1 – If you are hoping for a huge change… this is not the answer. Not all changes are permanent and/or large. Some adjustments may last as little as 3 months.

2 – Loan modifications are not quick. If you can’t wait the standard 9 weeks for the review of your file and another 5-9 weeks for paperwork processing, you don’t have enough time and you may want to move forward with other options like a short sale or foreclosure.

3 – Give an accurate listing of all your expenses. Don’t exaggerate but don’t minimize either. Have a good understanding of exactly how much you are paying. Keep this information available for when you call the bank.

4 – You will be rejected if you have recently made large purchases or if your credit score is low. You shouldn’t be making large purchases anyway so I can’t say as if I blame the banks for this stipulation.

5 – If you have a second mortgage with another lender, they will likely require you to get approved for the Making Home Affordable Program on your first loan before they will consider a change to your second mortgage. If you are accepted for the program on your first loan, it’s easy to submit the same paperwork for your second mortgage.

6 – This should not be your only option. It’s worth a try, but don’t fool yourself into thinking this will solve your problems.

7 – If your home is not a Fannie Mae/Freddie Mac mortgage, this program does not apply to you… BUT some lenders are still willing to modify other types of loans.

8 – This is a voluntary program. No one HAS to help you. Sure it’s good business sense to lessen foreclosures on the banks part, but if you are a problem child, don’t expect any help. Banks don’t want to keep you as a customer anyway. Be kind, courteous, and polite even if you are frustrated.

According to the bank’s calculations, my husband and I qualify. We are now in the first 9 week waiting period while they review our files. We have stellar credit scores and we haven’t made large purchases in a long time. We are good candidates for an interest rate reduction from the over 7% it is currently, down to the market rates of 5-6%.

Do I really think it will really happen?

No. But it’s worth a try.

My score is up, but only slightly. The credit card payoff has not yet hit the reporting agencies (of course, if I had missed a payment, it would have likely been reported the same day). I hope to see a bigger jump in four more months.

If you decided to check your credit report with me and follow my once yearly free report check, this time I used:

Equifax

Not only does this prevent your credit from being misused, it also gives you a clear picture of where you stand financially.

If you’d like to join me, next on the list:

Trans Union

I’ll remind you again in four months! Happy Credit Score!

Update: I forgot to say where to go for the free reports. Please visit http://www.ftc.gov/freereports for the only TRUE free credit reports. Thanks L!

It features a man dressed as a pirate in a restaurant singing a silly tune about getting his identity stolen. The commercial implies that having your identity stolen will ruin your life and somehow force you to lose your job. The only way to prevent the tragedy, according to the commercial of course, is to pay a small fortune for monthly credit monitoring services.

I’m not saying that losing your identity is easy.

I had my purse stolen a few years ago and I was terrified every time I ran my report. I was simply waiting for that ticking time bomb to explode.

Can I tell you what DIDN’T happen? I didn’t lose my job. Crazy enough, I still had the ability to work and my brain still functioned – unlike what the commercial portrays.

Losing your good name will not force you to sing as a pirate in a restaurant and preying on people who fear this is over the line. In fact, I believe these credit monitoring agencies are a complete rip-off.

You have the right to obtain your credit report FOR FREE on a yearly basis from each of the three major credit reporting agencies (go to annualcreditreport.com). If you’d like a copy of your credit score, it’s an additional $5 – $7.

You can also put a fraud alert on your credit if you feel your information may be at risk. I put a fraud alert on my credit immediately after I financed our home. I knew my social security number was floating around several financial institutions and I didn’t want to take the risk. The fraud alerts last 3 months and can easily be renewed if you feel you need a little extra time.

But here’s the kicker….

You are still at risk – even if you use a credit monitoring company. I was silly enough to hire one of these agencies AND I had a fraud alert on my credit and I was still able to finance $1,500 worth of dental work without a hitch. They didn’t even call to alert me that someone was taking out a loan.

What am I trying to say?

The only person who can RELIABLY monitor your credit is Y-O-U.

You can obtain your report online. You have no excuse.

I check my credit twice a year. You should too.

Stay informed. Know your score. Know what’s on your report.

Every year, you are entitiled to one free annual credit report from one of the three major credit reporting agencies (Experian, TransUnion & Equifax). You can opt to get all three at one time yearly, or you can space them out over a few months. For example, you can get Experian now, then in four months get the TransUnion and then in another four months you can get Equifax. With doing that, you can check your report out three times a year.

To get started, all you have to do is visit annualcreditreport.com. There are a few imitation sites out there that even charge you money! But annualcreditreport.com is the authorized site and it’s the best price of all…free.

