Ever wonder how employment background checks are done so easily or even why some financial institutions don’t ask you to prove past employment when applying for credit? That’s right - they already have access to that information. For a fee, your work history can be obtained by anyone asking for it (your salary is only given out with your permission).

The company is St. Louis based Talx. The specific system is called The Work Number and according to the Talx website, “Over half of the Fortune 500 outsources routine employment and income verifications to The Work Number, as do many major public sector employers.”

How it works: employers pay a set up fee and monthly subscription fee to be including in the The Work Number system. They agree to submit employee data, including salary, type of position, how long the position was held in the company and length of employment. In return, they also have access to all data in the Talx system. Talx does maintain that salary information is not given out to anyone without the employee’s permission.

What’s in Your File? Does this type of set up sound familiar to you? For all you credit junkies, it should, as The Work Number system falls under guidelines of the Fair Credit Reporting Act. What this means is, as a consumer, you can get a one free copy a year of the information that Talx has on file and also dispute any inaccuracies on it. The file also will tell you who has been looking at your information (inquiries). If you would like to order a copy of your report, you can print out a request form and mail it in or call 1-866-604-6570.

The funny thing is that I trained at the Talx facility in St. Louis in 1998 doing work for a client to create that annoying phone selection software like “Press 1 for questions about your credit… Press 2 for indicating your frustration with phone-based systems…etc”. I actually enjoyed the experience and was impressed with the company itself.

Do you know of someone who has requested The Work Number file?

Popularity: 5% [?]

I’m listing the candidates here in alphabetical order…and offering no comments (surprise!)

From the John McCain Campaign Website:

John McCain has no specific campaign promises addressing credit cards, but does address the housing crisis and student loans in the following ways.

John McCain Is Proposing A New “HOME Plan” To Provide Robust, Timely And Targeted Help To Those Hurt By The Housing Crisis. Under his HOME Plan, every deserving American family or homeowner will be afforded the opportunity to trade a burdensome mortgage for a manageable loan that reflects their home’s market value.

• Eligibility: Holders of a non-conventional mortgage taken after 2005 who live in their home (primary residence only); can prove creditworthiness at the time of the original loan; are either delinquent, in arrears on payments, facing a reset or otherwise demonstrate that they will be unable to continue to meet their mortgage obligations; and can meet the terms of a new 30-year fixed-rate mortgage on the existing home.
• How It Works: An individual picks up a form at any Post Office and apply for a HOME loan. The FHA HOME Office certifies that the individual is qualified and contacts the individual’s mortgage servicer. The mortgage servicer writes down and retires the existing loan, which is replaced by an FHA guaranteed HOME loan from a lender.

John McCain Calls For The Immediate Formation Of A Justice Department Mortgage Abuse Task Force.

• The Task Force will aggressively investigate potential criminal wrongdoing in the mortgage industry and bring to justice any who violated the law. The DOJ Task Force will offer assistance to State Attorneys General who are investigating abusive lending practices.

John McCain Proposes Keeping The Credit Crunch From Hurting College Students by Proposing A Student Loan Continuity Plan:

• Students face the possibility that the credit crunch will disrupt loans for the fall semester. John McCain calls on the federal government and the 50 governors to anticipate loan problems and expand the lender-of-last resort capabilities for each state’s guarantee agency.

From the Barak Obama Campaign Website:

Obama plans to address the housing crisis in the following ways:

• Create a New FHA Housing Security Program: Barack Obama strongly supports the efforts of Senate Banking Committee Chair Chris Dodd (D–CT) to create a new Federal Housing Administration (FHA) program that will provide meaningful incentives for lenders to buy or refinance existing mortgages and convert them into stable 30-year fixed mortgages. This plan provides an important federal backstop – not a bailout – to this growing national problem. Neither lenders nor homeowners would receive a windfall from this plan.
• Create a Universal Mortgage Credit: Obama will create a 10 percent universal mortgage credit to provide homeowners who do not itemize tax relief. This credit will provide an average of $500 to 10 million homeowners, the majority of whom earn less than $50,000 per year.
• Ensure More Accountability in the Subprime Mortgage Industry: Obama has been closely monitoring the subprime mortgage situation for years, and introduced comprehensive legislation over a year ago to fight mortgage fraud and protect consumers against abusive lending practices. Obama’s STOP FRAUD Act provides the first federal definition of mortgage fraud, increases funding for federal and state law enforcement programs, creates new criminal penalties for mortgage professionals found guilty of fraud, and requires industry insiders to report suspicious activity.
• Mandate Accurate Loan Disclosure: Obama will create a Homeowner Obligation Made Explicit (HOME) score, which will provide potential borrowers with a simplified, standardized borrower metric (similar to APR) for home mortgages. The HOME score will allow individuals to easily compare various mortgage products and understand the full cost of the loan.
• Create Fund to Help Homeowners Avoid Foreclosures: Obama will create a fund to help people refinance their mortgages and provide comprehensive supports to innocent homeowners. The fund will be partially paid for by Obama’s increased penalties on lenders who act irresponsibly and commit fraud.
• Close Bankruptcy Loophole for Mortgage Companies: Obama will work to eliminate the provision that prevents bankruptcy courts from modifying an individual’s mortgage payments. Obama believes that the subprime mortgage industry, which has engaged in dangerous and sometimes unscrupulous business practices, should not be shielded by outdated federal law.

