Tag Archives: Credit reporting agencies

New Credit Reporting Rules: Many may find relief from reports of tax liens and civil judgments

New rules provide credit score relief for some people who have tax liens and civil money judgments against them. Errors on consumer credit reports have been a problem for a long time and many people have incorrect information on their credit reports. New credit reporting rules take effect July 1 and change the way Trans Union, Experian and Equifax verify data regarding the reporting of tax liens and civil judgments. Now, the three credit reporting agencies must verify the individual’s name, address and either social security number or date of birth. Since so many companies omit social security numbers for privacy concerns, there may be a large group of people who will no longer have tax liens and civil judgements appearing on their credit reports. This should also help prevent future instances of information appearing on the wrong person’s credit report.

The purpose of credit reporting and monitoring

From applying for a cell phone account or utility to buying a car or home, our credit rating is used to determine where we stand on the scale of credit risk. With great credit, we present a low risk of not making our payments in full and on time. The volume of credit data and computer systems processing and sharing information open the door to error. If we do not check our credit scores frequently, someone else’s negative information could prevent you from being accepted for a mortgage loan or a new credit card. Imagine finding out your credit score was damaged by another person’s tax lien or the civil judgement entered against them.

How errors happen and how prevalent they may be

With tax liens alone, some estimates suggest that half of the tax lien information reported to the credit bureaus has ended up appearing on the wrong person’s credit report. When social security numbers are available to the individuals reporting tax liens, one missed number could cause the wrong person to receive a negative mark on their credit report.

Even if someone checks their credit frequently, or pays a few bucks every month for a credit monitoring service, the effort it can take to correct the mistake can be staggering.

How the new rules apply to tax liens and civil judgments

The rule change for reporting information to the credit bureaus about tax liens and civil judgements will require the verification of three pieces of vital information, the individual’s name, address, and either their social security number or date of birth.

By requiring three sets of identifying criteria be matched before receiving credit reporting data about tax liens and civil judgments, the likelihood of mismatches is significantly reduced.

The new rules take effect July 1. This article in USA Today has more information about the new rules and how they might apply to you.

About us: Joseph Wrobel, Ltd., works with clients to find out if they qualify for Chapter 7 or 13 bankruptcy, and their options and rights under the law. The firm will also advise and assist clients with questions and concerns about the collectors and their rights to pursue you.

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Understanding and improving your credit score before or after bankruptcy

Understanding how your credit score works requires knowledge about how the credit system works and how lenders use your credit score. There are three companies, Experian, Equifax and Trans Union, and they collect your credit use and payment history and calculate your credit scores. Based on several elements of your credit patterns, your scores from each agency will range from an extreme low of 200 to an extreme high of 850. The average credit score among most people is 711. When your score is 740 and higher, you will likely receive the best interest rates on credit cards and consumer loans. If however, your score is 620 and lower, approval is less likely, and when approved for a credit card or consumer loan, your interest rate will likely be much higher. The interest on a credit card or loan can vary from five to 20 percent based solely on your credit score.

Your frequency of credit use and amount of credit allowed versus used is important to your score.

There are several activities and factors that affect your credit score. The amount of open credit card and loan accounts is a factor in your score. If you have several open credit accounts you are not using, or you have not opened a new credit account in many years, your credit score can suffer. The loan balance to loan amount is another factor in your credit rating. The more you pay down a loan, the better you can affect your score. A ratio of credit offered and credit used is important, especially with credit cards. If you have a credit limit of $1,000 you should keep your monthly spending around 30 percent ($300), which is a general rule, not using your credit limit and using up all your available credit are both harmful.

Get the free copy of your credit report and challenge the errors, or use a credit repair company.

Order a free copy of your credit report and decide how to take action or hire a credit repair company to do it for you. There is a free credit-reporting website (www.AnnualCreditReport.com) you can use to generate your full credit report. Most people have some inaccuracies or wrong information on their credit report. Reviewing all the information and challenging anything that looks like an error is a quick way to increase your credit score. Additionally, there are credit repair agencies you can hire to fix your credit for you, using all their tools and knowledge.

Obtaining secured credit cards is easy, use several and pay the fixed monthly bills.

