Over the past few years I have heard non-stop stories from consumers who were taken for costly rides by debt settlement scams. While it is true that there are a few good and well intentioned programs available that provide real debt solutions, my experience shows that a vast majority of these outfits are simply money grubbing nightmares for cash strapped consumers.
The debt relief world can be a very confusing place, especially when people are in a seemingly desperate financial situation. With that in mind I would like to shed a little light on this industry and present:
Author: br_admin
Royalty Resource Network Named in Advanced Fee Loan Deception
Consumers in West Virginia are being warned, by their Attorney General Darrell McGraw, about a scam that offers the promise of fast and easy loans. These promises are coming from advertisements produced by the “Royalty Resource Network” (RRN), a Canadian based scam operation, that is appearing in local West Virginia publications.
Attorney General McGraw stated: “Consumers should use extra caution when responding to any sort of advertisement regarding lending and finance. Thieves will use newspapers, websites, e-mails, telephone calls, any medium at their disposal to help you part with your hard-earned money. No legitimate company or organization will require you to wire money in advance using a wire transfer service in order to qualify for a loan, grant or any other financial aid.”
RNN’s advertisements claim you can obtain a loan ranging from $2,500.00 up to $1 million, with no consulting, application or processing fees. Too good to be true? What actually happens is, the consumer sends an advance portion of the money they intend to borrow through a reputable wire service where a fake RNN loan offers collects the money and disappears.
Many scans of this type surface frequently on the internet. It appears that this particular instance the company in question is using smaller newspapers and publications to reach consumers. In this instance a large ad was ordered and placed in The Ad Bulletin. Not only were consumers scammed, The Ad Bulletin was too. RRN’s scammers used a stolen credit card to pay for the advertisement.
Scammers are able to quickly open and close a scam in a matter of days, by using disposable cell phones, free e-mail accounts and remotely routed toll-free numbers. In this case if you call the toll-free number given by RRN it rings as a fast busy signal. Other companies related to this scam are the Vintage Consumer Network and Forum Family Services. The names were possibly choose for their friendly connotations.
Attorney General McGraw’s Consumer Protection Division has referred the complaints against these three companies as well as other across-the-border advance-fee loan scams, to the Canadian Anti-Fraud Centre. The Centre is a joint task force of the Ontario Provincial Police, the Royal Canadian Mounted Police and the Competition Bureau Canada.
These advance fee loan scams unfortunately attract a number of people who are desperate to get loans and sadly pay money, never to see it again.
This guest post is by Steve Rhode. Steve is a consumer debt expert that helps people for free to learn and avoid scams. Feel free to report a scam if you know of one.
Grandparent Scam Strikes Again
Put yourself in the shoes of a caring Grandmother. Let’s say one day you receive a call from your grandson telling you they’ve been in an accident and are being held in jail in the Dominican Republic. They want you to keep their little debacle a secret but they need you to wire money to them ASAP to get them out of jail.
What would you do?
Claudia Beach of Jacksonville, Florida recently faced this exact scenario recently and in a worried, emotional state, sent the money straight away to her needy grandson. Her grandson first called asking for $3,400 for bail out of the Dominican Republic jail he was stuck in.
My emotions went wild. I couldn’t think. All I could think was he was in jail in a foreign country.
She rushed to her nearest Publix and wired the money immediately via Western Union.
Keeping her grandson’s secret she apparently didn’t discus this matter with the boy’s parents. The very next day she received another call from him. This time he said they were making him pay his medical expenses of $2,400.
To Western Union!
Later that very afternoon the phone rang again. This time sonny-boy was asking for $1,800 to pay for the medical expenses of the lady he hit.
She says that the employees at Western Union questioned her each time if she was sure if this was her grandson. When he called the first time he told her that he didn’t sound like himself since he had been in the accident and had stitches in his lips. In a concerned state, she bought this story.
The money was wired each time to a lawyer by the name of Angel Rosario. Money that Claudia Beach will never see again. A total of $8,300. She has since filed a complaint with the Federal Trade Commission and the local police. Beach has come forward with this story to bring awareness to others that might be at risk for this scam.
To protect yourself:
- Do not disclose any information before you have confirmed it really is your grandchild.
- If you’re not sure ask the caller for their middle name or the elementary school he or she attended.
