February 13th, 2010 | Posted in Credit Report Dispute Letter
Your creditors have agreed over the phone to you making lower payments based on your current financial hardship. Follow up your conversation with a letter outlining the terms of the agreement.
After negotiating a reduced payment plan with your creditors, this free sample letter can be used to write your own personal letter confirming the terms of the reduced or delayed payment agreement.
Free Sample Letter for confirming payment agreements with creditors based on your current financial hardship
Today’s Date
Your Name
Your Address
Attention: {Creditor’s Name}
Credit Department
Creditor’s Address
RE: Account #: {your account number here}
Dear Mr. /Ms. {insert name of person you spoke with}
Thank you for speaking with me today about my temporary problem in making my normal payments, and for also agreeing to the following payment arrangement on my account.
As agreed upon in our conversation, I will make reduced payments in the amount of $ _____ on or before the ______ of each month for a period of ____ months and after that time will resume making normal payments. see alternate text below
Thank you for your help and understanding in this matter. If you have any questions regarding this matter I can be reached at (insert daytime phone number with area code).
Sincerely,
Signature just above printed name
Your Printed Name
Source: http://www.debt-n-credit-letters.com
February 13th, 2010 | Posted in Credit Report Dispute Letter
You purchased or leased a product or service on credit but are not satisfied! Sending a complaint letter that clearly explains your problem with a product or service is a powerful method for resolving complaints.
Free Sample Letter
Complaining After a Purchase or Lease of a Product or Service
Today’s Date
Your Name
Your Address
Business Name
Business Address
Dear {Consumer Affairs Department or President} ,
Re: (account number, if applicable)
On (date), I (bought, leased, rented, or had repaired) a (name of the product, with serial or model number or service performed) at (location, date and other important details of the transaction). state problem
Unfortunately, your product (or service) has not performed well (or the service was inadequate) because (state the problem). I am disappointed because (explain the problem: for example, the product does not work properly, the service was not performed correctly, I was billed the wrong amount, something was not disclosed clearly or was misrepresented, etc.).
To resolve the problem, I would appreciate your (state the specific action you want – money back, charge card credit, repair, exchange, etc.) Enclosed are copies (do not send originals) of my records (include copies of receipts, guarantees, warranties, canceled checks, contracts, model and serial numbers, and any other documents).
I look forward to your reply and a resolution to my problem, and will wait until (set a reasonable time limit) before seeking help from my local or national consumer protection agency and filing a complaint about your business with the Better Business Bureau. Please contact me at the above address or by phone at (daytime phone number with area code).
Sincerely,
Signature
Your Printed Name
Keep copies of all correspondence
and all related documents (letters, faxes, email, etc.)
source: http://www.debt-n-credit-letters.com
February 13th, 2010 | Posted in Credit Report Dispute Letter
Use this FREE letter to make a settlement offer when you wish to pay less than the debt collector is demanding!
Feel free to print this page, or copy and paste the text into a word processor. If neither option works for you, then use this to have Rich send you a free copy of this letter in Microsoft Word format.
Free Sample Letter for Confirming Actions
Promised by the Company or Creditor
Today’s Date
Your Name
Your Address
Business Name
Business Address
Re: (account number, if applicable)
Dear {use the name of the person with whom you spoke with}
Thank you for speaking with me today and for agreeing to resolve my complaint.
For the record, my complaint is (clearly but briefly describe your complaint – use facts)
As agreed upon in our conversation, you will state that you or your company will (state the specific action agreed upon including all details) See note below
Thank you for your help and understanding.
Sincerely,
Signature
Your Printed Name
February 13th, 2010 | Posted in Credit Report Dispute Letter
You discover an error on your monthly credit card bill and need to dispute the error with your credit card company.
The Fair Credit Billing Act (FCBA) outlines your specific rights and your credit card company’s specific responsibilities when you dispute an item on your credit card bill. When disputing credit card bills, always do so in writing and in a timely manner. In your letter provide specific facts, descriptions, figures, names, dates, locations and so forth. Equally important is including a certified copy of receipts, a bill of sale, the credit contract and any other document that support your claim.