Obama Proposes to Help Students with Financial Aid in the following way:

• Simplify the Application Process for Financial Aid: Obama will streamline the financial aid process by eliminating the current federal financial aid application and enabling families to apply simply by checking a box on their tax form, authorizing their tax information to be used, and eliminating the need for a separate application.

Obama promises to Address Predatory Credit Card Practices in the following ways:

• Create a Credit Card Rating System to Improve Disclosure: Obama will create a credit card rating system, modeled on five-star systems used for other consumer products, to provide consumers an easily identifiable ranking of credit cards, based on the card’s features. Credit card companies will be required to display the rating on all application and contract materials, enabling consumers to quickly understand all of the major provisions of a credit card without having to rely exclusively on fine print in lengthy documents.
• Establish a Credit Card Bill of Rights to Protect Consumers: Obama will create a Credit Card Bill of Rights to protect consumers. The Obama plan will:
  • Ban Unilateral Changes
  • Apply Interest Rate Increases Only to Future Debt
  • Prohibit Interest on Fees
  • Prohibit “Universal Defaults”
  • Require Prompt and Fair Crediting of Cardholder Payments

Popularity: 10% [?]

It’s not just the housing market who is tightening the reigns of their credit lending…the current trend among credit card companies is to reduce credit limits. You know the credit card companies generally change the rules of the game anytime after sending you your credit card. Typical sneaky tricks include increasing interest rates, add rules of arbitration, increasing late fees - all of which is perfectly legal. Be honest now, do you read the entire text of your credit card statements and updates each time when they come in the mail? I admit that I don’t.

The latest trick seems to be lowering the credit limits on your cards, apparently in an effort to reduce the risk to the card companies. If you have a $10,000 limit, a credit card company may want to reduce their risk to $5000, cutting your credit line in half. They will not decrease your credit limits, though, in such a way that would put you over the limit. For example, using the $10,000 credit limit above, if you are using $6000 of that line, they would not reduce your credit limit to $5000. They might reduce it to $6000, though which would put you at 100% of your credit line utilization.

Increasing your credit line utilization is one of the fastest ways (other than big negative marks like bankruptcies or judgments) to decrease your credit score. To maintain high credit scores, the overall guideline in credit card utilization is no more than 33% (preferably 25%, though). Can you see how a sudden 50% reduction in available credit can play havoc with the average consumers’ score?

Naturally, the credit card companies are defending their moves by saying they are acting in the best interests of the consumer. According to a MSNBC article:

“Business conditions continue to weaken in the U.S. and so far this month we have seen credit indicators deteriorate beyond our expectations,” American Express’ CEO Kenneth Chenault said in a statement.

That’s why card companies including Washington Mutual, HSBC and Wells Fargo are lowering their credit limits, according to data from the consulting firm Institutional Risk Analytics.

One of the oft-ignored, but critical responsibility of the consumer in carrying credit cards is to at least make an effort to know what the current terms and conditions for their credit. The easiest way to know if your credit line has been lowered? It’s not in the fine print - the basic credit card statement lists the credit limit prominently, often right next to the current balance and payment due. Next month, when you receive your credit card statement, make sure you take a minute or two to take note of your credit line. Should you find your limit lowered, call your credit card company and see if you can convince them to increase it back to its old limits. This shouldn’t be a problem if you’ve been a good customer.

Has this happened to you? Tell us by leaving a comment!

Popularity: 13% [?]

Ok, that might be a bit extreme, but according to a recent article in businessweek, the lifestyle choices a consumer makes as far as spending habits may even affect their credit score.

