3 Credit Scams That Are Hurting Your Credit Score

December 27th, 2010

The Credit and Debt Summit is exposing one credit scam after another. This time, credit expert Brian Diez exposed three credit scams that could be hurting your credit score and your ability to secure a loan.

Are you a victim?

Here are the three scams:

Credit Scam #1: Lenders oversee themselves.

Lenders report information to the credit bureaus. If you submit a claim that disputes this information, guess who is responsible for verifying the information? Lenders.

Imagine that you were to file a lawsuit against a doctor. You arrive at court to prove your case, and the doctor is sitting on the jury responsible for deciding whether your case is valid.

Such is the system of repairing errors on a credit report.

Credit Scam #2: Lenders benefit from errors.

And it gets even worse. Lenders benefit from sloppy records. If a lender causes an error to appear on your credit report, your credit score could drop. In turn, the lender can charge you more in interest.

“This scam is propagated by a system that almost guarantees errors,” Diez told attendees at the Credit and Debt Summit. It works like this:

The computer systems that collect information from lenders and then report this information to the credit bureaus do not require an exact match. If a Social Security number matches a last name, the system considers it “good enough,” even if the first name and address don’t match.

You can see how easily a mistake can appear on your credit report. In fact, 44 percent of reports of identity theft are nothing more than a merged credit file.

Credit Scam #3: Unless you are a politician, celebrity, or attorney, your complaint will not be taken seriously.

Making matters worse, if you try to correct an error on your credit report, you will have to jump through hoops … unless you are “someone important.”

Let’s imagine that you are one of the many people with an error on your credit report. (About 80 percent of people have at least one credit report error.) You contact the lender to report the mistake. The lender tells you to send a letter, which you promptly drop in the mail.

If you are a celebrity, politician, or lawyer, your letter will be handled immediately. Otherwise, your letter will be sent through a computer system that is responsible with determining whether your complaint is frivolous. If the computer says the letter is frivolous, your complaint won’t even be processed.

If the computer decides that your complaint has merit, your letter will be outsourced to Costa Rica, the Philippines, India, or Jamaica. A foreigner who most likely speaks English as a second language will be responsible for reading your letter and assigning a two-digit code, which determines the next action that should be taken on your complaint. Now a computer will spit out a letter telling you what will happen next.

Instead of doing actual research, Diez says the lenders just take the easy way out. So unless you are a celebrity, lawyer, or politician, you will be treated like a commoner. The worst part, your credit score just keeps dropping.

Want to stop this credit scam, and others? Be sure to download What Your Banks Won’t Tell You About Credit.

Tags: credit scams, credit score

Banking Scams: How Banks Are Legally Stealing Your Money and What You Can Do About It

December 17th, 2010

The down economy has hurt more than just general public – banks are feeling the pinch as well. In an effort to generate extra income, they’ve become quite creative and sneaky in their tactics. We refer to these at 720CreditScore.com as banking scams. They are the ways banks “legally steal” from you month after month, most times without you even realizing it.
Whether you want to hear it or not, the truth is that the banks are in bed with the government and although the government tells the banks to “treat people fairly,” they continue to steal your money, while greedily taking money from you (via the government and your tax dollars) at the same time.

To spread the message and help people avoid these banking scams, we’re inviting everyone to share their stories of banking scams that may have happened to you. The goal is to make the public aware of what’s really going on so you can protect your hard-earned money. A few dollars here and there may not seem like much, but when you add up the thousands of accounts they are doing this to, you can see how much banks depend on these banking scams.

This is an important issue that we believe strongly about and we greatly appreciate your time in sharing your scam. If you don’t have a story to share, take a few minutes and read through the scams to make sure you don’t become a victim, or share this page with others who you think will benefit from the information.

To make it easier to find your story, if you’re sharing a scam please start your comment with the words “BANKING SCAM.”

If you have a facebook account, post this via the Facebook Comments below so we can get this message out!

In the spirit of sharing, here is one that happened to me recently.

US Bank: BANKING SCAM
If this isn’t a scam from US Bank, I’m not sure what is.

Last week I was helping my Mother in Law close out her lease with US Bank, she owed the final payment of $395, so I called to pay it.

Before they collected the payment, I told the US Bank Representative that my Mother just moved from California to Arizona eight weeks ago. She gladly took the information and then told me that she will have to charge my credit card $405 instead of $395. I asked, “Why?.”

Well, I found out that it is US Bank’s policy to charge an extra $10 fee for billing addresses in Arizona. Interesting.

Hmmm… I have clients all over the world and it doesn’t cost me extra money to charge a person’s credit card in Arizona vs. California. Even if it did, NO WAY it would be $10. And, even if I were charged extra, I wouldn’t even think about passing that on to the client.

Here I am, five days after this happened blogging about this US Bank Scam… to my entire client base. These companies need to start focusing on building more value to their clients instead of penny pinching all of us.

Here is how I got around the $10 scam. I told her to change my address back to the California address and rerun it. I told her, “If you charge me the $10 fee, I refuse to pay the bill.” She changed the address, I saved $10, and I’m not using US Bank again!

Share your Scam!!

Philip Tirone is a Credit Scoring Expert and Champion for the Human Race

Other Scam Posts:

The Retail Store Credit Card Scam – Click to Read
The Dirty Little Secret that Hurts Credit – Click to Read
Protecting Yourself from Common Bankruptcy Scams – Click to Read

Tags: banking scam

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How to Get Business Credit

December 13th, 2010

I learned a ton of great information from Tom Kish about how to get business credit during Week Two of the Credit and Debt Summit.

How to Get Business Credit

Tom Kish is the author of Shortcuts to Money, and he’s one of our experts at the Credit and Debt Summit. Basically, Tom teaches people how to get business credit, and then he teaches them how to use it to expand their businesses. You can download the transcripts from the call by registering for the Summit (registration is free).