FREE Sample Letter for Disputing Errors on Credit Card Bills
Today’s Date
Your Full Name
Current Address
Current Phone Number
Name of Credit Card Company
Mailing Address (check your statement for the correct address! It’s usually different than the one you mail payments too)
City, State, Zip
Dear {Insert name of Credit Card Company from statement}
I am disputing an item on my statement, dated {insert date of statement}. Please note that this letter is dated within the 60-day limit required under the Fair Credit Billing Act.
or use the following paragraph instead
I am disputing an item on my statement dated {insert date of statement} because I am unable to determine from my records what the charge is for. I need more information about line item {place the line item number or description here}. Please send copies of any documents you have pertaining to this item.
Please use the following information to investigate my claim:
{Insert your name as it appears on your credit card statement}
Date of Statement: {Insert the date from the statement you are disputing}
Account Number: {Insert credit card account number}
Date of Transaction: {Insert date from statement}
Description of Transaction {Copy from statement}
Describe Error: {If disputing dollar amount, insert amount using $0.0 format}
{Insert explanation of why you believe an error occurred} see more examples below
I understand that you have 30 days to respond and 90 days to either resolve my dispute or inform me in writing of why the bill is correct. Until then, I will pay any amount due except for the amount in question and await your letter explaining all actions taken concerning this dispute.
If your investigation shows the information to be accurate, I respectfully request that you provide an explanation of your findings, a statement of what I owe, including any finance charges that have accumulated and any minimum payments I’ve missed while questioning this bill. If I agree with your findings, you can expect my payment in the amount you say I owe within the 10-day limit allowed under the Fair Credit Billing Act.
Sincerely,
Signature
Printed Name
February 13th, 2010 | Posted in Creditor Dispute Letter
You have one or more inactive credit accounts with a zero balance that are hurting your credit score!
Open but inactive credit accounts with a zero balance can hurt your credit score. Consider closing inactive accounts with a letter addressed to the creditor requesting the account be closed and the correct status, “closed by consumer” reported to the credit reporting agencies
Free Sample Letter
Closing Inactive Credit Accounts With Zero Balance
Today’s Date
Your Name
Home Address
Phone Number
Attention: {Creditor’s Name}
Creditor’s Address
RE: Account #: {your account number here}
Dear Accounting Department {or Creditor’s Name if you have it}
Please close the above referenced account effective immediately. I spoke with {insert name} on {insert date} at {insert time}, and {he/she} assured me that the “payoff balance” would be no more than $ {insert dollar/cents amount}. I’ve enclosed a check for that exact amount.
Or alternatively… Please close the above referenced account effective immediately. My records indicate the account has a zero balance.
Please send me written confirmation that this account has a zero balance and the date the account was closed . Also, include proof that you’ve complied with section 623(a)(4) of the Fair Credit Reporting Act by reporting this account as “closed by consumer” to the national credit bureaus.
Thank you for your cooperation. If you have any questions concerning this matter I can be reached at (insert daytime phone number and area code)
Sincerely,
Signature just above printed name
Your Printed Name
Source: http://www.debt-n-credit-letters.com
February 13th, 2010 | Posted in Creditor Dispute Letter
Your financial situation has worsened leaving you no choice but to reduce the amount you can offer your creditors each month.
When circumstances such as a loss of job, divorce, separation even the death of a loved one cause us financial hardships, it’s in our best interest to let our creditors know right away. Use the sample letter below to write your own personal letter informing your creditors of your financial situation and for making a payment offer that you can afford.
Free Sample Letter for
Amending Previous Payment Agreements with Creditors
Today’s Date
Your Name
Home Address
Phone Number
Attention: {name of collector}
Name of Debt Collection
Agency Address
Account Number: {place account or reference number here}
Dear Mr. /Ms. {Creditor}
This letter is to inform you that my financial situation has worsened since our previous payment agreement. Given my significantly reduced income, I have no choice but to request an amendment to our original payment agreement dated {insert date}.