It’s fairly common knowledge that some major factors that influence credit scores involve occupation, payment histories, public records, ratio of balance to available credit lines, etc. Lenders, insurers, and other financial firms use credit scoring models (the current industry standard is the FICO score) to make a host of decisions about consumers, including the interest rate on their home mortgages, limits on their credit cards, and the monthly premiums for their auto coverage. The scoring model utilized is at the discretion of the financial firm, and the formula is likely to be a mystery to all except the statisticians that developed it.

The businessweek article states that a lawsuit was filed by the Federal Trade Commission in federal court in Atlanta on June 10 against credit card issuer CompuCredit (CCRT). According to the article:

The allegations, in part, focus on CompuCredit’s Aspire Visa, a subprime credit card for risky borrowers. The FTC claims that CompuCredit didn’t properly disclose that it monitored spending and cut credit lines if consumers used their cards at certain places. Among them: tire and retreading shops, massage parlors, bars, billiard halls, and marriage counseling offices. “The company touted that cardholders could use their credit cards anywhere,” says J. Reilly Dolan, assistant director for financial practices at the FTC. “What they didn’t say was that you could be punished for specific kinds of purchases.” The Federal Deposit Insurance Corp. is also seeking $200 million in penalties from CompuCredit in the matter.

So next time you go to the bar, besides using that bogus name, take cash!

And the truly burning question: should you choose red, or white to improve your credit score quickly?

Popularity: 17% [?]

If you want to maximize your credit card’s optional features, you need to do a little homework before you select a card. Since our economy these days depends in large part on the frequent use of credit by consumers, companies that offer credit cards have come up with a number of attractive features designed to keep customers using those credit cards as much as possible. Such features include various rewards programs, elimination of annual fees, and a low annual percentage rate (APR).

In addition, there are many credit cards from which to choose. You may receive solicitations in the mail urging you to sign up for a new credit card. You’ll find offers for low interest rates, instant no-credit-check approval, rewards programs (including air miles), prepaid cards, and even credit cards that give you cash back on your card purchases. Any of these can be yours if you have a good credit rating.

Credit cards with rewards programs or cash-back programs have become extremely popular. Many people look at the rewards offered by a credit card as its best feature. The extra incentive of cash back, air miles, or points that can be redeemed for merchandise certainly is encouragement for you to spend freely using your credit card. That, of course, is the goal of the banks and credit card companies!

Look for a card that has a low annual percentage rate. The APR is the amount of interest you’ll be charged (calculated on a yearly basis) if you transfer a balance from another credit card, request a cash advance, or carry an unpaid balance over from one month to another. A”fixed rate” credit card is desirable; that means the APR won’t change often, and when it does change, the company has to inform you in advance of the increase. “Variable rate” credit cards can change the APR as frequently as they wish.

Remember that banks and credit card companies are in competition for your business. If you look around, do some research online, and compare the advantages and disadvantages of several credit cards, you’ll be more likely to find a credit card that has excellent options.

Bankrate.com is a wonderful resource for information on various credit cards; it even calculates and provides the comparisons for you! Check out the information on Creditinfocenter.com about choosing a credit card, including descriptions of many options, and clear explanations of how credit card companies calculate their fees, APRs, and interest in general.

Can you recommend any credit card for your situation - low interest rate, secured cards, airline rewards?

Popularity: 25% [?]

For better or worse, FNMA keeps tightening the reins on those unlucky (not so) few that are going through the foreclosure process. They announced earlier this spring that they were increasing the time period (up a year, to 5 years) that borrowers who have been foreclosed upon would have to wait to be considered to have a “re-established” credit history.

On the positive side, they will continue to allow a lesser time period to elapse (3 years, in lieu of the previous 2 year requirement) for borrowers that can demonstrate “documented extenuating circumstances” the resulted in the foreclosure action. However, believe it or not, “financial mismanagement” is not an acceptable circumstance!

Serves them right, all those folks who blindly signed on for mortgages that they knew they really couldn’t/shouldn’t afford…. or does it? With a 5 year waiting period, these individuals should have plenty of time to work on repairing their credit…

Popularity: 30% [?]

Isn’t Congress supposed to be doing something about $40 late and over the limit fees

From 2002 to 2006, the nation’s ten largest banks increased their reliance on fees by 17%.

• From 1994 –2005, over–the-limit fees in the credit card industry more than doubled, while late fees nearly quadrupled.
• Interchange fees–fees credit card issuers charge merchants when you use your card–have tripled since 1998 amounting to $30 billion a year today. The increased cost of interchange fees is often passed on to consumers and totals more than $300 per American household every year.
• Last summer, Bank of America–the bank with the largest ATM network in the country–increased noncustomer ATM fees by 50% to as much as $3 per transaction. Other leading banks are quickly following suit.
• Americans pay billions more in overdraft fees than the actual amounts they overdraw from their accounts. In 2006 alone, consumers paid $17.5 billion in overdraft fees on just $15.8 billion in overdrafts.