I’m happy to report that everything seemed in order on our reports. In the past, we have had to clear up accounts showing as open, but were closed. We almost didn’t get our mortgage because of an extra auto payment showing up. Mistakes are sometimes made, so it’s best to check things out to make sure everything is in order. It’s also important to check everything out for suspicious activity.

He skirted around the issue a bit, and basically said, “What do you need a credit score for anyway?”

Thinking about it a little bit, maybe he had a point. If you want to avoid debt and obtaining new debt, who cares about your credit score? Go ahead and tank it since you won’t be trying to obtain new credit.

But wait a minute. Some employers pull credit reports on potential employees.

“…most people also don’t know that cellphone companies, landlords, and home insurers often use the scores as part of customer background checks.”

[Via USNews.com]

Somehow, having a good credit score has been linked with having good personal responsibility. Since you have a good score, you are a good person. Of course, I don’t buy that for a minute. A number like that can only tell you so much. But companies outside the financial district are using it to judge you. That upsets me more than a little bit.

I told the gentleman with the debt settlement company that I wasn’t interested. Debt settlement wasn’t an option for me at that point. We are able to pay off our debt, given some time to do it. Now, if we were facing bankruptcy versus going with a debt settlement company…that would have been a different story.

Since it seems like the number of businesses/companies using your credit score as a type of background check is increasing, I wonder what the future will hold for credit scores. I personally hope the importance of credit scores decreases outside of the financial industry.

Hi, I enjoy your website as we are also trying to pay off credit card debt. I wish you would focus some on identity theft. It just happened to me. Someone stole my social security # and was able to obtain a personal loan for 12,000. Everywhere I went, banks, police, etc., either someone had it happen to them or someone they know. This problem is so much bigger than we can imagine. I am just an average working girl with average credit and alot of debt. I used to joke and say if someone wanted to steal my identity they could have it, with all the bills. Now i’m eating those words. I now have a long process ahead of me to clear my name, not to mention my new paranoia. Anyhow, I hope you can use my story as a example for people to be aware it could happen to them.

Reading that email gave me chills. Even I have joked about someone stealing my identity with all of my debt. I guess no one is really exempt from it anymore and it’s not only adults.

A recent Good Housekeeping article details how a little girl who was only 5 years old had at least 10 people (or someone with 10 different aliases) using her social security number to get employment. It started as early as the year she was born. Her parents were tipped off that something was wrong when they tried to sign their daughter up for a state-run insurance program. The officials for the program wouldn’t let her daughter on the program because she has earned income.

In the case of the little girl, someone happened to produce a social security number that matched hers. There were no documents left out and no wallets lost. It was just by chance. That in itself is a little scary.

I dug a little and have found a few tips to help provide some protection against identity theft (check the articles I reference for even more information):

Shred all documents with personal information – this includes credit card applications that you may receive in the mail (don’t just tear them up). Some theives will raid your trash to find information that can be used for identity theft.

Stop credit card applications from arriving in your mailbox – if you have an unlocked mailbox, you may want to consider calling 888-567-8688 to stop credit card offers from being mailed to you. Theives can raid your mailbox and use these applications to open credit cards in your name [via Good Housekeeping].

Contact your credit card companies and ask that they stop sending “Convenience Checks” – I know a lot of companies send these out. Some as often as once a month. Call them and tell them to stop. Having them around is asking for trouble. If you have a pile of them sitting around, shred them. [via Dateline NBC]

Hang up on telemarketers that seem to be trying to get personal info [via Dateline NBC] – I have a hard-fast rule that I adhere to when it comes to telemarketers. I tell them, “I’m sorry…I do not conduct any business from unsolicited calls.” That includes surveys, organizations requesting donations, etc. If I am not calling them, I don’t do anything. Period.

Be diligent about checking your statements – don’t let your statements sit in a bin to be opened months later. Make sure you are checking them for fraudulent activity [via About.com].

Order your credit report at least once a year – there are credit monitoring services out there (My Fico, Identity Guard, etc) that will let you know within 24 hours of an account opening. I do subscribe to one of those services because of my online presense. You can save that cost by taking advantage of the Federal law that gives you the right to one free credit report each year from the three credit bureaus: Equifax, Experian, and TransUnion. To get that free credit report, go to Annualcreditreport.com. You could stagger your reports from each of the three bureaus to have one every four months like so

• July 07 – Experian
• November 07 – TransUnion
• March 08 – Equifax
• July 08- Repeat cycle with Experian

The sad thing is…a lot of the time you cannot prevent an ID theft from occuring [via Dateline NBC]. You can definitely make it more difficult if you follow the steps above. The key is to be vigilant and watchful so if you find something suspicious going on you can stop it.