Based on my current income and the number of other creditors I owe money too I promise to pay
$ _________ each month, ( week, every two weeks etc.) until my account is paid in full.
If my financial situation improves and I am able to increase my payment, I will contact you immediately. Please send written confirmation of your acceptance or rejection of this offer to my address outlined above.
As a show of good faith I have enclosed payment in the amount of the lower payment. I thank you for your understanding in this matter and look forward to your favorable consideration. If you have any questions concerning this matter I can be reached at (insert phone number and area code).
Sincerely
Sign above printed name
Your Printed Name
Source: http://www.debt-n-credit-letters.com
January 12th, 2010 | Posted in Credit Card Debt
Of all the games the credit card companies play that end up costing you thousands of dollars (late fees, over-limit fees, transfer fees, and so on), it’s always been the interest rate game that hurt the most — until now.
There’s a new, completely legal game they’re playing, and it can literally wipe you out financially if you’re not careful.
The Universal Default Clause
If you own a credit card, you know by now that if you’re late with a payment the credit card company will charge you a late fee in addition to raising your interest rate. But did you know that they can raise your interest rate if you’ve made a late payment on any of your other cards, including those issued by other companies?
Not only that, but your interest rates can skyrocket to 30 percent or more if you make a late payment on your car loan, mortgage, or even your phone bill!
“How can that be legal?” you may ask. The answer is found in the fine print of your credit card agreement, and it’s called a universal default clause. According to the Institute of Consumer Financial Education, currently almost 40 percent of credit card issuers apply this policy to their customers.
A Late Payment ‘Trigger’
Generally, a universal default clause states that a creditor reserves the right to penalize you with an increased interest rate if you’re late — that is, in default — of a payment to any other creditor. They justify this practice because, in theory, if you pay any of your creditors late, you pose a greater credit risk and are less likely to pay your debt.
Your creditors also have the right to routinely monitor your credit file. So a creditor with a universal default clause will be watching — and waiting.
Let’s say your Visa card has a universal default clause. Any late payment — whether it’s on your utility bill, home equity loan, or Macy’s credit card — acts as a “default trigger” allowing the bank that issued the Visa card to double or even triple your interest rate overnight. Your all-important credit score will be hurt as well.
According to a study by the nonprofit advocacy and education group Consumer Action, the top three default triggers that cause your interest rates to spike are a decline in credit score, paying your mortgage late, and paying your car loan late.
Other Triggers to Worry About
Under the universal default clause, your interest rates can be increased for several other reasons, including exceeding your credit limit, bouncing a check, having too much debt, having too much credit, getting a new credit card, applying for a car loan, and applying for a mortgage loan.
How does this affect your financial future? Take a look at the numbers. Let’s say you’re an average American household, with $8,000 of credit card debt. Assuming you make no additional purchases on your card, you have a 9 percent interest rate, and you make the minimum monthly payment, it’ll take you 218 months (18 years) to pay off your debt and you’ll end up paying $3,334 in interest.
Now let’s assume that for whatever reason you were late one month with your car payment. This late payment triggers the universal default clause with your credit card issuer, and now your penalty rate gets increased to 24 percent (the average default rate in 2005). It’ll now take you 679 months (56 years) to pay off your credit card debt, and get this — you’ll pay $30,813 in interest.
Staying Ahead of the Clause
Here are six ways to protect yourself from interest rate hike triggers:
1. Stay away from credit cards with a universal default clause.
If you’re looking to open a new credit card account, be sure to choose one without a universal default clause. This means you have to truly read the fine print. If you’re confused by the fine print (as many are), call the credit card company and ask what specific circumstances will affect your interest rate.
I read recently that Capital One cards don’t have a universal default clause (although you should double-check before applying), and Citi has dropped its universal default policy as well. In addition, sites like CardWeb.com, Bankrate.com, and LowerMyBills.com let you compare credit card offers, so visit them before you apply.
2. Know your current obligations.
Check your current statements and credit card agreements to find out your current interest rates, and to identify which cards have a universal default clause that you weren’t aware of until now. Again, if you’re uncertain after reading the fine print, call your credit card company.
