For a long time now, consumers have been able to get a free copy of their own credit report one time each year from each of the three main credit reporting agencies, TransUnion, Experion and Equifax.
And that has led some consumers to mistakenly believe that they are also entitled to a free credit score. But that is not true. Necessarily.

But now there are some changes. A new rule that just went into effect in January requires lenders to inform consumers if a poor credit score resulted in less favorable terms for the loan, such as a higher interest rate or a higher down payment.

Another rule will take effect this summer that will require lenders to give more borrowers free copies of their credit scores.

Under the rule that went into effect in January, the lenders will have two options to disclose and inform the consumer. One of these options is to provide the borrower with a copy of the credit score that was used to make the decision. If a credit score is given, further information should also be included that will explain the range of possible credit scores so the consumer can see where they rank on a National level according to their credit score.

The lender will also be required to disclose which one of the three credit bureaus, Experion, TransUnion or Equifax, provided the score.

The other option that the lenders have now does not require the disclosure of the actual score but rather a letter stating that the borrower was given less than the most favorable rate or terms because of their lower credit score. While this letter need not include the actual credit score, it must still disclose the credit bureau that provided the credit report and the credit score.

However, on July 21, 2011 that loophole will be closed and the lenders will be required to disclose the credit score if the low credit score was used to deny the credit or loan or if it was used to give the consumer less favorable terms than someone with a higher credit score. After July 21, the consumer should always receive a free copy of the credit score if it caused them a problem in obtaining the loan or if they obtained the loan but at less favorable terms.

So if you have been denied credit or if you have been given less favorable terms you can get a free copy of your credit score.

But if not, you will still have to pay for it.

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Many people, many more than usual and many more than in past years, have recently experienced the trauma of not being able to make the house payment, not being able to catch up after delinquencies and the horror of foreclosure, not to mention the people who never really missed a payment but were completely unable to sell the home for as much as they owed when they needed to move, thereby resulting in a “short sale” on their credit report.

And all of these problems affect your credit scores and your credit reports. The question is how much? And how long? And what can I do to improve now that the crisis has past?

Well the people at FICO, the credit score people, have long been tight-lipped about how much these types and even other types of problems can affect you. You can check out this article on Mintlife, “How Mortgage Delinquencies Affect Your Credit Scores” to see some of the worst details.

Apparently, it has much to do with how high your credit score was in the first place. If you had a score of 680 there is no difference between a 30 day late and a 90 day late (except of course, it is much easier to pull out of a 30 day late and if you haven’t been able to make payments for as long as 90 days, you may find that nasty foreclosure to be inevitable).

But if you had a 780 score to start there is a difference between the 30 and 90 day delinquency.

An interesting note is that if you had a 680 score, a short sale would negatively affect your score as much as a foreclosure. Rather seems extremely unfair for those millions of folks who just got unlucky in the market and couldn’t sell their home. You know, if you haven’t missed a payment that ought to count for something, don’t you think? Is the typical homeowner in the typical town in the USA actually responsible for the fact that real estate prices have plummeted since they purchase their home? See, these credit scores are not always reasonable and very often not really fair.

And no matter what your score was to start with, any one of these problems can make it much, much worse. It will take time to recover.

Approximately, 3 years for a short sale or a foreclosure, 5 years for a bankruptcy.

But one consideration is the fact that until mortgages are more readily available, even to the people who have struggled in the past recession the housing crisis will not really end.

And that is a boon for you if you had these types of problems in the past because the price of housing in coming down. By the time your credit has recovered the prices will probably be even lower.

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If you have ever purchased a home with a mortgage, you will remember the stacks upon stacks of papers you needed to sign, bothe during the loan application and the closing, all the while supposedly knowing everything each paper said, even while there was not time to read them.

Well now, Elizabeth Warren, the woman tapped by the President to create the Consumer Financial Protection Bureau, has stated that one of the first orders of business for the new Consumer Financial Protection Bureau is the create a one-page disclosure form for all home buyers.

