The Democrats in Washington were busy patting each other on the back when they passed the credit card reform bill earlier this year. That quickly changed though when they realized that the reforms they passed were only inciting the credit card companies the raise interest rates, lower limits, and increase fees before the laws are enforced. Many of us in the industry had seen the reaction of the credit card companies coming like an overloaded freight train a mile away. The delay written into the credit card reforms were nothing more than Congressional leaders bowing to the pressure of the banking industry lobbyists. Now that they’ve realized what a colossal mistake they made by delaying the implementation of these new rules and regulations… well let’s just say they’re not as self congratulatory.

Reps. Carolyn Maloney (D-NY) and Barney Frank (D-MA), in the House, and Sen. Mark Udall (D-CO) in the Senate, are introducing legislation today on the Hill to minimize the damage the delay in the legislation caused. The back peddling they’re doing today would put the new rules and regulations into effect by December 1st, 2009. That’s 3 months sooner than required in the current law. It’s amazing that they didn’t realize this would happen when they wrote the legislation. If Congress passed legislation to outlaw soda, but said the law would not go into effect for another year, would Congress be surprised when the price of soda went up? The fact is, they knew what would happen, but the lobbyists hired by the banking industry made more of an impact on members of Congress than their constituents.

Democrats have been urging Ben Bernanke, the Federal Reserve Chairman, to put the reforms in place sooner, but he has been reticent to do so. He explains his apprehension by stating that an earlier start date for the legislation “could provide benefits for consumers, [but] the Fed continues to believe that, given the breadth of the changes required by the law, card issuers must be afforded sufficient time for implementation to allow for an orderly transition.” Suffice it to say many on Capitol Hill were not impressed by Bernanke’s response. Credit card companies, however, were. Let’s hope they don’t celebrate by raising interest rates even more.

What’s that ticking sound?  You’re probably hearing the clock counting down on the $8,000 tax credit for qualified home buyers.  The tax credit, part of the American Recovery and Reinvestment Act of 2009, is set to expire Nov. 30, 2009.

That means anyone who has never owned a home before or has not purchased a home with an FHA mortgage in at least 3 years,  has just days to close on the purchase of a home and receive a tax credit of up to $8,000.  Time is certainly slipping away.

Potential home buyers are encouraged to move quickly. If you’re already working with a lender and have been pre-approved, there is probably still time to buy.  Using a conventional loan and having a down payment is available will improve your chances considerably.

The numbers show clearly that the tax credit has spurred sales, especially of lower-price homes typically purchased by first-time buyers.  Many home buyers questioned have admitted readily that they were buying now specifically because of the $8,000 carrot.

There may me hope for people who haven’t started yet though.  There’s rumblings from the President and in Congress about extending the program at least through next summer, and possibly raising the credit to $15,000.  We’ll just have to wait and see at this point what happens.  Without a new credit home sales will decline again, worsening the economic crisis.  Programs like this are a slippery slope for the country, but then again, if it helps families achieve the American Dream it can’t be all bad.

I have people asking me all the time “Can’t I just repair my own credit?”  The answer is, quite simply, yes.  You can learn all the laws that govern credit reporting in the United States and in your state of residence.  You can learn the rules and regulations that govern the credit bureaus, credit card companies, collections agencies, automobile finance companies, mortgage companies, etc. You can find the contact information for all of the creditors on your report; find out who originally owned the debt, trace who it has been sold to, etc.  In fact we provide the information you need on this site to repair your own credit.  You are also allowed by law to defend yourself in a court of law if you are charged with murder—you can reads the applicable laws, research the cases that have set precedent, hire a private investigator to collect evidence, have forensic analysis done, hire expert witnesses, and everything else involved in building a defense, or you can hire a good attorney and prove your innocence.  It’s the same thing.  Can you defend yourself in court and repair your own credit?  Yes.  Should you? Probably not, if you want to stay out of jail or have the best credit score possible.

That’s where a good, reputable credit repair company comes in.  If you don’t want to spend years learning everything there is to know about how credit works you hire a professional.  You take your car to a mechanic, your dog to the vet, and your kids to a dentist, all for things that you can theoretically do yourself, why should your credit be any different?  The key though is finding a reputable company.  If you’re looking for credit repair make sure you ask a few questions.

• Are you registered with the Secretary of State where you do business?….
• Do you have a surety bond in place to protect me?
• Do you have any complaints with the Better Business Bureau?
• What laws do you use to remove items from a credit report?
• Are your employees FCRA certified?

If you don’t get satisfactory answer to those questions you should probably look elsewhere.  Just like any industry, there are companies out there that do the bare minimum to collect their payment, and there are companies that go above and beyond.  If you’re not getting a reputable company you might as well do the work yourself, but if you find a company that really knows what they’re doing you can have the peace of mind that comes with getting a job professionally done.

