FAQs

Garnishments on Your Credit Report – 4 Ways to Resolve Them

Garnishments on Your Credit Report – 4 Ways to Resolve Them

Ignoring your contractual debt obligations can have a very serious impact on your financial status.  Garnishment, a creditor’s last-chance attempt at debt collection, hits debt holders where it hurts; their ability to fill the gas tank, pay the bills, and feed their families. It is something that you should try to avoid at all costs.

When facing debt that can’t really be paid, the best plan of action is to act early and speak to your creditors to see if you can negotiate a payment plan or achieve some sort of payment arrangement. If debt goes unpaid and overlooked, the court may interfere by issuing a judgment requiring your employer to “garnish” or withhold a bit of your wages or financial balances to pay back the debt.

The road to wage garnishment can be long and winding. Here are four things you can do to deal with wage garnishment on your credit report:

  • Stay in touch with your creditor: Wage garnishment is typically a final effort by creditors to squeeze some cash out of you when they cannot seem to get you to pay your debt with a certain time frame. If you ignore them or refuse to talk to them, you put yourself in a weaker position. Try your level best to stay in contact with the creditor and work on building up a reasonable payment plan. Showing the creditor you have every motive of paying back your debt may urge them to back off for now.  A creditor is much more willing to work directly with a consumer to avoid court and attorney’s costs associated with obtaining a judgement and ultimately a wage garnishment.
  • File an appeal: If the wage garnishment gets approved by the court, you have all the rights to file a “claim of exemption” which shows that you cannot avail this type of pay cut as your paycheck covers all your basic living costs, including insurance, grocery bill and housing. You will need to show to the court that you would basically get behind on your consistent bills if your wages were garnished. If the court gets convinced that the garnishment will worsen your financial condition even more, they may prevent the creditor from garnishing your wages or ask the creditor to reduce the amount that is to be garnished.
  • Pay the judgment amount: If you do have some funds available to pay off the full debt within ten days of the judgment, the court can put a stop on the garnishment process altogether. Before that, make sure you are aware of the judgment amount and pay it off in full as soon as you can.

Summary: Resolving Garnishments on Your Credit Report

Being aggressive when creditors are coming after you can help prevent this drastic step altogether. Try your best to work out a repayment deal with your creditors so that they stay confident that you will pay the debt within a particular time frame. This is the best way to keep creditors off your back and stop garnishments on your credit report.

How to Remove Tax Liens from your Credit Report

How to Remove Your Tax Liens from your Credit Report

Tax lien is the right of the IRS or state or country to take possession of the property in-case of negligence in paying property tax or income tax. It is filed in-order to force the tax-payer to pay his/her outstanding tax amount. However, when filed it is also recorded in the public record and then added to the consumer credit report. It can be viewed by anyone including credit reporting agencies.

Tax lien has derogatory impact on the credit score. Consumers with no other credit issues could lose 100 points with tax lien. Being one of the most difficult credit issues to overcome, it can stay on the credit report for 7 years and in certain situation, forever! Unlike other collection accounts, it is not mandatory by the law to remove it from credit report after 7 years. According to Fair Credit Reporting Act (FCRA), the tax lien may be removed from credit report, 7 years after the date of payment of outstanding tax amount.

So, How do you remove tax liens from your Credit Report?

The good news is that It is possible for consumers to remove the tax liens prior to 7 years, as long as it’s paid. The ‘Fresh Start Initiative’ from IRS has released new policy to handle tax liens. Full payment of outstanding tax amount will facilitate taxpayers to withdraw lien from credit history, upon request. Some eligibility criteria facilitates taxpayers to withdraw after a minimum of 3 payments towards the payment agreement. However, it should be noted that removing tax liens from credit history is not always possible, but customers can try a number of steps to get the lien removed.