Apparently the bureau has already drafted four separate forms that the industry and consumer watchdog groups will review before they establish which one will become the final version. And of course, if it is anything at all like Real Estate Purchase Contracts or HUD statements, there will probably be revisions as time passes and different considerations come to light.

There has always been disclosures with home mortgages, hence the stacks of papers a home buyer and a home seller are required to sign at closing. But the fact is that a disclosure is supposed to assist a buyer to better understand the all of the terms of the mortgage. Elizabeth Warren has stated that the existing regulations that require dozens of arcane disclosure forms for closing a loan now is one of the most ineffective rules that are currently in place and this is one of the things that she seeks to change.

Imagine, just one form that spells out all of the details in an effective and concise manner.

Many financial analysts, including Elizabeth Warren herself, have said that the subprime bubble in mortgage lending was created by lenders steering unsuspecting borrowers into overpriced subprime loans that became too burdensome for the borrowers in the long term contributing to the housing downturn and the recession.

Much of the problem was the stacks of papers the borrowers had to sign at closing and also at loan application. The paperwork was so laden with “fine print” that it became nearly if not completely impossible to compare mortgage offers.

A one page mortgage disclosure form would be a relief and much easier to understand by the typical homebuyer.

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Many problems with credit can be caused by going through a divorce. Many times, regardless of what the court order may say, the lenders just want their money and so they will harass you for payment and report bad credit on your report even if your ex-spouse is supposed to be the one responsible. Divorce is frequently a cause of bad credit.

But what if you are still married? In this article, someone wrote in asking about identity theft by a spouse and what they can do. The person answering the question gave three scenarios with the last one including “file for divorce”. This was supposedly the last resort according to the advice.

But really? If you can’t trust your spouse not to steal your identity and make you responsible for paying for things that you never consented to and essentially threatening your own credit and the livelihood of both of you, should you really stay married to this person?

Bad credit for either party in a marriage affects both parties. It is often difficult to qualify for a home mortgage with just one income. And credit card payments and car payments and food, lodging and everything else typically comes out of a combined income. Surely, you’re not going to let your spouse starve if they make less money than you do and they don’t have any money for groceries. And splitting all expenses straight down the middle isn’t exactly teamwork.

So, I tend to disagree with the advice that in this case divorce is the last option. Of course, it does depend upon other things in the relationship and extenuating circumstances, of course, but marriage needs to be a partnership. You need to work as a team. And if you can’t trust your partner in a business you call it quits. If you can’t trust your partner in a marriage, you should also call it quits. Your choice.

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It’s the last week to file your taxes if you are going to make the April 18 deadline for the year 2011. And while many who were expecting a huge refund may have completed this onerous task clear back in January or early February, those of us who know that they will end up paying typically put it off till around the last minute. That turned out to be last Friday for me.

“Document your receipts” was the advice I received from my tax man. Being self-employed I need to and can take deductions for everything from my home office to paying my children for doing work for my business. And so I try to keep very thorough records and document every receipt for every ream of paper, the utilities for my home office and more.

But I could learn a few things from this guy. He is billed here as “The Most Tax Efficient Man in America”. It sounds as if he painstakingly documents every possible legal deduction and enjoys every minute of it.

And I admire him for it. I say “Take every deduction you can”.

Unfortunately, though, I do not quite feel the same about General Electric, America’s largest corporation and the fact that they did not pay any taxes.

Somehow taxes on profits of $14.2 billion or even $5.1 billion from operations just in the United States, seems like it could substantially cut into the deficit and help with the balancing of the budget instead of doing it on the backs of the middle class and the poor.

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Today is April 4, leaving just 11 days until tax day 2011. And while your financial mind may be on other things at this point, tax day can serve as another reminder that if you haven’t checked your credit report lately, you need to do it. If you haven’t checked your credit report yet for the year 2011, you have another reminder, another chance to do it now. You can do it later but you will be better off if you do it now.

You need to do it. At least one time per year, more often if you have bad credit or if you are consciously trying to improve your credit you need to check out your credit report.

You are entitled to one free credit report each year from each of the three main credit reporting agencies. Do not go to the sites that are advertised on the TV unless of course they are for the right one!