The governor of Illinois signed a law today that limits the marketing that credit card companies can do on college campuses.  Personally, I applaud this decision because I have experienced the detrimental affects of poor credit choices while young personally.  It was actually a pretty nice piece of legislation in that it doesn’t prevent credit card companies from marketing on college campuses, but it does mandate that if a college allows a credit card company to market on campus (something that the colleges make a ton of money on, never forget higher education is a business) they must also provide personal finance education as well, something sorely lacking in our society.  Kids going off to college walk through the commons, just like I once did, and see a shiny booth set up giving away t-shirts and Frisbee’s and coffee mugs, which lures them in, and then they get pitched on opening up a credit card with a $1000 credit limit.  If those kids are anything like I was at that age, bills were very much and out of sight, out of mind type of thing, so they’re stunned when they start to receive bills and realize they’ve spent hundreds of dollars that they wouldn’t have if they’d just been spending the cash in their pockets.  Credit is a necessary part of life in America, but it is also dangerous when wielded irresponsibly.  The repercussions of poor credit choices in college can reverberate throughout a lifetime.

Consider this, you go to college, get a great education, but also ruin your credit with irresponsible credit choices, choices you probably made naively because you had never been educated on how credit works.  You finish your degree and get offered your dream job, only to have that offer withdrawn at the last moment because the company hiring you pulled a credit report, saw your credit history, and decided that you were too irresponsible to handle their business.  That certainly isn’t the way you want to start your professional career.  That’s an extreme example of course, but also consider one more common—you do get that great job, and the salary that goes with it, but you are still driving around dad’s ’71 Nova.  You go to the car dealership and pick out the new Accord that goes with your salary and the image you need to put forth in the business world, only to be denied financing.

So what am I getting to with all of this?  Talk to your kids, educate them about credit. You talk to them about the birds and the bees, talk to them about interest rates and credit scores too.

Consumers need to be especially vigilant about their credit cards for the next few months.  I’m sure you’ve all heard that major regulatory changes were signed into law back in May, 2009 regarding how credit card companies can operate, but keep in mind the law does not go into effect until February, 2010.  That means the credit card companies still have 6 more months of business as usual.  Here’s a few things be careful of in the meantime.

• After the law goes into effect “universal default” will go away, but it’s still in place now.  Universal default is a practice were credit cards companies B, C, D, and E all raise your interest rates after you pay credit card A late.  So be especially careful about getting those bills paid on time.  Which brings us to the next point, due dates.

• After February, the credit card companies will have to give you at least 3 weeks from the billing date to make your payment before you’re late, they won’t be able to arbitrarily change the billing date, and it will be illegal for them to set the bill due at, say, 11:00 AM when they know the mail doesn’t come in until 2:00 PM.  So that means in the meantime they can do all of those things.  Be sure you open your statements when they arrive and check the due date on them.  If you’ve forgotten to mail a payment out and realize that you aren’t going to be able to get it to them in time, you might need to suck it up and pay one of those astronomical phone pay fees, because if you don’t you might just see the rates on all your other cards go up because of universal default.  Your cards going from 12.99% to 24.99% is going to cost you a lot more than that $35.00 phone pay fee.

• Know your credit limits and balances.  Come February you will be able to “opt-out” of exceeding your credit limit.  Your purchases will be denied if they exceed your limit.  Right now though, credit card companies can still approve transactions that put you over the credit limit, allowing them to charge ridiculous over limit fees, raise your rates, lower your limits, etc.  You’ve got to protect yourself until then though, by being aware of how close you are to your limits.

So make sure you’re reading your bills carefully.  That doesn’t mean that after February everything will be hunky dory and you can just sit back and trust the credit cards companies to do the right thing, which of course is ridiculous.  The best person to protect you from unfair business practices isn’t the government; it’s you, so regardless of regulations watch out for yourself.  Use some good old fashion common sense—spend only what you can afford, pay your bills on time, and don’t let anyone take advantage of you.

The number one question people typically ask about National Credit Solutions is “How much does it cost?”  I wish I had an easy answer that I could put here, but the fact is it varies widely. We have several different options, from membership plans that include services at no additional fee, to add on services that are situation dependent, to stand alone services with no set price.  Let me first explain goes into determining the price.

• Which program will the client be signing up for? We have several different programs here at NCS, so until we know which program the client qualifies for there is no way of putting a number on the price of the credit repair.  Not everyone qualifies for our services, and not everyone qualifies for all of them.  It’s like going to a car lot and asking how much a new car will cost.  Well which car do you want?
• How much does the client need to have fixed? Credit reports are like fingerprints, there are no two exactly alike. Client A might have a 550 credit score with 15 negative items while client B might have a 550 also, but only have 5 negative items. So until I know exactly what needs to be fixed, both the number of items and who the creditors are, I’m unable to price things out.

So the answer to “how much do your services cost?” is “I need to see your credit report first.” We are not a company that works on one or two items per month over several years, making money by charging a nominal monthly fee. We work on the entire credit report from day one so we can get the fastest results possible. So in order to price out what a client’s investment in the program will be I need to review a tri-merge mortgage report (the most detailed credit report available), then I can call a client back and let them know exactly what needs to be fixed, which programs they qualify for, and exactly what the cost of the program will be.

