Do you know your Credit Score?

Share |

Let’s face it; times are tough on just about everyone these days. Housing prices may be down, but it takes stellar credit to purchase one because of the recent housing foreclosure crisis. The national unemployment rate is the highest it’s been in 30 years, millions of people can’t afford health care. The list goes on and on. We live in a buy now pay later society and it has finally started to catch up to most Americans. We are definitely in an economic recession, but that doesn’t mean we have to sit back and let it happen as if we were absolutely powerless. There are things we as consumers can do to manage our finances so this recession doesn’t have such a negative impact on our lives. Effectively managing one’s finances is more important than ever under this current economic recession. Knowing how to manage your money can make the difference between coming through the current economic storm unscathed, or loosing everything, or even worse, having to file for bankruptcy.




Over 82 million Americans live with poor credit scores. According to Office of Government Accountability, many consumers are aware of the basics of credit scores, but are not aware of the factors that can lead to a low or high score. Further, statistics show that most people with high FICO scores tend to know what’s contained their credit report, and they also tend to know what their FICO score actually is. The opposite is true for people with low credit scores. They tend not to know what’s in their credit report and generally do not know their FICO score. I do not claim to know why it is that way, and I am not here to judge anyone. I am writing this article to let people know how important, and easy it is to find out what’s contained in their credit reports and how to remove any information that might be inaccurate, incomplete or just plain wrong.



According to a study conducted by the research firm, US PIRG, almost 80 percent of Americans have mistakes on their credit reports. You read it right, almost 80 percent! Even further, one in every four credit reports contain erroneous information severe enough to cause the denial of credit or employment, not to mention having to pay higher insurance premiums, higher rental costs, and higher percentage rates for items such as automobile loans. For example, on a $300,000 mortgage loan, the difference in payments between a 620 FICO score and a 720 FICO score is over $70,000 over the life of a 30 year loan. These facts, taken together show a grim picture of the credit industry and clearly reveal the importance of knowing what the “big three” credit bureaus are “telling” business about your financial habits and history. What is most disturbing here is that some of the information they have on record in our consumer credit files is outright false!

What you can do?

As consumers, we have several weapons that can help us defend ourselves against the credit industry and the machinations of the “big three” credit bureaus. It is called the Fair Credit Reporting Act (FCRA). The Fair Credit Reporting Act is a United States federal law that regulates the collection, dissemination, and use of consumer information, including consumer credit information. Along with the Fair Debt Collection Practices Act (FDCPA), it forms the base of consumer credit rights in the United States. It was originally passed in 1970, and is enforced by the US Federal Trade Commission and private litigants. Knowing the pertinent sections of these laws is critical to anyone trying to repair their credit and must be referenced when dealing with the credit bureaus, collection agencies, and original creditors.

Add Seasoned Trade Lines to Improve Your Credit Score

*

The 2007 recession created the housing crisis, historical levels of unemployment, and the stock-market crash on Wall Street. On Main Street, most people could not even relate to concepts like the Troubled Asset Recovery Program (TARP), or the National Economic Stabilization Act, but we could relate to not being able to pay our mortgage, or our car payment. For most people, losing a job usually has catastrophic effects upon their lives. There can be some severe results of losing a job; losing your home, losing your car, drastic change in lifestyle. Those material things can be replaced over a relatively short time period once a person finds work. However, what cannot be remedied in the short term by finding work is the damage done to a person’s credit rating. Once that damage is done, it can take years and years of work to regain your previous credit standing. And there are no guarantees that you won’t encounter difficulties repairing your credit as you will have to deal with greedy collection agencies, original creditors, and of course, “the big three” credit reporting agencies – Equifax, Exprerian, and TransUnion. We all know it’s a lot easier to lower your
FICO score than it is to raise it.

From a socio-economic perspective, it seems quite unfair that wrong-headed politics can drive the world’s strongest economy into the worst recession since the Great Depression, cause hundreds of thousands to lose their jobs, then hold them individually responsible for repairing their own credit when they weren’t responsible for what caused their credit score to tank in the first place.