The right place and only place to actually get a completely free, no strings attached, nothing further to purchase and nobody to sell you anything additional is annualcreditreport.com

You need to check your report. The fact is that it has been estimated that over 75% of all credit reports contain errors. You need to check your report and make sure that all of the information belongs to you personally rather than the deadbeat two states over who has a similar name. You also need to make sure all the information is up-to-date. Many banks have changed names and hands in the past little while, make sure that what is being reported is accurate.

And check your report to see what you can improve on. Credit repair is very possible and often necessary in today’s cruel world . If you need to do some credit repair, get your report, get a plan and take some action.

The credit you repair today may very well be the credit you need tomorrow.

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There are a lot of valid reasons for avoiding credit. However, there are also some reasons you should have credit.

Many mortgage companies are now requiring 3 open lines of credit along with a good down payment and a 750 plus credit score in order to qualify for a new mortgage to purchase a home. And with the mortgage crisis that is going on and the millions of foreclosures out there, this practice is just prolonging the agony of the bad market.

If there is a glut of inventory, which there is, and it is exceptionally difficult to qualify for a mortgage to purchase a home, how can the housing market get better?

And if you are an owner, who needs to move, but is likely upside down in your mortgage, meaning that you owe more than you could ever possibly sell the house for in the near future (remember, mortgages are hard to come by and there are probably hundreds of homes out there competing with yours) what do you do? Corporations in the same situation walk. Some people are starting to walk away, which of course, makes the market even worse. But what is the answer if you must move for whatever reason?

So if you want to buy a house with a mortgage in the future, you may need credit, good credit. And if you have had any difficulties in the past you may need to complete some credit repair.

So get a prepaid credit card. Use it regularly and pay it off. Then use it regularly and pay it off. And slowly expand, get a few more lines of credit, be careful of the type, however, as department store credit is not given as much value as a credit card or an automobile loan, but most importantly of all, pay all of your bills on time, do not charge more than 20% or so of your total credit limit, don’t shop for credit and get financially responsible.

If being financially responsible means avoiding credit, then avoid what you can but do what you have to do to get your house.

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Remember Catch-22 and that “damned if you do, damned if you don’t” mentality? Well that is exactly how credit works these days.

If you are responsible, pay off all your debts on time and live a relatively debt-free, all cash life, you can be penalized by mortgage companies when you want to purchase a home. Even though, you are financially responsible and living completely within your means.

Oftentimes, mortgage companies penalize a person for having too little credit and of course, you get penalized if you have too much credit or if your credit is less than stellar.

Mortgage companies like to see at least 3 open lines of credit to make sure that you are credit-worthy.
So if you would like to live a relatively debt-free life and the only reason you want to get a mortgage at all is because you didn’t have the large pile of money that it would cost you to buy a house just sitting around in your bank account waiting for you to find the perfect home, you may be in for a big shocker. You can be penalized for having too little credit as much (or maybe even more) than for having too much credit or too poor credit.

Yes, it’s a Catch-22, you’re “damned if you do and you’re damned if you don’t.”

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The mortgages that are at least 30 days late decreased more last month than it has in over a year.

Delinquencies in February 2011 were down 1.2 percent from January 2011 and 18.4 percent from last year at this same time.

But the foreclosure inventories are still quite high and significantly higher than last year at this time. Right now there are approximately 2,196,000 foreclosures in the market and there is a total of 6.865,000 that are 30 delinquent or already in the foreclosure process.

The states with the highest numbers of foreclosures are Florida, Nevada, Mississippi, New Jersey and Georgia. The states with the lowest numbers are Montana, Wyoming, Alaska and North Dakota.

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According to a new study from the credit bureau, TransUnion, there are as many as eight million credit card accounts that are deemed “incactive” today. The inactive accounts are believed to have contributed to the 24.6% decrease in U.S. Credit card delinquency rates.

The majority of the inactive cards were in the “high risk” category but consumers in every category have been cutting back and using credit cards less.

Cash and debit card use has increased while the use of credit cards has declined contributing to softer profits for the credit card industry.

Read about it at “TransUnion: Eight Million Credit Cards “Inactive”.

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