be NCS’ Registered Agent in North Carolina – a company’s registered agent for a state has to live in that state.

I had to check but I was certain there could be a major issue here.  Service would continue to be problematic because their registered agent lives in another state.  So what does one do in that situation? Well, you have to serve the Secretary of State.  Having a registered agent – one that meets the requirements of the state – is the law; without one, a foreign corporation cannot receive a Certificate of Authority to practice business.  And in North Carolina, without a Certificate of Authority, a collection agency cannot obtain the required license to collect debts.  And collecting debts without that license in North Carolina is a Class I Felony.

I sent a letter to their contact at that point advising him that I intended to report them to the State at the time I serve the Secretary of State.  And, I added, I was going to request the state administratively dissolve their Certificate of Authority – retroactively.  It would, in turn, dissolve their collector’s license making their collection activity against me now criminal as well.

I sent the letter to them last Friday.  On Tuesday, I received an email indicating they were sending me a check for my settlement demand by overnight mail.  Case closed.

Getting Rid of Inquiries on TransUnion

If you are on the road to credit repair, you know how important it is to add new positive accounts. Doing so, however, will start racking up the inquiries on your report pretty quickly.

You will come across references to bumpage or the B* or b* used to reference it without spelling out the word and alerting the credit reporting agencies! Haha.  If you can’t tell, that’s some major sarcasm!

So as far as “bumping” inquiries off of your credit report:  (1) there is no way to get inquiries bumped off of Experian – the inquiries you have on that one will remain there unless you can get them removed some other way; (2) Bumping inquiries off Equifax is possible – I have done it a few years back, but my recent attempts were unsuccessful, presumably due to Choppage or C*; and (3) TransUnion is pretty easy to do and doesn’t take that long.  I am going to tell you an easy way to eliminate your TransUnion inquiries.

What do you need?

You are going to need a triple-daily puller.  For those who don’t know what that is: it is a subscription to a site that allows you to pull/update your credit report and score every day.  There are not a lot of these left anymore – and you need at least two  triple daily pullers.  I used USAA and MPM – the USAA membership and My Privacy Matters:

• USAA:  You do not need to be in the military or meet any of their other regular membership requirements to join USAA via their website. Just sign up – you will not be able to open a checking account but you can become a member.  After you have joined, login and look for the Credit Check Total benefit they offer.  Sign up for the triple-credit monitoring.  If I am not mistaken, the monthly fee is around $33.  I called and complained about the price per month – they cut it in half and I paid $16 per month for this one.
• MPM:  My Privacy Matters.  To join MPM, you have to go through a different website – eliminateidtheft.com – they are $11.95 a month

Since you are bumping TransUnion, you can get your results faster by pulling through other TransUnion-based sites:

• SmartCredit:  Will let you pull your report and score every day if you choose the premium membership of $9.95 per month.
• CreditKarma:  Even though they don’t pull daily anymore, they pull a few times as a month – and they are FREE

So this could cost you over $50 per month.  Every day, after 24 hours has passed since pulling the day before, make sure you pull your credit report and refresh score through each site.  If you are diligent with doing this, you should see at least a few of the inquiries, if not all of them, gone within a month.

Questions?

Incompetent Attorneys

Don’t think that just because they have an “ESQ” behind their name or have passed the bar that they can be relied upon to properly pursue your case.  Last December, I began the dispute process with a particularly obnoxious debt collector.  It didn’t take me long to realize that this was not going to resolve itself – nor would it resolve via letters back and forth.  I drafted a Complaint for filing in my state district court.  Why?  Several reasons:  (1) it costs $200 to file in my state’s district court and over $400 to file in federal court, (2) it is perfectly acceptable to file an FDCPA case in local court and (3) if the defendant is not local, it will not only cost them a lot more in attorney fees, you can let them pay to move the case to federal court.

I have been a paralegal for ten years now – I have written plenty of Complaints.  And while I see nothing wrong with being a pro se litigant, I believe a lawsuit filed by an attorney has more teeth.  SO, I found an attorney who had sued the defendant previously and offered him a very simple case.  The Complaint was filed as is – he didn’t make any changes to it.  Basically, all he had to do was sign it and send it with the appropriate number of copies to the courthouse for filing and service.  Lawsuits typically follow a general path from start to finish, as I have shown in the very basic flow chart here.  NOTE:  It is 30 days to Answer in my state – it may be different in yours.  Also, this is a general lawsuit flowchart – by no means intended to represent the way all lawsuits go.

