These days you really have to be on your guard – from dubious foreclosure saviors to nasty bill collectors trying to trick you into paying money that you don’t legally owe.

But did you know that Experian, one of the three major Credit Reporting Agencies, has a scam of its own?

One Free Annual Credit Report

As many people know, the Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies – Experian, TransUnion, and Equifax – to provide a free copy of your credit report, at your request, once every 12 months. It’s important to check your credit report once a year for accounts you don’t recognize, which can alert you to identity theft, and discrepancies that can affect your credit score, which often result from errors or fraud by ethically-challenged bill collectors.

Here’s what you may not know: by federal law, the only regulated source for obtaining these annual free credit reports is AnnualCreditReport.com. There are three ways to request your report:

• go to the AnnualCreditReport.com web site
• call 1-877-322-8228 toll-free
• fill out a request form and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281

Not All Free Reports Are Truly Free

When I Googled “free credit report,” the #1 listing was the Federal Trade Commission-approved AnnualCreditReport.com described above. The #2 listing was FreeCreditReport.com — which is an imposter site created by Experian.

If you order your “free” report through FreeCreditReport.com, Experian will automatically enroll you in a credit monitoring service that charges a monthly fee. Here’s the fine print on their site that you may not catch:

“When you order your free report here, you will begin your free trial membership in Triple Advantage(sm) Credit Monitoring. If you don’t cancel your membership within the 7-day trial period, you will be billed $12 for each month that you continue your membership.“

Does a 7-day trial period give you enough time to really try the service? And how easy is it to cancel once they’ve started to bill you? How did this happen?

On the Master Your Card blog, Mike summed it up well:

“In 2004, the U.S. Congress ordered the three major credit bureaus – Experian, Equifax, and TransUnion – to craft a website to allow consumers to order their credit reports online for free, once per year.

Not long after, Experian realized the legislation presented a clever, untapped marketing opportunity. They launched FreeCreditReport.com with the (obvious) hope that unsuspecting consumers wouldn’t know the difference between their not-so-free site and Congress’ mandated, free alternative.

Consumers have since been inundated on television, in print and, of course, online with ads for the FreeCreditReport.com website. That sing-song jingle (“Freeeeee Credit Report … dot.com!”) alone should be a crime, but that’s another topic for another day.”

What happens once you’re in their trap? There are many stories online of consumers who found that “unsubscribing” from Experian’s Triple Advantage program required months of phone calls, e-mails, and online forms.

Battle Of The Free Credit Report Bands

The FTC has received so many complaints about FreeCreditReport.com that they recently launched two of their own hipster videos with catchy tunes.

From the FTC press release:

“The new videos highlight the differences between AnnualCreditReport.com and those other sites that claim to provide ‘free’ credit reports. Other sites require users to pay hidden fees or agree to additional services. For example, some sites provide a free credit report if you enroll in a new service. If you don’t cancel the service during a short trial period, you’re likely to see membership fees on your credit card statement.”

You can watch the FTC spoof videos here:

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Your credit report may be one of the most important documents that you will come across in your lifetime. In my opinion, it is more important than your marriage license, driver’s license, social security card, paycheck or bank statements. Why? Because your credit report determines how much you are going to pay in interest when you want to buy something.

If you have a low credit score, and you don’t care enough to do anything about it — no problem! You will just keep shelling out thousands of extra dollars to pay for high interest rates.

What is a “good” credit score?

There is a lot of talk out there about credit scores, but very few people understand what these magic numbers actually mean.

You probably had a credit score of around 450 when you were born, and in my years of experience, the highest scores I have seen are over just over 800. But these numbers are meaningless unless you understand how they affect your ability to get a new loan.

In general, a credit score of 660 or higher will get you approved for a government-guaranteed mortgage. What if your credit score is lower than that? Well, you can still get approved, but guess what — your mortgage will have a much higher interest rate.

Are you ready to do the work it takes to improve your score? You may be shocked to know that there is one item that will do more damage to your credit score than just about anything else.

Late Payments Kill Your Credit Score

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The single most important item that will lower your credit score is a recent late payment. I have seen credit scores sink a hundred points in one day (from 690 to 590) because payment on one account showed up as being 30 days late.

And size does not matter! Even if you miss one measly $50 payment, your credit score will drop drastically. Your credit scores will be affected not by the dollar amount of the entry, but by your track record of making payments on time.

Take a look at your credit report. Next to each account, the report shows how often you were 30, 60 or 90 days late in making your payment.

Look For Common Errors In 30, 60 and 90 Day Reporting

It is important to remember that the data in your credit report was entered by humans, and humans do make mistakes. Review your credit report carefully, and double check any instances of making a late payment to be sure they are correct.

What if you look at your report and it shows you as being 90 days late (4) times yet 60 days late (2) times? Now, let’s use some common sense. How can you be 90 days late before you are 60 days late? Not possible. Sorry, you cannot get to third base without passing second base.

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Have you disputed an item on your credit report, only to be ignored by the Credit Bureaus?

Credit Bureaus work hard to discourage you from attempting to restore your credit.  While the Fair Credit Reporting Act (FCRA) legally requires them to give you a chance to dispute an item on your credit report, Credit Bureaus do whatever they can to make it difficult for the average consumer to exercise their rights.

This may come as a shock to you, but the Credit Bureaus do not want you to have good credit because lenders — their customers — make far more profits from people who have low credit scores.

Who Handles Disputed Items On Credit Reports?

Under pressure from Washington, the Credit Bureaus now include a generic dispute form when they mail your credit report to you. In theory, if you see an item on your report that you do not believe is correct, you simply fill out the form and send it back so they can fix it.