Do You Qualify? You may request to withdraw tax lien for credit report if:

  • You have paid the full amount you owe and lien has been released
  • For past three years, you are in compliance with providing your individual, business returns
  • You are up-to-date on your tax payment and deposits
  • You owe $25,000 or less and have agreed on the direct debit installment payment toIRS, from your back account automatically.
    You could ask tax professionals to learn more about the eligibility criteria. Pay the Outstanding Tax Amount:
  • After full payment of you due, you may receive the IRS Form 668(Z) for ‘Release of Federal Tax Lien’
  • Fill out IRS Form 12277 for ‘Application of Withdrawal’
  • Submit ‘Notice of Federal Tax Lien’ IRS Form 668(Y) along with above two form to IRS and provide explanation of why you want your tax lien to be withdrawn.
  • You may receive the IRS Form 10916(c) for ‘Withdrawal of Filed Notice of Federal Tax Lien’. It is also filed in the recording office where the original NFTL was filled.

You may produce these documents to the credit reporting agencies or ask IRS to to notify them.

Summary: How to remove tax liens from your credit report

Above all, send a goodwill letter to all three credit bureaus, explaining your full payment of outstanding money. Give honest reason why you defaulted. Address the issues behind tax lien and steps you took to pay what you owe. Moreover, be patient! The complete process may take months to reflect on your credit report.

Length of Credit History – Does it matter?

Length of Credit History – Does it matter?

A credit history is an assimilation of number of accounts in your credit reports, payment history, your amount of debts, and the score that is obtained after analyzing all these details. This information is used by lenders while giving loans or selling expensive products. Lenders will be basically interested in the “length of credit history” when they evaluate the paying capacity of borrowers. By length of the credit history, it means how long you have had taken credits and where does your credit score stands currently.

What is Length of Credit History

It simply means how long you have had credit; the age of the information in your credit history. Your credit report also has an age like every other tangible asset you possess. And, that age of the credit report has a 15% impact on your overall credit score. Hence, a positive or a negative credit history may influence your credit score likewise. In the world of FICO score, the Length of Credit History has a significant impact on your total credit score. This is one area where you have very little control and it is highly imperative that you develop a thorough understanding of this concept.

How is it calculated?

By knowing how Length of Credit History is calculated, you might be able to control it at some point. Credit specialists have suggested various ways and points from time to time to calculate this in the most appropriate manner. Of all the information obtained, here is the summary of factors that play a role in the calculation of the age of credit history:

1. There of customer’s oldest credit account
2. The average age of all the credit accounts opened to date
3. The age of customer’s newest credit account
4. Length of different types of credit accounts that has been established
5. Length of different types of credit accounts that has been consistently used

Out of all these, the age of the oldest account and the average age of all the accounts used to date play a crucial role.

How you can use your length of credit history to improve your FICO score?

It all comes down to your current FICO score. In general, active and current accounts have a larger influence on your current FICO score than the older accounts. The most recent activity has a greater impact on the overall credit score. However, if you have an older account that is debt-less and still active, it will fetch you a very good score than a recently opened credit account. Having old account can be, therefore, highly beneficial when it comes to improving your credit score.

Summary:  Length of Credit History

Hold on to your older accounts and think twice before closing them. With older accounts active, you can easily score high in this category.

Life after Bankruptcy – 10 Strategies to Rebuild Your Credit Score

Life after Bankruptcy – 10 Strategies to Rebuild your Credit Score

Bankruptcy inflicts financial misery on more than a million Americans every year. This is most damaging thing that can happen related to credit reports. A bankruptcy may be listed on your credit report for up to 10 years and there is a good chance your credit score will be rather low until you take the necessary steps to rebuild your credit. Rebuilding your credit score after bankruptcies is the real way to get back on a better financial path.

Take necessary steps to rebuild your credit score. But before that, it is important to understand why it is effective for creating a great financial future. While applying for car loans, credit card, the financial agency or say banks first looks at FICO score and credit history to determine the liability of applicant. If the FICO scores are amidst 700 or more, means you have good score, but if lies below, it needs rebuilding. Here are some suggestions for rebuilding FICO score after bankruptcy. Adopt these strategies to rebuild the score that all work, to some effect.