If you are one of the many people who need to improve their credit score or repair their already bad credit, tapping seasoned trade lines is one of the strategies available in the market. A Trade line is any account included in your credit report; a mortgage, credit card, car loan, computer, and even furniture payments. Any account with a balance and perfect payment history over a long period of time is called seasoned trade line. This concept is also known as piggybacking. Historically, this practice was conducted by business investors to improve their credit scores. Now this tool is being offered to the public.

Using seasoned trade lines to boost credit score has been subject to numerous controversies. Although it is a considered technically legal, many financial experts consider this credit repair trick very unethical. Recently, several cities across United States and the Federal Trade Commission are scrutinizing this unconventional method. Following the normal procedures, it will take them at least 3 to 5 years to improve their scores.


Here’s exactly how it works:

When a borrower opens a line of credit, such as a credit card, car loan, or a home mortgage, these accounts are called trade lines. The number, history and status of these credit trade lines comprise a large part of a person's credit score. The higher a person's credit score, the greater the likelihood of obtaining credit and of qualifying for more favorable interest rates and terms.

Credit bureaus such as Experian, TransUnion, and Equifax look at the amount of open trade lines, the payment history on the accounts, how long the account has been open and how long since the last activity on an account to determine an individual's credit score. To build positive credit history a person generally should strive to have approximately 3-5 active trade lines that are "seasoned," meaning the accounts have been open for around 2 years, have positive payment history on all accounts and the accounts should be current and in good standing.

Lines of credit that are in the name of the primary account user are called primary trade lines. For example, if Borrower A opens a credit card in his name, Borrower A is considered the primary account user and the credit card account is considered a primary trade line. If Borrower A added Borrower B onto the credit card account as an authorized user, Borrower B would be considered a secondary account user and this would be considered a secondary trade line for Borrower B. Authorized users on accounts are generally not responsible for re-paying any debt incurred on the account as the primary and/or joint account holder would.
Due to the importance of trade lines in credit scoring, there are now businesses that sell access to positive trade lines to customers who are looking to improve their credit score. These businesses find and pay people with good credit who are willing to add other authorized users onto their seasoned and positive credit accounts. Customers looking to build their credit pay these businesses for the ability to be added as secondary authorized users on these established accounts. This practice is often known as "piggybacking."

In theory, the positive history of these trade lines help increase the credit score of the borrower with negative credit history, since these trade lines are reflected on both the credit history of the primary holder and on the secondary holder as well. This was generally done with parents adding their children as secondary users on their accounts to help their children build credit. However the practice of selling seasoned trade lines, while legal, is considered controversial and can be a risky endeavor


This method is plagued by legal controversies. Privacy laws and the Fair Credit Report Act make it impossible for lenders to identify fraud from legitimate use. Financial experts admit this is technically legal but can be fraudulent in most cases. Credit score companies are taking some steps to halt the growing usage of this method. In fact, FICO already changed their scoring method by not considering "authorized users" to come up with the credit score. Eliminating this will have outright impact on many striving students who are using their parents' credit cards and for unemployed spouses relying on their partners.     
For those who extend their good credit through seasoned trade lines, there is a possible downside. The other party might actually use the credit and refuse to pay for it. For this reason, it is important to carefully consider if you are interested to be a "donor" in this transaction


WHAT THE FTC SAYS:
The “seasoned” part simply implies that the account is aged or that it has an established history. There is no cut and dry answer regarding the many questions surrounding the legality of piggybacking; however, there are many sources that tend to indicate perhaps a general answer, such as:

FTC spokesman Frank Dorman said: “What I’ve gathered from attorneys here is that it is legal, however, the agency is not saying that it is legal technically.” Other law enforcement agencies, like the Florida Attorney General’s Office, are reviewing whether such activities are legal.