Popularity: 32% [?]

I just got off the phone with a consumer attorney who is representing one of my clients. This client is being sued by one of the big collection agencies and they are throwing everything they can at this poor guy and his mother, interrogatories, discovery, etc. At my suggestion (although I always suggest this, but most clients cannot afford it), the client hired an attorney to represent them.

My client was actually in the lawyer’s office and called me from there. What the heck I thought? So next I’m talking to the attorney, who is mostly handles criminal cases but has done collections. We went over the case, and once again determined that the lawyers handling the case did an amazingly slip-shod job and had absolutely nothing in the way of documentation. I reminded her that any documentation presented needs to be authenticated, a clear chain of ownership between the credit card company needs to be shown. Another example of how easy it is to beat collection agencies in court.

I also suggested that she file a counter suit against them for violations of the FDCPA (misrepresenting the status of the debt as collectible, and other goodies).

Just for reference, here is some background on authentication and hearsay on documentation:

Admissibility of business records:
Evidence : Hearsay Rule & Exceptions : Business Records
Evidence : Writings & Real Evidence : Authentication
Under the Fed. R. Evid. 803(6), the custodian of business records may authenticate them by stating that: (1) the records have been made in the course of regularly conducted business activities; (2) they have been kept in the regular course of business; (3) the regular practice of that business is to make the records; and (4) the records have been made by a person with knowledge of the transaction or from information transmitted by a person with knowledge. Once they are properly qualified, business records fall under an exception to the hearsay rule.

Anyone else have any case law to back this up?

Popularity: 39% [?]

It’s common knowledge that credit card companies sell off bad debt to collection agencies (aka Junk Debt Buyers). It’s also known that hospitals and doctors sell off debt to collection agencies as well. But did you know that hospitals are auctioning their debts off on the internet? Two main companies, ARxChange.com and Medipent.com seem to be handling the bulk of the auctions. According to the Wall Street Journal:

ARxChange.com says it has handled more than $400 million in patient debt in about 27 auctions, involving nine hospital systems and four individual hospitals. Medipent.com says it has hosted events involving 12 New York hospitals and $60 million of debt.

Participating hospitals say they are still testing the process, often putting up for bid some of their older debt with a low likelihood of being repaid. Bidders typically offer just pennies or fractions of pennies on each dollar owed, reflecting the small amount they expect to collect from patients while still pulling in a profit.

This bears out the normal rates that most collection agencies pay for for debts - fractions of a penny. Once a collection agency purchases a debt, they often get to keep the entire amount they are able to “extract” from a debtor. As we’ve pointed out in our debt settlement procedure, this knowledge can come in handy when making settlement deals with collection agencies. If a collection agency only paid 1 cent on the dollar and you offer them 25% of the debt, they are still making a tidy profit, and will most likely accept such an offer.

The article also points out that hospitals are going after “old debt” - and specifically mentions that some debts originated in 2003. This is interesting, since the statute of limitations (SOL) in some US states is less than 5 years. (The SOL sets limits on the amount of time a creditor or collector has to sue a debtor in court.) Keeping this in mind, I see the chance collection agencies crossing the line here by going after uncollectable old debt. Several state’s attorney general’s have gone after collection agencies trying to collect on debt which is past the statute of limitations.

Popularity: 42% [?]

I get this question a lot - “I’m being sued by a collection agency - do you know of a good attorney?”. We do present a list of consumer attorneys on our website, but the list is not complete. Consumer attorneys are few and far between and in some states and counties in the US, I do not know of a lawyer to recommend.

This tip was given on our discussion boards by a user and I thought it was so good that I decided to pass it along.

If you smell a lawsuit brewing and want to do some preparatory legwork to find a potential lawyer to represent you should you get sued (or if you are actually being sued), a good idea is to go to the court website listing the active civil cases in your state and county. Input the creditor you think is going to sue (or any of the big creditors) into the search engine. The case listings include the lawyer or firm representing the defendant; although, if your county is anything like mine the defendants are overwhelmingly pro se (consumers representing themselves without a lawyer). If you are having trouble finding a lawyer this info can point you in the direction of lawyers who handle consumer credit cases in your area. You can even go to the appearance date and see how they do in court.

Popularity: 51% [?]