  1. Rebuild your credit score with a secured credit card: You may need to apply for secured credit card once come out from bankruptcy so you have the convenience of not carrying cash. With secured credit card, you make a deposit into its account and you can make charges out of it like a regular debit card.
  2. Keep paying non-bankruptcy accounts on time: All loans are never included in bankruptcy. Keep paying on non-bankruptcy accounts on time, as positive payments will improve your credit score. Also, keep up payments on accounts that aren’t on credit report because this could be reported later and cause downfall in credit score.
  3. Review the credit report: If there’s bankruptcy on your credit report, it does not mean you ignore reviewing it. Review the credit report annually and obtain a copy for any erroneous information or inconsistencies.
  4. Pay bills on time: Prioritize on time payment of bills and due to prevent non- essential spending. Set up reminder on calender to pay bills every month on due date.
  5. Do not close accounts: Closing account and swearing off all credit card is not the right action to build credit score. Rather, it reduces the amount of credit available. Therefore, it is better to keep the credit lines open.
  6. Avoid utilizing a large amount on your credit available: Utilization of high credit during bankruptcy signals to financial trouble. Keep your debt balance to 20% or less than the credit limit all the time, even pay of the balance in full each month.
  7. Make a budget and limit your expenses: Figure out what you can afford to pay every month on your debts. Your budget will help manage cash flow and prevent from racking up unnecessary debt. Know the limits on your credit card to keep your balances below them.
  8. Add a loan down the road: Credit loans are like secured cards, which are often small amounts and are reported as positive account as long as payment are made. Buy a vehicle that is affordable and you can pay off successfully. Your credit scores will climb without any fail.
  9. Paying of debt: Paying of debt on time is No.1 method for improving credit score.  If you have debts then bankruptcy could not wipe out. The credit score may fall and you would not get a new credit. You could erase a bad credit history and stay under a healthy credit limit.
  10. Go out of guilt and shame: Many Americans battling the lingering effect of great recession. Let of the shame to go and don’t dwell on negative thoughts. Adopt the right attitude, become more disciplined and educated, not to repeat the mistake again.

Summary:  Rebuild your Credit Score

These 10 suggestions will surely work to build credit after a bankruptcy. However, the most important lesson is to be patient and follow the guidelines, uninterruptedly.

How to Remove a Late Payment from Your Credit Report

How to Remove a Late Payment from Your Credit Report

With many families struggling with rising living costs, the problem of late credit payments continue to grow. So what happens if you just don’t have enough to cover the minimum payment this month? Well well well let me inform you that, late payments on loans and credit cards can have devastating consequences on your short-term financial future. It will hurt your overall credit health and make you a riskier applicant in the eyes of lenders and renters.

Banks and issuers consider payment history when evaluating your credit risk and deciding whether or not to approve your credit. So, late payment can be a big deal and turn detrimental to the process. It can drastically lower your credit score and make it difficult to get a good interest rate on a loan in the near future. So, it’s essential to get the late payments removed immediately.

Here are the basics of how to remove a late payment from your credit report.

  • Get your credit report: If you couldn’t figure out that whether you have made any late payment or not, then get a copy of your credit report immediately. Sometimes, a creditor doesn’t report about your late payment to the credit bureaus. So, before getting into the trouble of removing the same, you need to know whether the late payment made is showing up on any credit reports or not.
  • Contact your creditor: If you become sure that your credit report holds a late payment status, the first and foremost thing you need to do is contact your creditor. Because he is the only responsible person for reporting about the same to the credit bureau and has the competence to erase it from your credit report.
  • Ask them to remove it: Contact your creditor and immediately let them know the reason for contacting them. Request them straight away whether they can erase the late payment from your credit report. Furthermore, if you are still a client of theirs, they may be willing to evacuate this late payment as a demonstration of great will. At last, the creditor will need to hold you as a client and will expel the late payment from your credit report.
  • Negotiation: At times, you may have the capability to negotiate with them on this matter. For example, if you have not made your payment, inquire them if they will delete the late payment from your credit report in return for your payment. Sometimes, they will help you in order to get your money.
  • Dispute with credit bureaus: If the late payment is illegal, you ought to discuss about it with the credit departments. Mail a duplicate of your credit report to the acknowledge authorities highlighting the late credit payment. Send a letter requesting them to evacuate the late payment and giving proof that the payment actually was not made late.