He filed the lawsuit on January 13.  And over the next two months, I heard about settlements I even accepted one settlement offer.  But by the beginning of this month, I was wondering what the hell was taking so long if I accepted their settlement offer.

I ended up having to do some background research because things weren’t adding up.  And lo and behold I discovered that the lawsuit, while it was filed, had never been served.  Why anyone would file a lawsuit and not have it served is beyond me – but it wasn’t.  And here, you have 90 days to get it served or get a renewed summons, and we were on day 85.

No defendant is going to take a lawsuit never served upon them seriously.  The date they are served is the date the clock begins – they have 30 days from that point to Answer the Complaint.  I am essentially starting over.

Needless to say, the incompetent attorney – he is facing a bar complaint and possible malpractice claim.

Who do they pull? Auto Brands and the Credit Bureaus they Use…

Many auto finance companies’ choice of credit bureau varies based on what region of the U.S. you are in.  Overall, though, this is who I have found the following car-makers’ captive finance companies credit bureau of choice:

Mercedes-Benz:  TransUnion
BMW:  Equifax
Lexus:  Experian
Audi:  TransUnion
Volkswagen:  TransUnion (Audi and VW are one in the same)
Jeep (Chrysler):  Experian
Toyota:  Experian
Nissan:  Equifax
Honda:  Equifax or Experian
Ford:  Equifax
Mazda:  Equifax
Hyundai:  Experian
Kia:  Experian

Remember:  the above is for the captive lender only! (VW Financial Services, BMW FInancial, etc.)  If you go to a dealership and apply for credit, they will likely pull all three and send your application to several banks who may choose to pull any or all three credit reports themselves.

Capital One Bank and Secured Mastercard

I remember getting a Capital One card in the 1990s with a $300 credit limit and thinking it was a joke – I did not have any cards with limits under $1,000.  I also remember being told by someone that Capital One was a subprime credit card company and using their card was the equivalent of telling someone you had bad credit.  The only reason I had even applied was because I received offers from them in the mail all the time.

In 1994, Richmond, Virginia-based Signet Bank launched a spinoff company called Oakstone Financial Corporation; a year later, Oakstone changed its name to Capital One.  Throughout the rest of the 1990s, Capital One was a bank that issued credit cards to people who couldn’t get cards from better banks.  They had higher interest rates and annual fees – they were like Providian.  In the early 2000s, Capital One started expanding beyond credit card issuance and working to improve its image and become a “prime” bank.  I was living in New Orleans, Louisiana when Capital One acquired Hibernia Bank, one of the largest banks in Louisiana and a bank I had accounts with.  Louisiana is among the states you will find Capital One Bank branches.

In 2012, Capital One bought HSBC’s U.S.-credit card portfolio.  Part of that portfolio was Orchard Bank, which issued secured and unsecured credit cards.  Anyone with credit issues or who needed to build credit in the 2000s probably had heard of Orchard Bank.  If you were not approved for an unsecured credit card with them, Orchard always offered you a secured card.  When Capital One completed its takeover of HSBC, Orchard Bank began being eliminated. Capital One launched its own secured card in its place, which became being the Capital One Secured Mastercard.  If you are rebuilding your credit and need a credit card, Capital One’s product is a good one overall.

A bit of advice…if you go with Capital One, have your s**t together.  They may not want to look like a sleazy sub-prime credit card issuer anymore but they haven’t become soft or flexible with their policies.  Capital One is unforgiving of those who mess up their accounts and they report negative accounts in a way that hits your credit the hardest and for the longest time.  I am a master at removing bad accounts from credit files and Capital One is virtually impossible to remove by any means.  They keep excellent records on all of their accounts, so getting them deleted on a technicality is very unlikely and they will always respond to disputes.  I recently prepared letters for someone with three charged-off credit cards on his credit reports – two from retails stores issued by Comenity Bank and one with Capital One.  My letter, a goodwill letter, offered to pay the balances on each account in full and explained the circumstances that resulted in the months of non-payment (hospitalization due to an automobile accident).  We received letters in response from all three.  With Comenity, he had only ever charged $29 on one account and $45 on the other but the balances were both almost $300 due to fees.  I offered payment in full in my letter – it was worth it if it got rid of the charge off.  The letters from Comenity, however, adjusted the balances to remove the those fees; in addition, Comenity agreed to delete both accounts as soon as they received payment for the $29 and $45.