- Do not respond with a name but instead let the caller explain who he or she is.
What breaks my heart about this scam is that it preys on love. If you are a caring Grandparent be wary if you receive a call like this that tugs on your heart strings. If you receive a distress call from a family member in another country I would recommend first, verifying that they are in fact in another country. Using the bullet pointed suggestions above or maybe calling their cell phone? Or their parents to ask how they are doing and what they are up to? I understand there will be different cases for different family dynamics but before you pay up you need to verify an identity!
Video about Grandparent Scam Strikes Again by @GetOutOfDebtGuy from GetOutOfDebt.org
This guest post was submitted by Steve Rhode who is a consumer debt expert and helps learn about getting out of debt and avoid scams.
Married or Engaged? Here's the 411.
One of my readers recently sent me a great question:
“If I marry someone who has declared bankruptcy this year, will it lower my credit score?”
She went on to say that her credit is currently golden. So when she marries her fiancé, what is going to happen to that great credit?
It’s a common worry, but the good news is that you and your spouse will retain separate credit files. Marrying someone with bad credit won’t hurt your credit in and of itself. And if you are already married to someone who experiences credit issues, your score will not be affected, so long as you protect yourself.
It works like this: If Joe has a credit card in his name only, his credit score will suffer if he makes a late payment, but his wife Jane’s credit score won’t be affected at all. But if Jane and Joe have a joint credit card, and Joe makes a late payment, both of their scores will suffer.
This is one of the reasons I always tell married people to keep separate credit files. This way, if one person in the marriage defaults, the other spouse still has strong credit, which the couple can then leverage. But if you have joint credit cards, mortgages, and car loans, what one person does on those accounts WILL affect the other person.
So no need to worry about your fiancé’s past mistakes. There’s no way it will hurt your credit score. But to protect yourself from any future credit problems, I strongly suggest that you don’t open joint accounts with your soon-to-be spouse. Instead, have him apply for secure credit cards and start the process of repairing credit after bankruptcy.
– Philip Tirone
10-Minute Pocket Guide to Build Credit: A Free Report
Want a crash-course in how to build credit? Then review this “10-Minute Pocket Guide” every six months or so. I know it’s not really small enough to fit in your pocket … I call it a pocket guide because it’s short. In 10 minutes or less, you can be reminded how to build a 720 credit score.
Step 1: Keep your credit card balances under 30 percent of your credit limit.
To increase or maintain your credit score, your balance on any one credit card should be no more than 30 percent of your limit. For instance, if you have a $10,000 spending limit on your Visa card, keep your balance at no more than $3,000, even if you pay your credit cards in full each month. The debt you carry on a credit card in proportion to your balance is called a “utilization rate,” and credit bureaus respond more favorably if your utilization rate is low.
If your utilization rate is too high, do one or more of the following:
1. Transfer funds among your credit cards so that each card has a 30 percent balance or less; and/or
2. Pay off any debts that put your balance above 30 percent of the limit; and/or
3. Ask your credit card company to increase your limit so that your balance is less than 30 percent; and/or
4. Open another credit card account and transfer balances accordingly (but only after reading STEP 2).
Step 2: Have at least three revolving credit lines.
Credit bureaus give higher scores to people with at least three revolving credit card accounts, which include major credit cards such as Visa, MasterCard, American Express, and Discover. If you do not have at least three active credit cards, you should open some.
If you have poor credit, you might not be able to open a typical credit card. In this case, consider opening a secured credit card. Lenders that offer secured credit cards will require you to make a deposit that is equal to or more than your limit, thereby guaranteeing the bank that you will repay the loan. If you do not make your monthly payment, the deposit is applied toward your balance.
Another option for borrowers with poor credit is to be added as an authorized user to an existing account in good standing.
If you have more than five credit card accounts, do not close the accounts. Most credit experts agree that once you have opened the excess accounts, the damage is done. In fact, closing them might hurt your score and will never help it.
Step 3: Verify the accuracy of your reported credit limits.
Credit card companies often fail to report your credit limit, or they report a lower limit than you have. This causes your utilization rate to be reported as higher than it actually is, which degrades your credit score.
Why do credit card companies fail to report correct credit limits? They do not want to lose their client base. If other companies see that you have a high limit and a positive credit score, they might solicit your business. By failing to report the correct credit limit, credit card companies keep your name off mailing lists and better retain your business.