Here are three highlights:

The first secret about how to get business credit is this: Don’t apply in your own name. A lot of entrepreneurs walk into a bank and fill out a business loan application using their own name. Kish says the banks will basically laugh in your face if you do this.

Banks want to do business with LLCs, S-Corps, and C-Corps. Banks know that corporations might buy insurance products through the bank, they might build investment accounts or retirement accounts, or they might process their merchant services through the bank.

And being a sole proprietor—even one with a Fictitious Business Names or “DBA”—just doesn’t cut it, says Kish.

But if you register your business as a corporation or formal partnership, the banks will practically salivate at your door.

The second secret about how to get business credit is this: Keep your personal credit score high. A lot of lenders will look at the owner or principal’s credit score when considering a loan application.

This doesn’t mean that you should apply for business credit under your own name. Once again, you absolutely should not. It does, however, mean that your personal credit score might be considered as part of the overall process.

So if you have a bad credit score, be sure you know how to build credit. Namely, get your outstanding debt as low as you can, pay your bills on time, and scour your credit report for errors. (Be sure to come back later for some hot information from Brian Diez about errors on your credit report!)

And the third secret I’ll share is this: Apply for more than one loan. Let’s say you have a business registered as a corporation and you want a $150,000 line of credit. Instead of applying for one big loan, try breaking it into three or four loans that add up to $150,000.

You will have much more success if you start by looking for a bank that will provide you with $30,000 or $40,000 line of credit. Once you secure this loan, apply for another one. And then another.

Heck if you are just getting started, apply for a $5,000 line of credit. Get your foot in the door and get the ball rolling.

One thing you should know about how to get business credit is that getting the first loan is always the hardest step, especially if you don’t have any assets or much history. Look for a bank that provides “stated income” loans that are unsecured. This means that you won’t have to provide tax returns, collateral, or a business plan.

Tags: business credit, credit

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Buying a Home With Bad Credit and No Money Down

December 1st, 2010

From bird-dogging to seller financing, Carter Brown kicked off the Credit and Debt Summit with six strategies for buying a home with bad credit and no money down. Even if you have a bad credit score and no down payment, Brown explains the six strategies for buying home, or investing in real estate.

Buying a Home with Bad Credit and No Money Down

Carter Brown is a real estate coach for Prosper Learning who started investing in real estate while he was in college. He now coaches other people on out-of-the-box strategies for buying homes or investing in the real estate market. These strategies don’t require any money down, and they can be used by people with bad credit scores.

As part of the Credit and Debt Summit, Brown shared these strategies with registrants:

Assigning contracts
Double-escrow closing
Subject to financing
Seller financing
Lease options
Bird-dogging

Two of the highlights are “subject to financing” and “bird-dogging. “

Buying a Home with Bad Credit and No Money Down Strategy: Subject to Financing

Subject to financing is a perfect strategy for buyers with bad credit and no money down and sellers who are on the brink of foreclosure. It works like this:

The buyer takes over mortgage payments on a person’s house. In exchange, the seller transfers the title to the buyer, but—and here’s the kicker—the seller keeps the loan in his or her name. The buyer, however, starts making payments on the home.

Does this sound crazy? Why in the world would a seller transfer title but keep the loan in his or her name?

It isn’t crazy, and Brown explains why it works;

1. The homeowner (seller) is going to lose the home to foreclosure otherwise. Under “subject to financing,” the seller doesn’t have to go through foreclosure and preserves his or her credit score. Perhaps more importantly, the seller’s financial stresses are over. No longer do they have to worry about coming up with thousands of dollars, negotiating with banks, attempting—and failing—to get loan modifications. The buyer can take over payments immediately, leaving the seller with peace of mind.

2. The buyer and seller can always write a clause into the contract that forces the home to return to the original owner in the event that the buyer misses a payment. And because the loan is still in the original owner’s name, the seller can track the buyer’s payments.

3. Worst-case scenario, the buyer misses a payment and the home returns to the original owner. If this happens, the original owner can start making payments if his or her financial situation has improved. If the original owner’s financial situation has not improved, he or she is no worse for the wear.

Obviously, this strategy is a bit sophisticated. Want the transcripts of Brown’s Credit and Debt Summit webinar? Register for the free summit here and get more details, including information on where you can find qualified sellers.

Buying a Home with Bad Credit and No Money Down Strategy: Bird-Dogging

If “subject to financing” makes you nervous, but you still want to get your foot in the door and start learning advanced techniques for real estate investing, Brown suggests starting with a technique he calls “bird dogging.”

Under this strategy, you don’t actually buy a home, but it allows you to shadow someone who is using outside-the-box strategies, which means you can quickly move up the ladder and start learning about buying a home with bad credit and no money down.

Simple put, bird-dogging is another way of saying that you act as a scout, and you get paid for bringing a seller and an investor together. You also get to shadow the investor so that you learn more about real estate investments.

Let’s say that you are chatting with your neighbor, and you learn that she and her husband are in financial distress. Their house has been on the market for months, but no one is biting. If something doesn’t happen—and soon—the bank is going to foreclosure.

This is where you come in. Simply introduce your neighbor to a real estate investor. Tell the investor that you want to provide a referral for a finder’s fee. If the investor purchases the property, you will receive a fee of about $500.

This isn’t where it ends. Ask the investor if you can shadow the transaction. Let the investor know that you are interested in learning more about real estate strategies. The investor, thrilled that a hot deal has dropped onto his or her lap, will agree.

Brown goes on to describe four other strategies for buying a home with bad credit and no money down. His strategies offer something for everyone—from the seasoned investor to the newbie hoping to get his or her feet wet.

Tags: bad credit, mortgage, real estate

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