Capital One, however, had a much different response.  The account I wrote them about had been a secured card – secured by $700 he had put on deposit.  Presumably due to fees, etc., the balance had swelled to over $1,200.  Again, my letter offered payment in full in return for deletion of the charge-off.  In response, Capital One provided him with a phone number to call to discuss payoff and resolution of the account.  They said paying the balance in full would certainly look good if they decided to consider deleting the account in the future but they would not commit to doing anything though.  The account remains on his credit report.

Pay your account on time, keep your credit under the limit, and don’t have any returned payments and you will be fine.

Capital One also won’t require you pay the full amount of the credit limit as the deposit.  For $49 or $99, you will get at least a $200 credit limit which you can increase in $100 increments whenever you want.  From the time you do the application it will likely be three weeks or so before you actually get your card.  When they say ten business days for the ACH from your bank account to post, they mean it.  Supposedly, Capital One may increase your credit limit at some point without you making an additional deposit.  I have read on several sites lengthy complaints from people about this not happening for them.  It’s a secured card people – if you get a credit limit increase, cool.  If not, send in some more money and increase your limit yourself.  That’s what you should expect with a secured card anyway.  Besides, if Capital One does do it, it won’t be for more than $100.

They have a great website and phone app for making your payments, which post in a day or two. My experience with them has been great so far.

The Shopping Cart Trick

One of the things I always find frustrating when it comes to the credit “tricks” you hear about is how difficult it often is to get a simple, straightforward explanation of how exactly one does it.  Instead, you do a search and end up on page 239 of 341 pages of forum posts about the topic.  Do you start from the beginning and read all 341 pages? Or do you just go forward from the page it sent you to? Either way, you have to read every person’s response on every page of posts hoping somehow to put together some idea of how it was done.

So, I am going to try and help with this.  Please feel free to comment below – but I am going to do my best to provide instructions within and update the post to include anything I may have left out based on your questions.  This posting is on what is known as the “shopping cart trick” or the “shopping bag trick”.  It is a method of opening one or more new credit card accounts without a hard inquiry being placed on your credit files.

 

WHAT YOU SHOULD KNOW FIRST:

• You MUST be opted-in for promotional offers.  If you don’t know what this means, click here.  If you know you are opted-out, you can opt-in again here.  Unless you remember opting-out, you are probably opted-in already and don’t need to worry about this.  If you get credit card offers in the mail, you are opted-in for sure.
• The trick applies only to cards issued by Comenity Bank.  Comenity is a major issuer of retail store credit cards, but also issues a few Visa and Mastercard branded-cards.   Here is a list of some of the Comenity-issued cards:

Abercrombie & Fitch Credit Card
Ann Taylor MasterCard Credit Card
Ann Taylor Credit Card
Arizona Mail Order Credit Card
Arhaus Credit Card
Ashley Stewart Credit Card
Avenue Credit Card

Bon Ton Credit Card
Buckle Credit Card
Burke’s Outlet Credit Card
Chadwick’s Credit Card
Chadwick’s Visa Card
Christopher and Banks Credit Card
Crate and Barrel Credit Card
Crescent Jewelers Credit Card
David’s Bridal Credit Card
Domestications Credit Card
Dots Credit Card
dressbarn Credit Card
Dunlaps Credit Card
Eddie Bauer Credit Card
Express Credit Card
Fashion Bug Credit Card
Fortunoff Credit Card
Fortunoff VISA Credit Card
Friedman’s Credit Card
Goody’s Credit Card
Gordmans Credit Card
Grand Rental Station Credit Card
Home Shopping Network (HSN)
Home Shopping Network (HSN) Mastercard
Jessica London Credit Card
Lane Bryant Credit Card
The Limited Credit Card
LOFT MasterCard Credit Card
LOFT Credit Card
maurices Credit Card
Marathon Credit Card
Marathon VISA Car
New York&Company MasterCard