The National Credit Solutions MultiPhase™ System is designed to last for 6 rounds. Each round lasts approximately one month. Not everyone needs all six rounds though, and occasionally people need more than six rounds depending on their unique credit situation. Some people are done in 45-60 days, but that it unusual. Like the owner of the company, Brad Boruk, says– it takes people years to harm their credit, so it takes time to put it back together again. I am typically able to provide a narrower time frame for the credit restoration after reviewing someone’s credit report.

Be wary of companies that promise you something that sounds too good to be true. If someone says they’re going to have your credit fixed in a week, run away. The credit bureaus have 30-45 days to respond to any inquiries you make with them, and they tend to push the edge of that time frame whenever they can, so expecting to have something done sooner than that is not realistic and a sure sign that someone is out to take your money and run. On the other side of things, be wary of companies that charge nothing up front, but rather charge a monthly fee with no time frame. Those companies will bleed you dry over time because they will only work on a small portion of the derogatory items on your credit report each month. They have no incentive to finish your file sooner rather than later, that just means they make less money. When credit repair is done right 99% of the work is done up front by a qualified research and processing team, so monthly processing fees with no end date should raise a red flag.

Overview of the MultiPhase™ System:

• Typically, in the first two phases, we go directly to the three reporting agencies, Experian, Equifax, and TransUnion, and perform an audit to ensure that all the laws have been followed by the credit reporting agencies and that the files have been documented according to the law
• In phases three and four, we conduct a certified validation of debt with original creditors and collection companies and a certified validation of public records
• In phase five, we repeat phase one and, if necessary, enlist the assistance of our attorney who specializes in demanding corrections be made and/or accounts be deleted
• In phase six we can work settlements on our client’s behalf. This is done only as a last resort to help the client accomplish a particular goal
• Throughout this process our dedicated Client Services Department works with the client on an individual basis to ensure that the client is utilizing their existing credit so as to maximize their credit scores. This also includes, if necessary, assisting the client in obtaining new lines of credit.

It’s a common belief that after 7 years the negative items on your credit report simply disappear. That’s the statute of limitations (in most states) right? Sadly, that’s wrong. Are the negative items supposed to come off after the statute of limitations has expired? Yes they are, but the reality is that it happens incredibly rarely.

Consider this scenario. You’re doing fine, getting all your bills paid on time, then tragedy strikes. You get hurt and end up out of work for a few months. Your personal finances take a nosedive, all the credit that you spent years building is suddenly out the window. You get back to work, but it takes months to catch up. Nothing is going toward the credit cards because you’re too focused on keeping the lights on and keeping foreclosure at bay. Finally the credit cards charge off, and your one consolation is you know they’re going to come off down the road. You move on with your life, keep the bills paid on time, and try to rebuild. You get a new car a couple years later—not what you wanted, and certainly not the interest rate you wanted, but you get the car. You try to get new credit cards, but get denied each time. After a few denials you tell yourself that’s okay, you don’t need credit cards anyway. Time passes. You look at the calendar and 7 years have passed. This is exciting; all those negative items that were on your credit report that took you from a 750 to a 450 years ago are finally coming off. Time to go trade in that car you got a few years ago that’s been nothing but trouble, all those negative items are gone now, it’s been 7 years and that’s the law, right? Wrong. You get denied the loan, the dealership tells you they can’t get you financed for what you want with all those collections on your credit report. You’re confused, and mad. This isn’t right, you think, I’ve paid my dues and rebuilt my life that stuff is supposed to be gone! What happened?

What happened was the accounts had their date of last activity updated. What that means is the date when that 7 year clock was supposed to start ticking was reset, possibly many times. The clock is supposed to start ticking the month following the first time you go late on a debt, so if you miss your June payment the clock is supposed to start in July. But what ends up happening are those debts get shuffled around. Maybe the credit card company moves it to their collection division after a year, which resets the clock. Then the next year they realize they’re not getting paid so they’re willing to recover anything they can, so they sell it to a collections company. The clock is reset. Already at least 2 years have been added on to the statute of limitations. And sadly, it doesn’t end there; your debts just keep getting shuffled around.

The fact is that’s not supposed to happen to you. The credit card companies are collection agencies aren’t playing by the rules. It’s like they’re all coming to that deserted 4-way stop intersection at 1 in the morning, and speeding right through it because there are no other headlights in sight. Someone has to go in there and let them know they’ve been watching, demand documentation to back up the dates that they have listed on your credit report, and then force them to remove the negative items when they can’t provide proof that the dates are correct—and this can happen after 8 years or 8 months, once they’ve falsely changed the dates of last activity all bets are off and the item is invalid. Be proactive with your credit, don’t just sit back and expect all the bad things to go away, because they won’t on their own.

The Credit Guy