Consider transferring your balance from a card that has the universal default clause to one of your cards that doesn’t. But don’t rush to cancel the card altogether, because it could have a negative effect on your credit score.
3. Run your credit report.
Not only do you need to know exactly what your current interest rates are, you also need to know exactly what’s on your credit report. Visit Freecreditreport.com or myFICO to order your credit report and credit score today.
4. Pay your bills on time.
According to the American Bankers Association, late payments for most types of consumer loans were on the rise during the third quarter of 2006. If you’re having trouble with your credit card payments, at the very least strive to make your minimum payment on time.
5. Be proactive — call your lender for relief.
If you’re struggling to make monthly payments on your other bills, like utilities, car payments, or mortgage payments, call your lender to see what options they might be able to offer you. They might be able to adjust your monthly payments so that they’re more manageable.
Your goal is to protect your credit report and credit score with a consistent record of on-time payments.
6. Fight back for your money — write your local legislator.
Right now, there are amendments to the Truth in Lending Act that, if passed, would prohibit many unfair practices within the credit card industry — including the universal default clause.
As a consumer, you can take action by letting Congress know that you want laws to protect your rights. For more information on how you can be heard, visit Consumer Action’s web site.
As I write this, Congress is holding hearings to discuss the abusive and deceptive practices of the credit card industry. Read more about it here.
A Good Night’s Sleep
Obviously, what you don’t know really can hurt you. Check today and see if you have the universal default clause on your credit cards.
If you do, be careful to stay on top of your debt. Better yet, find a credit card that doesn’t have the clause — you’ll sleep better at night.
January 12th, 2010 | Posted in Credit Card Debt
Six out of ten Americans suffer from a “bad credit rating.” Bad credit starts with imprudent choices, maxed-out credit cards, exhausted savings, overdue bills … then a letter from a collection agency.
This is followed by more letters and phone calls every day. Now each time you submit an application for credit or even a job, you will be troubled and humiliated by the specter of late payments on your credit rating.
Credit grantors tend to view any kind of collection account, whether paid or not, as negative. These negative entries can stay on your report for seven years and in the case of bankruptcy, ten years.
Here are some scenarios that can put black marks on your credit:
• You go through a divorce and your spouse maxes out your joint credit cards
• An unpaid bill from your college years comes back to haunt you
• A creditor fraudulently places a black mark on your report
• A contractor you employed places a black mark on your credit report because you refused to pay him for incomplete or substandard work
• You were late with your credit card payment.
Things happen in life: layoffs, poor health, unplanned crises that can have consequences on your credit report.
Divorce and separation can also cause bad credit. This does not mean you have to give up on dreams that you may have, such as owning a home. If the bank turns down your mortgage application, many brokers and lenders may consider you an “A” buyer.
Several companies offer mortgage loans to people with less-than-perfect credit ratings, because homes are very secure collateral. The rates and fees might be outrageous, but even people in bankruptcy and foreclosures can apply.
Automotive credit also plays a part in re-establishing your good credit standing because an automobile is an asset that can be repossessed if things go wrong.
There are two ways you can have bad credit: one is where you can’t buy anything on credit, and the other is where you have a bad credit report, but you may still be able to buy on credit. There are also varying degrees of bad credit. Much depends on what you are purchasing and who the creditor is.
If you’ve reached the end of your tether, filing bankruptcy instead of trying to pay your bills in dibs and drabs can also decrease your ability to purchase on credit.
January 12th, 2010 | Posted in Credit Repair
Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcies can generally be described as “liquidations” or “reorganizations.”
Chapter 7 bankruptcy is the liquidation variety — property is sold (liquidated) to pay off as much of your debt as possible, while leaving you with enough property to make a fresh start. Chapter 13 is the most common type of “reorganization” bankruptcy for consumers — you repay your debts over three to five years.
Both kinds of bankruptcy have numerous rules — and exceptions to those rules — about what kinds of debts are covered, who can file, and what property you can and cannot keep. Bankruptcies, of any kind, stay on your credit report for 10 years. All decisions regarding bankruptcy should be considered very carefully and not taken lightly.