Newport News MasterCard
New York&Company Rewards Credit Card
Newport News Credit Card
Ohio University Alumni MasterCard
OSH Credit Card
OSH Commercial Credit Card
Overtons Credit Card
Palais Royal Credit Card
PacSun Credit Card
Parisian Credit Card
Peebles Credit Card
Petite Sophisticate Credit Card
Petland Credit Card
Pier 1 Credit Card
Pottery Barn Kids Credit Card
Pottery Barn Credit Card
Priscilla of Boston Credit Card
Premier Designs Credit Card
Reeds Credit Card
Restoration Hardware Credit Card
Spiegel Credit Card
Sports Authority Credit Card
The Sportsman’s Guide Visa
Talbots Credit Card
The Tog Shop Credit Card
TigerDirect Credit Card
Torrid Credit Card
Total Rewards Visa Credit Card
Trek Credit Card
True Value Credit Card
UnderGear Credit Card
uTango VISA Credit Card

Value City Furniture Credit Card
Victoria’s Secret Credit Card
Virgin America Visa
West elm Credit Card
Westgate Credit Card

• It does not always work.  And it may work for one store but not for the next.

HOW TO DO IT:

This is the simple part:

1. Go to the retailer’s website, such as http://www.buckle.com.
2. At this point, I usually register or join or whatever that particular store calls it. You give them your name, email, phone number and maybe address information.
3. Pick an item or two and add it to your shopping bag or shopping cart.
4. Begin the checkout process.  Enter your shipping address, billing address, etc. and go as far as you can before it requires you to enter your credit card information.  If the trick is going to work, you will get a pop up offering you an account at some point before you have to enter payment info.  ACCEPT THE OFFER.

NOTE:

• If you have pop-ups blocked, you may miss the offer.
• Once you accept the account offer, you can choose whether or not you want to proceed with using your new account to finalize your purchase.  You do not have to buy any of the items in your cart once you accept the offer – you will still get the account.
• You may or may not be told the credit limit on the account.  I would not expect it to be high though – they are typically $500 or less.  You can always request a credit limit increase once you get your card.

Based on my experience and what I have read from others’ experiences, the following cards are pretty easy to get this way:  Express, Buckle, J Crew, and Pier 1.  I have read a lot of comments that it does not work with Abercrombie & Fitch – at least for a lot of people.

The Total Rewards Visa is part of the Harrah’s Total Rewards players club.  I have read that it does work with this card as well; most people discover the pop-up almost immediately after they login to their Total Rewards account.

If you don’t get the pop-up and select a link for the card on the store’s website and then subsequently fill out an application, understand you WILL get a hard inquiry on your credit file.

Finally, remember that even without the inquiry, you are adding a new account to your credit files.  Doing so may lower your AAoA (Average Age of Accounts), which some people may not wish to do.  In my opinion, for those trying to build credit history and need open, active tradelines to do so, getting a couple cards this way can help achieve this without adding an inquiry or inquiries.  Keep the balances low or paid off and let the accounts age – they will really start helping 6-12 months later and beyond.

Good luck.

A Way Away from Sallie Mae

Recently I’ve been thinking a lot about the direction I want to be headed financially, my sources of income, and how much money I need to make things happen.

I want to get into real estate investment and I have a lot of ideas about how I want to do this.  Getting my credit repaired and my scores up will be a critical part of making this happen and it is one of the reasons I hit the ground running there.  But there are obstacles remaining I have not yet tackled because I am still trying to figure out how.  Last night, I tried to break things down and determine what was holding me back.

Even as my credit improves and I continue to build it up, there is one account that remains on my credit reports that, while reporting as current/paid as agreed, will no doubt hinder my ability to secure financing for real estate in the future. This is my account with Sallie Mae, my consolidated student loan account, currently reporting a balance of over $81,000.  As I looked over this account in recent months, armed with the knowledge I have now, I am disgusted and ashamed of how irresponsibly I handled this account over the last seven years and it makes me ill thinking of just how much money it will ultimately have cost me.

My original student loans totaled about $54,000 – at least that was the total balance after they had all been consolidated in 2007.  The intended repayment term for most student loans is ten years – the interest rates are low, the payments spread out, and the average person would have them paid off by their early- to mid-thirties.  If I had begun repaying my student loans in 2007 on a ten year plan:

Monthly Payment:  $609.73
Total Principal:  $54,000.00
Total Interest:  $19,167.63

Paying an extra $100 each month would knock two years of payments off the loan and reduce the amount of interest I paid by over $4,000.  That would have been one of the many options that would have been wise and prudent.