Do these forms work? Well, sometimes they do.

But put your imagination to work here for a minute, and place yourself in an office building somewhere in Atlanta, Georgia where you along with another hundred workers do nothing else but respond to credit disputes.

Photo by wbaiv

Now, this is not the highest paid job in the company, and the working conditions are not as plush as the executives on the top floor with a nice view of the Atlanta skyline. In your tiny cubicle, you get a telephone with speed dial and a place to put your purse. You report for work at 8 AM and wait for the guy from the mail room to drop off a big pile of dispute letters from irate consumers who are angry about their bad credit.

Most of these letters are pretty generic, the sort of thing you get from a “credit repair kit” sold at one of the leading discount stores for $19.95. Then there are the nasty letters, the ones that practically shout, “You are the reason for my bad credit”, “My brother-in-law says that by law you must help me” or “I am going to let the air out of your tires, unless you fix my credit.”

What a great job, right? These credit dispute staff come in to work every day to do the same mundane task.  The pay is terrible, and since people quit all the time, half of the workers are still “in training.” Do you really expect your dispute letter will be handled in a highly professional manner?

How Do They Handle Disputes?

Under the Federal Debt Collection Practices Act (FDCPA), you have the right to ask a collector or creditor to prove that the amount owed is accurate. The woman who reads your dispute letter is required by law to “verify the debt”.  She probably already has the phone number of the creditor or the collection agency in her automatic dialer, so she just calls them up and says, “Do you have so and so as a customer”? Then they answer, “Why, yes we do and they owe us $1,543.20.” So she makes a note on your credit report that the account has been verified.

She’s just taking their word over yours, and she never checked any further into the details. Why would she, when she just wants to get to the end of her work day and go to the movies with her boyfriend? This is how many errors end up on credit reports. Even though verification is mandated by law, Credit Bureaus simply do not provide 100% accuracy.

There Are No Credit Cops

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How can they get away with this? Well, on the surface, the Credit Bureau in this example has followed the law. The Federal Trade Commission is supposed to enforce these laws, but they often lean toward the side of the credit bureaus, and there are no “credit cops” on patrol to make sure that everything is done correctly.

And in all too many cases, the customer simply gives up and stops trying.  They are counting on you giving up.

You lose unless you fight for your own rights.

To learn more about how to make Credit Bureaus to sit up and take notice of your dispute, check out my e-book, Get Out Of Credit Prison.

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Think again! Signing that paper will not make your problems go away — in fact, it may make things worse.

Don’t Lose Your Home – AND Your Good Credit

In today’s world, many folks are confused about what to do when facing a foreclosure. There are a lot of “opportunists” who claim to have an angle on how to get your money figured out. I have seen it all. The most common scam is telling you that a short sale of your home will save your credit.

Do you honestly think that the bank is NOT going to put your late payments on your credit report? No one tells you the truth — that your credit is already on the rocks and going down. Why? Because, they will tell you anything to get your money.

Photo by miusam-ck

Don’t Trust “Foreclosure Saviors”

Be on the alert when a well-dressed shark tells you he is going to make your payments for you and save your credit if you just sign a deed in lieu of foreclosure. This is total BS. A rip-off. A scam.

Wake up, man! Do you think strangers walk around handing out money to people they don’t know? This is the real world, and everyone has an angle to get your hard-earned money.

Get It In Writing

The only way this short-sale strategy will work is if the lender agrees in writing:

1. to delete your prior mortgage payment history from your credit report, and
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2. that they will NOT proceed with the foreclosure action.

If you get this agreement in writing, you can avoid a “default judgment” and keep the whole thing out of public records.

But be alert, and do not accept personal assurances or promises over the telephone. People lie every day.

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Are you facing a foreclosure on your home?

Are you tired of getting scary legal documents and court summons in the mail?

It can be very tempting to just ignore it all.

Maybe you have said to yourself, “Aw, to hell with it — I am just going to walk away from this mess.”

Read this very carefully.

I’m going to share what you have not been told — not by an attorney, your friendly investor, your mortgage broker, and surely not by your real estate broker.

Do Not Pretend It Will All Go Away

If you play in a baseball league, and you don’t show up for a game, the other team wins by forfeit. It works the same way in the legal system.

If you fail to defend your foreclosure simply because you did not answer the complaint, then the judge will automatically give the plaintiff (lender) a “default judgment”.

Now read this a couple of times over. In most states, if you get a default judgment against you, it is entered into the public record and will remain there for many years. Here in Florida it can remain for twenty years.

What Does A Default Judgment Do To My Credit?

Let’s say it’s five years later, and things have straightened out for you. You have a decent job, and want to buy another house. You have been paying your bills on time.

But when you apply for a loan, the underwriter or title company always checks public records. And there it is, sticking out like a sore thumb — a judgment on your record.

You will not get a mortgage until that judgment goes away.

How Do I Answer A Foreclosure Complaint?

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How do you protect yourself from what is happening to you?

Summon your courage, and defend yourself against a foreclosure:

1. Answer the complaint even if you don’t have an attorney.

2. Do so before the deadline spelled out on your complaint.

Is it hard to answer a complaint?  Not at all! Just follow the instructions.

If it says to show up in court within twenty days — then show up in court within twenty days!

You may be nervous to appear in front of a judge and an attorney — but ask yourself why you are willing to just roll over and just accept a judgment without a fight.

In Get Out Of Credit Prison, I share several ways that you may actually be able to legally get your case thrown out by a judge.

Before you ignore that forclosure complaint, my friend, think ahead!

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