Using credit cards and loans is a great way to improve your credit score when you follow a few basic rules. Paying your credit card on time every month is imperative to demonstrating credit responsibility. The more credit cards you have in current responsible, the better your score should be. It is a good practice to pay your fixed monthly bills with a few credit cards and pay them off every month. If you recently filed for bankruptcy or do not have a credit card, the secured credit card can help you start repairing your credit immediately. When you go to a local major bank, bring $300-600, deposited into a savings account connected to a normally functioning secured credit card. You receive and pay your bill on time every month and your credit improves. The bank may refund some or all of your deposit money once you demonstrate a positive payment history. If you never pay the bill, the bank will use your deposit to pay the bill.

Joseph Wrobel Ltd., can get your debts partially or fully wiped out and help you with credit rebuilding.

If you take advantage of the bankruptcy laws and discharge some or all of your debt, your credit card companies adjust the status of those debts and should reflect the new amount owed, if anything, but the credit reporting agencies do not always reflect the discharge. Joseph Wrobel, Ltd. has relationships with credit repair experts who can help challenge credit errors, assist in the clean up, and credit rate increase process. It is important to remember that good credit has less to do with what happened before the bankruptcy and everything to do with how you use and build credit afterwards.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can “Like” the firm’s Facebook page and “Follow” Joseph Wrobel. Ltd. on Twitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.

Lawsuits prompt Bank of America and JPMorgan Chase to update credit reports to eliminate consumer zombie debt

Imagine being consistently denied for employment due to negative marks on your credit report. Now, consider those same negative marks on your credit are discharged through a bankruptcy, but are still on your credit report. Some people have been compelled to pay off discharged debt because the banks have them over a barrel and refuse to update your credit report. Diane Torres is one of these victims. Ms. Torres went through bankruptcy in 2010 and received a discharge of certain debts. Two of the discharged debts, a Chase credit card and another from GE Money Bank, were still showing as delinquent accounts on her credit.

Job offers and loan approvals can require positive credit scores. Even after bankruptcy, some lenders refuse to clear reported debts from consumer credit reports.  

Ms. Torres applied for a job at a credit union. They told her they could not offer her the position unless she cleaned up the negative marks. ““I felt desperate,” she said. “It was urgent that I pay these debts or else I would not get the job that I really needed.” But after, at the suggestion of her bankruptcy lawyer, she provided the credit union with a record that she had voided the debts in bankruptcy, she got the job.”[i]

Ms. Torres is not alone, but she is lucky the credit union told her why her offer was in jeopardy. Many others simply do not receive offers after promising job interviews and they might never learn that the deciding factor was a negative credit mark; one which may have been discharged in bankruptcy.

When the bankruptcy court discharges the debt, that debt becomes uncollectable as a matter of law. The discharge does not automatically clear the credit score for someone who went through bankruptcy. In many cases, bankruptcy clients report they are being bullied into paying off credit cards with banks refusing to budge, despite the bankruptcy.

 Bank of America and JPMorgan Chase, both involved in lawsuits in federal court on this topic, agreed that they will update borrowers’ credit reports.

Zombie debt is commonly known as debt that has been discharged in a bankruptcy, written off, or otherwise no longer collectable for a variety of reasons. When these debts are bought and sold among finance companies the consumer loses. The recent announcement that these banks will put the zombies of consumer debt to rest is good news, “bills that are still alive on credit reports although legally eliminated in bankruptcy,[ii]” should be updated within the next three months.

The New York Times reported, “The lawsuits accuse the banks of engineering what amounts to a subtle but ruthless debt collection tactic, effectively holding borrowers’ credit reports hostage, refusing to fix the misstated unless people pay money for debts that they do not actually owe.[iii]

Joseph Wrobel, Ltd. can help clients with zombie debt problems and financial catastrophes, generally. Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can Like the firm’s Facebook page and Follow Joseph Wrobel. Ltd. on Twitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.

[i] New York Times, Bank of America and JPMorgan Chase agree to erase debts from credit reports after bankruptcies, by Jessica Silver-Greenberg, May 7, 2015.

[ii] See HNi

[iii] See HNi