If your credit limit is not listed on your credit report, or if it is inaccurate, contact your credit card company and ask it to correct the mistake. Follow up with the credit card company by sending a letter. If you are still having problems getting the proper limit reported, contact the credit bureaus directly, send copies of your statements, and ask that they make the proper corrections.
Step 4: Have at least one helpful active or paid installment loan on your credit report.
Having a healthy mix of credit is a great way to increase your credit score. Therefore, to maximize your credit score you should have at least one installment loan, a mortgage, and three major revolving credit cards (Visa, MasterCard, American Express, or Discover). Typically, an installment loan is used to purchase a car, but it also can be used to purchase a computer, furniture, or major household appliances.
Make your installment payments on time. As helpful as an installment loan can be to your credit rating, it can be equally harmful if not paid on time.
Beware of harmful installment loans—those that delay payment on an item for more than 30 days. This type of credit will always hurt and never help your credit score.
Step 5: Remove high-priority errors from your credit report.
An error can be as simple as having the wrong address or name listed on an account. It can be a limit that is not listed. It could be investments you did not make or accounts you do not own. People with accounts in collection often have duplicate collection notices reported for the same account.
Errors come in two forms: high priority and low priority. By removing high-priority erroneous information from your report, you could see your score jump 20, 50, or even 100 points!
Beware, however, of spending too much time on this step. Errors that are older than two years are likely not hurting your credit score that much. As well, do not waste your time correcting low-priority errors. Faster, more efficient ways to increase your credit score are described in the other six steps.
| High-Priority Errors | Low-Priority Errors |
| Active collection accounts less than two years old and listed more than once | Incorrect address of a mistake in your address (low priority, unless you think you might be a victim of identity fraud or a victim of merged credit reports) |
| Someone else’s Social Security number or a mistake in your Social Security number (this could indicate that you are a victim of identity fraud, or this could result in your credit report being merged with another person’s report) | Wrong date of birth (low priority, unless you think you might be a victim of identity fraud) |
| Someone else’s name or a mistake in your name (this could indicate that you are a victim of identity fraud, or this could result in your credit report being merged with another person’s report) | Other incorrect information, such as your employer |
| Accounts that do not belong to you | Typos in your account numbers (low priority, unless you think you might be a victim of identity fraud) |
| Mistakes in your payment history that occurred within the past two years | Mistakes in your payment history that occurred more than two years ago |
| Accounts in good standing that are not listed in your credit report | Delinquencies older than seven years |
| Incorrect credit limits | |
| Collection notices that are not yours | |
| Account information—other than duplicate collection notices—listed more than once (high priority if the account is harming your credit; low priority if it is helping your credit | |
Step 6: Negotiate before paying a bill in collection.
Paying off a credit card after it has been in collection might further damage your credit. Bills that have been turned over for collection affect your score only minimally after two years and are all but erased after four years. Collection notices do remain on your credit report, but they affect your credit score only slightly. However, each time you make a payment on a bill in collection, your credit score will be damaged, and it will extend the amount of time the item stays on your credit report.
If you have a bill that has been in collection, you should not pay it until you get an agreement from the creditor or collection company to submit a letter of deletion to the credit bureaus asking that the derogatory item be wiped from your credit report. When negotiating for this letter, you should never admit that the debt belongs to you.
Step 7: Create a structured plan to protect your credit.
Your credit report changes daily. Once you have started to build good credit, you will need a plan for maintaining it. Otherwise, your good credit can turn into bad credit before you can say FICO. Once you have completed STEP 1 through STEP 6, develop a plan to maintain your credit, as described below.
Create a budget and spend frugally. Make sure you are never late on payments and that you can keep your utilization rate below 30 percent.
Use technology to keep your bills current. Set up automatic payments on all bills that you pay regularly. This way, you will never forget to pay these bills, and your credit will be protected.
Review your credit card bills and bank statements monthly. Check the limit and interest rate and adjust your balance accordingly. Review your credit card and bank statements and compare against purchases you’ve made. If you notice any unfamiliar items on your credit card statement or bank statement, immediately contact the credit card company or bank to determine whether you have been a victim of identity fraud.