I instead let my loans remain in forbearance (and several times, my failure to remember the forbearance had ended allowed them to enter repayment, become delinquent, and put the negative payment history on my credit file I am dealing with today).  Sitting in forbearance, the loan continued to accrue interest that was compounded (made part of the principal) and thus interest on the interest.  The result: my student loan balance is now $30,000 greater but not because of more education.

I am scheduled to enter repayment next month – as my forbearance comes to an end.  In order to pay this debt off in ten years, I would now be looking at the following:

Monthly Payment:   $925.89
Total Principal:  $83,000.00
Interest Paid:  $29,106.00

And don’t forget that $30,000 of the principal IS ALSO INTEREST.  The amount of interest I would be paying is greater than the principal balance.

If I can’t make that much of a payment and I instead pay according to the thirty-year repayment plan:

Monthly Payment:  $511.57
Total Principal:  $83,000.00
Interest Paid:  $102,166.49

Monitoring my credit reports has also helped me see the magnitude of this situation as well.  Each month that goes by, the amount owed on this account increases by over $400.00.  Just to stop it from becoming even greater, I would need to pay over $400 per month!

This balance is comparable in size only to a mortgage – and that is how lenders will see it when I seek financing to buy real estate.  This monthly obligation will affect the total expenses they will consider for me, since it is equal to a mortgage payment of its own.

There is no escaping this loan. It will never expire, never be dischargeable, never be settled.  The only way to eliminate it, is pay it.

I have to figure out how to tackle this loan.  The best solution at this point is to pay it off as quickly as possible – doubling the monthly payment, for example, would pay the loan off in 4 years and would save me over $18,000 in interest paid.  But that would be four years of monthly payments of $1,937, and at this point in my life, not even remotely possible.  What I need is a large, lump-sum payment to immediately reduce the balance enough that the monthly interest being created is substantially reduced.  This would make my monthly payments count for a lot more.

Figuring out how to do so is the trick.

Judge Me For Saving Money

My first post was about my experience being terminated for the first time by my employer.  When I was called into the conference room to meet with my supervisor and the firm’s Executive Director, one of the first things raised as an “issue” was my personal use of a rental car obtained through the firm.  To make a couple things clear: (1) the cost of the rental car was not being paid by the firm – it was charged to my personal account that I was responsible for paying, (2) when I expressed interest in renting a car, I was directed to an individual in the accounting department who handled car rentals – she made my rental car reservation and assured me I was following procedure and that this was permitted; (3) I was able to get an excellent monthly rate due to the firm’s volume of business.

I started my job one month before I started my credit repair. It was challenging getting rides to work and coordinating schedules with other people when I was working two jobs myself.  I knew I needed to buy a car; I also knew with a  494 credit score, no finance company was going to give me a loan and if, by chance, I was able to secure financing, it would require a huge down payment with the remaining amount financed at an outrageous interest rate.  It was pointless to even look at cars at that point – all that would come out of it would be disappointment and a bunch of inquiries hitting my credit reports.  I knew, though, that if I could get a few things cleaned up on my credit reports and get my score up, I could get an auto loan.  It was just going to take me a little time to do so.

They looked at me like I was shady and up to something when they asked me about the rental car.  ‘Why would you rent a car for a month?’ they asked.  Well, I needed to get a couple things cleared up on my credit files to get financing – I did not have $5,000 to spend on a down payment at the moment nor did I want a loan at 26% interest.  Today, one of my former co-workers told me that people “talked” about me renting a car – again, as if I was doing something sketchy.

Let’s say I chose not to be “sketchy” and wanted to buy a car that was $20,000.  Assuming I got lucky and only had to put down $5,000 (25%), I would be financing $15,000.  The best I could expect would be 48 months on the loan.  At an interest rate of 21%, my monthly payment would be $470.  And remember, that was with $5,000 down.

Well, because I was shady and rented a car for a month (which cost $675 by the way), I was able to get my credit score up.  I applied with VW Financial Services for a new Jetta.  I was approved for a fully-loaded TDI with a sticker price of just under $30,000 with $0 down.  My monthly payment is $414 per month and to a lender who will benefit me credit-wise both short- and long-term.  Renting a car and being patient cost me $675 out of pocket and I got a brand new car – a car $10,000 more than the other scenario.  And I saved myself $5,000 cash and almost $60 per month for 48 months – almost $3,000 there too.

So judge me all you want.