More resources:

FTC’s Website
PrivacyRights.org (probably the most comprehensive list I’ve found)

Here’s a screenshot…

Back in August of 2004, my FICO score was 726. I do not have the screenshot here, but just a year earlier it was around 680. The biggest change that occurred is that a medical account that went to collections fell off my credit history because enough time had passed. That gave my credit score an instant boost because I didn’t have any other lates on my report.

Then, something happened in early 2005 and it reduced to 704. I know exactly what caused that. That was when my credit card was used heavily for my husband’s business. Therefore, my credit utlization ratio raised and my credit score lowered. My cards were soon almost maxed out.

After that, my credit score has teeter-tottered back and forth a little bit. Some of that has to do with the credit card companies raising my credit limit (therefore raising my score) and then I would charge more on the cards (therefore lowering my score).

This year, as soon as I started paying off the credit card debt, my credit score started going up. Looking to the future, as more debt is paid off I expect my credit score to keep raising. I would love to get to 800 at least once in my life, just to say I did it. Time will tell

Last month, we recieved a letter from Chase notifying us that they mistakenly identified some computer tapes as trash and threw them out. Those tapes had information on us from one of our old credit cards. Besides wondering how that could happen, I wonder about things that have happened that customers haven’t been notified about.

Unfortunately, they haven’t located the tapes. It doesn’t sit very well with me that this happened. I think as consumers, we place a lot of trust on businesses to take great care with our personal information. When something like this happens, it doesn’t make you feel very good.

I’m not sure what else to say about this. It’s one of those things that I think we do not have much control over as consumers. We just have to be vigilant with checking our credit reports. We were fortunate to find out about this mishap, but there have probably been others through the years that we haven’t been notified about.

To get a copy of your credit report for free, go to annualcreditreport.com. You can receive a copy of your report once every 12 months from each of the three nationwide credit reporting companies: Experian, Equifax and TransUnion.

Yesterday I discussed how I paid off Credit Card #6 and how I want to close it. Some of you mentioned that I might not want to close it for it could affect a FICO score.

From everything that I read, closing your card can affect your FICO score in two ways:

1.) Length of credit history. Something that FICO scores take into consideration is the length of history in regards to your open lines of credit. The longer you have a card, the better it is for your FICO score.

2.) Your debt to credit limit ratio. When you close a card, you are losing whatever credit limit they gave you. When you do that, you are raising your debt to credit limit ratio (for the most part). Here’s an example using my numbers (please note I removed the balance due on my Prosper loan here, but I include that amount within my credit card debt totals for my updates).

Total Credit Limit = $57,000
Total Debt = $22,700

We are currently using around 40% of our total credit limit available.

If I close CC#6, our total credit limit will be reduced to $55,000 and we will be using almost 41% of our total credit limit available.

Since CC#6 is one of the more recent cards, it shouldn’t affect the length of our credit history too much since it was just opened this year. We have older cards that are still open. As for the debt to credit limit ratio, a slight decline of 1% probably will not do much overall to reduce our FICO score.

Now, I do have one credit card with a limit over $25,000 that has a zero balance. No matter what the terms are on that card, I will keep it open. It is the card that I’ve had the longest (and started it all with our credit card debt) and it has a huge balance not being used. If I closed that card, our debt to credit limit ratio would skyrocket.

So, if you are wondering about closing any of your cards, take a look at the impact it will have on the points I mentioned above. It may be best just to keep cards, sign up for online access and receive balance emails (if you can) to monitor for unauthorized use (also check the statements). If you are worried about using your cards, a safe place you could store them is a safe deposit box at the bank.

For more info on figuring out the age of your credit cards, check out this article at Blueprint for Financial Prosperity. He goes more in depth.

Here’s what I saw.

Back in May, my TransUnion FICO score was 732. Since then, I’ve paid off a bit more of my debt and I was pleased to see it raise to 742.

TransUnion also had some very nice positives about me since I haven’t had any late payments and I’ve had credit lines over 10 years. They still don’t like how much debt I have, but I expect that negative to be there for a while.

TransUnion

Can anyone explain why I have a positive for the length of my credit history yet a negative for the length of time with my revolving accounts? Especially since my credit history started with a revolving account?

I’m scratching my head on that one, but let’s move on.

Here’s the positive/negative information for the highest score I received from Equifax.