Pull your credit report regularly and review the POCKET GUIDE. Contrary to popular belief, if you request your own credit report, you will not hurt your credit score, so request it freely. In fact, the worse your credit, the more often you should pull your credit report. After receiving your credit report, review the POCKET GUIDE and modify your plan accordingly. Make sure that no new derogatory information has been added to your credit report. Also make sure that previously corrected errors on your credit report have not resurfaced. Check for any indications that you have been a victim of identity fraud. For instance, look for names, Social Security numbers, and accounts that are not yours.
Google+, Better Social Media
Did you hear that Facebook’s rival is in town? As I’m sure some of you know, Google released a new social media site called Google+.
If you haven’t received an invitation to join Google+, please let me know! The site is invite- only… and it’s amazing! Where Facebook lacks,
Google+ takes off.
For instance …
1) Google+ is fertile ground for you to build your business (or promote your job skills). It’s really easy to stand out because, unlike Facebook,
there aren’t bunches of people competing in the
same space.
2) The folks at Google+ are ultra-sensitive about privacy issues, so they don’t capture the same personal information that Facebook does.
3) It’s really, really easy to separate friends, family, and co-workers, which means you can share photos and personal information with friends and family
members, but not the guy who sits in the cubicle down the hall!
Like I said, if you want an invitation, let me know. I look forward to connecting!
Px
P.S. You’ll need a gmail account, which you can get at www.gmail.com. (It doesn’t cost anything.) Once you’ve established the gmail account, send me an email at Philip (at) 720CreditScore (dot) com and let me know that you want to be invited!
Cash-Only Is Dead Wrong
Many so-called experts say that if you want to build credit, you should adopt a cash-only policy. But here’s the truth …
They are dead wrong.
Avoiding credit won’t make life easier. In fact, it will make life a heck of a lot harder.
If you adopt a cash-only policy, you won’t be able to build credit. In fact, you’ll end up with no credit. And no credit is just as bad as poor credit.
You see, the credit-scoring bureaus want to see that you can responsibly handle many different types of credit before they award you a good credit score. If you don’t accumulate a proven track record, you won’t get a good credit score.
This is why I always say that having no credit score is just as bad as having a poor credit score.
No credit score means …
- You’ll have a hard time getting great insurance premium rates.
- You might be unable to find a job.
- Landlords might not want to rent to you.
And if you ever need a loan (and you probably will!), you will get lousy terms and pay an arm-and-a-leg in interest.
Most likely, the banks are spreading vicious rumors!
Here’s the cold-hard truth …
The banks have intentionally kept consumers in the dark about credit scoring.
The banks fare better if your score is lousy. Simply put, the lower your credit score, the more you will pay in interest.
But what if you learned all the secrets and beat the banks at their own game?
Click here for an article I wrote about the biggest misconceptions of credit scoring. And feel free to pass the article on.
Oh, one last thing. Here’s a pop quiz …
Is the following statement true or false?
“If you shut down some of your credit card accounts, your score will go down.” Click here to read the full answer.
Quick Credit Tip: Become an Authorized User
Learning how to become an authorized user on a credit card is a strong and quick strategy for building your credit, and building it fast. In fact, I have seen people’s scores jump as much as sixty points just by becoming authorized users.
Before discussing the mechanism for becoming a an authorized user on a credit card, let us take a look at the definition of an authorized user. An authorized user is a person who has permission to use another person’s credit card. The credit-scoring bureaus treat an authorized user just like they treat the account holder. If the account is delinquent, the authorized user’s credit score will suffer. If the account is in good standing, the authorized user’s credit score should improve.
For this reason, people with bad credit scores can become an authorized user as a strategy for building their credit scores.
To go about this properly, you will need to do several things. First and foremost, choose a family member (preferably a relative who lives with you) with good credit. The credit-scoring bureaus only include authorized users who are related to the account holder. If you have the same address and same last name as the account holder, the credit-scoring bureaus will be more likely to consider your authorized user status as valid.
Next, make sure the credit card company reports authorized users to the credit bureaus. You can simply call the credit card company and say: “I want to become an authorized user. Will you report my status as an authorized user to the credit bureaus?”
If the creditor does not report authorized users, this strategy will not help repair your credit score, so you should find a different credit card to which you can be added as an authorized user.
