Archive for the ‘Blog’ Category

How A Credit Dispute Can Affect Your Chances Of Getting A Mortgage

Tuesday, November 8th, 2011
Did you know that an open credit dispute can keep you from owning a home?

Did you know that an open credit dispute can keep you from owning a home?

In today’s day and age it is very important to own a home, but is there a possibility you can be denied home ownership before you even begin?  The answer is yes.

While we have been taught to dispute any inaccuracies in our credit report and do what it takes to protect and correct our credit, this can bite us in the butt while trying to secure a mortgage.

Most people will ask, “How can this be?” The truth is that now more so than ever lenders are using any means necessary to eliminate a potential homeowner from the lending process.

In a world that is consumed with debt, as a majority of Americans are constantly fixing their credit, especially when it is time to buy a house or any other considerable purchase this can create an unexpected problem.

The reason why you or I may be eliminated from the lending process is due to a process of verification that most large lenders such as Fannie Mae and Freddie Mac use.  During this process they look for any blemishes that stand out along with the state of your current credit.

They do this by viewing and analyzing both your credit score and credit reports.  At the time of review, in most cases if you have any open disputes you may have difficulty no matter how good your credit may be and if your credit is less than great you can expect to be flat out denied immediately.

This can be avoided by taking a few precautions. First, verify that there are no open disputes by checking your credit report.  Do not take a creditor or any other credit reporting entity for their word, while you may have agreed to terms, if it is not reported at the time you are seeking a mortgage, to the lender you still have an open dispute.

Next, if you are in a hurry to get your mortgage process underway and you have decent to great credit, it may be in your best interest to hold off on the dispute until you get the ball rolling on the home owning process.

For those with not so great credit, it is better to be honest with a potential lender, as they should have a general feel for the process and should be able to tell you upfront if an open dispute will be a red flag and keep you from home ownership before you begin the long application process.

This does not necessarily mean you should not pursue lending, but it is far better to be aware and have a read on the potential outcome of your loan application process before starting.

Finally, I cannot reiterate it enough: Always keep an eye on your credit and take care of any disputes as soon as possible.  Also, stay aware and continue working towards a higher credit score and a blemish free credit report.  Work towards securing financial freedom and staying there.

Debt Validation and What it Means to You

Sunday, November 6th, 2011
Debt Validation Process

Make sure when you are validating your debt that it is reported to all 3 credit reporting agencies. Your credit report, credit history, and credit score depends on it

The first question is: What is Debt Validation and what does this mean to me?

Often times when a debt is ongoing and time has passed chances are that your original debt has changed hands several times by your original creditor selling the debt to third party collectors.

This process can be extremely stressful, especially if there are multiple debts being owed.

This can become a nuisance because you often lose track of who owns the debt, how to handle it, how much you owe, and the most important question: Is this legitimate?

The good news is that every debtor has consumer rights protected under the United States Fair Debt Collection Practices Act (FDCPA).

This set of regulations protects you from ongoing harassment by collection agencies as well as reducing the number of collection attempts. So back to the key questions: What is Debt Validation and what does this mean?

Debt Validation is a right that all consumers have which allows you to challenge any and all debts and allows you to receive official documentation verify the debt in question to ensure its legitimacy.  This will protect consumers from false collection attempts; collectors collecting on previously settled debts, collecting from the wrong person, as well as reducing harassment from collectors who can often be inappropriately aggressive.

Next question: How do I go about the Debt Validation Process?

Here I will provide a simple outline for validating your debts and alleviating any inconsistencies and/or errors in a few easy yet important steps.

1. Do not panic.  Always remain calm and know that you are protected.  After all you have laws to protect you.

2. Do not take collectors as being your source of information.  They are bullies; they want to scare you into paying.

3. Dispute all collections that may be erroneous with ALL 3 credit reporting agencies. (Making changes to anything less than all of them will still leave your credit history hanging in the balance.)

4. Research the Statutes of Limitations on each particular debt.  Sometimes the time to collect has passed.  If this is the case send a letter to the collectors stating the error as you have found it within the statutes.

If the collection agency does not remove this listing, request a debt validation. If there is no validation given dispute it with the three credit agencies (Equifax, Experian, and TransUnion).  If this does not immediately correct the error, you may have to sue the agency. (Lets hope you do not have to take it that far)

5. While contacting the collection agencies wait 30 days for a response before proceeding to the next course of action.  When and if you receive a letter of response from a credit agency it should provide you with the following:

  • Proof of ownership of the debt
  • Proof of debt by way of statements and documentation from the original creditor
  • And a copy of the original signed agreement from the original creditor or a credit application

When and only when you receive the above, will it be satisfactory.

6. If they have not sent you the adequate information, respond by sending a letter stating they have not complied with the FDCPA and if the debt is not removed from ALL 3 credit reports, then a lawsuit will be filed.

7. After 20 days if there is no response check to see if it has been removed, otherwise chances are they will not respond.  At this stage most agencies will have removed the erroneous filing from your credit reports.  When you get the letters from the agencies keep them on file in case you need to present them to the 3 credit reporting agencies.

8. If all else has failed, you will have to file a lawsuit in small claims court against the collection agency on grounds that that agency violated the FDCPA and have paper served to the agency.  This will cost a small fee, but it is worth it.

9. Make sure you stay up to date on the status of your verification and debt reporting.  Keep an eye on your credit report and credit score.  The sooner you find errors, generally the easier they are to correct.

10. Any times there are inconsistencies do not hesitate to contact the creditor or collection agencies.  And always be prepared to contact the 3 credit reporting agencies.

Hopefully this has provided you with some great advice on correcting you debts.  This will help you to attain financial freedom and alleviate the burden of debt.