A report published by the Federal Reserve Board reported “This is possible because creditors generally have followed a practice of furnishing to credit bureaus information about all authorized users, whether or not the authorized user is a spouse, without indicating which authorized users are spouses and which are not. This practice does not violate Reg. B”

In a written statement from Fair Isaac Corporation on credit scoring models and credit score before the U.S. House of Representatives Committee on Financial Services, Subcommittee on Oversight and Investigations, Tom Quinn, Vice President of Global Scoring Solutions for Fair Isaac Corporation, stated: “After consulting with the Federal Reserve Board and the Federal Trade Commission earlier this year, Fair Isaac has decided to include consideration of authorized user trade lines present on the credit report…”

What's in it for people with good credit? They are paid $100 to $150 for every account they authorize as users. Some seasoned trade lines companies lure many people with good credit by promising that they can earn more than $10,000 per month without doing anything. This method has existed for many years but did not gain much popularity until now. Most of the time it is used by many students who piggyback with their parent's credit cards. Of course, this is free! The subject of controversy is whether it is unethical to let other people use your good credit so they can convince lending companies to approve their loans or mortgages.     
A simple Internet search will reveal numerous online businesses like seasonedtradelines.com, offering this service to the public. While there are some legit seasoned trade lines groups, the number of scammers is significantly growing. One common aspect among these companies is the promise to improve credit scores literally overnight. Although some are subtle on this matter, they let people with bad credit believe in miracles like raising your credit score by 200 points with no effort at all or 30 days seasoned trade lines.      
It is very understandable why many people with bad or low credit scores are drawn in to participate in seasoned trade lines and pay high fees ranging from $700 to $2000. A good credit score means many things to many people. It can lower your interest rates, allow you to buy new homes or take vacation to your dream island, and to be considered for some high-paying jobs.      
On the side of cardholders with good credit reputation, there are some big risks involve in venturing with this business. Overall, it can hurt your reputation or be demoted to bad credit once financial institutions learn your participation. However, that is very difficult to prove because we are protected by many privacy laws and Fair Credit Report Act.
Another downside of seasoned trade lines is when your so-called authorized users use your credit to settle their debts and refuse to pay you in the end. All trade line companies promise they never share the full credit card number to their customers. In spite of this, they are many ways to get this information for these newly authorized users are empowered to make some transactions on your behalf.

Corporations too big to fail...Also too big to sue.

Supreme Court biased toward big corporations

Technorati Tags: consumer protection,too big to fail,supreme court,social justice

Anyone paying attention to the Supreme Court over the last decade would have noticed a trend toward more conservative decisions in general but more specifically with regard to matters involving big-business and corporations.  The current Supreme Court has 5 justices who regularly decide cases based upon conservative ideology, and 4 who are arguably liberal, but considerably less liberal than the most liberal justice (Sandra Day O'Connor" in recent times.
Liberal organization, Alliance for Justice called the current court, “the court for the 1%.”  They have released the above video that features several cases that showcase unfair treatment of the “little guy” by big corporations such as Wal-Mart, and other cases where the Supreme court sided against the individual. The Court is lead by openly conservative Chief Justice John G. Roberts. Many liberals think that the current conservative Court is turning back the clock on decades of progressive jurisprudence with it’s 5-4 majority decisions on nearly every controversial issues involving civil rights, voting rights, regulating big business practices, and the 1%.

The United States Supreme Court, the highest court in the United States, in 2010. Top row (left to right): Associate Justice Sonia Sotomayor, Associate Justice Stephen G. Breyer, Associate Justice Samuel A. Alito, and Associate Justice Elena Kagan. Bottom row (left to right): Associate Justice Clarence Thomas, Associate Justice Antonin Scalia, Chief Justice John G. Roberts, Associate Justice Anthony Kennedy, and Associate Justice Ruth Bader Ginsburg. (Photo credit: Wikipedia)

The video is hosted by editor and publisher of The Nation Magazine, Katrina vanden Heuvel.

Related articles

• Money, Politics and the Roberts Court (counterpunch.org)
• Citizens United 2.0 To Go Before US Supreme Court (crooksandliars.com)
• Supreme Court won't allow challenge of surveillance law to move forward (grumpyelder.com)
• Sandra Day O'Connor steps carefully in NY gun case (crainsnewyork.com)