Liquidation (Chapter 7)
Liquidation bankruptcy is called Chapter 7, and it can be filed by individuals (a “consumer” Chapter 7 bankruptcy) or businesses (a “business” Chapter 7 bankruptcy). A Chapter 7 bankruptcy typically lasts three to six months.
In a liquidation bankruptcy, some of your property may be sold to pay down your debt. In return, most or all of your unsecured debts (that is, debts for which collateral has not been pledged) will be erased. You get to keep any property that is classified as “exempt” under the state or federal laws available to you (such as your clothes, car, and household furnishings). If you don’t own much, chances are that all of your property is exempt and you have what is known as a “no asset” case.
If you owe money on a secured debt (for example, a car loan, where the car is pledged as a guarantee of payment), you have a choice of allowing the creditor to repossess the property; continuing your payments on the property under the contract (if the lender agrees); or paying the creditor a lump sum amount equal to the current replacement value of the property. Some types of secured debts can be eliminated in Chapter 7 bankruptcy.
Not everyone can file for Chapter 7 bankruptcy. For example, if your disposable income is sufficient, after subtracting certain allowed expenses and monthly payments for certain debts (including child support and debts that secure property), to fund a Chapter 13 repayment plan, you won’t be allowed to use Chapter 7.
Bankruptcy doesn’t work on some kinds of debts. Though bankruptcy can eliminate many kinds of debts, such as credit card debt, medical bills, and unsecured loans, there are many types of debts, including child support and spousal support obligations and most tax debts that cannot be wiped out in bankruptcy.
Reorganization (Chapter 13)
Chapter 13 bankruptcy is also known as “wage earner” bankruptcy because, in order to file for Chapter 13, you must have a reliable source of income that you can use to repay some portion of your debt. And to qualify for Chapter 13, your secured debts must be less than $922,975 and your unsecured debts less than $307,675.
When you file for Chapter 13 bankruptcy you propose a repayment plan that details how you are going to pay back your debts over the next three to five years. The minimum amount you’ll have to repay depends on how much you earn, how much you owe, and how much your unsecured creditors would have received if you’d filed for Chapter 7.
If you have secured debts, Chapter 13 gives you an option to make up missed payments to avoid repossession or foreclosure. You can include these past due amounts in your repayment plan and make them up over time.
December 3rd, 2009 | Posted in Credit Repair
Anyone whos tried to fix an error in a credit report knows that it can be a slow, tedious process. Yet some companies promise to fix credit mistakes in 72 hours or less.
And guess what? Its not a scam.
Rapid rescoring services are a legitimate and growing part of the credit industry. Usually offered by independent credit reporting agencies, these services are used by mortgage lenders or brokers who are trying to get better loan terms for their borrowers.
Removing errors can help boost a borrowers credit score in the midst of the lending process and get them a loan, or a better rate, than might have been possible otherwise.
Now, the bad news:
- You cant use these services directly.
- These services cant remove true negative entries or items that are in dispute.
- You need proof that an error was made.
- Results arent guaranteed.
Companies that offer rapid rescoring work with mortgage lenders and brokers, not with consumers. If youre being offered instant credit repair directly, its almost certainly a scam. Rapid rescoring cant help you erase the past or win your case if youre fighting with a creditor. Typically, this comes in the form of a letter from the creditor admitting the error — something along the lines of We acknowledge that the account we reported as 30 days past due was not in fact delinquent. Its best if you, as a consumer, already have such a letter in hand, although some rescoring services will contact the creditors for you and arrange to get proof. This delays the process, however. Removing the error may help your credit score, or it may not. Theres still too much thats unknown about how credit scoring works to predict with certainty how your score will react to the change.
Still, brokers who use the services say they typically get good results.
It has been an extremely useful tool when you run into credit challenges in the middle of trying to get home-loan financing for a client, said Ginny Ferguson, vice president of the National Association of Mortgage Brokers. Even when the rescoring takes longer than 72 hours — sometimes the process can take two weeks — its still a faster process than snail mail, Ferguson said.