Summary: How to Remove a Late Payment from your Credit Report

Late payments are not only bad for your credit scores, but also assumed to be one of the worst things you could do to your scores. So, timely bill payment each month is one of the essential ways to manage your credit score, suggesting that you are a responsible and reliable borrower.

Vehicle Repossession – Everything you need to know.

Vehicle Repossession – Everything you need to know. 

A personal vehicle is a necessity for everybody and is one of among top big expenditures. Chances are, it is bought on finance. This also brings the dangers of repossession by the finance company or the creditor. After leasing or availing finance for a vehicle, the creditor has certain rights till the debt is repaid. These rights also include repossession of vehicle in case of default.

Creditor has the right to repossess or take back the vehicle without any prior notice or warning and even from your own property. The law, however, vary from state to state. According to some law, your creditor can also sell the bond to someone else, called as the assignee. This also inherits all rights from the creditor to the assignee.

Their Limitations:

Repossession can be voluntary or involuntary. Former, is when you give the car back to the lender. Later, is when they come to take it back. Some state may allow them to take it from the owner’s property without permission. However, they must do it without disturbing you or the neighbor. In some states, breaching the peace of the society could mean aggressive threating and using physical forces. This also limits them from repossessing the vehicle from your closed garage. In such actions, they are entitled to pay for your damage. This gives you the advantage to use it during the deficiency lawsuit.

Creditors are not entitled to keep any personal property found in the vehicle. They must let you know, what items were found and how you can retrieve. If you do not claim your property, eventually it will be considered abandoned and will be disposed of.

Your Credit Score:

Repossession will have a derogatory impact on you credit score. The fact that you have defaulted, this may damage the credit score. It will further be listed in the public records of the credit report. In case the lender obtains deficiency judgment, it will be added to the credit report too. They will remain in the report for up-to 7 years.

Getting Your Car Back:

Even after a vehicle repossession, you can get the car back if the lender hasn’t sold it yet. You can redeem the car by paying the balance debt including additional repossession charges. However, it is uncommon among the buyers.

Furthermore, you may be allowed to reinstate the car by paying off the arrears and other charges. You need to continue paying your regular debt amount.

When being sold in the auction, you could bid to buy it back. However, you will still have to pay the deficiency balance.

A vehicle repossession is common in America. Millions of cars are being repossessed every year. Moreover, it has extended to all sorts of goods like electronics, boats, equipments and more. As the stakes are high and it will cost you your credit score as well as reputation, repossession must be avoided at all cost.

What is a FICO Score?

What is a FICO Score?

People who would like to get into any type of financial transaction need to know what is a FICO Score? It is one of the best and most popular ways in the USA for assessing someone’s credit or money viability. A type of credit score which help prepare an appropriate credit report that lenders generally use to assess the applicant’s credit risk and make a decision whether to give a loan.

It was invented by Fair Isaac. FICO represents the Fair Isaac Corporation, and the word, “score”, represents the assessment. It computes the scores to assess a person’s monetary status, transactions and the financial move. Actually, it’s your credit score that makes you eligible or not-eligible for a credit loan. The score determines your repaying ability to a loan. It is based on five factors, that are your paying ability, the amount you have to repay, the credits you had, the new credit you have, and the types of credits you are using. If you score high, you could get your loan approved at lower interest rate.

Past and current credit affairs like your accounts open date, types of accounts, last use and default computed as well. The score comes in a three digit number that ranging between 300 and 850 and it decides your chances. Obtaining a high score that is above 600 reflects your ability in controlling your finances in a great manner and your creditworthiness. Your probability of being granted a credit loan by the banks and creditors increases to a great extent.