Equifax

Equifax is showing me some love because they say I have a low proportion of debt to credit limits on my credit cards (33%). So perhaps that is the magical percentage to be under – eureka!!

Wait…but TransUnion gave me a negative there so why is there a difference? I thought perhaps the debt balances were showing different but they aren’t. They even give the same exact percentage of 33%.

I’m still scratching my head. The only thing I can think of is the fact that Equifax says the average proportion is 40% and TransUnion says 36%.

Now, Experian gave me the lowest score of them all. They didn’t list any positives

Experian

The biggest difference with my Experian report is that my Prosper loan is only reported to their agency. Therefore, Prosper shows as an inquiry as does the last credit card that I obtained (to do a balance transfer). With only 2 recent inquiries, they put that as a negative. Ouch.

I suppose if Prosper reported to the other two agencies as well, I would have taken a hit on all three scores. I really wish I pulled my Experian score before my Prosper loan was reported because I could do more comparisons.

I feel that one of the biggest problems with a FICO score is that it is just a snapshot in time. As far as I know (and someone please correct me if I am wrong), you cannot go back at a certain point in time and look at your FICO score. The only way you could know is if on that day in time you paid for your score and you kept it on file for future reference.

Overall, reviewing all three FICO scores at once leaves me feeling like my score is somewhat of a crap shoot. You never know if all of your creditors will report to all three agencies and if you apply for a mortgage what agency will the company pull your credit report from? And then the information they give as to the positive and negatives? Your credit history is long enough…your revolving credit history isn’t long enough…you’ve opened a new account recently…AAAAHHH!

Seriously – that’s how I feel. It makes my head spin trying to figure out what they want me to do to increase my credit score.

I’m not bothering to pull all three scores ever again. I probably shouldn’t have done it this month since things were going to be tight but I was just too curious. I also pulled another score (which I thought was a FICO score but wasn’t) and I’ll post about that one later. I think I will just stick with the one I get with my yearly subscription and that’s it. It just boggles my mind on how they come up with the scores so I’m just gonna continue paying my bills on time and paying down my debt.

My new FICO score was ready, and there was an increase from 711 to 732!

They still quote the same negative factors on my score: the high amount of credit being used and the length of my credit history (relatively short in their eyes). But the balances dwindling on the credit cards has helped to raise the score.

My advice to anyone looking to raise their credit score or to keep it fairly high is to not miss any payments. Being current on accounts has definitely helped me. For an article on what late payments can do to your score, check out this article from Credit Bloggers, which I heard about from Mapgirl’s Fiscal Challenge.

How could it be that my score is so high given all of my credit card debt and other debt?

It all boils down to how the FICO score is calculated (as found at myfico.com):

35% – payment history
30% – amounts owed
15% – length of credit history
10% – new credit
10% – types of credit in use

One thing that has always been a top priority is to try to make sure all payments to debt have been paid on time. There are no late payments showing on my credit report. That right there is 35% of my score and I believe it’s the best thing I could have done considering my debt situation. Without that, I’m sure my score would be quite low.

One negative that I always seem to have on my FICO score reports is the fact that most of my credit cards were maxed out. That feels good, I can say were maxed out now

With the identity protector program I am on, I will be issued a new FICO score late this month. I am actually looking forward to seeing how much it may raise with the lower balances on my credit cards. I say “may” because you never know, I have found my FICO scores to jump all around in the past (from 706 to 726). I will be a little disappointed if it doesn’t raise just a little bit.

UPDATE: My new FICO score has arrived

My reponse – UNBELIEVABLE!!

Because of my debt, I have less than a stellar credit report. Will a potential employer see my debt load and decide that they do not want to hire me? Maybe they will see me as a potential embezzler? I’ve stolen a total of three things in my life. Once I stole some nail polish from a garage sale when I was 5 (and hid it away because I felt so bad). And the other time was when I was a teenager I stole two $1.00 pins (and went back and sneakily returned them because I felt so bad). Even in my darkest financial hours the thought of obtaining money through dishonest means never crossed my mind.

And who cares if someone has some late payments? How is that going to relate to the ability of a person to do the job they have applied for? Credit reports do not give the story behind a late payment. Maybe a major event happened in someone’s life and they missed a bill? Gosh knows that when a loved one dies – other smaller things in life like mailing a bill payment just take a backseat.

Man, I guess this is just a sore spot with me…whew!

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https://www.annualcreditreport.com/cra/index.jsp

After you receive your report, look through it carefully for anything that looks suspicious. If something does look fishy, get on the phone and find out more information. You may find out that it was just something you have forgotten about, but it’s better to be safe than sorry.

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