This brings me to my next point. In trying to implement what you have learned about how to become an authorized user, you might find that your family members are hesitant to add your name to their accounts, especially if you have a history of bankruptcy, repossession, or other financial disasters. What if you buy a bunch of things using the credit card that you cannot afford? The account holder will then be forced to either pay the bill or harm his own credit score. (And your relationship with the account holder might also be harmed.)
Here are some strategies so that the account holder can protect himself or herself:
1. First, the account holder should tell the credit card company not to issue a card to you. If you do not have a physical credit card, you will have a very hard time making purchases!
2. The account holder should not disclose the account number, credit card expiration date, and card security code from you.
In other words, you will be added in name only, without the ability to use the credit card. You can borrow the account holder’s positive credit history, but you will not be able to tarnish the account’s standing.
Keep in mind that account holders will not be affected by your behavior on any accounts that are separate. So long as the account holder does not allow you to access the authorized user account, his credit score will not suffer.
But yours will surge, so long as the account holder keeps the balance low (preferably below 30 percent of the limit) and continues making on-time payments. In fact, you might be shocked at how quickly your score starts to improve. After all, learning how to become an authorized user is among the most powerful tricks for repairing your credit.
Teaching Children About Credit: Step Two
Last week, I told you Step One of my plan for teaching children about credit.
This week, we’ll talk about the next step.
Allow your children to make pre-approved and controlled purchases using the authorized user account you established for them during Step One.
By giving your children access to the physical credit card and allowing them to make purchases, and then insisting they pay their bill at month’s end, you will go a long way toward teaching children about credit.
And if they make mistakes, push their budgets, and cannot pay their bills, even better! Let me explain.
I’ll start by putting into perspective exactly how this step works. Depending on your family’s finances and level of comfort, you can allow your child to make as large or as small of a purchase as you want, so long as:
1) The purchase does not push your utilization rate over 30 percent; and
2) You can pay the amount in full if your child is unable to do so by month’s end.
The important thing is that you insist your child pay interest on any payments that are not made in full by month’s end.
And if your children want to buy something you suspect they will be unable to pay back within a month’s time, I suggest you allow them to learn a lesson by making a mistake, so long as you are prepared to pay the bill at the end of the month. This financial expense will be worth the valuable lesson you will be teaching children about credit.
Obviously, we want our children to be responsible all of them time. But the reality is that they will make mistakes when learning something new. Wouldn’t you rather that they have already made a few mistakes in the safety of your home? I know I want my children to know what constitutes a high interest rate and how much debt they can reasonably carry without hurting their pocketbook. I want them to plan for paying off whatever debt they might accumulate. And I don’t expect them to simply stumble into this knowledge.
They will need to learn it somewhere, and this starts by allowing them to make mistakes along the way.
Consider two scenarios. In the first scenario, your daughter leaves for college without ever having experienced use of a credit card. On her first day of school, she walks by a booth in which a credit card company is promising approval. Your daughter signs up on the spot and receives a $500 credit limit on her first credit card.
The next week, she receives another credit card in the mail. She didn’t sign up for it, it just arrived. This credit card has a $1,000 credit limit. During the first week, your daughter goes on a shopping spree and maxes out her credit cards. And then she receives the bills, which have a minimum payment of $30 each.
She puts them on her desk and forgets about them. After all, she does not have a system of paying bills, and she is short on cash. The next month, her minimum payment on each card is $135, which includes the original $30 minimum payment, the next month’s minimum payment, and a $40 late payment. As well, because the late payment and interest have pushed her over the limit, she now has a $35 over-the-limit fee on each card.
Within one month, your daughter’s finances suddenly became desperate. She doesn’t have an extra $270 to pay both bills. What is she going to do? Turn to you to bail her out? Ignore the situation until it is turned over to a collection company? Hopefully, she will come to you for help, but regardless, the situation is not ideal.
Now consider the second scenario whereby you took a proactive approach to teaching children about credit. Your daughter is 16 and asks you if she can buy a DVD that costs $49.99. Because you can afford to pay the $49.99 added expense regardless of whether your daughter pays you back, you give her the credit card for this one purchase and tell her that she must pay you in full by month’s end or you will charge interest and a late payment fee. You explain that interest will be 29.99 percent, the typical interest rate assigned to new credit users, and the late payment is $40.