On the other hand, if you score less than 600 it shows that you are not in control of your finances. The banks or creditors might also say no to pass your loan or approve it at a much higher interest rate or just give you pretty less amount.

FICO does not see the amount you make, where do you work, how long you have been working or worked, your age, sex, color, race, religion, or the kind of job you are doing. What it sees is your percentage scored. Listed below are the percentages for each part:

  • For payment history, it is marked 35 percent.
  • For amount owed, it is marked 30 percent.
  • For the length of credit history, it is marked 15 percent.
  • For new credit, it is marked 10 percent.
  • For types of credit, it is marked 10 percent.Your FICO score is not the end of possibilities to obtain a decent interest rate. You could increase your scores by improving some of the important factors like reducing the amount of your outstanding debts, your payment history for a start. A number of things are there that could assist you in achieving the final score. You just need to go through in detail and find out the areas that need a boost to re-build your current credit scenario.

Understanding Your Credit Report

Understanding Your Credit Report

Ever wondered why you were denied that car loan you applied for last month or the house loan that was not approved? The reason could be a ‘bad credit score’. It is not difficult to lose your credit points and a small delay in bill payment or untimely settlement of debts can have grave effects on your overall credit score. Even if you had a good credit score a few months ago, the figures will plummet before you know it. It is, therefore, highly crucial to understand the key aspects of your credit report.

Understanding your credit and what influences it is the key to having a better credit score. Once you gain complete knowledge about the subject, maintaining it will just be a cakewalk.

What is a CIR (credit information report)

While a credit report is the numeric summary of your credit history, a CIR or Credit Information Report is an account of the entire payment history of the individual. This has been calculated from the time you first received your Cibil TransUnion Score, another name for credit score.

What constitutes your CIR

Your CIR is the assortment of the Cibil TransUnion Score, and other important details of employment, bank accounts, credit cards, etc. Below are the key sections in detail.

  • Cibil TransUnion Score – A credit score ranges between 300-900. A score above 700 is considered good
  • Personal details – Contains complete and authentic personal information, address and telephone details
  • Employment details – Income details that have been earned by you as an employee
  • Account Information – Details of all the credit facilities and banking transactions related to your account such as account numbers, ownership details, date of last payment, loan amount, loan details, current balance, and so on.Every time you are applying for a loan, the respective lender or institution accesses your CIR. Understand your credit report and make sure that these elements are always up-to-date.

Know about Credit Bureaus

One important thing to know when developing an understanding of your credit report is the Credit Bureaus.  Credit Bureaus are the bodies that keep a track of your entire financial history, along with the credit report to date. Three major credit bureaus are involved in the process – Equifax, TransUnion, and Experian.

FICO Score

FICO or the Fair Issac Corporates creates a credit score for every individual that is used by top lenders while they consider offering credits.

Summary:  Understanding Your Credit Report

Each lender has its own strategy to assess that helps them decide whether the concerned candidate is suitable to receive a credit. If you identify the areas that these lenders use in order to assess your credibility, you can easily sort them and work towards their improvement. Once you get a better hold of these key aspects, you can easily create a good credit score.

Co-Signing a Loan – Should you do it if someone asks?

Everything You Need to Know about Co-signing a Loan

Co-signing a loan may be a requirement by the lender when giving loan. This is the act agreeing to pay the debt if the borrower fails. Individuals with good credit score are often asked by their friend or a family member to co-sign. Although, you are willing to help; you must also be aware of its multifarious aspects. This article will focus on both the faces of co- signing the loan and help you make an informed decision.

What a co-signer is liable of:

When cosign a loan, he or she is pledged to pay the debt in-case the borrower defaults. Moreover, the cosigner is liable to pay the extra amount including late fees and collection money. The creditor has the right to collect the debt from the cosigner without even approaching the borrower (depending on the law of the state). Plus, they can sue or even seize salary.