A faster way to fix problems
Ferguson was among a group of NAMB members who began agitating in 1997 for a faster way to fix credit errors.
In the past, human beings made most lending decisions, which some say led to discrimination. But it also allowed loan officers to plead their borrowers cases, especially if there were special circumstances. Errors in a credit report — accounts that werent the borrowers, payments reported as late that were actually on time — might not sink a deal if the borrower had a sympathetic loan officer or underwriter.
In the days prior to the proliferation of credit scores, said 22-year mortgage veteran Dick Karth, vice president of product development for MortgageIT Inc. in New York, a good loan officer or a diligent underwriter oftentimes saved deals which might have been denied based on erroneous information.
Now most lending decisions are automated, using computers and credit scores — three-digit numbers used to judge your credit-worthiness. The opportunities to get special treatment have declined dramatically, brokers say, and errors are a more serious problem.
If someone elses bankruptcy is reported in your credit file, for instance, you can lose hundreds of points off your credit score — and your mortgage application likely would be rejected. Even minor errors can knock enough points off your score for the lender to turn you down or charge a higher interest rate.
Waiting for a mistake to be corrected through normal channels — by writing the credit bureau and waiting up to 30 days for an investigation — simply takes too long, brokers said. Home sales and refinancings can fall through in the time it takes to fix problems, and the crunch has gotten worse as interest rates have dropped and loan volumes spiked.
Sometimes problems in a credit report arent noticed until days — or even hours — before a loan is scheduled to close, said David Wolff, vice president for consumer relations at credit bureau TransUnion.
Ive seen it happen on the morning of the closing, Wolff said. Thats somewhat understandable, given the volumes of mortgage lending were seeing right now.
How it works
The rescorers — credit reporting agencies that act as middlemen between lenders and credit bureaus — have established relationships with the bureaus to speed through corrections, said Marty Flynn, president of Credit Communications, a San Ramon, Calif., company that offers rapid rescoring.
The loan officer or broker typically collects proof of the error from the borrower and passes it along to the rescorer. In some cases, the rescorer may contact a creditor directly to get a letter acknowledging the mistake.
The rescorers transmit the proof to the credit bureaus, which have created special departments to collect the information and verify it with the creditors. If the credit bureaus agree an error was made, they update the borrowers credit report to reflect the change, allowing for a new credit score to be calculated, said Christina Karpowitz, spokeswoman for credit bureau Experian.
For many credit-reporting agencies, the rapid rescoring services have become an important sideline to their other services, which include merging credit reports from all three bureaus into one easier-to-read report for brokers and loan officers. Credit Communications charges about $100 to correct one error at all three bureaus, Flynn said.
Do your own repairs
Still, even brokers who tout the services say consumers are better off not waiting to the last minute to fix any credit problems. If you dont have proof that youre right, rapid rescoring might not help you. And getting a loan can be harrowing enough without trying to hurriedly correct problems in the middle of the process.
Your best bet, they say, is to do as much credit repair yourself as possible before you begin shopping for any major loan.
Here are some steps to take:
- Review your credit report.
- Contact your creditors.
- Keep good records.
Get a copy of your credit history from each of the three major bureaus and review for errors, outdated information and accounts that arent yours. The bureaus will provide information about how to dispute these items. If the bureaus say the creditors have verified information you think is incorrect, youll need to contact the creditors directly to argue your case. If you succeed in getting the creditor to remove the item from your credit report, make sure you get a letter from the creditor acknowledging the error. Hang on to all the paperwork thats generated by these disputes and investigations. You can present it to the credit bureau, or your loan officer, if the creditor continues to report the error.
These steps are in addition to the things you should be doing to protect and improve your credit score, regardless of whether you plan to apply for a loan soon. (For more on that topic, see my column “Beef up your credit score in 5 steps.”)
Liz Pulliam Weston’s column appears every Monday and Thursday, exclusively on MSN Money. She also answers reader questions in the Your Money message board.
Written By: Liz Pulliam Weston
Source: www.msn.com