Because you want your daughter to experience the situation as it would play out in the real world, you send her one email notice, letting her know that the bill is due in one month’s time. Then you don’t speak to your daughter about the debt until the first day of the following month. You learn that your daughter forgot to make the payment. She now owes $49.99 for the DVD, plus $1.25 in interest and a $40 late payment fee—a combined total of $91.24.
Because you are committed to teaching children about credit, you sit her down and review the rules of credit card companies, showing her evidence that your terms are reasonable. In fact, you explain that in the real world, she is also over the preapproved limit that you, the creditor, set—$49.99. In the real world, she would also have to pay an over-the-limit fee, which would bring her total to about $126.24.
If she was unable to pay that balance down to at least $49.99, she would be charged an over-the-limit fee for each subsequent month as well. Tack on compounding interest and that $49.99 DVD is going to cost your child $196.24 in a few shorts months.
Instead, you offer your child a deal. She pays the $91.24, plus monthly interest, in three monthly installments, and you waive the over-the-limit fee. Next time, you won’t be so generous. Like any creditor, you will stay on top of her about making the payment. You might even call her cell phone early in the morning on a weekend to make sure she is planning to pay the bill on time.
Your daughter has just learned an important lesson in a safe environment in which you can protect your credit and her credit at the same time. So when she walks by that booth on the college campus, she will be better educated to make good decisions about credit habits.
How Often Should I Allow My Child to Use the Authorized User Accounts?
The answer to this question is as individual as the child. The frequency at which your children ask to use the authorized user accounts is a good indication of how responsible they are. If your children ask a few times a year and always pay the bills in full, you can be fairly certain that they are responsible with credit. If they ask a few times a month and often have trouble paying the bill in full at month’s end, then you probably want to grant access less frequently, making sure that one debt is paid in full before another line of credit is granted.
You will also want to spend time on subsequent steps making sure you are teaching children about credit education.
Related Articles
Teaching Children About Credit: An Introduction
Teaching Children About Credit: Step One
Teaching Children About Credit: Step One
Last week, I told you that I had a “crazy” plan for teaching children about credit. And I explained that teenagers who do not know about managing credit might be in trouble when they leave the nest. On the other hands, if you teach children how to build credit, they will have an advantage.
This week, I’m going in-depth with Step One of my seven-step plan for teaching children about credit.
(Step One, incidentally, is the step that sounds the most crazy!)
Teaching Children About Credit: Step One—Add your children as authorized users to one of your existing credit card accounts.
Let’s get this out of the way: an authorized user is someone who has permission to use your credit card, even though you are responsible for paying the bill. That’s right—an authorized user has no legal obligation to pay a bill.
Nonetheless, I think you should add your children as authorized users to one of your existing credit cards.
But let me be very clear: Unless you have extremely mature children, you should not give your child a physical credit card (at least not yet). If you are just starting the process of teaching children about credit, your kids could very well misuse a credit card, leaving you with a pile of debt, a higher utilization rate, and a lower credit score.
So clearly, you must protect your pocketbook and credit score, which is why I say you should not give your children a physical credit card. In fact, you might not even want your children to now that they have been added as authorized users yet. And be sure your children cannot access your financial records or account numbers. In doing so, you can begin building your child’s credit score without exposing yourself (or your children) to the dangers of an immature credit user.
Okay, with all those precautions out of the way, let me explain why I think this is a critical step of teaching children about credit.
Listing your children as authorized users comes with a host of positive outcomes:
1. You will set the stage for later steps of teaching children about credit. We will talk about this later, but briefly, once you start teaching children about credit, you might want to give your children access to a credit card so that they can make small, pre-approved purchases, like paying for a $20 dinner or a $10 movie.
2. Your children will begin developing a relationship with the credit card company. Eventually (when your children become adults), your child might want to apply for a credit card company of his or her own. If your child has been an authorized user for years, he or she will receive better terms, so long as your account has been in good standing.
3. If you use the right account, your children’s credit scores will rise. In short, you should choose a credit card that:
- Is and will remain in good standing. This means you have always paid it on time and you will always pay it on time!
- Has a low utilization rate.
One last thing about teaching children about credit by adding them as authorized users: If you are ever late on a payment, remove your children as authorizes users immediately. This will preserve their credit score. And be sure to join us next week for the next part of this series!
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