So, make sure you can afford the amount and are willing to accept the responsibility.

Why would someone consider co-signing a loan?

You might want to co-sign a loan for your son and buy him his first car. You might also want to cosign someone’s education loan! The fact that, credit rejection is common; especially for people with low credit score; you can help them by cosigning a loan. This will help increase their credit score and credit history, as well as get them the transportation or education they need.

Things to Consider:

  • Make sure that you can afford the debt amount
  • Defaulting may get you sued or lose credit rating
  • It may keep you from getting other loans
  • Before cosigning, ask your creditor to quote the effective amount you will owe
  • You could negotiate and limit your obligations to just the principal and not include the additional charges
  • You must take the copies of all essential papers after cosigning
  • Know your co-signer rights

Risks of Co-signing a Loan:

Co-signing a loan comes with a lot of risk, like increasing the DTI (debt-to-income) ratio. As a cosigner is an integral part of the loan; he/she must address the loan closing documents. The loan is reflected in the credit report and the monthly payment goes to the DTI ratio. Moreover, as the amount you owe is 30 percentage of the FICO score, hence lowers the credit score. More, is the debt amount, lower will be the credit score. Keep the DTI ratio below 36 percentage.

By co-signing, you are accepting the responsibility and are tied to it until the balance is paid off. There is no escaping once done. However, in certain cases like with student loan, you can avail release from being cosigner.

The bottom line is, if the needs of the borrower outweighs you personal preference, you should choose to cosign the agreement. However, it is advisable to judge you friends trustworthiness wisely. It might not be noble, but this may save you later.

What is a credit bureau? Experian, TransUnion, Equifax

What is a credit bureau? There are 3:  Experian, TransUnion, & Equifax

When you opt to buy something on credit or take a loan, the lenders don’t just decide to give you the facility right away. They try to collect information on your credit behavior, both past and present, track record, and various other data to ensure that you have the potential to fulfill the liabilities you obligate yourself with. This is where the Credit Bureau comes into the picture.

Ok, so what is a credit Bureau?

A credit bureau is a company that collects and maintains credit information of individuals and supplies it to the interested organizations and bodies such as lenders, creditors, etc. As a consumer, you can also have your own credit report from the bureau. The credit information is basically a summary of your credit behavior and includes the following details:

  • How much of credit you have
  • How much of the credit is left
  • How much credit are you using
  • How often do you make your payments

Credit information also contains rental repayment reports if you own a property. Other details mentionable in a credit report are liens, judgments, and other details that expresses your current financial position.

There are 3 major national credit bureaus in the United States:

  • Experian – This global information service group operates in almost 40 countries and employs a total of 17k people. The agency was founded in 1996, the headquarter of which is in Dublin, Republic of Ireland.
  • Equifax – Another consumer credit reporting agency and one among the three largest credit bureaus, Equifax records and maintains information of over 400 million credit holders in the world. Based in Atlanta, Georgia, the company employees 7000 plus employees and operates in 14 countries. Equifiax is also one of the oldest credit report gathering agency that has its operations ongoing since 1899.
  • TransUnion – The third largest credit bureau in the United States, TransUnion is an American credit information management agency. The company has information of approximately 500 million customers worldwide and over 45,000 business houses. It works closely with Callcredit, a UK based credit reference agency.

Based on the information on your credit report provided by any of the three aforementioned credit bureaus, the lender assesses whether they can offer you the credit or not. Whether your credit scores pose a risk and put you in a bad standing or has a high score that easily help you in obtaining the loan. This will also help them in deciding what interest rates they can offer you.

Summary:  What is a credit bureau?

There are agencies that can help you in getting out of a bad credit report. They will help in reestablishing your reputation as a credit holder and will solve all your credit issues. Search on the Internet to find such providers and take their help to get back on your feet.

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No information contained herein can be relied upon as legal, tax or any other type of professional advice. It is for general informational purposes only and does not apply to your particular set of circumstances.
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